Our digital future Boo Chanco
DEMAND AND SUPPLY - Boo Chanco (The Philippine Star) - August 7, 2020 - 12:00am

Our Great Leader threatened to expropriate the properties of our two telecommunications companies if they are unable to improve services by December. He declared we would go back to the old days of the dial up telephone. Hello… Hello… Party line?

This has to be another example of our Great Leader’s use of hyperbole. There is no going back to the bad old days of rotary dial phones with party lines.

The young ones don’t know what I am talking about. The PLDT then was owned by a Marcos crony and didn’t want to invest its own money on improving services.

It could take over 10 years to get a phone connection and you had to share a line with another subscriber... a party line. If you were waiting for an important call and the party line was spewing sweet nothings to a lover for hours, sorry ka na lang.

Anyway, our Great Leader threatened Globe Telecom CEO Ernest Cu that he would be  hanged on a Globe tower if the service is not improved. Mr Cu simply threw back the problem on the President’s lap:

“You could not do that Mr. President, there are no towers available because we’re waiting for the permit to be approved.”

Our Great Leader had to admit government is at fault and ordered Cabinet members to speed up the approval process.

Since most of the problems are with LGUs, Interior Secretary Eduardo Año promised that from an average of 200 days, telco permits will be released within “16 to 20 days,” after which construction may proceed. To do that, some licenses will no longer be required.

Actually, the justification for the third telco license given to DITO Telecommunity of Davao businessman Dennis Uy and China Telecom is to fast track improved services. But even they are claiming red tape is a problem.

Our Great Leader’s tirade against Globe and PLDT/Smart is also undeserved. As former DICT undersecretary, Eliseo Rio, explained to me that  these two companies have made their biggest capex investments starting 2018. Since they started operating more than 20 years ago, the two telcos have been increasing those investments yearly in 2019 and 2020.

“They are preparing their networks for the competition that DITO will give them when it starts commercial operations in March 2021. This, in fact, greatly improved our telecommunication services.”

But if our Great Leader wants something faster, he should certify the Open Access bill still pending in Congress. It will allow cable companies, internet service providers and others to quickly compete with the telcos.

The Ramos era EO 467 restricts access to international satellites to public telecom entities only. It was meant to break the Philcomsat monopoly. But today, it’s a barrier to “non-telco” internet service providers (ISPs), even in areas not served by telcos.

Setting up a phone company just to get into the broadband service is stupid. No one wants a landline phone these days.

Take the example of Converge that is owned by Pampanga’s Dennis Uy.

Converge started as a cable tv operator (ComClark) which can deploy fiber. But when it shifted to offer finer broadband, it had to get a “telco” franchise just because it was “putting up a network” outside its cable service area, even if it did not intend to offer telecom service.

The Open Access bill long pending in Congress fixes that problem. Once passed, local cable companies and other entities can go into broadband service without any need for a telco franchise. That increases the number of service providers and the increased competition gives consumers better choices, better service and better rates.

There is a version of the Open Access bill (Yap version) that opens up the market not only for satellites, but also for international cable landing stations where most of our bandwidth right now comes from.

Our problems with broadband service quality aside, CLSA, an international investment bank, had expressed big hopes for our telecom market. In a recent study, it noted that “with smartphone ownership at 70 percent, we think that the Philippines has already hit critical mass.”

CLSA noted that “data usage and demand for higher-value smartphone units are rising - a positive indicator…”

But Grace Mirandilla Santos, an industry analyst, was unimpressed. She pointed out that “smartphone ownership, similar to internet usage, should be viewed in the proper context. Ownership of a device is not the same as ‘more people having access to a device’ since some people can have multiple devices (and SIM cards).

“The cost of smartphones, however, is going down. There are brand new internet-ready phones for as low as P1,500 (Cherry Mobile and MyPhone). But whether these devices are getting to people who previously did not  have internet access is another thing. Mobile phone penetration is quite high at 110 percent of the population.

“However, local surveys conducted by the SWS (latest results in 2019) and the National ICT Household Survey (conducted by PSRTI and commissioned by the DICT in 2019) reveal a lower percentage of usage.

“SWS says only 46 percent of Filipinos use the internet. The NICTHS shows that 63.7 percent of barangays do not have access to a cell tower, 70.2 percent do not have access to fiber optic cables, and 87.8 percent do not have access to free Wi-Fi (this figure should be looked into given the 2021 budget request of the DICT).”

Still, CLSA thinks that with “breakthroughs in smartphone and data penetration, the Philippines is on the verge of major digital adoption. Key building blocks in this process are its large population, youthful demographic and government-led improvement of essential infrastructure.

“We expect the digital environment to gain traction over the next five years, with data users breaching 94 percent penetration. Organizations that are able to adapt and execute will survive over the long run…

“In a country of 105 million people, Filipinos are some of the biggest users of social media and video-on-demand services - core drivers of digital maturity…”

There is indeed, so much promise. Ironically, our Great Leader’s dramatic threat for telcos to improve broadband service may finally get ABS-CBN where it really wants to be.

Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco

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