Message for legislators

Congratulations to our newly elected congressmen and senators. I don’t mean to rain on your parade, but I think it is timely to take advantage of your euphoric mood to bring to your attention a situation that cries out for a hero. I am referring to our preparedness to secure the future of our country as we enter the global digital economy where digital technology will have a profound impact on productivity, quality of life, and global competitiveness. Whoever gets it will determine who succeeds and who gets left behind. Sadly, in ASEAN we are considered a laggard. This was not the case nearly 20 years ago.

eASEAN Framework

On Nov. 24, 2000, ASEAN leaders signed the e-ASEAN Framework Agreement to set in motion the regional grouping’s effort to bridge the digital divide with the rest of the world, with each other, and within their respective societies. It was a pioneering initiative that prescribed the basic requirements for a digital-ready economy: digital infrastructure, digital literate workforce and consumers, and an enabling regulatory environment that encourages investments in digital technology and its utilization in such applications as e-commerce and e-governance. I had the honor of being tasked by the ASEAN leaders with leading an e-ASEAN Task Force to craft the elements of the Framework Agreement. My appointment was a tacit recognition of Philippine leadership in the region at that time. Looking at where we stand today, you will understand why I get cantankerous when I write about this topic.

Under this framework, ASEAN members have pursued collectively and individually their march towards digital economy readiness. Collectively, ASEAN has laid out important policy measures and frameworks, including the AEC 2025, the Masterplan on ASEAN Connectivity 2025, the ASEAN Information and Communication Technology (ICT) Masterplan 2020, and ASEAN Strategic Action Plan on Consumer Protection 2025, among others. Developing a harmonized approach would help to streamline the necessary policies for enhancing ASEAN’s digital competitiveness and integration. However, given their differing levels of capacity for absorption and deployment, there is no one size fits all approach.

Each of the ASEAN economies have therefore developed their own digital readiness blueprint — the Philippines included — although in varying levels of comprehensiveness and quality. Currently, experts rank Singapore, Malaysia and Thailand as the leading three in terms of ASEAN digital development index. Their approach has been wholistic involving a whole-of-society approach. One can see that in the government agencies that were created to coordinate implementation of these blueprints. Thailand’s Ministry of Digital Economy and Society was tasked with creating a digital ecosystem. In contrast, that of Indonesia (Ministry of Communications and Information) and the Philippines (Department of Information and Communications Technology) were digital infrastructure and telecom centric and more regulatory than developmental in purpose.

Moreover, the Philippines was operating under an overall policy framework that was developed and continues to be based on analog-era policy environment, so says researcher Grace Mirandilla-Santos in an Asian Development Foundation study. 45 percent of our population remain unconnected to the internet. Fixed broad band service costs consumers 7.1 percent of gross national income per capita per month – well above the five percent threshold recommended by the International Telecommunications Union.

Vietnam (with a lower GDP per capita) has 170 percent more fiber connections than Globe and PLDT broadband subscribers combined. It targets 19 million fiber connections by 2020. By the end of 2017, Vietnam has 9.3 million connections.

In a connectivity report conducted by Akamai, the average broadband connection speeds (megabits per second or Mbps) in some ASEAN countries are as follows; Singapore 20.3Mbps, Thailand 16Mbps, Vietnam 9.5Mbps, Malaysia 8.9Mbps, Indonesia 7.2Mbps and the Philippines 5.5Mbps.

The Arrival of 5G

At the time of the drafting of the eASEAN framework, mobile technology was then at 2G which allowed texting. Today it is now 4G which brought with it an explosion of usage – from amended mobile web access to gaming services, mobile HDTV, video conferencing, and cloud computing. It ushered in mobile e-commerce and payments. That said, in terms of 4G speed, the Philippines still ranks 4th slowest among 88 countries surveyed.

With the arrival of 5G, the potential for the Philippines to be left even further behind is exacerbated. 5G will deliver massive connectivity, ultra-low latency, faster gigabit speed (up to 35 times that of 4G) and will enable advanced applications like smart cities, Internet of Things (IOT), and augmented reality (AR). Its impact on economic growth will be decisive for those who have it in place. Singapore, Thailand and Malaysia have put up common use test beds. Globe and Smart each have their own test facilities being installed in Clark.

There are however major challenges that first need to be overcome before commercial deployment is achieved since it is still in the early stages of development. The first is the assignment of the spectrum through which 5G is transmitted. The second is the choice of technology providers. Currently Huawei, ZTE, Ericsson and Samsung are the major players. The US has developed an alternative technology but is still way behind industry leader Huawei. The third is the enormous investment required in 5G infrastructure – denser cell towers and massive amounts of fiber optic cable to the cell sites. Lastly, there must be a large enough market for applications that this technology will make possible for the investment to be worthwhile. 

Role of Government

In meeting these challenges, the role of government is going to be critical. Spectrum policy will impact on costs and the choice of technology. On the choice of technology providers, it seems a no-brainer to go with Huawei but one cannot discount the security issues being raised. This must be addressed by government and business to the satisfaction of all concerned. In terms of the massive investments required, the government would need to step in to incentivize investments with appropriate tax and pricing policy and ensuring fair competition. It must develop a sensible policy for bringing the costs of cell towers down from a range of options which other countries have utilized. These include from outright ownership by government to mandating common use. Certainly, the local regulations must be reviewed as this constitutes a major bottleneck. Finally, the government must encourage utilization of this technology through regulatory reform including on mobile payments, data privacy and protection, transport networks, medical applications, and labor laws among others. After all, even though the technology is available globally, how one country benefits from another is the ability to craft the right policies that will enable them to harness the full potential of these technologies.

For this to happen would require the leadership of both houses of Congress to help the Executive develop these right policies. First, they would have to dive deep to appreciate the complexity of the challenge. Who will be that intrepid member of Congress that will step up to meet this history changing challenge? Technology delayed is development denied!