THE ONLY REALISTIC WAY to cut the cost of Internet access
and improve Internet speeds and service is for the administration of President
Rodrigo Duterte to strictly enforce the 2014 Philippine Competition Law that
penalizes uncompetitive behavior.
The government must also build a separate Internet
infrastructure in which up to three Philippine satellites will ensure the cheap
and fast Internet service we now crave. The Philippines doesn’t have a single
satellite in orbit and this disadvantage is one reason why the satellite internet
access that can help drop internet access prices isn’t viable here.
PLDT and Globe Telecom, which are not Filipino-owned
companies, have consistently proven their ability to stall or stifle moves by past
administrations to get them to improve the quality of their internet service.
Filipinos know the Philippines has the worst internet service in Asia and we
have PLDT and Globe to thank for this humiliating epithet.
Turn the screws on PLDT and Globe
The duopoly of PLDT and Globe will only be goaded into improving
their internet services by a competitor it fears. That competition was to have
been San Miguel Corporation, which last year made loud noises its joint venture
with Australian telecom giant Telstra Corporation would deliver faster internet
speeds at lower prices. Telstra said it was prepared to invest up to $1 billion
in the business.
San Miguel’s braggadocio failed in the face of opposition by
PLDT and Globe -- and government indifference and ineptitude. The result: SMC last March called-off its
partnership with Telstra, ending the promise that Filipinos might soon be
delivered from the hellish internet service of PLDT and Globe.
SMC then sold its broadband frequency assets (including its
700 megahertz spectrum) to PLDT and Globe Telecom. With the sale, both Globe
and PLDT promised to provide faster Internet within three to six months. Really?
More ominously, San Miguel’s defeat virtually eliminates the
possibility a third private player might soon compete in the Philippine internet
market. To begin with, any new player won’t have the spectrum needed to provide
fast and cheap internet service. PLDT and Globe now have a stronger lock on this
spectra with their purchase of San Miguel’s broadband assets.
Real competition is the key
This means the only competitor PLDT and Globe really has to
fear is the national government.
The Duterte administration should, on its own, develop a
separate government-run internet infrastructure by investing heavily in it and by
strictly enforcing the Philippine Competition Law that penalizes the
uncompetitive behaviors of PLDT and Globe such as predatory pricing and
collusive behavior.
The Philippine Competition Commission, the country’s
anti-trust body, should reject the sale of SMC’s frequency assets to the
duopolists since it will only cement the Globe and PLDT duopoly in the telecoms
industry.
The sale of the frequency assets of SMC to PLDT and Globe is
detrimental to the future growth of the internet. It will also impede the
future growth of the broadband sector.
PLDT and Globe are a true duopoly, which is defined as a
market form where only two companies have dominant control over a market. In a
duopoly, the two dominant players collude to reduce competition and charge consumers
higher prices. This type of uncompetitive behavior is penalized under the 2014
Philippine Competition Law.
The administration’s goals in providing cheap and fast internet
via its own infrastructure are simple: provide 70 percent broadband Internet
penetration with speeds of at least 5 megabits (Mbps) per second covering
around 85 percent of the whole country. This will hit PLDT and Globe where it
hurts the most.
Delivering 5 Mbps or up to 10 Mbps of Internet to Philippine
subscribers will kill the goose (the mobile business) that lays the golden eggs
for PLDT and Globe. Philippine satellites will play a key role in realizing the
aim but we have to make plans to build and launch these satellites plus the
infrastructure they require.
It’s obvious PLDT and Globe protect each other’s mobile
business by keeping the Internet slow and unreliable. The Philippines’ overall
telecom infrastructure remains inefficient, unreliable and poor despite both
firms making billions of pesos each year.
Should the government compete against the duopolists,
subscriptions to PLDT’s Smart/Talk-N-Txt/Sun and Globe Telecom’s mobile
services -- their gold mines -- will be drastically reduced. Further eroding
this revenue stream is the ever expanding popularity of apps such as Viber,
WhatsApp, WeChat and all other Internet apps that allow you to call and text
worldwide using your mobile phone for free!
The government should come in as the third player and
initiate policy changes that will chart the future internet growth of this
country. This option has been taken by a number of countries.
Congress and the new Department of Information and
Communications Technology should actively initiate policy directions and enact
new laws that foster competition. Both Globe and PLDT
should be made to follow and participate in government plans.
They should not be
made to stymie government moves to foster competition similar to what they did to
SMC and Telstra.
South Korea: world’s
fastest internet
South Korea is the world’s internet speed leader and boasts
the world’s swiftest average broadband speed at 22 Mbps. Last May, the
government said it will upgrade the country's wireless network to 5G by 2020,
making downloads about a thousand times speedier than they are now.
Backed by strong government support, South Korea has one of
the world’s most advanced telecommunications and information technology infrastructures.
It’s a global leader in broadband penetration (97 percent), and a world leader
in average peak connection speed (20.5 Mbps) in the third quarter of 2015,
according to Akamai Technologies.
In addition, 97 percent of South Korean households have an internet
connection while 81 percent of its population of 54 million are regular internet
users. South Korea recently launched commercial “Giga internet” supporting
speeds of 1 Gbps and 500 Mbps.
How did Korea do it?
South Korea began by dismantling the government monopoly in
its telecommunications sector in 1981. This led to liberalization and
encouraged a competitive telecommunications environment. In 1994, the
government realized that “information superhighways,” or fiber optics networks
operating on a national level, were crucial to its growth.
The Korean government funded the Korean Information
Infrastructure that built a backbone to connect government and public
facilities. By being the first customer, the government eliminated the start-up
risk private industry would not have been able to fund.
The pattern of government support continued with the
Broadband Convergence Network and the IT839 through which the Korean government
provided $70 billion in low-cost loans to broadband service providers to build
high-speed broadband networks. Broadband providers invested an equal amount.
The South Korea government also enacted regulations and
provided incentives to private companies to build networks. It also launched a
number of successful efforts to spur broadband demand.
Along with South Korea’s superfast Internet came substantial
reductions in internet prices. South Korea charges only $22.13 for 10 Mbps (Unlimited
Data, Cable/ADSL Monthly), said the website www.numbeo.com.
In contrast, we in the Philippines pay $44.77 (if it’s
available). For Singapore, that’s $31.14; China, $16.74; Thailand,
$17.31; Vietnam, $11.13; United States, $50.89; Bermuda, $136.83 and the UAE, $86.25.
Other countries are boosting
broadband internet
In 2015, U.S. President Barack Obama created the Broadband
Opportunity Council to produce specific recommendations to increase broadband
deployment. The 28-member country European Union considers the development and
extension of broadband coverage a major priority project.
The EU now aims to provide broadband above 30 Mbps by 2020
while 50 percent of the EU should be subscribing to broadband above 100 Mbps by
2020.
Similar recommendations are being encouraged by the 34 member
states of the Organization for Economic Cooperation Development (OECD)
countries that spans the globe. OECD said its “Policy makers should aim to create
a favorable environment for investment and innovation and ensure a predictable legal
and regulatory environment for market participants.”
So, what must the Philippines
do?
It’s obvious countries with fast, cheap Internet connections
tend to have more competition. The duopoly of PLDT and Globe hardly shows any
semblance of competition.
There is a formula for the Philippines to vastly improve its
internet service: build a government-run internet infrastructure (including internet
satellites); get the private sector involved in a competitive environment;
enforce the Philippine Competition Law and enact new laws and policies that
will chart the internet direction of this country.
Pres. Duterte -- the Man without Fear -- can show his
toughness by facing down PLDT and Globe.
And the Philippines will applaud him.
