PH telecom sector is sorry for your inconvenience

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AS the presumptive president-elect Rodrigo Duterte prepares to install a new government for the Philippines, I hope he understands the true weight of the expectations behind the “change is coming” meme with which he has apparently decided to brand his impending reign. While promising to do things that any sincere barangay captain should do has a certain short-term appeal, even this early we are seeing signs that much of the “change” may be cosmetic.

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We’ve already had six years of cosmetic change—and much of it for the worse —and public frustration is going to set in quickly if there is no clear progress. BS Aquino 3rd could afford to be a slacker because he was a disposable cog in a much bigger political apparatus; a failure to perform on Duterte’s part, however, would actually leave a destructive vacuum.

The Manila Times’ editorial yesterday suggested that a relatively quick path to success for Duterte would be to focus on issues with broad appeal, in this case, the pathetic state of the nation’s telecommunications sector. Crappy service at ridiculously high prices is a burden on absolutely everyone in the country; doing something to change that would pay tremendous dividends both economically and politically.

One thing the editorial took issue with was the excess of foreign equity in the telecom sector, which essentially consists of just two giant companies, Globe and PLDT, yet at the same time, it pointed out that competition is the key to improving performance and costs. I believe there’s a contradiction in that; to maximize competition, entry to the sector has to be made as open as possible, because the Philippines on its own likely does not have all the financial, technical, and management resources and competencies it needs. There is nothing inherently wrong with 60-plus percent of PLDT and about 40 percent of Globe being under the ownership control of foreign interests; the problems arise when the parameters of that ownership in terms of performance standards are far too loose.

The telecommunications infrastructure, specifically telephone and internet communications networks, should be considered a strategic asset, along with other infrastructure like the national electrical grid, water systems, airports, and the road and rail networks. Maximum performance at a cost that reflects fair value is not just a matter of good public service, but of national security. This does not necessarily mean that the telecom sector should be nationalized or be subject to limits on foreign equity, but what it should be subject to are strict, non-negotiable standards. Front-end barriers to investment are pointless—that is, unless one is a local rent-seeking conglomerate unfairly benefiting from them—if they do not ensure the delivery of the best possible products and services.

It is up to the government, guided by the demands of the millions of business and individual consumers and not the risk and return considerations of would-be investors, to set the standards that define acceptable products and services.

A good place for the incoming administration to start would be to upgrade existing regulations and regulators to reflect an institutional awareness that we indeed live in the 21st century. The National Telecommunications Commission (NTC), which is responsible for setting standards and regulations for internet service, operates on a set of guidelines that were developed more than 20 years ago, and cannot actually regulate anything more modern than basic cellular service. Internet speed and uptime standards are more appropriate for a time when a 56K modem was considered fast, not one in which a majority of the population doesn’t leave the house without a fully-capable internet device in their pockets. As just one example of arcane rules the country could do without, one of the legal requirements for new network providers is the capacity to provide 500,000 fixed-line connections, which is about as necessary in this day and age as requiring a communications company to offer telegraph services.

Another issue that needs to be addressed is the unjustifiable control of what should be shared resources by private concerns, which handicaps the capabilities of the entire infrastructure. There are two specific steps the new administration should take: First, it should take control of the unused 700 MHz band away from San Miguel Corp., and distribute it equitably among existing and future service providers; SMC does not have a significant interest in telecommunications at the moment, there is no justification for its being allowed to hoard a broadcast band for the vague reason that it might someday do something with it. The second step should be to enforce internet peering, and this is specifically directed at PLDT, which has stubbornly done everything it can to avoid it.

And the new administration should also give productive attention to some of the complaints of the two existing telecom providers, particularly in terms of the difficulties encountered in dealing with local government units. By PLDT’s estimate, it takes no fewer than 10 permits and six months to install a single transmission tower, and that is a best-case scenario. While LGUs and local property owners are certainly entitled to benefit from hosting facilities, their greed is universally obnoxious, and harmful to the entire country. A single, fair and consistent set of guidelines that apply to every jurisdiction in the country must be developed to encourage capital investment in network expansion that both PLDT and Globe say they want to do, but can’t because of localized extortion.

These are not the only issues, of course, but addressing them properly will lay the groundwork for solving other problems, and create the so-called ‘level playing field’ for future investment. And from a political point of view, it would, as yesterday’s editorial pointed out, reap a windfall of goodwill for the soon-to-be President Duterte, something he is going to need if he intends to take on other, more contentious issues during his term.

ben.kritz@manilatimes.net.

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5 Comments

  1. Ben, you have great ideas and forward thinking proposals, and I thank you for these, but, with an uneducated populace and a corrupt establishment, I wouldn’t be surprised if after six years of a Duterte administration, things would not have moved an inch from where we are today.

    Same with the traffic quagmire in Metro Manila. I’ll bet my house on it.

  2. ferdinand naboye on

    If you want to improve the system take it away from the monopolies and open to the public to really see change. change will never come fro m the monopolises

  3. To create a change , it must be measurable from point A to point B. not only measurable but transparent so everybody will not doubt the numbers. Freedom of Information Act is needed. I will ask every reader of this column, where does the government get its data to provide the ever popular, generally misunderstood GROSS DOMESTIC PRODUCT ? I know how to get INFLATION RATE. based from the incremental price increase of basic commodities like gasoline, food prices and various items. Dept of Consumer Affairs tabulates the numbers.

  4. Amnata Pundit on

    The simplest solution is for the government to enter the business through DBP, SSS, GSIS, Landbank in partnership with non-telco players like SMC, SM and Megaworld, something like a PPP, but this kind PPP will not result in conning Juan dela Cruz. This should scare the existing telcos enough to make them wet their pants towards a better service.

  5. The cost of putting up new cell sites and upgrading the existing ones from 2g/3g to LTE to LTE-A is really prohibitive, and because most Filipinos today specially our poor folk still uses legacy 2g texting and calling, the duopoly are forced to maintain these legacy system indefinitely even probably when 5g services are already here.

    The high cost have also force operators to go for cheaper Chinese made systems with all its problems, the Chinese is quite difficult to deal with than the Japanese, there’s always and excuse for everything.

    A cheaper alternative should be made here, mobile internet is just priced to steeply here, the solution is for the govt to require all establishments any building owners be it malls or groceries , office building to put up free wifi services from third party operators. I remember in the beginning MacDonald has a free wifi service, instead of developing it however it simply banished when smartphones became popular.