Spectrum reform now!

Ma. Lourdes N. Tiquia

Ma. Lourdes N. Tiquia

AS of January 2015, the Philippines had over 44.2 million Internet users, the second highest in Southeast Asia and the sixth in the whole of Asia. In terms of comparative scale, there are over a billion Internet users in the AsiaPacific region, which amounts to over 46 percent of the total number of Internet users in the world. Google has forecast that the Philippine Internet population would double by 2016.

According to the UK-based We Are Social’s “Digital in 2016” report on digital, social and mobile usage around the world, of the total Philippine population of 100.8 million, 49 percent are in urban centers, 44.2 million are active Internet users, with 90 percent having active social media accounts. In fact, Internet access in the Philippines has “grown by 500 percent, the fastest rate in Southeast Asia,” the report said.

Mobile connections stand at 114.6 million, or 114 percent of the population. This means mobile is the universal platform, with some having two units. People having two units often say that they do so because of the spotty telco service across the archipelago. Traditionally, in urban centers, Globe is strong but in rural Philippines, Smart is better. Since it is hard to cross platforms, some would have two plans to ensure connectivity with those in Globe or Smart. And crossing platforms is like scaling a tall building in Makati.

It used to be that one was better than the other, but these days, both have miserably failed their client base that users are praying hard for more competition. The rumored third, Telstra, was gone even before it launched. Some say the odds were just stacked against a third by the duopoly. And from Peru, PRRD again teases about opening the telco market to a third player.

=Despite the bad service, the Philippines leads in average “Time Spent on the Internet” through laptop and desktop, and one of the highest via mobile worldwide. “From a global average of 4.4 hours/day, the Filipino spends an average of 6.3 hours/day online via laptop and 3.3 hours/day via mobile.” That’s a grinding, slow motion of a connection. But that is pure gold for operators and we have not yet even touched servicing the last mile. Where are all the income from drop calls and dragging connectivity? Spirited away? Reinvested as capex or gone to other, diversified interests of the holding firm?

=Several years back, we pushed for improving cellular services in the country, for us to be delivered from drop calls, static lines, turtle-paced internet and a truly bad customer service by the duopoly that is Globe and Smart. There was as yet no Department of Information, Communication and Technology (DICT). Today, with the passage of Republic Act 10844 last May, much is expected from the DICT in terms of improving cellular services. It is doubly challenging for the first DICT secretary to prove to the users and the public at large that despite being a former Globe official, he will do good by the people.

Ahead of DICT, there was the Philippine Competition Commission, created by Republic Act 10667, or the anti-trust or competition law, in 2015. The PCC shall “prohibit anti-competitive agreements, abuses of dominant position, and anti-competitive mergers and acquisitions. Sound and efficient market regulation by the PCC will result in markets that foster innovation, global competitiveness, and enhanced consumer choice, thereby improving public welfare.”

Two laws, one after the other, and telecom service has gone from bad to worse. And yet Juan dela Cruz owns the airwaves or spectrum. We fry in our own lard and government is unable to wrestle with the telco giants and mandate decent service. Why?

Spectrum is patrimony just like the seabed. The airwaves are owned by all Filipinos. That is why operating TV, cable, radio, cellular services need a franchise from Congress. And that is where the problem lies. By regulatory capture, Congress deals franchises like ministerial tasks, an overloaded deck of cards. Nothing to look into save submit all paper requirements, deal some grease and voila, a franchise bill is signed into law. In the case of Avocado, it got a franchise fast and in the dead of night, the measure lapsed into law, without the previous president doing anything. Look at its parliamentary history and Avocado is certainly a lucky fruit? (Or is it a vegetable?) Who authored the Senate version? Who owns the franchise?

After issuing the franchise, Congress does not even exercise its oversight powers, nor has it deemed it feasible to cancel a franchise because of bad service or non- use. Worse, Congress has been a party to spectrum lords who sit on their franchises waiting for someone to bundle it up and buy for a higher fee. Have you actually seen the table of spectrums? Why is there a sudden pick of franchises a year before elections? Radio and cable in rural provinces or too crowded media centers? Who are the spectrum lords?

So, has the DICT looked into the Philippines’spectrum with an eye to efficient allocation, licensing and use? Has it determined the policy on the use of white space? Has it reviewed licensee rights, property rights in favor of a muchmorenimble system such as a commons regime?

Central to the choice between a property right regime or a commons regime are (1) scarcity and (2) transaction costs. “If a resource is scarce in that many people contend for its use, then a commons regime will be afflicted with the ‘tragedy of the commons,’ in which the resource is overused; in spectrum terms, we experience interference. In the face of scarcity, a property rights regime will function to ration the scarce resource; the resource will have a positive price and contention for it is resolved in the market. However, if the resource isn’t scarce, then a commons regime works quite well without incurring the cost of a property rights regime. Further, if a property rights regime is imposed where scarcity is not present, the price of the resource at the margin falls to zero.” Price is determined by the regime we adopt.

And so, without DICT, the market is too wild and bad. With DICT, end users are expecting a better service, right? And the test case that is being talked about is pending in the PCC involving the 700 MHz band, where Smart and Globe supposedly bought the franchises “owned” by San Miguel. Why is it taking toomuch time to resolve the case? Was the San Miguel-Telstra break-up due to risk-sharing or was it because the regulatory agencies had to play along with the duopoly? What is taking PRRD so long to look into the horrible service of the duopoly?

C’mon, PRRD, stare them in the eye and get them to deliver what the real owners of the spectrum truly deserve!

As has been said, “the number one benefit of information technology is that it empowers people to do what they want to do. It lets people be creative. It lets people be productive. It lets people learn things they didn’t think they could learn before, and so in a sense it is all about potential.”


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1 Comment

  1. I would love to watch documentaries on Netflix and other such providers, but my download speed is too slow to download properly. Everything just sits and spools and spools. I feel as if I am paying in full for my connection and (lack of) service, yet I am only able to use my desktop for 50% of it’s potential.