A decent internet service

November 24, 2017

DEMAND AND SUPPLY By Boo Chanco

Philippine Star | November 24, 2017

After Jack Ma mocked the internet service our telcos provide, I was hoping an overnight miracle will boost the quality of our broadband connectivity. National honor is at stake.

I am told the telcos have the existing technical capability to vastly improve the broadband service they give us, but would rather that we upgrade our plans to get that. The BPOs are paying for the privilege of getting world class internet connectivity.

 Acting DICT Secretary Eliseo Rio Jr. cited lack of cell sites as one cause of the problem. We had enough cell sites for text messaging, but not when we all started using smart phones. The telcos blamed regulatory problems, notably at the local government level that prevents them from building new cell sites faster.

Telecoms experts, however, cautioned me that the problem isn’t as simple as having more cell sites. Nor is it just a question of having the frequencies of San Miguel, which the two telcos acquired. Indeed, a year after they got the San Miguel frequencies, service quality hardly improved.

When we had dinner with President Duterte, one topic he was passionate about is bringing competition into the telco business. The President said he fired former DICT secretary Rudy Salalima because he was not working fast enough to improve telco competitiveness.

As soon as he left, Salalima’s acting successor, retired General Rio, made public his plans to increase competition in the telco industry. The cornerstone of General Rio’s plan is letting smaller players have direct access to international connectivity as they provide the middle and last mile network, independent of the two telcos.

Experts tell me we can triple the number of cell sites in the country, but we won’t get the speed and cost we want for so long as the two telcos control our international access through their landing stations and exclusive use of satellites that connect us to the world.

Using satellite for internet connectivity is one obvious solution to our problem, but it can’t be done under our current rules. Countries with faster internet than the Philippines, like Japan, Indonesia, Thailand, even Singapore all use satellite broadband.

The main barrier to satellite use in the Philippines is policy. EO 467 (s. 1998) and NTC MC 04-03-99 currently restrict the use of satellites to enfranchised telcos, based on the outdated notion that they are used for voice services, a telco expert explained to me. We need a policy that is more appropriate for the internet Age. “Opening up the market for satellite broadband is an important first step to ensuring that all Filipinos, wherever they are, will benefit from internet connectivity.”

If there is one accomplishment I am confident the Duterte administration will deliver, it is improving our internet service. The President is pretty incensed about the current situation and since he has made public how piqued he is, his officials must deliver results fast… or suffer the fate of Salalima.

The good news has started to happen. Last week, BCDA and DICT announced a partnership with Facebook to build a P975 million high-speed internet infrastructure called the Luzon Bypass Infrastructure. It will have a capacity of 2 terabits per second, almost equal to the combined capacity of existing telco players.

Under the agreement, BCDA will bid out the construction of two cable landing stations placed in Baler and Poro Point, while the DICT will operate the facility. Facebook will construct and operate the submarine cable system that will land in the cable stations. This will give us direct connections from Luzon to internet hubs in the United States and Asia. The project is expected to go online in 2019.

This is good news. Having another source of bandwidth is a welcome change. Sources told me Usec. Denis Villorente has been working tirelessly on this initiative for over a year, but then sec. Salalima did not want to pursue it. Instead, Salalima wanted government to build cell sites and save the telcos huge amounts in capex. This is probably why President Duterte accused Salalima of conflict of interest.

This development gives flesh to the plan earlier announced by General Rio to organize cable operators and regional telcos to constitute the backbone of a virtual third telco using the Luzon Bypass Infrastructure to bypass the telco duopoly. But having the bypass infrastructure is not enough. Government must be able to bring this capacity from the middle to the last mile, to our homes and offices.

Related to these developments is the announcement of General Hermogenes Esperon that government will also make use of satellites to connect to the last mile! They will amend current rules that limit access to satellites to franchised telcos.

Indeed, General Rio confirmed to me what General Esperon said. “A proposed EO has already been submitted to the Office of the President to make VSATs accessible to even just VAS license holders.”

That means small players like cable TV operators, small telcos, and rural electricity coops that already have middle to last mile infra in place can connect to Google, Facebook and other international satellites without going through the telcos. 

Once satellite becomes mainstream, we can imagine a proliferation of community wireless ISPs getting bandwidth from international satellites and distributing through Wi-Fi. This is how to use technology to induce real competitive behavior in our telco industry.

The announcement that President Duterte invited Chinese telcos to operate here shows he is desperate to make the telco industry more competitive. Revising the old Public Service Act to take out the telecoms industry from the definition of public utilities is needed. A proposal to this effect is now pending in Congress.

This is chapter 2 of the saga started by FVR to level the playing field in telecoms. Hopefully, it works this time. New technology can make monopolies and oligopolies things of the past.

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

http://www.philstar.com/business/2017/11/24/1761823/decent-internet-service