High In­ter­net cost in PHL blamed on out­dated laws

Business Mirror - - FRONT PAGE - By Cather­ine N. Pil­las

THE coun­try’s out­dated telecom­mu­ni­ca­tions laws con­tinue to ham­per in­no­va­tion and re­strict the in­flow of in­vest­ments needed to im­prove the sec­tor’s com­pet­i­tive­ness and cut In­ter­net cost, stake­hold­ers said on Wed­nes­day at the launch­ing of a pol­icy brief on the coun­try’s broad­band ser­vices by the Philip­pine Busi­ness Groups and Joint For­eign Cham­bers (PBG-JFC).

“If telecom­mu­ni­ca­tions and the In­ter­net are such lu­cra­tive in­dus­tries, how come there are not enough in­vestors com­ing in?” asked Mary Grace Mirandilla-Santos, in­de­pen­dent in­for­ma­tion and com­mu­ni­ca­tions tech­nol­ogy ( ICT) pol­icy re­searcher and na­tional ICT re­search con­sul­tant at the Asian De­vel­op­ment Bank, who au­thored the PBG- JFC broad­band pol­icy brief.

“The an­swer,” she said, “is be­cause there are le­gal con­straints, such as the for­eign- own­er­ship cap, which only al­lows 40- per­cent equity if you’re a for­eign player who wants to come in.” The Com­mon­wealth Act (CA) 146, or the Pub­lic Ser­vice Act of 1936, clas­si­fied telecom­mu­ni­ca­tions as a pub­lic

ser­vice of­fered by a pub­lic util­ity, thus, in­clud­ing the sec­tor un­der the con­sti­tu­tional pro­vi­sion on 40- per­cent for­eign- own­er­ship cap. “There are ac­tu­ally a lot of for­eign play­ers op­er­at­ing here but they sell only band­width to clients, and they can’t sell th­ese at a cheap price be­cause of the re­quire­ment by law to part­ner with a lo­cal telco and en­ter into a com­mer­cial ar­range­ment,” she ex­plained.

Ac­cord­ing to the pol­icy brief, telecom­mu­ni­ca­tions is a cap­i­tal­in­ten­sive and in­no­va­tion- driven sec­tor. Be­cause of the re­stric­tions, for­eign play­ers can­not fully par­tic­i­pate in the whole­sale mar­ket seg­ment—now oc­cu­pied by Philip­pine Long Dis­tance Tele­phone Co. and Globe—thus, lim­it­ing the num­ber of play­ers that can in­fuse cap­i­tal and al­low the trans­fer of tech­nol­ogy.

The whole­sale mar­ket is dom­i­nated by the two tel­cos be­cause they have full con­trol of the land­ing sta­tions and the back­haul net­works from which band­width ca­pac­ity can be sourced from, ac­cord­ing to the pol­icy brief.

The two tele­coms’ dic­ta­tion of the whole­sale price lim­its the num­ber of down­stream, small In­ter­net ser­vice providers ( ISPs) or re­tail­ers that can dis­trib­ute In­ter­net ser­vices in far- flung ar­eas, like Min­danao, where the tele­com gi­ants have deemed not prof­itable to en­ter.

Smaller ISPS and end-users are ul­ti­mately sad­dled with high whole­sale and retail costs.

Ac­cord­ing to Winthrop Yu, chair­man of In­ter­net So­ci­ety of the Philip­pines, the whole­sale price of busi­ness-grade band­width that is around 1 gi­ga­bits per se­cond is much more af­ford­able in other coun­tries be­cause of their com­pet­i­tive tele­com en­vi­ron­ment:

In the US the price per megabits per se­cond (Mbps) is at $. 35 to $2; Hong Kong is at $1.50 to $6 per Mbps; Aus­tralia of­fers a rate of $6 to $9 per Mbps; Manila charges $18 to $45 per Mbps, while Cebu is at $25 to $40 per Mbps.

An­other re­stric­tive leg­is­la­tion, Yu said, is RA 7925, or the Pub­lic Telecom­mu­ni­ca­tions Pol­icy Act, that re­quires con­gres­sional ap­proval for a telecom­mu­ni­ca­tions fran­chise.

“Sim­i­lar to how the Elec­tric Power In­dus­try Re­form Act amended CA 146 to make power gen­er­a­tion not to be con­sid­ered as a pub­lic-util­ity op­er­a­tion, amend­ments can be made to ex­empt cer­tain seg­ments of the In­ter­net in­fra­struc­ture as a pub­lic ser­vice, par­tic­u­larly those that do not serve the pub­lic di­rectly,” the pol­icy pa­per rec­om­mends.

Perry Lim Pe, Man­age­ment of the Philip­pines’s newly elected pres­i­dent, backed this spe­cific rec­om­men­da­tion, as he pushed for the cre­ation of a Depart­ment of In­for­ma­tion and Com­mu­ni­ca­tions Tech­nol­ogy.

The Broad­band Pol­icy Brief is the fourth of a se­ries of pol­icy briefs re­leased by the Arangkada Philip­pines Pro­ject, a United States Agency for In­ter­na­tional De­vel­op­ment-Amer­i­can Cham­ber of Com­merce of the Philip­pines and JFC pro­ject meant to ad­vance the 470 rec­om­men­da­tions in Arangkada Philip­pines 2010.

The Arangkada Philip­pines 2010 is a doc­u­ment with rec­om­men­da­tions meant to gen­er­ate $75 bil­lion in for­eign in­vest­ment, 10 mil­lion jobs and over P1 tril­lion in rev­enue for the Philip­pine econ­omy within this decade.

Newspapers in English

Newspapers from Philippines

© PressReader. All rights reserved.