Connectivity and infrastructure

Watching the vice presidential debate last Sunday was an unexpected joy. After the two presidential debates, expectations were low that we would get anything more than entertainment.

Alan Cayetano engaging BB Marcos in a verbal scuffle on the Marcos hidden wealth issue provided the opening sparks. For me, it was also good to hear the candidates saying pretty much what we have been writing in this column for at least the last six years.

The candidates were one in pointing out how bad our infrastructure is. Leni Robredo was even able to skillfully dissociate herself from the fiasco of DOTC that is tainting her running mate, Mar Roxas. She emphasized she is the only one among the VP contenders who regularly takes public transport up to now.

They all said a lot of the right things about our infrastructure gap… from transportation to Internet speed and access.

They are all going to give the Philippine National Railways a lot more attention and hopefully, resources. And they are all very unhappy over the way the NTC is regulating the telco duopoly at the root of our expensive but slow Internet.

I am not sure if the candidates know it, but Internet is slow only for the retail business side of it… you and me. I have talked to a number of people who manage call centers and they (even the foreigners) are happy with the speed and quality of service provided by our two telcos.

I guess our telcos are deaf to the complaints of retail consumers because guys like us are not paying enough… not an exciting enough ARPU or average revenue per user. We cannot threaten to go elsewhere because there is nowhere else to go. But for their big customers, they are able to provide world class service at world competitive rates.

I suppose the two telcos will eventually be able to upgrade the quality of their service to retail subscribers, but it is not at the top of their list of priorities. Still classified as a value added service, Internet service is really outside the regulatory ambit of the NTC.

The supposed speed testing NTC is doing is just drama to make it look they are doing something. But the NTC guys know they can do nothing to force the telcos to improve their service. NTC officials are hoping adverse publicity will eventually force the telcos to improve their services.

In a sense, VP bet Leni Robredo is right to point out the NTC Charter is outdated, with minimal fines of P200 per violation which mean nothing to the telcos. Robredo is right too to recommend that government get into the business of providing some Internet facilities, specially in places that are far from population centers and are too expensive for the telcos to invest in appropriate facilities.

The senator who knows a lot about the Internet problem is Sen. Bam Aquino. He conducted extensive hearings and researched heavily on the problem. When I asked him what could be done, he said we can do this and that, but in the end only real competition will solve the problem.

Competition is another area Bam is busy with. He worked on the Competition Law, our version of the Anti Trust Law that created a new government body now headed by economist Arsi Balisacan. Frankly, I am not all that confident this body can do anything for us beyond trying to look busy.

Opening up the telco industry to more competitors is the way to go, as Sen. Bam says. Indeed, giving entities like San Miguel a fixed deadline to launch a competitive challenge or lose their frequency sounds like a good and fair idea. Use it or lose it is a good principle when it comes to the use of a public resource like frequencies.

Gringo Honasan called for more foreign participants, but he may have forgotten that the two telcos are already owned by foreigners, Indonesians and Singaporeans. Another foreign group or two will improve service and bring down rates only if we fix the regulatory environment.

On the other hand, the duopoly companies also have valid gripes. Ramon Isberto of PLDT/ Smart attributed a lot of the infrastructure backlogs in the teleco industry to problems getting LGU (local government unit) permits.

It is difficult to put up cell sites due to the sheer number of permits that have to be secured. The telcos have become the favorite milking cows of LGUs who impose all sorts of taxes and levies on cell sites and other facilities.

It is time for government and all the stakeholders in the telco industry to get together and work out an acceptable strategy for all. I am not sure the NTC is the right government body to be on top of this effort. Maybe the DICT, if it ever gets organized, should have this problem at the top of their list of things to accomplish.

In the meantime, give the NTC more teeth. Enable NTC to impose meaningful fines that can catch a telco’s attention. Move internet from value added service that is supposed to be market driven to a basic service that is regulated by government. Internet connectivity is now as basic as electricity and water, both regulated.

Then, it is also time for government to invest in some of the more basic infrastructure that would complement the private sector owned network. The DOST has time and again proposed a governmentowned broadband network to service needs of government agencies. The DOST has also made a lot of noise about providing free wifi services nationwide. It is time to start delivering on promises made.

I would normally prefer a private sector led telco industry with little or no government participation. But the duopoly failed to deliver on the promise so government must step in.

As for the transport infrastructure, we have not really exhausted the role that private sector can play because DOTC had been less than competent over the last six years. It had been unable to make up its mind on whether to go ODA or PPP in rebuilding our railway system. And they take too long to study and get the projects rolling.

It is also not just DOTC that has proven problematic. NEDA is also a cause of much delay. Its officials are strongly biased in favor of ODA to the detriment of PPP. And they also take too long studying project proposals, even those already studied by the PPP

Center and the government agencies concerned.

Perhaps, a Duterte or Poe administration will be able to streamline the bureaucracy to get projects going. Why should NEDA, DOTC, PPP Center study the same project over and over again? A Mar Roxas administration will be a continuation of the last six years of getting stuck in the paperwork.

A Binay administration will likely move fast, but likely at the inflated cost of Makati parking buildings. I was just thinking that maybe even overpriced infra that can be used quickly by the people will generate gains for the economy a clean project that fails to get off the study mode can’t.

The Vice Presidential candidates seem to understand the issues and the things that have to be done by the next administration. Hopefully, the next Presidential debate will give us the confidence that the candidates for the highest executive office are as conversant of the problems as their running mates are.

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