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The Philippines government has yet to select the player that will become the nation's third telco
(Continued from part 1)
Perhaps the Philippines can take away a thing or two from the National Broadband Plans (NBPs) of other countries who are enjoying better internet service.
NBPs often have specific targets that can be realistically achieved and measured in a specific time period.
Indonesia’s Broadband Plan 2014-2019, for example, targets to expand fixed broadband penetration from 15% of households (HH) at 1Mbps in 2013 to 71% of HH in urban areas at 20Mbps and 49% of HH in rural areas at 10Mbps in 2019. For mobile broadband, the target is to cover 100% of the urban population and 52% of the rural population at 1Mbps in 2019.
Thailand targets to provide cities that are economic and regional hubs with high-speed fiber optic cable broadband with a minimum speed of 100 Mbps by 2020.
These targets are often addressed not only through infrastructure development but also, and more importantly, through policy and structural reforms.
Despite huge progress in broadband connectivity, countries like Singapore have NBPs that focused on changing the market structure and market incentives.
Singapore’s National Broadband Network was anchored on a plan that was aimed at achieving (i) competitive prices for both wholesale and retail broadband services, (ii) inclusive connectivity, (iii) innovative services; and (iv) ultra-high access speeds at a minimum of 50 Mbps uplink and 100 Mbps downlink per end-user connection.
To achieve the NBN’s desired outcomes, Singapore adopted the Open Access model which involved structural separation in the wholesale wireline segment (passive infrastructure) served by Network Companies (NetCo) and operational separation in the wholesale bandwidth services (active infrastructure) served by Operating Companies (OpCo).
The result of Singapore’s telecoms industry restructuring is competition that benefits consumers and businesses. From only three nationwide providers of fixed broadband in 2010, Singapore now has 12 OpCos and 30 retail service providers. Today, more players such as Cloud, SaaS providers, and non-telecoms companies have entered the market. The price of fixed broadband has also substantially dropped over the past six years; households can now subscribe to a 1-Gbps fiber plan for as low as US$27.
Effective and efficient spectrum management is also a special focus of NBPs.
Indonesia aimed to add 350 MHz bandwidth to support mobile broadband. Singapore identified 225 MHz of spectrum for release. To facilitate the entry of a fourth mobile network operator (MNO), IDA set aside a single package of 60 MHz of spectrum (900 MHz and 2.3 GHz TDD) for a Separate New Entrant Auction, exclusive to pre-qualified, eligible new entrant bidders only.
In crafting the Philippines’ first National Broadband Plan, and given the DICT’s proposal to build a core and aggregation network (Option 2) that will connect all municipalities, a few questions come to mind.
If the government would invest taxpayers’ money to build infrastructure to reach even the far-flung areas, this presupposes that there are service providers who would bring the bandwidth to the unserved and underserved areas. What if the telcos cherry pick the portion of the broadband network that they will lease—and these would probably be in more business-friendly areas—what will happen to the rest of the country that is not as commercially palatable? Certainly the government would not (and should not) assume that role because it is not a telco.
If the status quo remains and no policy and structural reforms are introduced, how would the government “consider market conditions” and still assure that broadband services will be delivered to areas where profit is far thinner than the telcos’ minimum ARPU thresholds?
Would the broadband infrastructure just be restricted to the government and the enfranchised public telecommunications entities with secondary licenses as inter-exchange carriers (IXCS)? Or would ISPs, VAS and VoIP providers be allowed to lease the broadband network directly from the government?
Given the huge market failure to expand broadband services, and to bring quality broadband to at least the urban areas, the time is ripe to truly open the market to have more, and a more diverse pool, of players.
Maybe the government ought to, for example, allow even local governments to build community-funded and/or community-run internet and Wi-Fi networks to serve their constituents who have been left behind by the market-driven telco roll-out.
Could the big telcos which will benefit from leasing the NBN be obligated to connect a minimum number of unserved areas or perhaps contribute to a fund for the last mile of the unserved and underseved municipalities?
This all brings us back to the point I made earlier on the necessity of pushing for policy, regulatory, and structural reforms, especially in a country where, despite a very profitable telecommunications industry, broadband service remains slow and expensive.
If the government pursues the funding of this massive infrastructure, it must constantly remind itself why this needed to be done in the first place. The measure of success of the NBP is not the mere completion of a publicly-funded broadband network, but how broadband connectivity will change the lives of Filipinos. And if this change and progress is to be sustainable, the telecommunications sector cannot remain the same. Where the government can be most effective is by changing a situation where huge profits have long dictated the kind of service that people got. Reform can be just as powerful, if not more so, than just building the infrastructure.