TWO RECENT events give hope to Filipinos that better and faster internet may be forthcoming, even as nobody really knows how soon. Enactment of the law creating the Department of Information and Communications Technology (DICT) promises a more focused and coordinated government approach to developing the country’s ICT facilities. More recently, telecom giants PLDT and Globe finally reached agreement on a bilateral peering arrangement that would permit information from one network to reach the other without having to go through a roundabout route overseas—something we’ve all had to contend with all these years, until now.
Even without all the media attention paid to it of late, we all know how frustratingly slow internet is in the Philippines. Hardly anyone was surprised when, in 2014, we were reported as having one of the slowest (if not the slowest) in our region. Many of us were incensed when, in 2015, we remained at the bottom, in a part of the world where the top global internet speedsters like South Korea, Singapore and Hong Kong are. Late last year, Akamai, a global content delivery network company, pegged the Philippines’ average connection speed at 3.2 megabits per second (Mbps), an 18-percent improvement from 2.8 Mbps in 2014. This is puny compared to top-rating South Korea, for which Akamai recorded an average connection speed of 26.7 Mbps, a 20-percent improvement from the previous year. While our percentage improvement was similar, in absolute terms it means that South Korea’s boost in connection speeds was 10 times the boost in ours, already woefully slow to begin with!
The Philippines also has high “e-Friction,” the Boston Consulting Group’s index for the constraints or restrictions to digital activity in a country. We score especially poorly in “Infrastructure,” which makes up half of this score, sitting within the bottom 25 percent of the 65 countries rated. The Infrastructure indicator reflects the Philippines’ “modest 52 percent internet penetration rate” (as reported by the ICT Office under the Department of Science and Technology), low speed, and high fixed broadband pricing.
The PLDT-Globe duopoly has been blamed for our internet woes, which is why the announced entry of the Telstra-San Miguel Corp. (SMC) partnership last year was widely welcomed. The third entity was expected to raise the bar on internet services and force PLDT and Globe to shape up. They were, in fact, not quite blameless. Until the recent peering agreement, information was not freely shared between the PLDT and Globe networks, and data had to go out of the country and back again just to move between the two. This added to transmittal time and to data traffic congestion, which the recent agreement will now alleviate.
Other factors outside the two firms make developing and upgrading the telecom networks in the country especially challenging. Geography is most obvious. Not only are Singapore, Hong Kong and South Korea smaller in area; they also do not have as many islands as we do. It’s simply not as easy to lay down a network if there’s an ocean in the way. Hong Kong reports average connection speed of 17.4 Mbps, but while those on the main island enjoy peak connection speeds exceeding 100 Mbps, Lantau and Lamma islands are reported to make do with less than 1 Mbps. The required investment in infrastructure to bring those islands up to speed is substantial.
Consumer behavior also gets in the way. The Filipino “tingi” culture makes us favor prepaid mobile internet over postpaid plans and fixed broadband with premium speeds. Because it is so easy to switch SIM cards, PLDT and Globe are locked in an intense battle to keep consumers. And to keep cost-conscious customers, they offer cheaper promos and plans that have low data volume allocations, driving the Philippines’ average revenues per user (Arpu) down. While Arpu in South Korea in 2013 was $34, it was only $3.33 in the Philippines. Couple this with the mostly high-frequency bandwidths that the National Telecommunications Commission (NTC) originally allocated for broadband, mostly in the 1900 megahertz (MHz) range and above.
The 700 MHz band, the spectrum band used by the APT700 band plan that is becoming a global standard, remained elusive to telcos as it had been assigned to TV broadcasts. While the higher frequencies can carry information faster, they are not good at penetrating walls or traveling long distances. The higher frequencies are useful for urban areas, but are not practical for rural areas with low density and wide separation between users. This is how the 700 MHz frequency held by SMC could improve service coverage in both urban and rural areas. It’s not so much additional speed that the additional band would help with, as additional network capacity through wider coverage. And this is barely scratching the surface of what needs to be done to give every Filipino not mere access, but practically usable access.
The NTC once estimated the investment required to bring 2 Mbps internet connection to the entire country at P800 billion. PLDT and Globe had to join forces to buy SMC’s telco business worth over P69 billion. It’s clear that the comprehensive nationwide upgrading of internet services that we need will not happen unless we open the door wider to outside players with deep pockets. Now that there is a DICT, perhaps the government can also absorb some of the higher-risk development costs. With a full government department now in place to take a more proactive and coordinative role in facilities development, perhaps the long-awaited modernization of the network will finally come faster.
Or so we hope.
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