What is broadband capping, and why is it bad for Filipinos?

it is easier to be an asshole to words than to people

Manuel made a good point in his comment over at The Jester-in-Exile’s A better draft memorandum order on Minimum Speed of Broadband Connections. So I will try to convey it in real world terms.

Here goes.

What do I mean by Broadband

“Broadband,” has come to mean how fast your Internet connection is. It is commonly associated with the transmission method by which “Internet data” is transmitted to you, and you back to the Internet.

“Bandwidth,” on the other hand is rate Internet data is transmitted to you.

In a road analogy, broadband is the difference between a street, an avenue, a highway or a freeway. Bandwidth is the top speed you’re allowed to travel to and from the road.

In a water analogy, broadband is the difference between how large the pipe is going to and from your house or office to your service provider. Bandwidth is the rate of pressure your service provider allows to pass the pipes to your home/office from the Service Provider office.

Broadband is also described as an Internet connection that is faster than dial-up. Dial-up, just for the record has a speed of 48.8kpbs.

When I speak of “Internet data,” it is anything conveyed over the Internet protocol, which is the network as it exists outside of your house or office. So this could be music that you are downloading from iTunes. It could be parts of the game you are transmitting, and receiving while playing a game of Counter Strike that you are playing against your cousin who is in the Internet cafe down the street. It could be the latest Lady Gaga Music video published on YouTube. It could be a rant you are reading on this blog.

So broadband could be transmitted to you through a number of ways.

Broadband could be transmitted through your phone line. This is called, ADSL, or asynchronous digital subscriber line. It is asynchronous because your download— the rate of Internet data going into your house or office is much faster than the rate you are allowed to send Internet data from your house or office. For example, you can receive Email at the rate of 10kbps, but you can only send email to your friends at 5kbps.

Another way to transmit Internet data, is called “Cable Internet.” This is Internet data sent to you via your Cable company’s line. It typically exists right beside your cable TV. Think of CNN as driving in parallel with your Lady Gaga stream, but on separate lanes.

Then there is something called, Wireless broadband. This happens over cellular network. Wireless broadband is what the networks call, “3G,” or “HSDPA.” From the cell tower internet data is sent and received by your mobile phone.

This is different from “WiFi.”

Think of WiFi as more localized. This exist inside your home, your office or in an environment like the mall. It is a means to allow people to share a Broadband connection.

So Broadband is more on the telco or service provider side, while WIFi is more on the end user side. It is important to make these distinctions.

transmitting

It is also important to note that between the data sent from the Telco to your house and vice versa, there is bound to be some “signal degradation.” So for example, a rate of 1MBps is theoretical. There are real world, matter of physics and engineering reasons why 10 is not a 10, but typically an 8 or at best, a 9. It could be the type of cabling used. It could be issue with a router that connects the cables used. It could be your distance to the router, the boxes and the switches. It could be a software issue.

For example, take a typical ISP modem that your service provider installed in your home. This is any modem installed worldwide. It would normally have a 10mbps/100mbps rating. Which only means that you can connect a cable rated to run at 10mbps or 100mbps. So you choose of course the 100mbps cable. You’re not going to get 100mbps speed off that.

My point is, people naturally expect some degradation.

So, when you go to your ISP and they tell you the service package is 1Mbps, they will tell you that it is a range. That that is the theoretical max speed. If you go to globe for example their sales is going to tell you that you shouldn’t expect to get that speed.

What you should expect in a 1Mbps connection, something like a real world speed of 784Kbps, but no slower than 512Kbps or 80 percent of your subscribed speed, but no less than 60 percent of that speed.

So if your connection is slower, then your’e being cheated.

“But wait!”

“Yes, you girl in the back!”

“I don’t even know all this mumbo jumbo stuff on bandwidth. I can barely open my computer let alone tell you how fast it goes. I only know when watching Youtube, that it does that ‘buffering,’ a lot. It takes sssoooo long to watch Old Spice guy! And you know what? Sometimes, I can even connect!!!! What’s up with that? ”

In real world terms, this is like the water company saying to expect high pressure coming out of your faucet, but you only get a tickle, drop.

Another analogy is the highway. The government allows you a top speed of of 100kph, but because the roads are filled with potholes, you can’t even reach the minimum speed of 30kph.

To be honest, 1Mbps is something you needed like 10 years ago. In today’s world, a 1Mbps speed is like dial-up was back in the day.

Why?

Primarily because there is so much content that websites are asking you to download. Content that you don’t really know as content but is part of the website experience. There are javascripts that phone home to tell the site owner that you opened the page at a particular time, at a particular place. That “Facebook,” banner with all the likes and number of people who liked the page? That phones Facebook to get the data.

That’s not all. We’re headed towards a video centric world. CNN’s website is typically video. Most news sites have video, and tons of photos. Both take bandwidth.

Consumer complaint and state of the Internet in the Philippines

Consumer complaint is the slow Internet. The Internet in the Philippines is one of the slowest in the world. We pay more for our slow Internet than our neighboring countries in ASEAN.

The World Economic Forum’s Global Information Technology Report is a report that highlights the key role of ICT as an enabler. It is described as “the world’s most comprehensive, and authoritative international assessment of the impact of ICT on the development process, and how competitive nations are.” It ranked the Philippines 85 out of 133 countries, right behind Trinidad and Tobago, Russia, El Salvador, Ukraine, Guatemala and Serbia. To compare, Vietnam ranks 54 out of 133. Thailand ranks 47 out of 133.

In 2010, Yahoo-Nielsen revealed a study on Net Index 2010. They determined that 69 percent of Internet users in the Philippines are using the Internet from Internet cafes. That Internet commerce in the Philippines is negligible. They also determined that mobile internet grew from nothing— 0 percent, to five percent between 2009 and 2010 because the telecom providers gave preferential pricing.

So the state of the network in the Philippines isn’t simply anecdotal.

What the NTC said

There are three important things to note in the NTC draft memorandum order.

First, the policy of “Best effort” continues. Meaning, it will not demand that telcos meet an exact reliability standard. It means, the NTC will not care if telcos reasonably meet and continuously meet 80 percent of the broadband speed they advertised. NTC will not chastise a broadband provider if they delivered 70 percent most of the time to a subscriber, when they should be delivering 80 percent.

Second, while the NTC says there should be a minimum speed requirement, it does not say what exactly is this minimum speed that consumers should expect from their service provider.

Third, it imposes a cap on the amount of data you consume.

The best real world analogy for this is water rationing. During a drought for example, the water company would limit the amount of water you would consume. Fresh water is a resource that is hard to come by. So during warm months, the water company would require that you only consume say, 10 liters of water, or else they will cut off the tap.

A truck from the water company for example would swing by your neighborhood. You will all have to line up carrying only two drums of water, because that’s all you’re allowed to get so everyone gets a chance to have drinking water.

That said, Internet data is created and destroyed all the time. Your Aunt Lily would post embarrassing family photos every few months on Facebook. Leo Laporte’s This Week in Tech would broadcast a podcast every week. The Colbert Report comes out daily. The New York Times would publish a news article every few hours. A new YouTube video goes up every few minutes. A tweet gets sent every few seconds.

Oh, and that neighbor who is addicted to CounterStrike and World of Warcraft, he gets to play an hour after school daily in his favorite neighborhood Internet cafe.

Distance, volume, and sometimes faulty code can seriously impair network speed. ISPs have the ability to increase the flow or decrease the rate of Internet data. It is simply a matter of software. ISPs also know the number of accounts connected to a particular junction or router. There is an understandable, physical limit to the amount of data that passes through a router. Yet, this physical limit could be overcome by technology.

So what the NTC is saying, and what the Telcos want to do is to limit your bandwidth consumption. For example, they will allocate 5GB of data per day. That seems to be a lot. I personally consume, 1GB to 2GB per day. But i’m not the only one who consumes Internet. There are at least four other people using the same Internet connection.

5GB is nothing.

Not to mention, the speed is so slow, it consumes a lot of time.

Yet, Internet speed is supposedly rising the world over.

Ergo, Brandwidth isn’t really a finite resource. It is simply limited by economics and technology.

Government and the Free Market

What’s stopping the upgrade of technology is simply an economic one. Bocchi explained it in his study of the Philippine puzzle. As in every business, ISPs would naturally milk existing technology. If they can get more subscribers to use the same existing infrastructure, without shelling out capital expenditure, and thus improving the bottom-line is good isn’t it? Businesses are benefiting from the status quo, so they see no need to reinvest.

What’s happening in the Philippines’ telecom sector is the lack of initiative to reinvest. From the point of view of the telco, why should we spend money, when we’re pretty much making money with our current technology? We will invest only at the last possible second.

Service providers have done so with Cellular technology. Remember a few years ago when SMS was popular but the technology was lousy? Messages got lost or arrived late. Spam was everywhere.

In the position of the Telco, you would do the same, would you not?

Shareholder value must be protected. They have employees to pay, and a business to run. From the point of view of the service provider it is an understandable position, is it not?

The NTC’s reason

The NTC explained that the reason they want to impose the cap is to prevent illegal downloads.

This is an all together different issue from the fact that the Telcos are not delivering reliable, and fast internet in the Philippines.

In fact, there are pretty much many legitimate uses of broadband that consumes bandwidth. Take the downloading of content from iTunes, I have been quoted by Chin Wong, in his Manila Standard Today column, “Broadband dunce cap” on this.

How exactly do you download iTunes in the Philippines, when in fact, iTunes is only limited to an App Store?

Over at my blog, I published a How to buy iTunes music, movies, TV shows, apps, and books if you’re living in the Philippines. Without a credit card.

TEDTalks. YouTube videos.

Just last November (2010) I got a chance to participate in Sony and DC Comics’ beta program for their up and coming game, DC Universe Online. It is a massively multiplay roleplaying game, set in DC Universe. You get to play beside Superman, Batman, Wonder Woman, as if you are a character in their universe. You get to play hero or villain. You get to go on missions.

It was geekgasm.

But you know what? It took several days to download the game. Not surprisingly, the game when I first had to download it was a whooping 12.3GB.

That’s like downloading 3 DVDs.

It is perfectly legal. It is legitimate use of Internet.

My point is, to argue that to associate huge bandwidth use with illegal content is a mistake. In fact, capping doesn’t solve the problem of software or content piracy at all. It will simply make it more difficult, but won’t certainly stop people if you don’t give people the ability to get content legitimately.

The lack of a local iTunes music store, for example I think speaks more about content licensing than actual technology limitation. The lack of streaming from Hulu and Netflix outside the United States is a content licensing issue.

People who are interested in buying content, can never get to it. So what happens, you’re creating generations of people who are getting used to simply getting their content.

A piece of music from iTunes cost as low PHP50.00. Apps too. Yet, you still have people preferring to get their content and their apps for free. Why? They want the content, but can’t get to it. You don’t sell it to them. There is no mechanism to say, we’re open for business. So prepaid card to buy content. No incentive to go legit. So an entire underground “economy” exists.

If you have that digital store open then people won’t have an excuse not to buy legitimate content. Correct?

My point is: broadband caps do not make the situation better. It doesn’t bring money to the content producers. It doesn’t make the economy grow. It simply pays the telcos more money for something they’ve already invested in and have milked on for years. No innovation.

The role of Government in the Free Market

The Free Market, I believe should be gospel. It makes the world go around. Yet, at the same time, we also know that a Free Market doesn’t mean it is without regulation. It means to have the minimum set of regulation to maintain balance. In a Free Market, government as a referee, as an instrument that levels the playing field and steps in only when absolutely necessary.

Every game has a set of rules so everyone plays fair and in a Free Market, government is referee and ensures that everyone plays fair.

That’s what we need here in the Telco industry and Internet in the Philippines. We need a minimum set of rules to determine how it is governed, and how it is governed properly. The Internet is a medium where everyone is both a producer of content, and a consumer of it. We have only the experience of Radio and television to tell us how the Internet will fare in a world where the lowest common netizen is not protected.

To join content and the speed and reliability of internet service in the Philippines is muddling the issue. It is a separate matter that has more to do with licensing than the pipes used to deliver the content. It is like saying roads are bad because we let trucks pass through them.

In the Philippines, more so than in many parts of the world, there is indeed a great digital divide. It is a divide between who is connected, and who isn’t. So many times there is a misconception of what the Internet is.

Today there are more people connected to the Internet using Internet cafes than there are at their homes. It speaks of the state of our economy, as much as it speaks about the quality of internet service we have in the country.

To let broadband cap through now would be a disservice to those people down the road. To look into the future and to cap say mobile internet use would also be a disservice, as Cellular networks are keys to getting the developing world online.

Studies have shown that Internet boosts productivity. That when the right set of policies are in place, broadband yields to real world GDP growth. In a nation such as ours, we need all the leverage that we can possibly get. We need a national cyber strategy that is holistic and true, and not born out of fear, but of imagination and hope and promise.

We are great big pioneers. What we do here today. How we define what the Internet is, vibrates ten years; twenty years; even a hundred years from now. We are still in the beginning of the Internet age.

At CES 2011, Microsoft announced a way to integrate its gaming system Kinect, which lets you play games without a controller with such features as netflix, hulu and even ESPN. The same system lets you watch say a game on ESPN, have a social interaction on that screen with say your brother watching the same game in a different country. They should the promise of what a virtual world would look like and how we could exchange social interactions in the future.

This is that video:

That would be data-centric. That would require bandwidth. That is a perfectly legitimate use of the network.

Microsoft sold 8 million kinect sensors in the last six months of 2010. And this is just the beginning.

Truth is, tomorrow is a data-centric world. And the shape of that tomorrow is here now. Everything now connects to the network. And it will only become more so. It must be governed or we may wake up one day to learn we have sold the future.

# # #


You might also be interested to read an Open letter to President Aquino and the 15th Congress on NTC Broadband cap draft memorandum

And it leads to The Jester-in-Exile’s better version of the NTC’s draft memorandum.



Image by XKCD, some rights reserved.

Cocoy Dayao

Cocoy is the Chief Technology Officer of Lab Rats Technica, a Digital Consulting company that specialises in DevOps, iOS, and Web Apps, E-Commerce sites, Cybersecurity and Social Media consulting. He is a technology enthusiast, political junkie and social observer who enjoys a good cup of coffee, comic books, and tweets as @cocoy on twitter.

Cocoy is also the Managing Director and Editor-in-Chief of the ProPinoy Project.

Cocoy considers himself to be Liberal.

  • I think we are moving forward in resolving issues with the NTC hearing yesterday. More public hearings should be conducted to ensure that regulatory measures are fair and tight. At least we’ve taken the first step by meeting with the NTC and telcos.

  • I think we are moving forward in resolving issues with the NTC hearing yesterday. More public hearings should be conducted to ensure that regulatory measures are fair and tight. At least we’ve taken the first step by meeting with the NTC and telcos.

  • jeg

    We need a minimum set of rules to determine how it is governed, and how it is governed properly.

    Key word: minimum. Large rent-seeking corporations prefer large complicated rules and regulations because it prevents upstart companies from competing against them; they can afford the regulations and what-not. A $100B corporation certainly wouldnt want a $2M company to grab market share from them by simply coming up with a better way to serve the consumers.

    20 years ago, people were predicting that big, bad Microsoft would dominate the internet, and yet now theyre hardly a major player in a field dominated by once-upstarts Google, Facebook, Twitter. Im with GabbyD’s comment. If foreigners are allowed to invest and compete with our local telecomm companies, it might address Cocoy’s concern: “What incentive would I have as a telcom provider to upgrade say my router to give my customers better service, if the said old router is still working and even though my customers are complaining of lousy performance?” That incentive would be the fear of the loss of customers to a competitor that serves the consumers better.

    • the jester-in-exile

      “That incentive would be the fear of the loss of customers to a competitor that serves the consumers better.”

      *thinks*

      i think i agree, but it already is difficult enough to enter as competition. congressional franchises and such, over and above restrictions on foreign ownership.

      • jeg

        Yap. The reason our telcos are so complacent is because they can count on government protection from competition.

    • cocoy

      See Jeg, that’s it… there is no fear of losing customers. In my case for example, if I wanted to have my globe DSL disconnected and switch to pldt, i can’t just do that. pldt said they can’t accept new subscribers already because they are at full capacity.

      As a someone who knows business, I don’t understand it. Why aren’t they more hungry? Is it because by updating their tech, thereby opening up to new subscribers they haven’t made money on their existing investment? So they’re holding off until they make money before adding more capacity? Or did they study the area and determined that ok, we’re only going to invest in N amount of customers because that’s just the market?

      Wouldn’t it then be better say to offer wireless technology to the customer to keep him in your account? Or the investment so huge, and the market so little that to spend money that way doesn’t do the shareholders any good?

      Is the market place so bad that to reinvest would make them lose money?

      It doesn’t happen like that in all franchise areas. A friend of mine posted on her FB page that she tried out Wii-Tribe, but was so dissatisfied with the service that she switched to a different carrier.

      There has to be a reason why people don’t see the point in reinvesting. How do you encourage people to reinvest and to buy in such a marketplace?

      • GabbyD

        which is why entry by foreign firms can be a boon.

        • cocoy

          Doesn’t Singtel already own globe? Metro Pacific is HK based and owns Smart? Wii-Tribe is foreign too correct? with business in places like Pakistan?

          My point is: what makes anyone believe that a fair skinned capitalist be any different from a yellow skinned one or a brown-skinned one, when it is the rules of the game that is flawed?

          • GabbyD

            “Doesn’t Singtel already own globe?”

            uhm, no. 47% accrdng 2 the internet. there are ownership limits, as you may not know.

          • cocoy

            They have at least a board seat correct? They all go stocholders meetings and determine who the executives are correct? So what’s this deal about ownership anyway? It makes little sense. as I said is there a difference between an American capitalist, an Indian, a Chinese or a Filipino?

            money is money. Business is business. How they do business is up their management and up to their stockholders.

            If you’re stockholder, take it up with them. Whatmakes anyone think that it is in the interest of anybody to have majority share of something? Globe’s internal business is theirs. In fact, it is doing them a world of good i think. Samsung partnered with Globe precisely because of its relationship with Singtel.

            GabbyD, you’re mistaking the problem as something to do with the Constitutional prohibition on corporation ownership in the Philippines. That is a mistake. That’s not the problem. The problem is that there are no basic rules. The referee— the government— can’t stand between corporations and the public, because there is no clear defined end goal.

          • GabbyD

            its simple– you said lack of investment is a problem.

            so opening up investment opportunities is part of the solution. new companies offering their services would help, or not hurt.

            now, regarding ur policy prescription, i have no comment coz i’ve not not thought it thru yet. but i sympathize with your position against capping.

          • Anonymous

            If $50Million is needed for CapEx and Pilipinas-owners willing to put down $8Million-max the project is dead even if foreigners want to put down $20Mil when the foreigner-percentage-ownership gets pushed above 1987 constitution.

  • jeg

    We need a minimum set of rules to determine how it is governed, and how it is governed properly.

    Key word: minimum. Large rent-seeking corporations prefer large complicated rules and regulations because it prevents upstart companies from competing against them; they can afford the regulations and what-not. A $100B corporation certainly wouldnt want a $2M company to grab market share from them by simply coming up with a better way to serve the consumers.

    20 years ago, people were predicting that big, bad Microsoft would dominate the internet, and yet now theyre hardly a major player in a field dominated by once-upstarts Google, Facebook, Twitter. Im with GabbyD’s comment. If foreigners are allowed to invest and compete with our local telecomm companies, it might address Cocoy’s concern: “What incentive would I have as a telcom provider to upgrade say my router to give my customers better service, if the said old router is still working and even though my customers are complaining of lousy performance?” That incentive would be the fear of the loss of customers to a competitor that serves the consumers better.

    • the jester-in-exile

      “That incentive would be the fear of the loss of customers to a competitor that serves the consumers better.”

      *thinks*

      i think i agree, but it already is difficult enough to enter as competition. congressional franchises and such, over and above restrictions on foreign ownership.

      • jeg

        Yap. The reason our telcos are so complacent is because they can count on government protection from competition.

    • cocoy

      See Jeg, that’s it… there is no fear of losing customers. In my case for example, if I wanted to have my globe DSL disconnected and switch to pldt, i can’t just do that. pldt said they can’t accept new subscribers already because they are at full capacity.

      As a someone who knows business, I don’t understand it. Why aren’t they more hungry? Is it because by updating their tech, thereby opening up to new subscribers they haven’t made money on their existing investment? So they’re holding off until they make money before adding more capacity? Or did they study the area and determined that ok, we’re only going to invest in N amount of customers because that’s just the market?

      Wouldn’t it then be better say to offer wireless technology to the customer to keep him in your account? Or the investment so huge, and the market so little that to spend money that way doesn’t do the shareholders any good?

      Is the market place so bad that to reinvest would make them lose money?

      It doesn’t happen like that in all franchise areas. A friend of mine posted on her FB page that she tried out Wii-Tribe, but was so dissatisfied with the service that she switched to a different carrier.

      There has to be a reason why people don’t see the point in reinvesting. How do you encourage people to reinvest and to buy in such a marketplace?

      • GabbyD

        which is why entry by foreign firms can be a boon.

        • cocoy

          Doesn’t Singtel already own globe? Metro Pacific is HK based and owns Smart? Wii-Tribe is foreign too correct? with business in places like Pakistan?

          My point is: what makes anyone believe that a fair skinned capitalist be any different from a yellow skinned one or a brown-skinned one, when it is the rules of the game that is flawed?

          • GabbyD

            “Doesn’t Singtel already own globe?”

            uhm, no. 47% accrdng 2 the internet. there are ownership limits, as you may not know.

          • cocoy

            They have at least a board seat correct? They all go stocholders meetings and determine who the executives are correct? So what’s this deal about ownership anyway? It makes little sense. as I said is there a difference between an American capitalist, an Indian, a Chinese or a Filipino?

            money is money. Business is business. How they do business is up their management and up to their stockholders.

            If you’re stockholder, take it up with them. Whatmakes anyone think that it is in the interest of anybody to have majority share of something? Globe’s internal business is theirs. In fact, it is doing them a world of good i think. Samsung partnered with Globe precisely because of its relationship with Singtel.

            GabbyD, you’re mistaking the problem as something to do with the Constitutional prohibition on corporation ownership in the Philippines. That is a mistake. That’s not the problem. The problem is that there are no basic rules. The referee— the government— can’t stand between corporations and the public, because there is no clear defined end goal.

          • GabbyD

            its simple– you said lack of investment is a problem.

            so opening up investment opportunities is part of the solution. new companies offering their services would help, or not hurt.

            now, regarding ur policy prescription, i have no comment coz i’ve not not thought it thru yet. but i sympathize with your position against capping.

          • Anonymous

            If $50Million is needed for CaxEx and Pilipinas-owners willing to put down $8Million-max, the project is dead.

  • the jester-in-exile

    “What you should expect in a 1Mbps connection, something like a real world speed of 784Kbps, but no slower than 512Kbps or 80 percent of your subscribed speed, but no less than 60 percent of that speed.”

    with reliable wireline, you can expect 80%, yes. lalo na kung fiber-optic end to end.

    with coax, a bit less, of course. say, 60 – 70%.

    not with wireless. one could get probably no more than 50% of advertised speed.

    shannon’s law at current technological levels.

    still, no reason for data volume capping nor an excuse to abandon the concept of service reliability.

  • the jester-in-exile

    “What you should expect in a 1Mbps connection, something like a real world speed of 784Kbps, but no slower than 512Kbps or 80 percent of your subscribed speed, but no less than 60 percent of that speed.”

    with reliable wireline, you can expect 80%, yes. lalo na kung fiber-optic end to end.

    with coax, a bit less, of course. say, 60 – 70%.

    not with wireless. one could get probably no more than 50% of advertised speed.

    shannon’s law at current technological levels.

    still, no reason for data volume capping nor an excuse to abandon the concept of service reliability.

  • Manuelbuencamino

    Thanks Cocoy.

    It seems that the NTC found an excuse, illegal downloads, for allowing the service providers not to upgrade their services. How much would it cost the service providers to bring us up to world standards? Do you think they are waiting for a critical mass of users before they decide to invest? Are mobile phones with internet capability included in the critical mass or are they in another income stream altogether?

    • cocoy

      The NTC admitted that illegal downloads only made up like 2 percent. i can’t seem to find the link… but i remember it being mentioned. anyway, I don’t really know each telco’s infrastructure status. What I do know is that both PLDT and Globe had negative returns on their stock price for 2010. Also the number of SMS use declined.

      I also know that Globe has WiMax. (Smart too, if i’m not mistaken). WiMax was tested in the Philippines to go as fast as 8MBps. Yugatech published the article in December 2009. A year later, the highest plan globe is selling WiMax is 1Mbps. WiMax stands for “Worldwide Interoperability for Microwave Access.” This is used for mobile Internet, and also for fixed (one site) only Internet.

      I could understand that maybe they can’t offer higher speeds to everyone, but why not have say the more affluent areas and crank the speed up there? Or select a target area for them to start deploying it in that area. I don’t really know if it is an economic issue, or what their business plan is.

      My gut tells me that for the Philippines, government would have to set the minimum speed, just as they did in Finland where the minimum speed is 2Mbps. If i’m not mistaken the law was enacted last year, but telcoms have until 2015 to fulfill their obligation.

      I think the telcos can do it. Maybe also encourage others to invest in the telcom business in the Philippines. (I heard the newest player, Wii-Tribe [http://www.wi-tribe.ph] has crappy service too. and they’re already implementing caps.)

      As for critical mass, i think there is pent up demand. in 2008, there was no mobile internet to speak off. Then the telcos started rolling out those USB modems and offering data plans. between 2009 and 2010, demand according to yahoo shot up from 0 percent to 5 percent of the total internet users in the philippines.

      It is hard to second guess someone’s decision or their motivations why they’re holding back but i really do think the future of internet in the Philippines is in mobile internet. I think the market would be predominantly mobile, eventually.

      This is still a predominantly, pre-paid marketplace. At the end of the day, it is a matter of economics.

      • Manuelbuencamino

        Cocoy,
        I agree the government has to set the minimum standards not only because it is in the consumers’ welfare bit more so because it will spur investment in newer technologies.

  • Manuelbuencamino

    Thanks Cocoy.

    It seems that the NTC found an excuse, illegal downloads, for allowing the service providers not to upgrade their services. How much would it cost the service providers to bring us up to world standards? Do you think they are waiting for a critical mass of users before they decide to invest? Are mobile phones with internet capability included in the critical mass or are they in another income stream altogether?

    • cocoy

      The NTC admitted that illegal downloads only made up like 2 percent. i can’t seem to find the link… but i remember it being mentioned. anyway, I don’t really know each telco’s infrastructure status. What I do know is that both PLDT and Globe had negative returns on their stock price for 2010. Also the number of SMS use declined.

      I also know that Globe has WiMax. (Smart too, if i’m not mistaken). WiMax was tested in the Philippines to go as fast as 8MBps. Yugatech published the article in December 2009. A year later, the highest plan globe is selling WiMax is 1Mbps. WiMax stands for “Worldwide Interoperability for Microwave Access.” This is used for mobile Internet, and also for fixed (one site) only Internet.

      I could understand that maybe they can’t offer higher speeds to everyone, but why not have say the more affluent areas and crank the speed up there? Or select a target area for them to start deploying it in that area. I don’t really know if it is an economic issue, or what their business plan is.

      My gut tells me that for the Philippines, government would have to set the minimum speed, just as they did in Finland where the minimum speed is 2Mbps. If i’m not mistaken the law was enacted last year, but telcoms have until 2015 to fulfill their obligation.

      I think the telcos can do it. Maybe also encourage others to invest in the telcom business in the Philippines. (I heard the newest player, Wii-Tribe [http://www.wi-tribe.ph] has crappy service too. and they’re already implementing caps.)

      As for critical mass, i think there is pent up demand. in 2008, there was no mobile internet to speak off. Then the telcos started rolling out those USB modems and offering data plans. between 2009 and 2010, demand according to yahoo shot up from 0 percent to 5 percent of the total internet users in the philippines.

      It is hard to second guess someone’s decision or their motivations why they’re holding back but i really do think the future of internet in the Philippines is in mobile internet. I think the market would be predominantly mobile, eventually.

      This is still a predominantly, pre-paid marketplace. At the end of the day, it is a matter of economics.

      • Manuelbuencamino

        Cocoy,
        I agree the government has to set the minimum standards not only because it is in the consumers’ welfare bit more so because it will spur investment in newer technologies.

  • GabbyD

    this is a great argument for increasing the foreign ownership cap from 40%.

    • cocoy

      I don’t think foreign ownership cap is a problem.

      • GabbyD

        why not? if investment is the problem, and the locals dont wanna do it, maybe the foreigners would?

        • cocoy

          If you look at America, they have Caps on their broadband too. And if you read the mac blogs you can see how much people hate AT&T, because they give bad service but everyone puts up with it because iPhone is exclusive to them.

          In the Philippine setting, the fundamental problem is that the existing capitalists don’t find any reason to reinvest. As i said, in their shoes, why would I invest in something when I’m still making money off the existing system?

          What incentive would I have as a telcom provider to upgrade say my router to give my customers better service, if the said old router is still working and even though my customers are complaining of lousy performance, it is still within my acceptable limit of tolerance? Put in another way, I am making money exerting the most minimum of effort, why should I get off my couch and do work, when i’m making money by not getting up?

          As I mentioned, a Free Market doesn’t not necessarily mean, a market without rules or regulation. Stock markets have rules. There are anti-trust regulation in place, and we debate whether or not there is too much government, or too little. In my humble opinion there are cases when the government shouldn’t interfere with the market. In this case, I think there should be the most minimum set of rules so no one screws the other. The problem is that no one is forced to maintain a certain standard.

          I think we should expect a certain standard from our telecom. Give them a framework to work within, and a reasonable timetable to accomplish it that fits with a national cyber policy.

  • GabbyD

    this is a great argument for increasing the foreign ownership cap from 40%.

    • cocoy

      I don’t think foreign ownership cap is a problem.

      • GabbyD

        why not? if investment is the problem, and the locals dont wanna do it, maybe the foreigners would?

        • cocoy

          If you look at America, they have Caps on their broadband too. And if you read the mac blogs you can see how much people hate AT&T, because they give bad service but everyone puts up with it because iPhone is exclusive to them.

          In the Philippine setting, the fundamental problem is that the existing capitalists don’t find any reason to reinvest. As i said, in their shoes, why would I invest in something when I’m still making money off the existing system?

          What incentive would I have as a telcom provider to upgrade say my router to give my customers better service, if the said old router is still working and even though my customers are complaining of lousy performance, it is still within my acceptable limit of tolerance? Put in another way, I am making money exerting the most minimum of effort, why should I get off my couch and do work, when i’m making money by not getting up?

          As I mentioned, a Free Market doesn’t not necessarily mean, a market without rules or regulation. Stock markets have rules. There are anti-trust regulation in place, and we debate whether or not there is too much government, or too little. In my humble opinion there are cases when the government shouldn’t interfere with the market. In this case, I think there should be the most minimum set of rules so no one screws the other. The problem is that no one is forced to maintain a certain standard.

          I think we should expect a certain standard from our telecom. Give them a framework to work within, and a reasonable timetable to accomplish it that fits with a national cyber policy.