News that Globe telecom has decided to implement a broadband cap created a small shimmer in the local blogosphere. This latest move shouldn’t shock anyone. For one thing, there is no NTC rule, or legislation that says this is illegal. For another thing, Globe Telecom reported their 2010 earnings that their revenues were down 22.4 percent to PHP 9.75 billion from PHP 12.57 billion in 2009. Implementation of this rule is simply an indicator that times are tough for Globe, and the company borrowed 7 billion from local bank, BDO to pay for its Capital Expenditure.
What irks people is that Globe said in their recent analysis, that the top 5 percent of heavy users take on 80 percent of their system capacity. Of course there is no way to really know this, except this is Globe’s word against anyone else. We don’t even know where the inefficiency in the network is. If this is a hardware problem, or an economic problem with Globe.
Bandwidth as resource
Telecoms argue that Internet is a finite pool. It can be analogous to electricity. Total electricity in the Philippines is N megawatts, because that’s all the plants— limited by physics and fuel can produce. Telcos do not produce bandwidth. Bandwidth is simply the bits that are processed per unit of time. So, if you’re attempting to share files with your officemate, the transfer between those two computers is measured in bandwidth. That’s bandwidth within your office or your home.
When you went to your service provider to get an Internet connection, you signed up for a particular speed. Say, 1MBps. That’s supposedly One megabits per second. So that’s suppose to be a million bits processed per second. That seems a lot right? So you’re living with a roommate and between the two of you, that 1MBps is shared. Typically to share this, the house buys a wireless router. This “WiFi router” is then attached to the modem that your service provider installed so you can connect to their service. So take for example You’re Mr. X and you were watching YouTube on iPad. Ms. Y, your lovely housemate is playing World of Warcraft on her Mac. That 1MBps connection is shared between you and Ms. Y through your WiFi router. It isn’t evenly split ok? The best analogy I suppose in this situation is the rate of water going through yours and Ms. Y’s shower. If both are turned on, the pressure might not be the same as only when one of you is taking a bath at that given moment in time.
But that’s not the whole story. Not all routers are cut from the same cloth. For example, Ms. Y has a movie stored in her Mac. And thanks to the magical technology from Apple you can watch that movie on your iPad. The transfer rate between your iPad and Ms. Y’s Mac has nothing to do with your Service Provider. This is the internal network. This is just you. Now, depending on your Wireless router you may not get fast enough data transfer between that Mac and your iPad. It could be because where you’re watching the movie is a little too far from the range of the wireless router. It could be that the signal has to pass through walls. It could also be because Ms. Y at the same time is playing World of Warcraft and your wireless router can’t process bits fast enough. So it is a combination of physics and capability of the router.
What the telcos on the other hand are saying is that there is a finite pool of internet resources available. What they’re saying for example is that your House, Mr. X is connected to their junction box. Mr. Z., from across the street is connected to the same junction box. So too is Ms. A., who lives three doors down to your right. What they’re saying from their telco server feeding to that junction box is a finite amount of bandwidth. What they’re really saying is that that junction can only process so much. For example Mr. X is playing World of Warcraft. Ms. A is downloading a youtube video while Mr. Z from down the street is downloading porn.
Now from that junction the data passes to the telco servers, and out of the Philippines. This isn’t just one server, but a whole bunch of services. Every time you visit Google.com, that’s you connecting to your service provider’s DNS server. DNS is like the phonebook on your phone. It looks up the name, and dials the IP address then it takes you to Google.com. Telcos also have a service called, “proxy servers.” These servers cache sites like Google, and Yahoo so it will load for you faster, and useful too in blocking sites. For example a company could be using a proxy server to prevent their employees from accessing porn, or Facebook.
So is Bandwidth finite? It can’t be finite because we’re talking about the rate that data is processed. It is the rate that your wireless router can process information. It is the rate the junction or the routers of your Service Provider processes information. It is the rate by which telcos transfer data from their servers out on to the world.
What they’re really trying to say is that their tech can’t handle the data. Is it finite in the sense that maybe all they need is to upgrade their hardware? Which costs money. Which, in every free market in the world means, they have to somehow earn money from it to cover that cost and their operational expenses.
What Service Providers are now trying to condition the marketplace is that they can’t handle unlimited internet. Wouldn’t it be a simple computation of how much computing resources a subscriber could possibly consume? My daily consumption according to my computer is between 1GB to 2GB of network transfer. That’s not accounting for playing MMORPG. So couldn’t a service provider assume that per household they should be allocating at least 5GB a day on their DSL connection? And make assumptions for big businesses as well?
There are no unknowns here. This is engineering and science, and based on their subscribers, telcos can definitely measure how much bandwidth is consumed. They could know how much capital expenditure they should be doing per year to keep up with worldwide bandwidth. We also know that cables going to and from service providers have natural physical limitations. We also know that cell towers broadcasting 3G signals have natural physical limitations. We also know that each router has its own physical limitation, and can process only N amounts of information. So from an engineering standpoint you can determine capacity, so where then does the problem lie why there is crappy internet in the Philippines?
Several weeks back, a few people in my household were complaining of crappy Internet speed. “I can’t connect to Facebook!” Which was odd in that I was on Facebook at the same time they were complaining. Our provider is Globe, and they were pissed off naturally. I sought to figure out why my Mac could connect to Facebook while the other PC (no, it wasn’t the PC’s fault!) So I found out that the PC wasn’t using Google DNS or OpenDNS. DNS is like this phonebook that your computer looks up so that it can contact a website. For some weird and totally insane reason, Globe’s DNS is really lousy. And boom! Just like that they were happy. So what’s up with that?
Where then does the problem lie on why there is crappy Internet in the Philippines?
The state of hardware these telcos have of course is related to the amount of money they want and can invest in. This is a business that telcos are in. Of course they are going to build capacity just right to keep up profits and to keep up with shareholder value. In the case of PLDT they bought Sun so they can grow their subscriber base. In the case of Globe they’re being slaughtered because for one thing, their service is really bad.
Telcos are always taunting, “market forces,” well if there really was competition people could easily switch service, right? Several days ago, I wrote that PLDT buying Sun may not be a bad idea. In a comment, Carlos Nazeno wrote,
“t’s not a bad idea. It’s a horrific idea.
See that “lack of availability of competing services in your area”?
Often, it’s not only cost but also territorial exclusivity agreements with LGUs that prevent other players from entering.
IF PLDT/Digitel pushes through, it’s going to get even worse and since you’ll be stuck with a monopoly, they won’t have incentives to improve service as opposed to if competition is available.
This brought up and discussed during the public consultation on Broadband/Internet with the NTC commissioner and legislators from the House Committee on ICT at MINT College last Feb.19.
NTC Commissioner Gamaliel Cordoba promised reforms that would open up the market and encourage new players to join.
What’s going to happen if this pushes through?”
So, is it true that LGUs are in collusion and hence market forces doesn’t happen?
Telcos are arguing that the reason why the network is slow is because of the top internet users are consuming content. Telcos are service providers. They are like Meralco, or Maynilad or the toll way operator. We buy access to get to the Internet. What we do with that bandwidth is our business. If Ms. Y wants to use it to browse porn that is her business. Why should telcos care what we do with that access so long as Ms. Y is paying? Meralco doesnt’ complain if you watch Willing Willie all day. Maynilad doesn’t complain when you spill gallons of water, so long as you pay. Maynilad doesn’t care if you use that water to shower with an escort you hired. The police may care that you hired an escort, and your priest may care that you hired an escort, but Maynilad doesn’t, and shouldn’t. It is a simple business arrangement between you and the company to provide a service. There is no morality involve!
As for the allegation that bandwidth is being used to download illegal content. According to a Canadian study, Illegal music, movies, and software is market failure. It is a content licensing issue. Hulu isn’t broadcast outside the United States because of it. Some eBooks aren’t sold by Amazon in a territory because of licensing issues. For the longest time, the Beatles weren’t on iTunes because of licensing issues. It has nothing to do with telcos. People want to watch content when and where they want to watch it. That’s what’s been clear in the 21st century.
Where does the problem lie then?
Telcos and problems
The state of a telco’s network of course is driven by market forces. The fewer subscribers they get, the less money they have. A telco’s terrible service affects its bottom line. Market forces dictate that people will flock to the alternative, the cheaper or the better service. Bandwidth cap is just another sign of how badly a service provider’s service is. Corporations are there to make money. To blame the user for spending too much of that service, which is clearly something that they can figure out through math, is a terrible way to make money. To raise a business issue to a moral one, likewise is throwing blame at things other than where the problem lies.
A consumer of internet service doesn’t care whether or not a telco’s router is overwhelmed. He cares about watching YouTube without buffering. A consumer doesn’t care about the telco’s internal woes. He cares about getting his money’s worth. If 1MBps is the agreement then why shouldn’t he get that 1Mbps? If the signed agreement has a fair use policy, that’s fine, consumers signed on it, but you know, there is something nasty when Service Providers never explain that fine print to their consumers. Yes, it wouldn’t be the first time, of course.
Imposing a bandwidth cap was never the issue. It is imposing that bandwidth cap with such lousy Internet speed and service is the issue. Imposing morality on the network is disingenuous, and blaming customers from using service is one hell of a way to be biting the hand that feeds you. Consumers just want what they agree with the service provider: Internet speed that is reliable, and agreed upon. Aren’t you pissed when you don’t get your money’s worth?