Should the government build a broadband network?

Business Nightly recently interviewed Ray Anthony Roxas-Chua, and he said that it was a bad idea for the Government to build its own broadband network, and that this is the “extreme response”.

Is it?

Without a doubt, the Philippines’ network infrastructure isn’t there. I think everyone could agree on that point. Network readiness isn’t great at all. And the lack of reliable, and consistent network framework isn’t there yet. Mobile internet could be great at the heart of Makati for example, but totally useless outside the city. And the common theme for recommending providers remain the same: it would depend on where you are. There are areas where Smart is good, and there are areas where Globe is better, and vice versa.

There are indications that the telecommunications companies are rolling out technologies that would greatly improve the network infrastructure. Particularly, mobile internet infrastructure is being improved by SMART and Globe Telecom. And the infrastructure can’t be built overnight. There is no question about that either.

Likewise we are all in agreement that the Internet is the world’s greatest communications tool. It is a powerful medium. It is also an economic multiplier. More, and more businesses are enabled because of simple things like email, or voice over IP.

Consider also taking into context, studies that show Internet usage is geared towards Internet cafes.   With that in mind, what we are certain of, is this.  Simple things like sending a presentation to a client, or documents to a client relies more and more on the power of the Internet. It is also true that for the most part, people go nuts when they have to send at least 10MB of presentation files to a client, and they can’t. And on the client’s part— especially if client is in the Philippines, would find it hard to get that same file. It is weird in the sense that sneaker net— passing usb flash drives around is often times faster.

On the side of the telco, the line drives in two ways. First: the MPAA, anti-piracy, people download too much line and the second, Internet is a finite resource. The reason being telecoms around the world are fighting tooth and nail not to be utilities. And these are businesses that need to maximize shareholder profit— nothing wrong with it, of course. The telco position is just a taste of how sore, and complicated, the situation is. Anybody with a business knows too well that striking equilibrium between profit and customer satisfaction is always a balancing act.

On the government side, it is doing two things. One is successful, one isn’t.

Where the government is succeeding right now is using Internet tools. One example of this is how the MMDA is using the web and other tools for traffic management. There are scores of other great examples of how the government is executing, and Secretary Coloma presented some good things about it in his Internet and Mobile Marketing Summit presentation.

What the government isn’t succeeding on is setting policy direction. How does the Government see Broadband? Is it a national imperative to provide every household with Internet, because it is an economic resource much like roads, and electricity? If recent NTC moves is a barometer, then it would appear, Government has fallen short of actually applying a fair and equitable playing field. On top of it there are allegations that while on paper the telco industry is suppose to follow market forces, some sectors allege that it isn’t.

Should the government itself build a broadband network?

What should be done

Government needs to address the lack of policy direction. It really does need to set a fair, and equitable playing field. Would it hurt to bring in new players? No, it wouldn’t.

With regard to the infrastructure itself, there are good broadband success story patterns to follow around the world. The best pattern so far is South Korea. In the South Korean model, the government stepped in to invest in fiber.  In the Philippine scene, what in my humble opinion ought to happen is some sort of public-private sector partnership but government needs to see broadband as an economic resource similar to roads and electricity for that to happen, and when it does, appropriately invest in that same direction.  Both public and private industries have an interest in getting Broadband to be reliable and fast.  The question now is, will there be leadership in that direction?

 

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Attribution

 Some rights reserved by Sean MacEntee

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.

  • It would be a great idea, on paper. but knowing the people who run this country will also be the ones who will “control” this project, it could go haywire.

  • Cocoy

    Joe,

    If the past few months is any indication, the NTC needs to sharpen its claws a little more. And I think it is a case of the NTC not doing enough to ensure the Free Market is operating properly.

    The Internet is so bad in the Philippines that at the heart of Makati, people use flash drives to pass around files because emailing a 10MB file takes forever. And I know this because that’s the case in one of my clients.

  • manuelbuencamino

    Cocoy,

    I saw an interview with the CEO of YTL one of the biggest business conglomerates in Malaysia. It is also a global company. Anyway, the man said he wants to take Malaysia to 4G because current network technology is holding back advances by mobile makers like Apple etc.

    What if the gov’t. goes 4G? Is 4G the future?

    • Cocoy

      Hi MB,

      Smart, and Globe have made it a big deal that they are launching “4G” in the Philippines. 4G is a mobile internet standard. I’m not sure what technology Globe is going to use, but for Smart it is HSPA+. Smart is selling their HSPA+ usb prepaid dongle (Smart Rocket) at 3,999 or something [and no, this isn’t an endorsement, haven’t tried it myself]. They also recently made it a big deal to launch, a Netphone— attempting to create an android-based phone ecosystem in the philippines. That said— and I use smart as an example only, but really everyone else is in similar straights, not every cell site is on HSPA+ or HSPA. They haven’t rolled out enough cell sites for it.

      If you can recall back in the day, everyone complained that SMS/Text were constantly delayed, etc. etc. It is the same case right now when it comes to mobile Internet.

      There are other reasons why Internet in the Philippines is ssssooo slow. In some cases, the telco’s network server settings is crappy. I’ll cite an example. Each url— like http://www.google.com or http://www.propinoy.net is like the name on your phone. Each name is associated with a “phone number”. That number is the IP address of the website server. We call that phone directory, DNS. And often, local DNS is crappy.

      How crappy? Well, there were some users in my home network who were complaining, why the hell internet was slow. They couldn’t access Facebook. I said, “What?” I was just on Facebook, not like 2 minutes. And Internet was fine. And there was no traffic like I wasn’t downloading or anything like that or no one else in the network was watching YouTube. So I go to their workstations, and changed their DNS settings to point to Google, and BOOM. Speed is was up to spec.

      There are also other reasons why Internet is slow locally. Telcos normally have Proxy servers in the Philippines. Sometimes those proxy servers get overwhelmed and such.

      When it comes to DSL on the other hand— this is like internet traveling beside your phone line, there are several “issues”. Like if you happen to be plugged into a telco’s box and it happens to be overcapacity or you’re far from the box— then more likely your service is going to be crappy. I’ve had DSL lines that worked really great. If you use the same DSL brand in a different part of the city/country, then you might not get the same quality service. So this is a telco infrastructure problem.

      There is also the case that a lot of traffic in the Philippines goes out of the country. The issue of local peering is being discussed on the google+ thread to this blog entry.
      There was a suggestion on my google+ thread that gov’t should invest on the underlying fiber— the basic infrastructure, and private operators will lease it from the government. I think that may be a good way to improve internet speeds.

  • Mr. America, the Answer Man, says government should improve schools and tighten the screws on the phone companies. PLDT, owner of Smart, has been milking depreciation and sending the cash in the form of dividends to its owners, a large share of whom reside in Great Britain, rather than re-investing to build a world class network. Applications by PLDT for acquisitions should be declined routinely until the company does a better job of recognizing its critical role in bringing the Philippines into the modern world. There may be other screws regulators can crank as well, and that is preferable to investing the public’s cash.

    I live in an outlying market and Globe Tattoo is fine for routine amateur use, such as mine. It could not power a commercial use reliably, and that is the bigger problem.

    If you listed priorities within a limited budget, it would be down on my list behind other things that must be done by the government. Schools, defense, roads.