An open letter to President Aquino, and to the 15th Congress on NTC Broadband cap draft memorandum

29 December 2010


His Excellency Benigno S. Aquino III
President of the Philippines

Hon. Juan Ponce Enrile
President of the Senate of the Philippines

Hon. Feliciano Belmonte, Jr.,
Speaker of the House of Representatives


Dear President Aquino, Senate President Enrile, and Speaker Belmonte:

I write today because the NTC announced a draft memorandum imposing a cap on broadband Internet usage in the Philippines. I believe such a move is a mistake, and it is a myth that putting a cap on the broadband experience helps telecom companies improve the service.

In the United States where broadband caps are norm, Internet service has not improved. Take for example this piece from veteran technology Walt Mossberg of the Wall Street Journal who gave iPhone 4 a great review, but added that AT&T network was its biggest downside and limitation.

Bandwidth capping is a tumultuous issue too in Great Britain as this op-ed piece, “ISPs against BBC iPlayer,” from the Register pointed out.

Countries like The United States, Australia, Malaysia, New Zealand and South America are well known for their broadband caps. It is to South Korea, Japan and Hong Kong where the Internet blazes.

In the Philippines, according to a study conducted by Yahoo-Nielsen Net Index 2010, 69 percent of Filipinos use Internet cafes to connect to the Internet. The State of the Internet in the Philippines 2010 reveals that the Philippines ranks 85 out of 133 countries on the Global Technology Report 2009-2010.

The Organization for Economic Cooperation and Development (OECD) published a paper called, “Broadband and the Economy.” It is the result of a ministerial meeting on the future of the Internet economy that the Korean Communications Commission hosted in 2008.

OECD determined that broadband is an enabling technology that creates huge impact on productivity and that the largest productive gain come from its use, rather than the production of ICTs. OECD also determined that governments can help define the macroeconomic framework conditions for a favorable innovation and investment climate.

Jacqui Cheng of the much referenced publication, Ars Technica wrote, “Cellular networks a key to getting developing world online.” In it, she pointed that the future for developing countries ought to be mobile space. In the Philippines, Yahoo-Nielsen Net Index 2010 determined that because of aggressive pricing, there was a zero to five percent growth in mobile Internet.

The future of the Internet points to an explosion of mobile data usage, as more and more Apps are created daily.

Just ask your staff and families who are tired to their iPhones, Blackberries, Android phones.

The response by the local Digirati on Twitter on this faux pas by the NTC:

@madballs: “If it ain’t broken, don’t fix it!”

@JonDoblados: “@aileenapolo Sure is not. Especially when these ISPs are already delivering less than what subscribers signed up for.”

@aileenapolo: “@JonDoblados definitely going backward when all other countries are moving forward. Haaaay naku, buhay nga naman.”

@marcosumayao: “…So the NTC just allowed local telcos to make even more money by charging more for higher data caps. I smell something fishy.”

@iandexter: “Consumers complain about poor internet connections, and NTC comes up with a (draft) memo to allow bandwidth caps. Wow. Brilliant.”

@peppersoriano of the blog, GameOPS wrote, “The National Telecommunications Commission (NTC) continues its anti-consumer stand by allowing Internet Service Providers to specify the minimum broadband connection speed, service reliability and rates.”

“Globe WiMax tops 8MBps uncapped,” YugaTech wrote as a headline in 11 December 2009. Globe Telecom at the time of this writing, offers PHP995 at 1Mbps as its highest plan speed.

HubPages reviewed Globe WiMax saying, “For heavy users of VOIP, via Yahoo messenger, skype, vonnage or Magic Jack – you guys are in for a treat. For the younger generation of P2P fanatics – this is not recommended. For regular browsing – this is acceptable. For our streaming video experience – we have had better experience with PLDT. For users of Digitel, anything other than their service is a welcome treat.”

Looking back at reviews of Philippine ISPs, little has changed in two years.

Who will be affected by this bandwidth cap by the telcos?

With 69 percent of the population relying on Internet cafes for their Internet needs, then it is this industry that will be grossly affected.

Business Process Outsourcing too, which rely on Internet to transfer data.

Universities which have a high demand for bandwidth would have to take on these rates.

To give you an idea of how huge a person can consume daily: my bandwidth usage is 2GB per day. That’s normal internet use, streaming video, downloading apps and content off iTunes (I have a US account). That does not account for uploading images to blogs, maintaining websites, and such.

Just imagine how much a BPO agent would use in streaming calls or conference calls.

Just imagine how much bandwidth is consumed by an ordinary Internet user wanting to video chat with their relatives abroad.

Multiply that, company-wide.

If the future of Internet is largely dependent on mobile there have been many complaints on outrageous mobile phone bills. There are still complaints to this day.

The World Bank published in January 2010, “Building broadband: strategies and policies for the developing world”. The paper described Broadband as an Ecosystem. The paper identified that for low to medium income countries, a 10 percent point increase in broadband penetration accelerated economic growth by 1.38 percent points. This is more than in high income countries. It noted a similar study conducted by McKinsey & Company, a 10 percent increase in broadband household penetration would result in a boost to a country’s GDP between 0.1 percent to 1.4 percent.

What did it suggest governments do to improve broadband?

First, be visionary, yet flexible to change given market conditions; second, use competition to promote market growth, and third, facilitate demand.

That said, and based on these points, the NTC is not a visionary. It has not successfully promoted market growth.

Telecoms need to make money too right?

On December 28, 2010, Maiki Oreta of ANC tweeted, “Telcos PLDT and Globe fizzled this year. Year to date: PLDT (TEL) -.25% to PHP 2,5550.00/share. Globe (GLO) −11.5% to PHP 810.00/share.”

Part of the vehemence directed at the NTC is its failure to establish a level playing field that balances consumer rights and corporate need for profit.

On 14 January 2010, Akamai which serves video and content on the Internet determined that the world’s Internet speed is rising.

Again, most broadband in the Philippines barely goes past 1MBps.

In the World Bank Policy Research paper, “Rising Growth, Declining Investment: The Puzzle of the Philippines” by Alessandro Magnoli Bocchi determined one of the key factors for the lack of growth in the Philippines. Bocchi wrote that local industries are not reinvesting big enough, because they make enough money within the status quo, and is therefore reluctant to invest.

Are local telecoms not investing enough? And if so, how do we get new players to invest?

Does the NTC and the telecom law need to be reviewed?

Can government guarantee a level playing field?

The NTC draft memorandum to put caps on Internet usage is regressive. It does both business and consumer no good. It will not encourage telecoms to reinvest to improve their service, and help the broader market unlock our potential.

Granted, this is just the tip of the iceberg, of an issue that cannot so easily be categorized. I argue that the Philippines needs to approach Internet as a holistic beast. There is a pressing need to ensure that the Freedom to Connect is guaranteed, just as reliable and fast broadband service be delivered to consumers hungry for real service. Just as those things are addressed, the nation also needs to be cognizant of the threats like sex and crime in the time of social media, and cyberwar. Our government must be properly armed for the future of digital warheads, in order to take on attacks on its online properties, not out of fear as it does, but with our eyes open.

I believe it isn’t to America that we need to look to for inspiration in developing a broadband strategy, but to South Korea, which is the most developed broadband network in the world.

I ask that our lawmakers review our telecommunications law, and the NTC to see if this faux pas could be changed and how best to provide for a level playing field.

I ask our executive department to draw up a national cyber plan, a vision of where ICT infrastructure can help boost productivity, as well as an aid to creative industries. A more responsible NTC needs to be part of that future.

I am cognizant of the challenges our nation faces, and the incapacity our people must overcome. It is a nation unequal, unstable, and unsustainable. The tunnel we find ourselves in, remains, dark. We need to continuously move forward to see the light. In your inaugural address, President Aquino, you said, “The dream starts to become a reality.” I believe the Internet and ICT properly leveraged could help the nation to make that dream, a reality. Can government provide that promise of a level playing field? As a nation, could we move forward, with our eyes open?

With respect,

Cocoy Dayao
Citizen

Cocoy Dayao has written 573 articles on this blog.

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Cocoy is an Internet entrepreneur, technology enthusiast, political junkie and social observer who enjoys a good cup of coffee, comic books, and tweets as @cocoy on twitter. He publishes The Multiverse, a weblog that covers pop culture, as well as Lab Rats that talks about Apple, Social Media and Technology. Cocoy is also the Managing Director and Editor-in-Chief of the ProPinoy Project. He regularly contributes political commentary at BlogWatch.ph, and writes about the technology sector for the Philippine Online Chronicles. "Conservative in what we say, Liberal in what we accept."