The telco predicament

Prof. Dindo Manhit, President, Stratbase ADR Institute

The global pandemic has exposed the vulnerabilities of social, political, and economic institutions to the point that there is no other way but to evolve routine and traditional practice. During the time of COVID-19, our nation’s weaknesses were exposed, from our healthcare shortcomings, missing policy contingencies, the fragility of our domestic economy, and our lagging telco infrastructure capacity. From all challenges, internet speed and telecommunications quality are most felt by many of our people as their lives are now intertwined with the internet and technology.

Currently, however, the telco industry is in the center of public scrutiny due to the inconsistent speed and unreliable connection that has been the bottleneck of our nation. According to the Speedtest Global Index in 2020, the Philippines ranked 108th in broadband internet speed downloads (23.74 Mbps) and 114th in mobile internet speed downloads (16.17 Mbps). Comparatively, with our ASEAN neighbors, the Philippines ranked the fourth slowest in broadband internet speed and the slowest in mobile internet speed.

Another factor that must be included in this discussion is the data from Hootsuite and We are Social, whereby internet and social media use in the country has dramatically risen from 44.2 million or a 40% penetration rate from 2015 to 76 million or a 71% penetration rate today. The Philippines currently does not have enough cell sites in the country with only 17,850 serving for 76 million internet users resulting in 4,258 users per site. Comparing our cell sites against our ASEAN neighbors, Indonesia has 96,556 cell sites with 1,554 users per site, and Vietnam has 90,000 cell sites with only 711 users per site.

Years of slow cell site expansion due to bureaucratic delays and inconsistent local government policies has consequently affected telco services to users and subscribers. Additionally, the increasing demand has also contributed to this multifaceted issue as Filipinos have drastically increased internet use throughout the years. If anything, the digital transformation necessitated by the pandemic further punctuates the need for more digital infrastructure to meet Filipinos’ growing demands.

It is remarkable to see the government pour on the blame on telco companies without seeing it as a systemic problem that needs a multisectoral approach. Telco players should not be made scapegoats since the root cause of the problem can be traced to three basic interventions that do not involve the companies solely, but also the government and communities.

First, the administration must veer away from issuing threats against businesses, and instead, initiate ways in partnering and implementing solutions for nation-building. Blatant threats and displays of aggression will only set back the goal of being investment-friendly and attractive for future local and foreign investments. The last thing we need in the country is to create further division with the business community and strain investor relations that will inevitably affect long-term economic sustainability. It should be understood that the real dilemma is not the telco players but the lack of infrastructure needed to serve the increasing demand. Alternatively, the administration should work together with the telco actors to resolve lingering pain points that limit their drive towards large scale infrastructure development.

This initiative can be reinforced by implementing the second solution, and this is to remove the bureaucratic barriers that hamper and impede the construction of building cell towers. The situation necessitates the intervention of our lawmakers by looking into the current policies that keep the industry from improving its services for the people. By improving and streamlining our laws, we can unburden the industry of the inefficiencies that stunt its capacity.

Finally, the government must focus on winning back the public’s trust by showing non-partisan leadership and protecting the interests of the people. Growing doubts are apparent due to the threat posed by the China Telecom-backed DITO telco, headed by the President’s well-known supporters. In a webinar hosted by the Philippine Bar Association on Sept. 18, retired Senior Associate Justice Antonio Carpio cited critical concerns regarding the entrance of a state-owned company through its local affiliate Dito Telecom.

Carpio warned against pending legislation that would allow full foreign ownership in telecommunications. He said that the Constitution imposes a “separate and distinct constitutional requirement” for companies to be 60% Filipino-owned to “legally utilize a natural resource,” this includes radio frequencies used by telecommunications companies.

Full foreign ownership in the sector is especially concerning given DITO’s unique ties with China. Carpio noted that this would be problematic since China’s laws mandate Chinese companies to disclose sensitive information required by their intelligence services, also given that the state is allowing the firm to install telecom equipment within military camps. In such a situation, the Philippines is inevitably wedged in a precarious situation because it currently has various issues with China and could endanger national security if exploited. It is, therefore, necessary for the Duterte administration to set an example that its leadership prioritizes the Filipino people above all.

In conclusion, the solution to the current telco issue will depend on the government’s ability to harness various actors and effectively guide the discourse towards inclusivity of concerns, impartial implementation of policies, and reassurance on commitments to serve flag and country.

This article was originally published in BusinessWorld.

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