In the wake of the mobility restrictions during the strict quarantine conditions last year, Philippine telcos have reported a 500% increase in data usage when lockdowns started last year because of the massive shift to online services to adapt to travel restrictions and working from home. This is a pandemic induced phenomenon that has permanently changed global ecosystems.
This brings to front a strategic challenge that if not addressed with urgency, will negatively affect the country’s economic recovery and competitiveness in a new digital driven economy.
According to the IMD World Digital Competitiveness Ranking (WDCR) 2020, ASEAN governments are upgrading telecommunications infrastructure such as Malaysia spending US$233 million for increasing coverage and broadband speed, Thailand investing US$343 million to connect thousands of villages, and Vietnam spending US$820 million for a 23,000-kilometer submarine cable system.
Given the region’s aggressive investments to upgrade wired and wireless networks, the Philippine government should take the cue from its ASEAN neighbors who are already investing aggressively to boost broadband services to world class levels.
Regrettably, The Department of Information and Communications Technology’s (DICT) proposed P18 billion budget to implement the National Broadband Plan was only allocated less than P1.5 billion in the 2021 national budget. This decision will further push back the decades long infrastructure backlog seen by experts as a major factor affecting broadband speeds.
The government’s move to cut the bureaucratic delays in the building of telecommunications towers, though long overdue, will hopefully close the 50,000 backlog in the next few years. In response, the two dominant telecommunications players are ramping-up infrastructure spending to enhance and expand services.
Globe telecom has announced increasing investments by 250 percent in 2021 for new cell towers and their 5g network expansion that will boost internet speeds. They recently announced an estimated P70 billion will be spent this year as part of modernization efforts in Luzon and upgrading of 4G to high-speed LTE signal in Visayas and Mindanao.
Smart Communications announced projected spending between P88 billion to P92 billion capital expenditure to expand services to the unserved and underserved areas in the country.
The impact of these huge investments on the part of the private telcos can potentially be quadrupled if government steps in with synergized digital infrastructure projects funded by developmental loans. This is a strategy that our ASEAN neighbors are aggressively implementing.
In this context, the implementation of the National Broadband Plan should be prioritized as a critical infrastructure project in the government loan portfolio that will generate long term benefits to public and private ecosystems. This is critical in meeting the increasing demand for reliable and fast broadband services needed by all sectors to sustain operations.
Cloud technologies are now essential tools that must be quickly integrated to all for surviving this deep economic crisis. The implementation of the NBP should be prioritized as a critical infrastructure project in the government loan portfolio that will generate long term benefits to public and private ecosystems. If left undone, our efforts to rebuild economic momentum will not happen if the country’s digital infrastructure is not ready to deliver the broadband speeds required to support a cloud-based ecosystem.
Furthermore, the innovative talent and creative skills of Filipinos is a potential that can be transformed into an economic pillar that will drive the economy in a digitalized new normal.
The government must prioritize the fast implementation of the NBP to accelerate economic recovery.
Prof. Dindo Manhit
Stratbase ADR Institute