PIDS: Relax foreign restrictions in telco industry

March 7, 2016 at 12:43

PIDS: Relax foreign restrictions in telco industry

By:  | 05:17 AM March 4th, 2016

The country will need to open up the telecommunications industry to foreign players if it wants faster and cheaper Internet, according to state-run think-tank Philippine Institute for Development Studies (PIDS).

In a policy note, the PIDS said the country also needed a dedicated agency, or a Department of Information and Communications Technology, that would focus on developing and implementing a national broadband plan.

“Clearly, the Philippines needed a national broadband to increase Internet speed and lower the service costs. Increasing foreign equity … in telecommunications, which is currently set at 40 percent under the 1987 Philippine Constitution, is another channel for attracting capital and expertise into this industry,” read PIDS’ policy note titled “Making digital dividends inclusive” published last month. The note was penned by Jose Ramon G. Albert, Beverly T. Lumbera and Ramonette B. Serafica.

The PIDS pointed out the price of information and communications technology (ICT) in the Philippines was the highest in the region yet “Internet speed was not worth its cost.”

Citing a 2015 report of the United Nations’ International Telecommunication Union (ITU), PIDS said the price of fixed broadband services in the Philippines in 2013 was $51.59 a month, the third most expensive in the region after Thailand and Brunei.

The costs of various mobile broadband services in the country were also among the most expensive in the Association of Southeast Asian Nations (Asean). The price of postpaid, computer-based mobile broadband at $51.38 a month, for example, was the highest in the region, ITU data showed.

As for Internet speed, PIDS cited a separate report from cloud data network Akamai Technologies covering the third quarter of last year that showed the Philippines ranking 108th globally in terms of average connection speed.

In the Asia-Pacific, only India’s average speed of 2.5 megabits per second (Mbps) was exceeded by the Philippines’ 2.8 Mbps. Korea had the fastest average Internet connection speed at 20.5 Mbps.

PIDS partly blamed the slow Internet connection in the country to gaps and weaknesses in existing ICT policies.

“Accountability should play a major role in the effective regulation of ICT. To protect consumers, the government should implement regulatory policies, assess the performance of telcos based on the standards they set, and provide penalties to hold them accountable for violation of laws and regulations,” PIDS said.

While two agencies currently handle administrative complaints against telcos—the Department of Trade and Industry (DTI) and the National Telecommunications Commission (NTC)—PIDS said “the current penalties for violations are very low, discouraging compliance.”

“The Public Telecommunications Policy Act of the Philippines (Republic Act No. 7925) does not have penal provisions. Thus, the NTC only used penalties from an 80-year-old law, the Public Services Act of 1936 (Commonwealth Act 146), which set fines at not more than P200 per day until the violation was corrected,” it noted.

Besides imposing quality standards and improving accountability among telco and Internet service providers, PIDS said the government should also “find other ways to improve ICT in the country, such as regulating the interconnectivity of networks, building better ICT infrastructures, and expanding ICT services to include other sectors for development.”


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