Much controversy has surrounded the Arroyo administration’s recent proposal to build a national broadband network (NBN) in tandem with a Chinese firm. Reports of corruption are rife; accusations are exchanged between the Philippine President Gloria Arroyo’s very own allies. But what is a national broadband network, really? And is this a project that most Filipinos need?
BY RICK BAHAGUE
Computer Professionals’ Union
Posted by Bulatlat
Vol. VII, No, 34, September 30-October 6, 2007
Much controversy has surrounded the Arroyo administration’s recent proposal to build a national broadband network (NBN) in tandem with a Chinese firm. Reports of corruption are rife; accusations are exchanged between the Philippine President Gloria Arroyo’s very own allies. But what is a national broadband network, really? And is this a project that most Filipinos need?
The NBN project: a short timeline
Apparently, talks on the NBN started in 2005. For an ambitious project that would entail such a tremendous cost for the Philippine government, the Department of Transportation and Communications (DOTC) managed to hide the discussions from public scrutiny.
According to the DOTC, the NBN was spurred by the Electronic Commerce Act of 2005, which mandates the Commission on Communications and Information Technology (CICT) to “install an electronic network” and to have an “integrated government information and communications infrastructure development program.” It was hoped that this would facilitate faster transactions between the local and the national government and pave the way for the creation of web-based government portals or websites by local government units (LGUs).
By July 2006, a Memorandum of Agreement was signed by Chinese firm ZTE Corporation and the Department of Trade and Industry (DTI) to “explore” various projects.
Normally, for such a huge information and technology (IT) project such as the NBN, studies for a proposal would usually take more than a year. However, the following month, ZTE submitted a proposal for a NBN that would be financed by the Chinese government through a “concessional loan”. The ZTE’s NBN proposal was endorsed to the National Economic Development Authority (NEDA) on October 2006. A revised proposal taking account of suggestions from the Bids and Awards Committee for Information and Communications Technology (BAC-ICT) of the DOTC was again submitted to NEDA on March 2007. Meanwhile, Amsterdam Holdings Inc (AHI) submitted a $240 million proposal while another company, US-based Arescom submitted a $135 million proposal for the NBN project.
A P16.5B NBN project by ZTE was approved on 29 March 2007 and was signed on April 2007. The NBN envisioned by the Philippine government is priced at $329.5 million. This project aims to interconnect government institutions and offices using broadband technologies, creating a huge intranet which supposedly will cut government spending in telecommunications by P3.6 billion ($79,928,952 at an exchange rate of $1=P45.04). The use of voice-over-internet protocol (VOIP) terminals is the government’s main reason for approving the ZTE proposal. The DOTC claims that these devices will lower the government’s P4B ($88,809,946) communications expenditures every year to P990 million ($21,980,461).
The NBN project became publicly controversial when copies of the contract between the Chinese and the Philippine governments were lost after ZTE Vice President Yu Yong and DOTC Secretary Leandro Mendoza signed the $329.5-million contract in Boao, China.
According to the National Bureau of Investigation (NBI), the copies of the contract were stolen. A reconstituted contract was then made to replace the original contract without any review from responsible agencies. No available agreement has been made available to the public until the Senate investigation on the project. AHI, the competing bidder then threatened to sue the government for favoring ZTE Corp.
Recent developments brought present Commission on Elections (COMELEC) Chairman Abalos—who has yet to be cleared in the recent Election Automation controversy—as one of the key players in the NBN deal. Abalos was dragged into the picture for brokering for ZTE and DOTC as well as allegedly bribing Jose de Venecia III of the AHI to drop their bid. Furthermore, the First Gentleman Mike Arroyo was identified as the so-called “mystery man” by de Venecia III to be linked to the ZTE deal.
This adds the NBN project to the litany of alleged corrupt undertakings of President Gloria Arroyo and her family.
