National Broadband Network: Boon or Bane?

The lack of fixed line communications facilities for the public was supplemented by growing private mobile providers. In 2006, mobile networks (who are the same fixed line providers) had enlisted 34.7 million subscribers, making mobile services also the most profitable businesses in the country today. Globe Telecoms posted 2.7 billion net income for the first quarter this year. Mobile users are already expected to grow to nearly half of the population.

However, such mobile communication lines are unreliable for high speed broadband connections. In the 2006 UN survey, only three out of 1000 people have access to broadband connections. As such, broadband connections are almost non-existent.

The current ICT situation described in this section has shown that majority of Filipinos based in rural areas lack access to even the most basic infrastructure for communications. The deregulation law has only brought saturation to profitable urban areas which now have more unused fixed lines, while the majority of rural areas remain without accessible communications infrastructures.

As an ICT project, the NBN will pose an additional burden to the people in the form of taxes. The envisioned network will be financed by a $400 million loan from the Chinese government and the China Import-Export Bank in the form of Official Development Assistance (ODA) to the Philippine government.

The Philippine Daily Inquirer editorial is correct in saying that “… ZTE is not in fact investing in the Philippines; it has bamboozled the Philippine government into taking out a loan from the Chinese government to fund ZTE’s investment” [4].

Failure of privatization in public utilities

From all angles, the ZTE’s NBN project must be terminated. The ZTE project, however, must be scrapped for the right reasons and the need for a NBN should be resolved through the proper solutions.

Other critics of the NBN contend that we should just leave the task of setting up a national information network to existing private firms instead. Economists Raul Fabella and Emmanuel De Dios, for instance, believe that government control over the telecommunications industry must be further reduced.

Fabella and De Dios propose a problematic solution: They claim that more efficient services can be brought about by privatizing and deregulating the Philippine telecom industry, where private companies develop the infrastructure and the government merely acts as a main consumer, citing the “successes” of Napocor privatization and MWSS as examples. They advised the government to just concentrate on “core competencies” and leave all “non-core competencies” to the private sector. Rather than creating new broadband infrastructure, they say, the government should utilize the existing ones owned by private telecommunications companies.

Such parties portray privatization as the cure-all for the nationwide lack of ICT services. But has privatization of Philippine public utilities been really beneficial to the people?

We can cite the power industry’s recent experiences with liberalization under the Electric Power Industry Reform Act (EPIRA) as the best example of failed promises to lower costs of public utilities.

“Contrary to what has been promised during the passage of the law, the EPIRA has not caused any real decrease in power rates since its enactment in 2001, apart from a one-time and fleeting 30 centavo Power Act reduction. Instead, power rates have continued to climb upward after the EPIRA legitimized the onerous Purchased Power Adjustment contracts entered into by the NAPOCOR.

The EPIRA failed to lower electricity rates for the majority of Filipinos precisely because its power industry reforms were geared not towards the benefit of end users but for foreign transnational corporations. The various highlights of the EPIRA ranging from the creation of the National Transmission Company (TRANSCO), the Power Sector Asset and Liabilities Management corporation (PSALM), the Energy Regulatory Commission (ERC), the wholesale electricity spot market (WESM), the unbundling of power rates and the various codes and rules implemented under the EPIRA are designed to segregate each saleable part of NAPOCOR, make it attractive to investors and create structures and offices to facilitate these transactions.

Public utilities such as the power industry and telecommunications infrastructures should primarily serve the interests of the people. Their services should help and improve the peoples’ daily living. But as the country’s experience with the power industry privatization indicates, privatizing another basic utility such as the telecommunications sector and handling over its ownership to private entities will eventually end creating profits for a few rather than providing services for the majority.” [5]

After more than 10 years of privatization and deregulation of the telecommunications industry communication lines have yet to reach the countryside. While mobile phones are accessible to almost 40 percent of the population, monopolistic tendencies in pricing also exist. The SMS services which are supposed to be free are now charged per SMS sent by the subscriber. In a day alone, telecommunications company extracts P250 million ($5,550,621) from SMS services. Extending and consolidating this policy of handing over the telecoms sector wholesale to business will only exacerbate the people’s current woes.

An ICT Sector for the People

Technologies can indeed help in improving services to the majority of population. The role of ICT infrastructures to deliver efficient services and information to the majority of the Filipinos cannot be disputed. The advancement of science and technology, information and communications technology has created many possible ways to improve information sharing and dissemination.

Any noble intentions, however, will be ruined when the interests of the people are neglected for the interests of a few government officials. The current NBN project is really about who will get the kickbacks. Even if the NBN deal improves the communications between government agencies, it will still fail to sustain a national communications network because of the corruption and kickbacks and the current administration’s dependence on foreign technologies, expertise and financing.

The rampant corruption of the Arroyo administration is one of the main reasons that such services have not reached the majority of the Filipino people. Its touted increase in GNP and GDP are rarely felt even by the urban poor much more by the ordinary peasant in the countryside.

The envisioned network will be financed by a government loan from the Chinese government as an ODA will favor the Chinese government and Chinese companies but not the Filipino people. In the end, the Philippine government will need to obtain millions from Filipino taxpayers to repay the debts incurred from the deal.

We believe that Filipino computer professionals have the competency to implement these projects. The government should recognize these to avoid too much dependence on foreign technologies. Whenever foreign help would be needed, such as in the absence of the capacity to build these infrastructures, genuine transfer of technology should be effected. Foreign contracts entered into by the government should always be in the favor of the Filipino people building our own capacity to produce and maintain.

A nationalized information and telecommunications network, if implemented by a government with genuine interest in serving its population can indeed enhance the flow of information between national and local agencies. Furthermore, a government with a clear plan of national industrialization is the very prerequisite for technological advancements in ICT to be in good use. Otherwise, huge ICT projects will always fail to address problems and will only enrich corrupt government officials. Improving telecommunication services by using modern technologies, without corruption and preference to foreign interests, is what the Filipino people need. Posted by Bulatlat

2.2006 Information and Communications for Development, World Bank.
3.National Broadband Network, Erwin Oliva,, 07 August 2007
4.Murphy’s Deal, Editorial,, 08 August 2007.
5.Ever increasing rates from the EPIRA, A closer look at the electric power industry in the Philippines, AGHAM Research, Dr. Giovanni Tapang, Engr. Ramon Ramirez, Kim Gargar.
6. Thanks to Lisa Ito-Tapang for editorial assistance.

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