PH telco sector needs revamp to improve Internet services – report

DAVAO CITY (MindaNews / 10 April) – Revamping the telecommunications sector is needed to address poor Internet services in Mindanao caused by lack of competition and the restrictions imposed on foreign ownership, a World Bank-funded Mindanao Jobs Report 2017 said.

Workers pull a fiber optic cable for installation to upgrade internet service speed in this photo taken morning of December 8, 2017 in Digos City. MindaNews photo by ERIC S.B. LIBRE

The country’s telecommunications industry is controlled by two giant companies referred to as duopoly, due to the 40-percent cap on foreign ownership, the report said.

It said slow speed and high internet cost are the major limitations facing Mindanao’s IT-Business Process Outsourcing Industry, and reforms to improve connectivity could promote greater job growth as well as create opportunities for internet-based delivery of health and education services to remote communities of the island.

“Poor Internet services are largely the result of a lack of competition; the market for both fixed and mobile broadband services is almost entirely controlled by two vertically integrated telecoms firms,” it said.

The study said a complete revamp of the sector is needed to address legal restrictions, difficulties in obtaining congressional approval and licenses, and prohibitions against Internet service providers to build their own networks.

It recommended the drafting of a National Broadband Plan to determine policy reforms.

Even without a constitutional amendment to remove limits on foreign ownership of utilities, the study said the government can encourage competition by “reducing the need for Congressional approval for some service providers and allowing domestic firms to use infrastructure owned by telecom firms.”

It said the following problems must be addressed, too: poor regulation of sales of Internet services, uncompetitive and non-transparent spectrum allocation, absence of competitions policy, inadequate enforcement of consumer protection, and obsolete laws that render many stipulations and penalties useless.

“Essentially, there is little to restrain duopoly from charging whatever it likes for poor quality services,” it added.

The report said another hindrance to improving service quality and availability is “lack of serious investment in fiber optic cables and cellular towers, which is compounded by regulatory obstruction, difficulties in securing right of ways, and a lack of coordination with public works projects to share the network and the cost of civil works.”

It added that “establishing a competitions policy for the internet, enforcing current antitrust laws, setting clear guidelines for spectrum allocation, and penalizing false advertising” can improve regulatory oversight.

It suggested more public investments, attracting more investment through public-private partnerships, and providing subsidies to so-called depressed areas that could enhance infrastructure supporting the internet. (Antonio L. Colina IV/MindaNews)