ICT policy reforms aim to enhance broadband services in the Philippines

To help boost internet penetration further and foster the benefits associated with it, the government has strengthened its commitment to building telecoms infrastructure. As such, the expansion of the national broadband network has been highlighted as an important pillar that will improve the ease of doing business, while at the same time increase macroeconomic stability and promote inclusive growth.

Connection

According to the “Global Digital Report 2018” released by communications agency We Are Social in early 2018, Filipinos spend more time than any other nation on social media platforms. In total, they average more than nine hours a day online, of which four hours are dedicated to social media.

While the intent of the government to increase connectivity is commendable, there are substantial gaps in penetration. A significant number of Filipinos are using broadband internet; however, penetration rates remain low in comparison to regional norms, with the average download speed lagging even further behind. According to the UN Broadband Commission, in 2016 the Philippines ranked 110th out of 186 countries in terms of fixed broadband penetration, 89th in mobile broadband penetration, 64th in the percentage of households with internet and 111st in the percentage of individuals with internet. Filipinos are also subject to the slowest internet speeds among the “ASEAN-5”, which includes, Indonesia, Malaysia, Thailand and Vietnam, according to the State of the Internet Connectivity Report released by Akamai for the first quarter of 2017.

The Philippines is one of only a few countries worldwide that has competing national fibre backbone infrastructure, a result of the country’s duopoly in the telecoms market. Under the current structure, the backbone infrastructure comprises of PLDT’s Domestic Fibre Optic Network and Globe Telecom’s Fibre Optic Backbone Network. In addition to the two main players, the National Grid Corporation of the Philippines (NGCP) maintains a telecoms backbone that operates at 2.5 Gbps (STM-16), 622 Mbps (STM-4) and 155 Mbps (STM-1) capacities, running alongside its electricity grid, connecting Luzon, Visayas and Mindanao.

The Plan

Given the growing global reliance on internet connections for day-to-day transactions, the reduction of the country’s digital divide is a major prerogative of the government. Accordingly, the execution of the National Broadband Plan (NBP), under the Department of Information and Communications Technology (DICT), has been designed to accelerate data speeds and bolster the IT industry as a whole. The plan was initially approved by President Rodrigo Duterte in March 2016, and though it had not yet launched as of mid-May 2018, it was expected to be implemented before 2020.

In terms of priorities, the NBP will provide necessary policy, regulatory and infrastructure interventions to ensure the delivery of fast and affordable broadband internet services. To achieve this, the government has increased efforts to deploy fibre-optic cables and wireless technology across the country, particularly in remote areas, in a bid to promote inclusive growth.

Meanwhile, the DICT has accelerated discussions with various stakeholders that are likely to develop into public-private partnerships that will increase community involvement. At the same time the NBP was announced, in June 2017, the DICT also rolled out the Free Wi-Fi Internet Access in Public Places (FWPP) project and the National Government Portal. The portal will act as a one-stop shop for all government services, while the FWPP project, also known as the Pipol Konek project, aims to enhance digital literacy nationwide.

To support the country’s compatibility with new technologies, the NBP suggests a number of policy reforms to remove certain legislative barriers. These include changes to the Commonwealth Act No. 146, also known as the Public Service Act, which would remove the need to secure a legislative franchise before constructing a network. Another suggestion is to amend the Republic Act 7925, or Public Telecommunications Policy Act, with the aim of bolstering the capacity of the DICT and the National Telecommunications Commission to encourage competition by redefining the existing market structure. In addition, suggested amends to the Republic Act 3846, or Radio Control Law, would remove the need to obtain the congressional franchise licence currently required to operate an ICT network.

The NBP will provide government offices with better connection and should narrow the digital divide by providing internet access to underserved areas. As of April 2018, the DICT had not finalised the mix of broadband technologies to be used, although the regulator was in talks with the NGCP about the possibility of using existing fibre network assets alongside the NGCP’s transmission network, which could significantly reduce project costs, originally estimated at PH77.9bn ($1.5bn).

Subsea Cables

Policymakers are working alongside development partners and private investors to advance the national communications network so that it meets the needs of an increasingly digitally literate society. In line with the presidential directive to develop ICT capacity, the DICT and Bases Conversion and Development Authority signed an agreement with Facebook in the fourth quarter of 2017 for the Strategic Engagement and Collaboration to Undertake a Reliable and Efficient Government Internet project. This will see the construction of the Luzon Bypass, an ultra-high-speed broadband highway consisting of two cable landing stations connected by a 250-km cable network corridor. If successfully constructed, the bypass has the potential to significantly reduce costs and improve internet speeds, two factors that have long restricted the progress of the IT sector and the wider economy.

The submarine cable system is expected to be built by Facebook and come on-line by 2019, connecting Luzon directly to hubs in the US and Asia. Facebook will also provide the spectrum equivalent of at least 2 Tbps, which, by the fourth quarter of 2017, almost equalled the combined capacity of the existing telecoms duopoly.

Jupiter Project

In addition to the Luzon Bypass, a subsea cable linking Japan, the Philippines and the US is set to strengthen the national network backbone. Expected to come on-line in early 2020, the JUPITER project will be constructed by a consortium of Japan’s NTT Group and SoftBank, the Philippines’ PLDT and PCCW Global, and US companies Amazon and Facebook. Using 400 Gbps wavelength-division multiplexing technology, the high-capacity JUPITER subsea cable system will cover a length of over 14,000 km with an initial design capacity of 60 Tbps, faster than any existing cable between Japan and the US.

According to local media, PLDT is expected to invest nearly PH7bn ($138m) in the project, which will link the Asia Submarine-cable Express, the Asia-Pacific Gateway and Pacific Crossing 1 subsea cables. The grid-less configuration will use submersible reconfigurable optical add-drop multiplexer and wavelength selective switch technologies, which will provide another three-route structure linking major cities across Asia and the US.

As of April 2018 there were seven subsea cable systems connected to the Philippines, including the Asia-Pacific Cable Network, the Asia-Pacific Cable Network 2, the City-to-City system, the East Asia Crossing, the Tyco Global Network-Intra Asia cable system, Asia-America Gateway and Guam-Philippines system. To supplement these systems, there were 18 satellite providers that support the nation’s network backbone. These international firms provide very small aperture terminal services in the country. Backed by wide-ranging satellite systems such as Thuraya, Iridium, Inmarsat, Eutelsat, IPSTAR, APSTAR, these providers deliver internet access services through C, Ku, Ka and other bands.

As new subsea cables are deployed and investment and capital expenditure in the telecoms sector reaches new heights, internet provider services and average broadband speeds are expected to improve in the near to mid term. As a result, the ICT industry is well on track to witness robust growth in broadband penetration.