Want faster Internet? Break the ISP industry monopoly!
Senator Bam Aquino made headlines two weeks ago week when he demanded an investigation on why the Philippines earned the dubious distinction of having the slowest Internet connection in the entire Southeast Asia.
“There are constant complaints about the Internet service providers’ (ISPs) failure to deliver on its promised connection speed, which usually leads to slow Internet link,” Aquino said.
The first-term senator is reacting to an infographic released in the Facebook page of ASEAN DNA which showed that the average Internet speed in the Philippines is only 3.6 megabits per second (mbps).
Among the countries it trails are Vietnam (13.1 mbps), Cambodia (5.7 mbps), and Myanmar (4.9 mbps). The average Internet speed in the region is 12.4 mbps while the global mean is at 17.5 mbps.
As GMA News rightly pointed out in their report, this is not supposed to surprise anyone.
In 2012, international Internet giant Google came out with a study which revealed that the Philippines have the 2nd slowest desktop Internet connection among the 50 countries that it surveyed. Read a report by Bloomberg.com’s Olga Kharif about it here.
If Aquino, a first cousin of President Benigno Aquino III, is serious about probing this shameful situation, he should look into the root cause of the problem.
In the first place, there are only a handful of ISPs in the country. According to Wikipedia, these are the major players in the industry:
*Eastern Telecoms (San Miguel)
*Globe Telecoms (Ayala)
A closer look at these companies will reveal just how monopolized the Internet service industry is in the Philippines. For example, business mogul Manny V. Pangilinan’s conglomerate controls in one way or another three ISPs: Smart Communications, Sun Cellular, and PLDT.
Meanwhile, Lopez Group of Companies operates Sky Internet and Bayan Communications. San Miguel Corporation, on the other hand, partly owns Wi Tribe and Eastern Telecoms.
Lastly, Globe Telecoms is affiliated with the Ayala Group while ComClark, currently led by its president Dennis Anthony Uy, hasn’t really established a strong presence outside Central Luzon.
So to recap, three business conglomerates control seven of the country’s nine major ISPs. How on earth did this very disadvantageous system (for consumers, at least) flourish?
Take a look at the country’s 1987 Constitution, one of the so-called legacies of Senator Bam’s grandma, the late former President Corazon Aquino. According to Article XII, sections 10 and 11 of the 1987 Charter, Filipinos should have not lower than 60% control of all public utility firms in the country.
Take note that Article XVI, section 11 of the Constitution mandates that all mass media entities has to be 100% Filipino owned.
Against this backdrop, it is now easy to see why Internet service in the country sucks. When you only have a few competitors in the market, you don’t have any incentive to make your product excellent.
And given that establishing a presence in the Philippines’ IS industry requires massive capital, it is perhaps understandable why there are just a handful of players in the market. In the end, it is the consumers who are at the losing end.
The present monopoly can only be broken if the protectionist provisions in the 1987 Constitution gets amended. In doing so, the country stands to get bigger foreign direct investments, especially in the industry of information and communication technology.
In the face of competition from foreign ISPs, local players like Bayan Communication and PLDT DSL will have no other option but to improve their service – lest they lose their customers.
This is exactly how free markets are supposed to go. And when the quality of the Internet service improves, the public will finally get their money’s worth. No wonder every initiative to amend the Constitution is met with stiff resistance from the ruling economic and political elite in the country.
Unless Bam Aquino is willing to discuss the real root cause of the problem he is so concerned about, his proposed Senate investigation will just be another waste of taxpayers’ money.