Third World telecom, first world charges!

WE support the efforts of the Philippine government, specifically the National Telecommunication Commission (NTC), to make the country’s telecommunications industry competitive and efficient.

That policy environment is long overdue. Had we established an open and competitive policy environment for the telecommunications sector—nay, for the entire services sector— a decade or two ago, this country could have been growing as fast as India and China by now. We have missed a beat in the ongoing Information Revolution but it’s not yet too late to catch up. The government may not have the money to “upgrade” this country into the 21st century, but it could certainly do so by ensuring a competitive environment through several measures including disincentives to predatory practices and abuses. And why not go all the way by opening everything 100 percent to foreign direct investments?

The Philippine economy, and the entire Filipino nation for that matter, is better off in a more competitive policy environment for all economic sectors, not just telecommunications. Such a policy environment assures easy entry and exit, and therefore would allow more innovative players to emerge, thus offering better and cheaper value-added services that will benefit the entire economy. Open competition ensures the economic diversity that this country needs to grow and mature as well as withstand potential shocks from an increasingly globalizing world. Besides, open competition and greater economic diversity benefits all Filipinos in terms of choices. Right now, many Filipinos go abroad the moment they have the opportunity to do so because they feel powerless vis-à-vis factors like lack of career choices, lack of clear direction for the economy, and the utter inefficiencies of structures and institutions affecting their lives that could be linked to the country’s economically restrictive policies.

Right now, the Philippines is considered the “texting capital of the world.” But that’s an ironic reputation since the Philippines right now has among the highest or the most expensive telecommunications charges in the Asia-Pacific Region. According to the latest study by the Asian Institute of Management (AIM), overseas calls to the United States now cost US$0.90 for every three minutes—yes, that’s P45 pesos per three minutes—against $0.48 in India and $0.71 in Malaysia, our closest competitors in the outsourcing business. To call the US, the Canadians ($0.48 per 3 minutes), the Irish ($.59 per three minutes), and the British ($.65 per three minutes) are charged even lower rates than us Filipinos who are dirt poor! It’s these skyrocketing telecommunications charges that are forcing us to do the finger-breaking task of encoding letters into those tiny keypads one by one so we could send important messages to our loved ones.

In this country, however, companies are making money from the sale of cellular-phone units alone, the cheapest of which could cost nearly $200. In India, the typical cellular phone handset would cost as much as US$60. In other countries like the United States, telecom companies would even give away cellular phones for free if only to get subscription. Telecommunications companies would move heaven and earth just to please their clients.

This is now the 21st century, where wealth is created through innovation as well as the creation of knowledge. Access to information, specifically the Internet, is vital to progress and development. But what we have in this country right now is the deepening of the digital divide, where the rich who are few are getting the best of the digital world while the poor could not even think beyond three square meals a day. Again, that’s because of the uncompetitive situation in this industry. Right now, according to the AIM, Filipinos also bear the highest Internet charges in the region. On a monthly basis, Filipinos pay about US$17.05 for Internet services as against $8.74 a month for Indians, $8.42 a month for the Malaysians, $10 for the Chinese, $12.71 for Canadians, and $14.95 for Americans.

For a very poor country with just over a thousand dollars of per capita income, Filipinos are paying telecom and Internet charges way above what is being paid by citizens in the First World countries, who enjoy per capita incomes ranging from 10 thousand to 30 thousand dollars! And most of us don’t even enjoy the benefits of real broadband that most of these neighboring countries have. Why should Filipinos continue to put up with these, when they certainly deserve better?

Many of us still wonder why we can’t seem to catch up with our neighbors in the Asia-Pacific Region. The major reasons for this continuing underdevelopment lie with these realities. Not only do we have the most expensive electricity, we also have the most expensive telecommunications and Internet services, thus ranking us among the most expensive places to do business.

Right now, we still attract lots of investments in cyberservices. But that’s because skilled labor here is dirt cheap. So are the prices of real- estate. But once the supply of skilled professionals and technical people tightens, wages will rise. So will real-estate prices, especially now that occupancy rates in major urban centers are approaching 100 percent. That will push up business cost in the Philippines higher than places like India, Malaysia and Vietnam. That in turn will turn away cyberindustries from the Philippines. Our skilled professionals and technical people will probably follow them through global migration should that happen. That will be the tragedy of us all.

The choices therefore are clear: reform and be competitive—or perish.