(Continued from March 19, 2021)
I THINK that many of us will still remember that during the early days of the internet in the Philippines, there were many companies that operated as Internet Service Providers (ISPs). In a manner of speaking, it could be said that these ISPs were Value Added Services (VAS) providers, and they made their money by adding value to the bandwidth that they bought from the Value Added Networks (VAN) service providers.
It could be said that during those days, there was equilibrium between the big companies that owned the VANs, and the small companies that owned the ISPs, among other types VAS providers. As we know it now however, the smaller ISPs are now gone, and only the big companies remain, as they control the entire VAN-VAS infrastructure.
There is actually an upside in allowing private companies to own public infrastructure, because they are actually more efficient in doing that, as we have seen how the private tollways are better maintained compared to the public highways.
There is a downside to that however, because private companies would tend to limit their investments to the extent that they could recover their money as early as possible, at the least possible expense of course. We could not really blame them for doing that, because that is the way business survives. Although it may be a farfetched notion at this point, the better compromise perhaps is for the government to build and own the entire VAN infrastructure, doing so in the public interest, without any profit motivations.
Although the private companies might initially balk at the idea of losing ownership and control over the entire VAN infrastructure, they will eventually wake up to the reality that the idea is good for them in the long run, because they do not have to invest too much money to stay in business.
Sooner or later, they will also realize that they could make more money by investing more to become better VAS providers, and as they do that, they could start by improving their businesses as ISPs, thus making internet speeds faster and bringing internet costs lower. Common sense would tell us that as internet speeds become faster and as internet costs become lower, more people would use it, thus improving the economies of scale.
Although the government can be strict in enforcing the rule of VAN ownership, nothing would also prevent it from going into Build-Operate-Transfer (BOT) agreements with the private companies, so that the latter could build, operate and eventually transfer ownership to the former, after a certain period.
If the government would allow the BOT scheme in the case of VAN infrastructure however, the same rule should apply, that the VAN project owners should not go into the VAS business, declaring that legally as a conflict of interest. The government should also see to it that the tariff charges should be adjusted as the market forces change, so that the investors would not lose their money and become discouraged.
As we also know it, internet connectivity via satellite is always available as an alternative to submarine cable based connectivity. We should now explore this alternative more seriously, more so now that satellite connectivity from the sky could now be supplemented by unmanned drones and air balloons.
As I know it, the download side of satellite connectivity is already reliable, but there could still be problems with the upload side. To be consistent with my earlier recommendation, the government should now be the one to invest in these drones and balloons, and also it should be the one to find solutions for the upload problems.
Also for a long time now, I have also been saying that we need to have a National Internet Exchange (NIX) in the Philippines, a facility that should also host our National Cache Database (NCD). The problem with this is that on their own, the private companies would not want to meet at a single point, fearing perhaps that doing so would weaken their competitiveness against each other.
While one of them would end up victorious in this de facto detente, the ultimate losers are really the internet consumers who have to wait longer as their emails and cookies have to go halfway around the world, a practice that also makes internet speeds slower and internet costs higher./PN
