IDC: Despite ICT upswing, PH still bogged down by Internet woes

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Photo credit: Photo credit:[/caption] Recent rankings on broadband Internet in Asia show the Philippines at the tail end of the list ? only ahead of Afghanistan. One of the factors that is setting the country back from getting better Internet services is its archipelagic nature, the research firm noted. As the country is composed of 7,107 islands, it is more challenging for ISPs to build infrastructure and provide customers unfailing Internet connection, IDC said, adding that the country?s geographic makeup impedes the expansion of telecom networks to rural areas. ?Building of Internet infrastructure in many provinces remains a work in progress because from a telco standpoint, it can be costly and is a kind of investment that may not necessarily prove to be lucrative, considering the lower number of data users in some areas,? said Alon Anthony Rejano, associate market analyst at IDC Philippines. To reach out and bring connectivity to far-flung locations, TV white space (TVWS) is being eyed by the government as one of the solutions. TVWS is a wireless data communications standard technology that uses vacant frequencies located between broadcast TV channels to provide wireless data connectivity to remote communities in the country. The Information and Communications Technology Office (ICT Office) announced its plans to deploy the wireless data communications standard technology, and pilot tests are currently being conducted. In another move to address the country?s slow Internet, the National Telecommunications Commission (NTC) issued a memorandum last August 13, setting the minimum broadband speed at 256Kbps. The NTC also compelled service providers to disclose to the public their average data rates per location. In the commercial space, IDC said the new regulation on minimum Internet speed may affect small offices and home offices (SOHOs) but is not likely to have any significant impact on medium-sized businesses and enterprises (large and very large businesses). ?Internet subscriptions of medium-sized businesses and enterprises would typically involve a committed information rate (CIR), which already serves as the minimum speed that an ISP is compelled to provide them based on the service-level agreement (SLA) between the two parties,? it observed. ?SOHOs, on the other hand, would usually opt for consumer-targeted Internet subscriptions that do not involve CIR and SLA. Therefore, they are the ones that are most likely to be affected by the minimum Internet speed,? IDC said. The analyst firm said that while there are some who argue that a minimum speed of 256Kbps is still too low, IDC said this is already a ?good move? toward effecting change in the country?s telecommunications industry. ?Setting a new minimum Internet speed is a step toward the right direction as it provides users a safety net. In an instance that ISPs fail to provide the minimum speed of 256Kbps 80% of the time, they can now be held liable as sanctions can be imposed on them by the state,? said Jerome Dominguez, market analyst at IDC Philippines. One of the most expensive in the world Another concern raised by the recent Ookla rankings is the Internet cost, in which the Philippines ranked as one of the most expensive in the region, averaging at $18 (P840)/Mbps compared with the worldwide average of only $5 (P230)/Mbps. While the high cost of the Internet in the country may be hurting consumers? pockets, on the commercial side, IDC said that this may have minimal impact on potential foreign investors. ?For foreign investors looking to set up businesses in the country, the cost of Internet services can be a factor to consider, although they are unlikely to decide against investing in the country just because of it, unless the company?s core business would run on the Internet,? said Karen Rondon-Garcia, research manager for IDC Asia-Pacific. ?Other factors such as manpower availability, labor cost, infrastructure cost, government regulations, political stability, security, and cost of raw materials (for manufacturing firms) would usually still take precedence over the cost of Internet in an investment decision,? Rondon-Garcia added. For Internet-dependent companies, the role of Internet is to enable business growth for business automation as a competitive tool, IDC stressed. ?This is important to provide quality customer experience and have a competitive edge in innovation. However, if the connection is slow and unsteady, it may mean loss of productivity and money for the enterprise,? it said. IDC said since the Internet is a key factor in a progressive economy, it is important for the government to study closely the existing laws and regulations. ?Right now, the government is addressing Internet- or infrastructure-related issues in silos, but it should focus on the entire picture as far as addressing the Internet situation in the country is concerned,? it said. The efforts of the government, with the help of the private sector, in championing the country’s campaign to improve availability, quality, and affordability of Internet services would be the key, IDC said. ?This includes finally putting in place a comprehensive national broadband program that would not only interconnect government agencies but more importantly prove the government’s commitment to an improved connectivity in the country,? it emphasized. IDC said one of the main reasons the cost of Internet in the Philippines is more expensive is because the country has only two major players. ?The lack of competition is keeping the prices high. A market disruption would typically help resolve the issue. Such could come in the form of additional players to stir competition and help drive prices down and improve the services,? it said. ?The market could also be disrupted by intense competition between the two main players, such as when one introduces a new service or product strategy that could be a game changer.?]]>

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