Philippines Online (Part 2 of 2)

The previous article explored how the Internet can benefit Filipino entrepreneurs by providing business information, networking, and wiki–style solutioning – on problems and financing. But making this available to Filipino Entrepreneurs requires increasing Philippine Internet penetration.

Deeper Penetration

Currently at 15% (much lower than Japan’s 73.8%, Malaysia’s 59%, and Vietnam’s 23%), Internet penetration must be increased, that its capability to boost Filipino entrepreneurial productivity be spread out. It would also foster an investor-friendly environment.

The Administration recognized this, which was among the primary reasons for considering a national broadband network with ZTE, one of the world’s largest service, equipment, and componentry providers, serving over 120 countries. Many branded telecommunications equipment – from routers to cellphones – contain ZTE componentry. It’s good enough for them; why isn’t it good enough for us?

On a government-to-government basis, Chinese Official Development Assistance (ODA) financing –10 years grace, 30 years to pay – interest costs would have been as low as 3%. On Build-Operate-Transfer (BOT), as purported by neo-oppositionists, the cost of money would have been at minimum, 12%. I know because I was deeply involved in the BOT (1989) law’s crafting at the then Congressional Economic Planning Staff (CEPS) office, precursor of today’s Congressional Planning and Budget Office’s (CBPO). We modified Turkey’s BOT law, converting a public sector initiative to private sector-led, at quadruple LIBOR rates to entice investors, or put the Philippines on the map.

Initially costing $330 million, the socioeconomic returns would have easily recouped this. Establishing the infrastructure alone would have created countless jobs, nationwide. Virtual, standardized education throughout the archipelago would have become enabled. Voice Over Internet Protocol (VOIP) would have delivered free long distance and virtual conferencing, enabling faster information and transaction flow.

Borne Free

Increased penetration requires making Internet accessible to the broadest market possible – for free. The model exists in Taipans John Gokongwei and Henry Sy’s malls offering free WiFi; as with some schools – like DLSU.

Singapore’s Wireless@SG program, powered by three service providers, delivers free, citywide, 512 kbps-speed WiFi access. Davao City, following Singapore’s example, last year worked to enable citywide WiFi.

So what justifies Telecom giants’ Php900 monthly, minimum for allegedly “fast,” often intermittent, broadband?

Free WiFi only attracts more business, whether retail (as mallgoers work their laptops in Starbucks) or corporate (as international investors teleconference in downtown Davao).
Fear and Loathing in Cybersapce

60% Philippines cellphone penetration (early 2008) potentially indicates that 6 in 10 Filipinos can access the Internet. Two problems limit this. First is properly-configured phones that connect to non-proprietary (free or lower cost) services; including mandatory user training.

Second is the Telecom giants’ chokehold pricing exorbitantly positioned as premium services. One currently charges Php0.15 per downloaded kilobyte. Seemingly meager, consider that a two-page, 40kb document costs Php6.00, unprinted. Promo pricing offers Php5.00 for 15 minutes, deducted automatically, maximized or not.

Rather than lower charges, and therefore spur business use, its pricing impedes usage. Incidentally, this is over the Php500-Php10,000 basic monthly charge! Don’t tell me that Php0.15/kb will defray costs of adjunct services integral to 3G technology. That’s as ridiculous as Php1.00 texts which, years ago, were free.

The Internet can dismantle oligopolies by spurring competition, manifested as new, effectively-priced technology. Consider Skype, which eliminates cellular or long distance costs.

Local telecommunications oligopolies must lower – or eliminate – certain charges, not because they can, but because they must. The Internet is a powerful business growth tool. As businesses grow, enabled by the Internet and accessed through their phones or computers, inevitably, so will the giants.

…and Internet for all…

If Filipinos cannot come to the Internet, then the Internet must go to Filipinos. For example, a program called Government Logistics Offering Rolling Internet Access can deploy high-speed Internet vans rurally, for free usage. By day they function as classrooms, broadcasting virtual educational programs, administered by local teachers. By night, with webcams, they put relatives in touch with Filipino Expats abroad, visually and aurally, for free; certainly better than what Telecom Companies currently offer.

TESDA programs could train entrepreneurs to use the Internet for business, like online advertising, selling through e-commerce; or finding cheaper suppliers offering product prices without the marketing costs that multinationals pass on.

It could spur local entrepreneurs’ development of coffee shops (“Star Baracks”?) in our 1,495 municipalities, with free WiFi, using second-hand computers.

Internet education in the school curriculum is a step forward. The Administration is already increasing Mindanao public schools’ Internet literacy and access, supporting programs like USAID’s Computer Literacy and Internet Connection (CLIC) Project (together with Microsoft, Intel, and IBM). This has provided over 700 schools Internet connections, computer hardware, and teacher training in Mindanao; Internet connections resultantly increased last year from 3,993 to 26,877.

Opening the Internet’s power and potential to Filipino entrepreneurial ventures will speed its integration with 21st century globalization.

More in the next article.

Reactions? Email entreprenomics@gmail.com