DEMAND AND SUPPLY By Boo Chanco
The Philippine Star 04/13/2007
Last week, the NEDA Board approved a multi-billion peso project to set up the National Broadband Network (NBN) project sponsored by DOTC. This project supposedly aims to create seamless connectivity among all national government agencies down to the barangay offices of the local government units (LGUs) to enhance delivery of government services.
The project is supposed to cost P16.47 billion and financed through an Official Development Assistance (ODA) loan from China. The project is being justified by citing expected cost savings generated from the operations and maintenance of old government communications network, on communication expenses due to Voice-over Internet Protocol (VoIP), on internet connection, and from avoided travel.
Coincidentally, at about the same time, DOTC rejected an unsolicited project proposal (not a B-O-T proposal as earlier reported in media) for a broadband backbone from a company called Amsterdam Holdings Inc. with funding also from an ODA loan from China. The rejection was based on the proponents’ supposed failure to meet the basic requirements set down by government, like proof of track record in the expertise required and demonstrated financial capacity to execute the project.
There is no argument that government needs a reliable broadband backbone as a necessary first step towards e-governance. The question is, should government spend scarce capex resources in putting up its own broadband backbone infrastructure or should it rely on the private sector to make the fairly large investments necessary and just buy capacity as needed?
I think government is better off leaving the heavy investments in telecoms infrastructure to the private sector. But this does not mean they shouldn’t have rejected the unsolicited proposal from Amsterdam Holdings, whoever they are. The reasons for rejection are valid and besides, we do not need the new government-owned backbone being proposed. There should be enough excess capacity in existing private sector backbones of PLDT-Smart, Telicphil-Bayantel and Globe-Innove. Or the private sector can build the additional capacities government needs.
For another reason, government already has an extensive broadband backbone under National Transmission Company (NTC) and it is just a question of coordination on how to maximize the investments NTC has already made in its Broadband backbone. The excuse for not using Transco’s facilities, I understand, is that it will be privatized including its Broadband network. But it shouldn’t be that much of a problem because Transco should have excess capacity in its network and the private concessionaire should welcome ready users and a steady stream of income.
As if that’s not enough, I also found out that there is another NEDA-approved government Broadband network, the Cyber Education Project, which will cost us around P24.6 billion. It will be using satellite-based technology and solely for the use of around 23,549 Philippine public elementary and secondary schools. I understand too that there were attempts to integrate these proposed info infra assets into the design of an "integrated single platform broadband network for Government and Education" which was to be called the "National Broadband Network" project.
Unfortunately, the effort failed. Officially, the effort is still on, under the leadership of the Department of Science and Technology (DOST) specifically the Advanced Science and Technology Institute (or ASTI-DOST), but is going nowhere fast. It is dead, for all intents and purposes. Government bureaucrats want control and so it is not surprising DOTC and DepEd want a network under their particular control, even if it does not make sense, capex wise. There is also this matter of dealing with infra contractors. Bureaucrats fight for that.
This DOTC project reminds me of the scandal surrounding an earlier DOTC project called Telepono sa Barangay. As it happened, it was overtaken by technology and the market. There is no way that DOTC Telephono sa Barangay project could have been better than cell phones provided by Smart and Globe. Of course, we all know there were other motives on the part of the bureaucrats who wanted that project, and public benefit isn’t one of those.
This brings me to the other advantage of just leaving this Broadband infrastructure to the private sector: technological obsolescence. Telecoms technology gets obsolete at a rather fast pace and government runs the risk of having to maintain equipment that should be in museums. In fact, that’s their problem now with the old Telecoms Office (TelOf) and one of the reasons cited by DOTC and NEDA for wanting to implement this Chinese government funded project.
The NEDA press release talks of "cost savings will be generated from the operations and maintenance of old government communications network." It also talks of wanting to avail of modern technology like Voice-over-Internet-Protocol or VOIP and the Internet. They have all those old equipment in the TelOf. Previously known as the Bureau of Telecoms or Butel, which handled telegraphs and telegraphic transfers of money, TelOf is a unit that has outlived its usefulness with today’s technology. It should have been closed down years ago but there’s no political will to do what’s necessary.
The other problem with government owning the Broadband infrastructure is that it would not be able to maintain these properly, given budget constraints. Neither can they compete for trained techie staff needed to run sophisticated high tech equipment with government pay scales. Then there is the problem with what to do with old staff, now all useless in the face of new technology and are probably no longer trainable in the new ones but are protected by civil service law.
I am disappointed with the NEDA Board for failing to think these projects of DOTC and DepEd a little more carefully. NEDA is supposed to coordinate capex proposals of various government agencies so that we allocate our scarce resources well. It is supposed to look at the total picture, see what every agency is doing and make sure no two agencies invest in separate but similar infrastructure they can share. Apparently, NEDA’s board got hit by the Holy Week vacation bug early and just approved the Broadband proposals without much thought.
As far as I can see, the private telcos are more than adequate in providing the Broadband requirements of government. Government must simply tell the private telcos what its capacity requirements are and let the private sector companies make the investments, run the infrastructure and worry about obsolescence and staffing. The private telcos may even appreciate the government business, specially because growth in the cell phone market is peaking. Besides, government is supposed to have a policy of outsourcing such ICT-intensive projects.
Government definitely needs to have access to a nationwide Broadband network for better governance across the board of government services, including in the area of peace and order. But it must be done rationally, with the best interest of the taxpayers in mind. That’s really NEDA’s job and it miserably failed on this one. The P16.47 billion can obviously be better spent, for example, in improving mass transit, also a DOTC responsibility. As for DepEd, is the P24.6 billion to be spent putting up a Broadband network a better use of money than say, for adequate schoolhouses, enough textbooks and better training for teachers?
I doubt if government can productively use all these expensive infra right away or would even know what to do with them. Government is better off getting its feet wet in ICT first by buying capacity from the private sector in small chunks at a time.
It is a question of having the right priorities, given our limited resources.
| Brains |
Gilbert Jose sent this one.
A three-year-old boy examined his testicles while taking a bath. "Mom," he asked, "Are these my brains?"
"Not yet," she replied.
Boo Chanco ‘s e-mail address is bchanco@gmail.com
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