1he Race for the Last Mile

A broadband special report

By Heinz Bulos
January and Iebruary 2002

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tvvcb. .fter tbe bovrtovg riaeocov grov veetivg,
ae.erre a brea/! vv, va,be `a ;v.t aro b,
tbe office vet ree/. cav atra,. acce.. v, fite.
frov tbe office vetror/ av,ra,. e.iae., barat,
av,ove`. at tbe office voraaa,.. 1ive to beaa off
to tarbvc/. ava ror/ ov v, .tor,. .va
aorvtoaa vore MP fite. ov v, tabtet PC rbite
`v at it. ec/, rb, vot catt it a aa, ava evgage
Dvitri frov Mo.cor iv avotber eic battte.

1his, in case your eyes just glazed oer, is
a ictional web log entry ,diaries are .o
twentieth century, set at the end o 2005.
I it sounds both aguely amiliar and
disorienting, it`s because this is what we`e
been promised...and not been getting.

I all the media hype, press releases, and
marketing brochures are to be belieed,
we should be, by this time or at least in
the next couple o years, suring the \eb
200 times aster, downloading ull-length
moies on demand, and accessing the
oice VPN rom home or on the road.

1he reality is, majority o us who are
connected to the Internet still do so ia
our 28.8 or 56kbps dial-up modems. And
those who`e upgraded to cable Internet
or DSL are bitching about it eery single
day.

Instead o broadband utopia, we get
nightmarish news and horror stories like
Seered broadband customers cry oul`
rom PC \orld.com, Broadband a long
haul in Asia Paciic` rom Gartner Group,
Cable net`s demise raises new worries`
rom Network \orld, Businesses ight
bandwidth blues` rom PC Adisor, and
Lxecuties conront broadband`s harsh
reality` rom Computerworld.

Messages posted on discussion boards and
mailing lists are more brutal: IMO, I
don't get my money's worth with it`,
there should be a law punishing
businesses or not deliering what they
promise to gie`, and somebody should
sue these people or alse adertising`.
And it only gets worse.

Is it not surprising then current statistics
are not too encouraging \orldwide, the
number o Internet users with broadband
access was 11 million in 2000, or around
2.6 o all Internet users. According to
Jupiter Media Metrix, in the U.S., around
5.2 million out o 5 million online
households, or just 9, had broadband
access in 2000. 1he \ankee Group earlier
projected that 10 million U.S. homes
ought to hae DSL connections by now,
but only 2 million hae so ar. At the end
o 2001, 5 o U.S. homes will hae
broadband access aailable to them. \et
only 4 to o U.S. households actually
sign up or the serice.

\hat`s wrong with this picture
Obiously, the igures are lower than
expected. 1here are two possible reasons
or this. One, Internet users are waiting by
choice. 1wo, Internet users are waiting
becav.e there`s no choice.

1here`s no doubt Internet users want
broadband access. Seen years or so o
ranting about dial-up speeds make it high
time or an upgrade. But early adopters
hae not been oerwhelmingly ecstatic
about the broadband serice they`e been
1
getting. Actual speed is much slower than
adertised, downtime occurs more
requently than expected, it`s not always
an always-on Internet, technical support
sucks, and the cost does not justiy the
perormance. Add to that the
uncertainties brought about by the recent
closure o major broadband proiders in
the U.S. such as Coad, Northpoint,
Lnron, and Lxcitelome, which could
just as well happen here. Does that reak
you out or what

On the lip side o the coin, een those
who want their cable or DSL hae to
wait...and wait. 1he act is, broadband
access is aailable only at selected areas,
typically high-end residential and business
districts. 1hose who do hae cable 1V
oten hae to wait or the pipes to be
upgraded to two-way transmission or
Internet use. Same thing or the telephone
copper wires or DSL to work.

1his is the situation in most countries,
including the Philippines. According to
IDC Philippines, only 9 thousand out o
some 1.5 million lilipino Internet users
had broadband access in 2000, or 0.6 o
the Internet population, a >3 million
business. Pyramid Research placed it at
.2 thousand in 2000 and about 15
thousand in 2001. \e compare to
Malaysia, Indonesia, 1hailand, and India
and are ery poorly is-a-is long Kong,
Singapore, and South Korea. Asia-Paciic
itsel has 6.1 million broadband
subscribers in 2000 out o the 8 million
total Internet subscribers, according to
Dataquest. Our share is a measly 0.1.
\orldwide, there were around 11.3
million broadband subscribers in 2000
and about 28 million in 2001. Our share
About 0.08 in 2000 and 0.05 in 2001.

History of Broadband

o hae a better perspectie on the
broadband industry, it`s important
to look at a short history o
broadband and how it eoled.

lor all the hype o broadband being the
next big thing, the truth is the technology
has been around or some time. ISDN,
rame relay, and leased lines hae sered
corporate clients or years. Len DSL
technology has been deeloped years
beore but was neer deployed until
recently.

Keep in mind howeer that in most
countries, telecommunications irms are
either a state-owned entity or a priate
monopoly. By that irtue alone, there`s
little incentie to innoate. Just recall the
decades beore the early nineties when
you had to wait or years to get a phone
line, een one with a party line.

But two major orces conerged in the
mid-nineties that brought to lie
broadband technology: the exponential
growth o the Internet and the
deregulation o the telecoms industry.

I the Internet did not become such a
worldwide phenomenon, pushing demand
or aster access and more compelling
multimedia content, the inrastructure or
oice and text-based data would hae
suiced. But the \eb changed all that.
Much o the demand, o course, is
manuactured by peddlers o online
multimedia content, and by the hardware
and access suppliers that support them,
but there i. a serious and real market need
or speed and more compelling Internet
applications.

Deregulation also played a crucial role in
the deelopment o the broadband
industry. In the U.S., it was the
1elecommunications Act in 1996. In the
Philippines, it was the
1
1elecommunications Act in 1995,
although the orces o deregulation started
as early as 198. Imagine i PLD1 was still
the sole proider o telecommunications
in the country. Broadband serices would
hae been rolled out much slower, i at all.
Oerpriced ISDN and 11 lines would
neer reach the Internet masses. And
prices would hae been sky-high.

\hile the local state o the telecoms
industry is ar rom ideal, the act is that
the deregulation o the industry by the
Ramos administration undoubtedly made
this sector one o the high-growth areas o
our economy.

Clearly, it has spawned a number o new
players. 1he telecoms industry`s hierarchy
starts with the carriers, then the alue-
added serice ,VAS, proiders, which
includes the Internet Serice Proiders
,ISPs,. Currently, there are 11 carriers,
including PLD1, Globe, Smart, Lxtelcom,
and Bell 1elecom. 1here are numerous
VAS, with about 200 ISPs, such as
Moscom, Paciic Internet, Inter.net,
Inocom, and Virtual Asia.

1hen there are the cable 1V ,CA1V,
operators, namely Skycable,lome Cable
and Destiny, with dozens o local
operators across the country. Plus direct-
to-home satellite systems such as
Philippine Multimedia Systems.

1here must be a good reason or this rush
o players. Unlike dot-coms, e-commerce
sites, and \eb deelopers, the barriers to
entry or telcos and CA1V operators are
much, much higher.

Getting a license to operate is in itsel a
huge hurdle to oercome. 1ake the case
o Bell 1elecoms, which took years beore
being inally granted a license to operate.

1hen, there`s the capital needed to
operate. Setting a communications
inrastructure is not or amateurs. 1he
Board o Inestments ,BoI, reported that
telecommunications irms contributed
88 o the total inormation and
communications technology ,IC1,-related
inestments or the irst eigth months o
2001. Globe poured in about P40 billion,
Smart around P18 billion, Digital more
than P8 billion, Meridian 1elekom with
P16 million, Mabuhay about P11 billion,
the list goes on.
All these regulatory and inancial obstacles
or what 88 thousand broadband Internet
subscribers by 2005, that is. 1hat`s a ten-
old increase rom 2000 numbers. 1hat`s
still a pittance compared to the global
estimate o 223 vittiov. Large enough pie
or a dozen proiders One client with
multiple users means high bandwidth
requirements and thereore premium
prices. A ten-old increase in reenues by
2005 translates to more than hal a billion
peso pie ,assuming same rates, zero
inlation, and lat exchange rates, to make
things simple,.
Some endors are much more optimistic,
projecting millions o subscribers and a
hundred billion peso industry by 2005. In
any case, or broadband in the country,
it`s quality, not quantity that matters.
Obiously, majority o the population is
not the target market or broadband
access. 1he real target market segments
are upper middle and upper residential
customers, corporate clients, SMLs,
educational institutions, and goernment
oices. 1isha Gay Corros, Customer
Serice Manager o Mosaic
Communications, the country`s largest
ISP, says most business clients will moe
to broadband Internet in the next ie
years. Only residential users would
continue to use dial-up access regularly.`

Problems with Broadband

he picture indeed seems rosy. But
why did only 0.6 to 0.5 percent o
current Internet users upgraded to
broadband lere`s a check list o
problems:

High price. It`s just expensie. lor end
consumers, a DSL or cable Internet
connection means, in the case o PLD1
myDSL, P2,000 to P2,500 a month, plus a
P1,500 setup ee. Some cable companies
throw in ree cable 1V, which is not a bad
deal, but still prohibitie or most lilipino
households. ZPDee oers packages
ranging rom P1,00 to P10,000,
depending on megabytes downloaded.
Destiny oers P1,980 plus modem rental
plus setup ee or unlimited use. 1rue, or
heay users who can aord it, a
broadband connection at the lower range
o these prices is justiiable, considering
that the aerage rates or unlimited
broadband compare with 150 hours o
dial-up access, neer mind i actual speed
is slightly better and not a hundred or so
times aster as adertised. But or middle-
class households, it`s a burden.

lor businesses, while broadband has
generally become more aordable and the
options hae increased, or majority o
SMLs, especially those that do not ind a
pressing need or Internet access, the cost
is still prohibitie. Globe is selling its DSL
serice or >1,250 or instance. Digitel
oers packages rom P8,500 to P40,000,
depending on bandwidth.

Costly bandwidth. Prices or broadband
serices are high mainly because the
supply itsel is expensie. An L1 line to
the U.S. costs around >10-20,000 a
month, a two-way iber DS3 costs
>200,000 a month.

Insufficient local content. 1he need or
more international bandwidth stems rom
the outside Internet traic demanded by
the local market, which accesses \eb sites
hosted abroad, including many prominent
local sites. 1his makes us dependent on
IPLs ,international priate leased lines,,
which are ery costly. According to a
Businessworld report, international
bandwidth...is said to account or as much
as 50 o the Internet serice proider's
operating cost. Analysts estimate that
more than 90 o \eb traic in the
Philippines goes out to the United States.`
1he case is dierent in South Korea or
instance, where Koreans access mostly
local content, so the traic is mainly
within the country, which itsel has an
excellent inrastructure.
Spotty serviced areas. Another problem
is that broadband access is made aailable
in ery select areas, i.e. the main business
districts like Makati and Ortigas, and
major cities such as Cebu and Daao. lor
residents, it starts with the upper-class
subdiisions and moes gradually to
upper-middle. So een those who want it
and can aord it but are not located in
these selected districts need to wait much
longer or the access proiders to roll out
their serices in their areas. It could be
that the copper or cable wires are not
ready or DSL or two-way transmission,
or the central oice is not equipped or it.
Perhaps the place is outside the assigned
or the local exchange carrier or in the
outskirts o the central business district or
metropolitan area. lor DSL or cable, it
will take a while. lixed wireless and
satellite broadband access are not limited
by wires and thereore can best be
proided in such cases, the pricier
packages being the primary obstacle or
adoption.

1
Limited subscribers. On the other hand,
another reason or the limited aailability
is the limited demand in certain areas. It
could also be that the access proider,
particularly o DSL and cable, does not
ind suicient demand within a particular
location or broadband serices.

Another reason is the low PC penetration
rate. Miguel Paraz, VP or 1echnology o
Inter.net, says, PC manuacturers want to
keep the same price points and proit
margins, and I think that's the biggest
hurdle in growing Internet users.` 1he
lack o demand may then be because the
household does not hae a PC, i not a
plain lack o interest or the Internet.

Slow connections. A major complaint
among broadband subscribers is that the
actual speed is much lower than what has
been adertised. Bandwidth quality
depends on a lot o actors.

One is the last mile technology used -
cable, DSL, iber optic, wireless, satellite.
1he last mile reers to the inal line to end
users. Lach o these technologies has its
own speed capacity. Download and
upload speed may also dier. 1hen, as in
the case o cable, bandwidth may be
shared, not dedicated, thus reducing speed
as more subscribers sign up. Second is the
international connection o the access
proider. 1he more the number o and
the more redundant the connections and
the higher the total bandwidth o its
international gateway help speed up the
end user Internet experience. low the
serice proider proisions bandwidth to
its subscribers also is a actor. 1hen, there
is the act that the Internet is simply a
network o networks. 1he \eb site being
accessed may be diicult to access, or
one. 1here are just so many things to
consider. Just as dial-up connections
cannot reach their maximum capacity, so
does broadband access. Perhaps, the
carriers and access proiders are simply to
blame or the alse promises and high
expectations set by their incredible ads.

Poor service. 1o add insult to injury,
serice and technical support leae much
to be desired. It`s not uncommon to ind
mailing lists and discussion boards
dedicated to dissing a particular
broadband endor, such as PLD1, Globe,
and Destiny. 1he latter in act has
inspired` a couple o parody sites.
Complaints about serice range rom a
lack o response and lack o
knowledgeable personnel to rude tech
support and ery slow rollout. I it`s any
consolation to the access proiders,
they`re not alone. It`s the same case in
countries like the U.S. 1his is not
surprising or new technology rollouts.
Just remember how eery text maniac was
cursing Globe or poor serice. Now, all is
,almost, orgotten. And to the proiders`
credit, they do take action once the
complaints snowball, by adding to their
capacity, improing their network, training
their people, and oering rebates.

Dominance of PLD1. 1hen there`s still
the long shadow o PLD1. 1he 800-
pound gorilla has its hands on almost all
broadband technologies - ISDN, leased
lines, iber optic, DSL, cable, and satellite.
It bought ISP Inocom as well as cable
1V operator lome Cable and had it
merged with SkyCable, owns satellite
proider Mabuhay Satellite, and operates
PLD1 myDSL.

1he latter`s introduction elicited an uproar
among narrowband ISPs, which
complained that PLD1 oered 256kbps
DSL or only P2,000 a month compared
to the approximately P50,000 a month
charged by ISPs or 64kbps. Some hae
accused the behemoth o undercutting its
competitors to kill o the small ISPs.

Broadband in general is expected to
cannibalize dial-up eentually as
aailability widens and charges decrease.
Says Paraz, I think dialup will die in areas
where broadband is aordable, but only i
broadband goes down to the less than
P1,000 price point. Right now, only power
users and businesses can justiy the more
than P2,000 pricing o broadband. 1o be
competitie, I think non-telco ISP's need
to work on non-access products and
serices such as consulting and thinking
o the next new thing.`

le adds, I think the new players are
innoating but the incumbents are
catching up
in serice oering or een looking into
buying into new technology. 1echnically,
the incumbents are at an adantage since
they already hae some inrastructure
aailable.`

Competing access proiders seem not to
be anxious. Corros says ISPs like Moscom
can remain competitie by proiding
good customer serice which telcos are
ery poor in ,and proide, content and
alue-added serices.`

Jonathan Lee, Marketing Manager o
Meridian 1elekoms, an alternatie access
proider, maintains that they hae an
adantage oer incumbent telcos ava
narrowband ISPs, `\e own our own
network. Getting to the last mile
connection is diicult or them. \e hae
our own connection. \e`re in total
control o our network, we can guarantee
its perormance, unlike ISPs. Beyond the
pricing, reliable serice is something we
can proide. ,As or incumbent carriers,,
they tend to ignore other places they don`t
bother to reach. 1he majority o our
clients are signing up because they are
disappointed with the telcos ,with regards
to, up time, tech support serice, and
wireline solutions they not able to
delier.`

Joey de Belen, VP or Sales & Marketing
o Bell 1elecom, a ull-serice telco, says,
`\hat we concentrate on is not to gie a
dial tone to eery lilipino. Our ision is to
be the premier business communications
proider. Our number o customers won`t
be the same as PLD1 haing millions o
customers. \e`ll be satisied with the
broadband customer base. \e won`t be
competing head on with PLD1 or Globe.
1hat`s not our game.`

le explains that Belltel`s positioning is
nationwide and broadband, as opposed to
just the CBDs ,central business districts,
and narrowband, which is the strategy o
competing proiders. le adds an
adantage oer ISPs, \e are a low-cost
producer, we can compete in alue and
price, we can go directly international
where we`ll be getting better rates.`

Regulatory restrictions. Much as the
1elecommunications Act has helped the
industry, there is still plenty o room or
improement. New bills pending in
Congress can help sole these problems.

One problem area is the issue o Voice
oer IP ,VoIP,, which the N1C ruled
cannot be oered by non-telcos. 1he
ability to make oice calls, including the
expensie oerseas calls, oer the Internet
can aect the reenue stream o
incumbent telcos like PLD1.

1he law that requires telcos to sere only
certain geographical areas, including
unproitable ones, in the iew o
proiding access to unsered areas, can
also be limiting. 1he diiculty o getting a
license to operate nationwide is a major
headache.

Also, telcos cannot oer broadcasting
serices and cable operators cannot oer
telecommununications serices under the
law. 1here`s also a cap on oreign
ownership. Such legal and regulatory
restrictions are proing to be limiting the
growth o broadband.

Paraz says there`s need or real
deregulation, such as permitting non-
telcos to operate broadband
inrastructure, especially wireless.`

Lee concurs that speciic legislation like
legalizing VoIP will boost the use ,o
broadband,, maybe opening it up more a
bit. Another thing is aailability. It`s
heaily ocused in Metro Manila.`

Lack of profits. In the end, it`s all about
the bottomline. Right now, the broadband
proiders are not making any money rom
their expensie inestment. It`s sae to
assume that no company has yet to make
a proit on their broadband serices.

De Belen mentions another problem, I
think there are too many players. 1his
results to price aberrations that`s not
beneicial to anybody, including
customers.`

Prospects of Broadband
t could be just a matter o time beore
we iron out these problems.
Bandwidth costs will eentually go
down. Competition will heat up and drie
prices south. Inrastructure and serice
will improe. As urban areas begin to be
saturated, outlying areas will start to be
sericed. New laws beneiting the market
will be passed. lopeully, the economy
picks up and our leaders get their acts
together, adding to the middle class and
increasing our purchasing power. Prices
or PC continue to decrease and more
people can aord them. Mobile
broadband will become ubiquitous and
reach more cellphone-loing lilipinos.
1elcos and ISPs recoup their inestments.
Ideally.

I you are a small business owner, heading
your company`s IS department, or a home
user wondering what broadband
technology to aail o, you need to look at
the current trends.

Right now, cable has the edge. According
to IDC Philippines, there are as o end o
2000, 8.5 thousand cable Internet
subscribers, compared to 300 or DSL
and 200 or ixed wireless. It`s the same
trend worldwide.

Paraz says, I think cable came ahead
because o existing cable in the ground or
1V,
and also due to the business model. I can't
predict the uture access methods because
een now, other telcos are coming into
the picture.`

Usually, ixed wireless and satellite are
deemed appropriate or ar-lung areas,
which cable and DSL proiders cannot or
would not reach. But in the Philippines,
this may not necessarily be case.

Already, alternatie access proiders such
as Bell 1elecoms are setting up a hybrid
wired and wireline network. Coming in
later in the picture, the newer players are
not bogged down by legacy networks and
can thereore make use o newer, cheaper,
more lexible, and easier to deploy
technologies such as ixed wireless access.

Lee explains, \e ind ourseles
competing with leased line, rame relay,
DSL, and cable. lor corporate, it`s ixed
wireless. I you`re within the city, it`s
pointless to use satellite. lixed wireless is
ar more eicient. Cable and DSL are
running on public networks, and are
heaily subscribed. Ours is like a leased
I
line and dedicated solution, but more
lexible and reliable.`

In ten years, it`s possible that iber optic
cables can een reach homes. Plus, newer
technologies will be introduced that would
urther drie down costs and increase
bandwidth capacity.

In the meantime, the dominant last-mile
technologies are cable and DSL. Cable will
dominate in urban areas, particularly in
residential areas. DSL will do well in
business districts.

1o be realistic, the Philippines will not
reach the take-up rates o South Korea,
long Kong, or Singapore. Says Lee,
1heir inrastructure is ery good. \e`re
an archipelago, that alone is a big
problem. In Metro Manila, the quality o
oice lines is poor. Plus in Korea, there`s a
high demand. 1hey say it`s built-in among
Koreans to be impatient. lere, anything
aboe 64kbps is broadband.`

Let`s get straight to the point: \ill
broadband succeed here \es, eentually.
It`s ineitable. 1he arious political,
regulatory, economic, and technical
problems notwithstanding, it is really just
a matter o time beore high-speed,
always-on, ubiquitous, and inisible
Internet access becomes a reality that we
will just take or granted. On two
qualiications: the goernment continues
to push or it and consumers ind a good
use or it.

\here are the telcos and ISPs, you ask
As important as they are in this equation,
they will not be the ones to drie the
growth o broadband. It`s goernment
that will use the stick and consumers that
will oer the carrot to drie this
proerbial horse ,or carabao or that
matter, to moe.

Consider the local state o
telecommunications. In 1989, there were
just 500 thousand installed telephone lines
or a population o 60 million, in 2000, it
was about million. In 1995, there was
just 1 alue-added serice proider ,VAS,,
there was close to 200 in 2000. In 1989,
there was a handul o cell phone
subscribers ,cell phones the size o a brick
at that,, in 2000, 6.5 million own mobile
phones, some o which are smaller than
your palm.

1he number o players has signiicantly
increased as well. 1he telecommunications
industry is diided into the ollowing
areas: Local Lxchange Carriers ,LLC,,
Inter-Lxchange Carriers ,IXC,,
International Carriers or International
Gateway lacility ,IGl,, Cellular Mobile
1elephone System ,CM1S,, Paging,
Mobile Radio Communication Systems,
Record Carrier Serice or
1elex,1elegraph, Public 1runk Repeater
Serice, Sattelite Serice, Very Small
Aperture 1erminal ,VSA1,, Value-Added
Serice ,VAS,, among others.

At the end o 2000, the country had 6
LLCs, 11 IGls, 5 CM1S proiders, 15
paging companies, 10 trunked mobile
radio serice proiders, 11 international
and domestic record carriers, 8 satellite
and VSA1 operators, and 156 VAS
proiders, including ISPs.

Not bad considering that beore 1989,
only PLD1 proided the country`s
telecommunications needs. Or did not
proide or that matter. Ater 60 years in
operation, it managed to install less than a
million phone lines, with close to another
million in backlog applications.

1his growth did not happen because o
the beneolence o PLD1. 1his growth
was compelled by the national
goernment, through new laws and strict
regulation. And it is this same actor that
will propel broadband growth.

1he Stick
he policies introduced by the
Aquino and Ramos administrations
in the late eighties and early
nineties orm the basis o the legal and
regulatory enironment that has spurred
the dramatic growth o
telecommunications in the country and at
the same is hindering the widespread
adoption o conergent technologies.

1he pertinent policies include 1he Public
1elecommunications Policy Act, or RA
925, in 1995, reinorced by two
Lxecutie Orders ,LO,: LO59, which
mandated compulsory interconnection o
all authorized public telecommunications
carriers, and LO 109, which required
LLCs to install 1 line in a rural area or
eery 10 installed in an urban area, IGl
proiders to install 300 thousand lines,
and CM1S irms to install 400 thousand
lines, all in ie years.

1he serice area scheme was also
introduced. 1he Philippines was diided
into 11 geographic areas distributed
among 8 telecommunications carriers. 1he
idea was to proide uniersal access by
orcing proiders to serice both
proitable and unproitable areas.

1he result: a growth in telephone density
rom 1.1 ,phones per 100 people, in
1992 to 9.05 in 2000. 1hat`s an aerage
growth o around 5 a year.

loreign ownership is another releant
policy. According to the 198
Constitution, in telecommunications,
oreign entities can own up to a 40
stake, allowing the entry o N11, Sing1el,
Deutsche 1elekom, among others in the
country. loweer, the broadcasting
industry, including cable 1V operators, is
required by law to hae 100 lilipino-
ownership.

1here`s also the Satellite Communications
Policy that paed the way to a satellite-
based telecommunications industry. New
policies were then introduced in 199 to
deelop the cable 1V industry. Other
reorms and economic incenties were
introduced to attract inestment in the
arious sectors o the telecommunications
and broadcast industries.

1he goernment agency tasked to regulate
the industry is the National
1elecommunications Commission ,N1C,
under the Department o 1ransportation
and Communications ,DO1C,.

\hat is wrong then with the existing
regulatory ramework i it worked quite
well in a little more than 6 years One
word: conergence. And it is broadband
that paes the way to this new order. 1he
lines among telephony, broadcasting, and
the Internet are blurring. Cable, wireless,
copper wire, satellite, and other
technologies are now capable o deliering
oice, data, and ideo simultaneously.
1hat means cable companies can allow
their customers to make oice calls and
telcos are now capable o oering ideo
content to their subscribers.

In this changing technological landscape,
the old policies and setup become
increasingly outdated. lor instance, it has
long been a bone o contention which
executie department - DOS1, DO1C,
or D1I - is responsible or certain IC1
policies and actiities, particularly those
related to the Internet. Obiously, there is
oerlapping and redundancy.

1here is also a question on where cable
1V should all under - broadcast or
telecommunications. An issue like oice-
oer-IP ,VoIP, remains unclear whether
1
non-telco carriers, e.g. ISPs and cable
companies, are allowed to proide such
serice. Ditto or ideo-on-demand
,VoD, or non-broadcast irms, such as
telcos.

1he serice area scheme is likewise being
reconsidered. Requiring proiders to set
up their inrastructure in unsered and
undersered areas that may not be
proitable can lead them to charge higher
margins on premium serices to subsidize
their costs in unproitable areas, thus
contributing to the slow business and
consumer adoption o broadband serices
in urban areas.

Other hot issues include oreign
ownership. 1here are pressing calls to
increase the 40 cap on telcos and
debates among cable 1V operators on
allowing oreign ownership at all. Len
the mere deinition o cable 1V needed to
be clariied.

It`s a matter o time beore electric utilities
and proprietary networks start oering
broadband, urther blurring conentional
deinitions o broadband access.

Central to the Arroyo administration`s
IC1 agenda is the proposal or a
Conergence Law, which includes the
creation o a Department o Inormation
and Communications 1echnology
,DIC1,, preiously proposed by ormer
Congressman Leandro Verceles, a long-
time I1 maerick.

1his challenge or drating a bill has been
taken up by Digital Philippines, the
priate sector group o I1LCC
,Inormation 1echnology and L-
Commerce Council,, the goernment`s
IC1 policy-making group, which
President Arroyo has since taken hold o
as Chairman, as well as a handul o
solons, namely Representaties lrank
Perez, Monico Puenteella, Joseph
Santiago, Ma. 1heresa Deensor, Jacinto
Paras, and Roberto Cajes. All are still
under deliberation.

Bills related to the cable 1V industry hae
also been submitted by Speaker o the
louse Jose de Venecia, Jurdin Jesus
Romualdo, Roseller Barinaga, Jacinto
Paras, and Joseph Santiago. Meanwhile,
apart rom some obsessie Internet porn-
related bills and widely-criticized serice
area scheme or ISPs proposed in the
Senate, there`s ery little actiity related to
the President`s proposals, busy as the
senators are currently with their Senate
coup. 1he recent telecommunications
scandal reoling around the proposal o
a telecommunications clearinghouse, with
its bribery accusations and all, urther
hampers progress.

1he Medium-1erm Philippine
Deelopment Plan ,M1PDP, or 2001-
2004 also places inormation and
communications technology ,IC1, as one
o the country`s driers or growth. It
listed 11 priority points on the legislatie
agenda, including some related to
telecommunications and broadband
inrastructure. In particular, the
goernment seeks to amend RA 925, or
the Public 1elecommunications Act, to
address conergence and uniersal access
issues, add more muscle to the N1C,
rationalize cable teleision operations to
make them part o telecommunications
and not broadcast media, promote
Internet uniersal access and
liberalization, and split the DO1C into a
DIC1. 1he I1LCC`s action plan called
ISP.com put into details the country`s IC1
strategy, mirroring the goernment`s
program.

Despite the good intention, clear-cut
agenda, and preliminary actiity, the
national goernment has been marked by
a lot o talk and not enough action.
Summits, meetings, drats, and papers
abound, all seemingly parroting the same
recommendations. I eeryone basically
agrees with what needs to be done, why
isn`t much being done already

More pressure obiously needs to be
exerted on our legislators, and here,
industry organizations including, and
perhaps especially, consumer groups are
crucial in lobbying or bills that beneit
the industry as a whole.

lor broadband access to really take o, it
requires the irm commitment o
goernment to spur competition, not just
among players within the same technology
network but also among competing
networks

Strictly monitoring their compliance to
their license requirements, proiding
incenties, compelling incumbents to
unbundle their networks to new entrants,
and making strong-willed decisions on
gray areas go hand-in-hand with the
legislatie agenda. As an OLCD
,Organization or Lconomic Cooperation
and Deelopment, report concludes, the
most undamental policy aailable to
OLCD goernments to boost broadband
access is inrastructure competition`,
ollowed by opening up network
elements o players in dominant positions
to competitie orces`, and open access
to cable networks, where it is warranted
by market conditions`.

1he Carrot
introducing legislation and policies
that relect a new, conergent world
and encouraging market competition
answer the supply side o the equation,
does demand naturally ollow

I, say, broadband Internet access alls
below the P500 leel, will consumers bite
It`s likely a good part o the existing
Internet subscriber base o 2 to 3 million
or so will. Add to that the more than 1
million cable 1V subscriber base and you
hae a potential gold mine. O course, it
will take a good while beore that
happens. IDC Philippines projects only 80
thousand broadband subscribers by 2005.
Not surprising i prices remain at the
P2,000 leel and up and with poor serice
perormance at that.

Outside the current market or Internet
and cable 1V, will potential new users buy
into it I a head o a household or owner
o a small business neer considered eer
getting a dial-up Internet connection or
the past six years, aside rom the price
actor, what will make him get one

Right now, we hae a hungry market
segment that cannot aord broadband
access and a much larger segment that has
no immediate need or it. I goernment
carries the stick, the market holds the
carrot. Len i legislation and regulation is
irmly in place, priate companies will
hae not the incentie still to inest and
spend i no one`s buying. 1here`ll be
ewer new entrants, meaning less
competition and less possibility o driing
down prices, which will then lead to ewer
customers willing to pay, and the cycle
goes on and on.

1he other key actor then has to do with
the demand side. \hat will make the
dierence is content or applications. \hat
the broadband Internet needs are killer
apps.

1hink cell phones. \hile the LOs o
Ramos paed the way or competition
,helped in no small part by the rapid
change in technology,, it was SMS - the
killer app - that droe demand to
phenomenal leels.

I
1his is what the broadband Internet
needs. Already, there are applications
being oered that take adantage o the
bigger bandwidth - ideo-on-demand,
irtual priate networks, and ideo
conerencing, to name a ew.

But the Asian and Philippine markets
hae unique needs, akin more to
Luropean markets than American. Most
likely, entertainment and communication
applications will drie adoption, not
business or inancial.

One possible hit: online gaming. Internet
caes hae been around or quite some
time, but LAN and gaming caes made
this new hybrid a category killer. But will
broadband to the home eer ind a mass
market like mobile phones had Not until
prices or PCs and modems become dirt
cheap, or until new, simpler, and cheaper
deices that access the Net lood the
market.

O course, the cost to broadband
proiders should also be taken into
account. Gien our high requirements or
international bandwidth ,there`s relatiely
little traic circulating nationally than
traic going to the U.S. sites,, proiders
are also hindered by this. But the trend is
decreasing charges, the ineitable
conclusion then is that sooner rather than
later, their own costs to proiding
bandwidth will also go down. As lortune
magazine reported, in the past two years,
transpaciic-bandwidth prices hae allen
by 50.`One megabit o bandwidth
between 1okyo and long Kong is now
just >130,000 per month, rom >00,000 a
year beore. 155 megabits is down >1.8
million rom >4 million last year.

Lower prices must come hand in hand
with killer apps. So ar, despite its
promise, online gaming and entertainment
haen`t drien widespread adoption in the
residential market. SMLs are also not
jumping into it in droes as well. More
content and applications must be
introduced and capture consumer and
business interest beore broadband takes
o - ideo-on-demand,
ideoconerencing, oice-oer-IP,
distance learning, maybe een online game
shows.

In sum, goernment action will create
competition. More competition will lead
to lower prices. Lower prices and new
applications will create the demand. A
boom in demand will lead to more
competition, and so on.

1he Goal
nother way to decrease the price
o broadband access is or
goernment to subsidize part o
the cost. And one way to increase demand
is or goernment to create content and
applications or broadband.

But should goernment take an actie role
other than introducing industry-riendly
policies and legislation and monitoring
licensed operators lor that matter,
should the goernment aim or uniersal
broadband access

1here are no easy answers. Right now,
there is a moe towards reducing our
budget deicit through taxes and spending
cuts, and buying bandwidth to sere rural
communities is obiously not in the
goernment`s priority list.

lorcing telcos to install phone lines in
unsered areas worked wonders, perhaps
adopting a similar proision in the
proposed Conergence Law requiring new
entrants to roll-out broadband access in
rural areas along with urban zones will do
just as well in spreading broadband
aailability.
A

loweer, market take-up is an altogether
dierent matter, particularly in rural areas.
Uniersal broadband access may not be
the best idea at this point. 1here are more
basic inormation and communications
needs that should be prioritized, such as a
telephone and een teleision in eery
baravga,. lence, the goernment`s
telecenter project looks like a wise moe.

I there`s one area the goernment should
consider paying or is proiding
broadband access to public schools. lere,
there is an obious use and applications
or broadband and it is one sector that
broadband proiders will shun.

1he goernment-wide mandate to wire all
its oices is also a step towards the right
direction. Goernment agencies such as
the BIR and L1O are increasing their
computerization and Internet eorts.
Slowly migrating to online applications
will help in creating use and demand or
broadband.

In other words, the goernment`s ideal
role is to increase competition in areas
that hae a built-in demand or
broadband, proide access in areas that
actually need it but will not be sered by
priate corporations, and take the lead in
using broadband applications.

1hese are the issues that need to be raised.
1he Philippines ought to look at success
stories such as South Korea to learn its
own lessons. I it`s any consolation, it
seems een the U.S. is bogged down by
the same obstacles we are haing -
incumbent telcos strongly lobbying or
their interests, slow roll-out, poor serice,
imperect laws. I we do this right, we
might een surprise ourseles.

Sidebar:
1imeline: A brief history of
communications in the Philippines

1920s: Dollarado, a ship-to-shore radio
and telegraph company, was incorporated,
later renamed Globe \ireless Limited
,G\L,, great grandather to Globe
1elecom.

1924: Radio Corporation o America was
born, later became PhilCom Corp.

Noember 28, 1928: Philippine Long
Distance Company was ounded. Its
charter extends to year 2028. 1he
company is authorized to proide just
about eery type o telecommunications
serice.

1930: G\L merged with Philippine
\ireless, Inc. and Claecilla Radio
Systems to orm Globe-Mackay Cable and
Radio Corporation ,GMCR,.

194: 1he 1elecommunications Oice
was created under Republic Act 51. 1he
Oice proides telegraph, telephone,
telegraphic transer, and social telegram
serices throughout the country.

1969: lirst cable teleision system
,CA1V, was established in Baguio.

194: GMCR sold 60 o its stocks to
Ayala and Co.

19: Sining Makulay, Inc. was gien an
exclusie ranchise to operate a CA1V
nationwide or 25 years.

June 198: President Aquino promulgated
Lxecutie Order 205, ending Sining
Makulay`s monopoly and opening up the
cable industry to competition.

lebruary 1990: 1he Municipal 1elephone
Projects Oice was created through
Republic Act 6849. 1he Oice sees to the
installation and operation o public calling
oices in each municipality in the
Philippines.

1990s: GMCR merged with CRS to orm
GMCR, Inc., later renamed Globe
1elecom.

1990: Isla Communications Co. Inc.
,Islacom, was authorized to deelop a
ull-serice telecommunications network
in the Philippines.

lebruary 24, 1993: President lidel V.
Ramos issued Lxecutie Order 59
mandating compulsory
interconnection o all authorized public
telecommunications carriers to create a
uniersally accessible and ully integrated
nationwide telecommunications network.

July 12, 1993: Lxecutie Order 109 sought
improement o local exchange serices in
both urban and rural areas. lor eery 10
lines installed in an urban area, 1 line was
to be installed in a rural area. IGl
proiders were required to install a total o
300,000 lines while CM1S proiders were
required to install a total o 400,000 lines,
within ie years.

October 1993: Bayan
1elecommunications loldings
Corporation ,Bayantel, was established.

1994: 1he Cable Policy Act was drated.

1994: Digital 1elecommunications, Inc.
,Digitel, was granted a ranchise to
proide domestic and international
telecommunications serices.

lebruary 20, 1995: Republic Act 925,
the Public 1elecommunications Policy
Act was passed.

199: Bell 1elecommunications was
granted license as a ull-serice telco.

1998: lirst Paciic o long Kong bought
1.2 o PLD1's stock to gain a
controlling interest in the company. lirst
Paciic ailiate Smart became a PLD1
subsidiary. PLD1 now has Smart, Piltel,
L1PI, and Philcom.

September 1999: PLD1 ties up with N11
Communications o Japan.

1999: PLD1 bought ISP Inocom
1echnologies and cable 1V serice
proider lome Cable.

2000: Ayala Corporation, Singapore
1elecom International Pte. Ltd. ,S1I,,
Asiacom Philippines, and De1eAsia
lolding Gmbl ,a subsidiary o Deutsche
1elekom AG, joined orces. Globe also
bought Islacom.

August 2000: PLD1 incorporated ePLD1
to include all its Internet, e-commerce, call
center, and multimedia entures.

August 8, 2000: Meridian 1elekoms was
launched.

September 2000: Smart exceeds 2 million
subscribers.

Noember 2000: PLD1 rolls out DSL.

lebruary 2001: Digitel entered into a joint
enture with Asia Global Crossing and the
Broadband
Inrastructure Group to orm Digitel
Crossing to lay a iber optic backhaul
network in the Philippines.

Sidebar: 1he Broadband Players

1HL 1LLLCOMMUNICA1IONS
CARRILRS

PD1
1echnology: wireless, cable, satellite, DSL
Key stockholders: lirst Paciic, N11
Key ailliates: Smart Communications,
Piltel, ePLD1, Inocom, lome Cable,
AceS, Mabuhay Satellite
Network: I-Gate ,155Mbps bandwidth,,
Asian Internet Network ,AIN,, Domestic
liber Optic Network ,DlON,, Asia-
Paciic Cable Network ,ACPN2,
Product lines: Internet gateway serice,
Philippine Internet exchange ,PhIX,,
rame relay, A1M, IP VPN, leased lines,
cable Internet, DSL
lees: ,or cable Internet, P1,650 or
installation, P1,650 monthly charge, P330
or modem rental, ,or residential DSL,
P1,500 or installation, P2,000-P2,500
monthly charge
Strengths: Still the dominant telco in the
country with a strong conergence
strategy, practically coering all broadband
serices, has biggest international
bandwidth.
\eaknesses: Burdened with debt
sericing, which made it postpone its
acquisition o GMA Network, the last
piece o its conergence puzzle, widely
criticized when it irst rolled out DSL
serice.
\eb sites: www.pldt.com.ph,
www.epldt.com, www.now.com.ph,
www.ino.com.ph

a,av 1etecovvvvicatiov., vc.
1echnology: cable, DSL
Key stockholders: Lopezes, Verizon
Key ailliates: Sky Vision Corporation
,Sky Internet, ZPDee,, RCPI, eLopez
Product lines: cable Internet, DSL, leased
lines, rame relay
lees: ,or cable Internet, P1,000 or
installation, P1,00-P10,000 monthly
charge ,depending on megabytes
downloaded,
Strengths: Can leerage dierent serices
as it has done with its lusion integrated
billing scheme.
\eaknesses: Bayantel is struggling with
debt and with problematic Lxtelcom.
\eb sites: www.benpres-holdings.com,
www.bayantel.com.ph, www.zpdee.net

Ctobe 1etecov
1echnology: DSL
Key stockholders: Ayala Corp, Sing1el,
Deutsche 1elekom
Key ailliates: GlobeNet, Globe Data
Network: MSDDN ,Multi-Serice Digital
Data Network,, National 1ransmission
Network ,N1N, Back Globe
landyPhone's Digital Cellsites,
GlobeLines lixed Network Inrastructure,
Very Small Aperture 1erminal ,VSA1,
Network
Product lines: DSL, leased lines, Globe
Internet Lxchange ,GlobeIX,, rame
relay, A1M
lees: ,or DSL, >500 or one-time charge,
>665->1,945 monthly charge
Strengths: Strong wireless market, uses
SDSL, not ADSL like competitors.
\eaknesses: Inested mainly in ixed
wireline and wireless, though known more
or wireless business, does not hae
breadth o PLD1, concentrated on
business sector.
\eb sites: www.globe.com.ph,
www.globenet.com.ph,
www.globedata.com.ph

Lastern 1elecommunications
Philippines, Inc.
1echnology: DSL
Key stockholders: PRN Philippines, Inc.,
Australian Gigahertz Network, Inc.
,AGN,
Network: metrowide iber optic network
distribution backbone that uses all-
Internet Protocol ,IP, that results into
high perormance connections to the
wider Internet ia C&\ USA, Concert
,A1&1 and B1, and UUNL1 or the U.S.
and Luropean access and PCC\ lK1
or the Asian region, Internet capacity o
100 Mbps
Product lines: DSL, Manila Internet
eXchange ,MIX,, leased lines, ISDN,
rame relay
Strengths: Pioneered DSL, has one o the
biggest international bandwidth, targets
ISPs, only proider with iber-optic
network running gigabit Lthernet.
\eaknesses: last-changing ownership.
\eb site: www.etpi.com

Pbitiive Ctobat Covvvvicatiov., vc.
1echnology: DSL
Key stockholders: APC Group o
Companies
Network: redundant international links
with Border Gateway Protocol routing
that runs on L1 connectiity ,2Mbps
bandwidth,,
Product lines: DSL, rame relay, leased
lines, ISDN
Strengths: Strong subscriber base in
Mindanao.
\eaknesses: \eak market position,
coming rom dormant ISP business, relies
on alliances such as with cable companies
to oer serices.
\eb site: www.philcom.com

Digitat 1etecovvvvicatiov., vc.
1echnology: DSL
Key stockholders: JG Summit loldings,
Inc., 1elia AB o Sweden
Key ailiate: Digitelone
Network: Luzon-wide "backbone"
transmission system consisting o radio
stations and iber optic cables, a transit
exchange with interconnections with
other operators in Metro Manila and an
international gateway acility ,IGl,, made
up o two IGl switches located in
Binalonan, Pangasinan and in Quezon
City, which proides instant connectiity
to more than 200 international
destination, owns submarine cable
capacities in the 1rans-Paciic Cable-5
,1PC-5,, the Asia-Paciic Cable Network
,APCN,, and the Southeast Asia-Middle
Last-\estern Lurope ,SLA-ML-\L,
cable systems. It also purchased capacities
rom the China-United States cable
systems and the Guam-Philippines cable
systems.
Product lines: DSL, rame relay, leased
line
lees: ,or DSL, P2,000 or installation,
P8,500-P40,000 monthly charge
Strengths: Largest telecom serice
proider in Luzon outside Metro Manila,
continues to expand network and quick to
add new serices.
\eaknesses: las interconnection
headaches with Globe and Smart.
\eb site: www.digitelone.com

ett 1etecovvvvicatiov., vc.
1echnology: ixed wireless
Key stockholders: Puyat-Reyes, Ortigas,
Madrigal-Bayot and Maramba
Network: wireless core network has a
iber optic backbone or total reliability,
Very Small Aperture 1erminal technology
is used to connect to the Bell1el core
network
Product lines: ixed wireless broadband,
leased line, VSA1
Strengths: Comprehensie license allows it
to proide aried serices nationwide, new
entry means it was able to skip older
technologies and jump ahead with a
cheaper and more lexible inrastructure.
\eaknesses: lixed wireless is a more
expensie and less popular option or
broadband.
\eb site: www.belltel.ph

Pbitiive Covvvvicatiov. atettite Cororatiov
1echnology: satellite
Network: lreedomIP broadband VSA1
network comprises an Andrew .3-meter
earth station central hub node at Pinugay,
with a Network Management System near
Manila, and 120 broadband VSA1 earth
stations located throughout the
Philippines
Product lines: VSA1
Strengths: Pioneer in satellite
communications, quite actie in signing
up clients and partners.
\eaknesses: Beset with controersies.
\eb site: www.philcomsat.com.ph

Pbitiive 1etegrab c 1etebove Cororatiov
Key stockholders: Republic
1elecommunications, Inc., Korea
1elecoms
Network: Lake Ring iber optic network
expected to hae the capacity to transmit
2.5 gigabits o data per second to
customers in Metro Manila, Laguna, and
Rizal
Strengths: Set to modernize its
inrastructure and calling stations into e-
stations.
\eaknesses: Still looking or inancing or
its capital expenditures, debt-ridden.
\eb site: www.pttphilippines.com


1HL BROADBAND ISPS

Destiny, Inc.
1echnology: cable, satellite
Key stockholders: Solid Group, Inc.
Key ailliates: Destiny Satellite
Network: hybrid iber coaxial ,llC,,
50Mhz two-way transmission bandwidth,
uses the distribution hub and iber node
network design, Destiny Satellite operates
the ranchise o Domestic Satellite Phils.,
Inc. ,DOMSA1,
Product lines: cable Internet, broadcast
uplink, VSA1, ISA1, leased lines, VPN
lees: ,or cable Internet, P2,000 or
installation, P1,980 or monthly charge,
P380 or modem rental
Strengths: 1he country's irst cable
inrastructure that was built entirely to be
completely ready or cable teleision,
Internet access and data serices including
irtual priate networks and leased line
serices. Can leerage on current cable 1V
subscribers.
\eaknesses: Suered wide criticism when
it irst launched its cable Internet serice
or poor serice perormance.
\eb site: www.mydestiny.net

Ove1irtvat Cororatiov
1echnology: satellite
Key stockholders: Mel Velarde, lund or
Assistance to Priate Lducation,LCC
Lducation Capital Corporation
Network: two-way satellite, linked ia
Panamsat 8 satellite
Strengths: lirst in Asia to launch two-way
satellite Internet serice, targets the
education niche market and cable 1V
operators.
\eaknesses: May need a resh inusion o
capital or uture growth.
\eb site: www.oneirtual.com

PhilSat/We are I1 Phils., Inc.
1echnology: satellite
Network: reseller o lughes Network
Systems Inc.`s DirectPC
\eb site: www.philsat.com

Multimedia 1elephony,
Inc./Broadband Philippines
1echnology: ixed wireless
Key stockholders: Jose Perez de Venecia
III, Callahan Associates International
,CAI,, Ldward P. Bass Group, Angelo,
Gordon & Co. LP, Inestcorp, Next
Century Partners
Network: wireless microwae
transmission, LMDS ,Local Multipoint
Distribution Systems, network
Product lines: ixed wireless broadband
access, bandwidth on demand
Strengths: lirst to rollout wireless
broadband network in Asia. 1argeting
oice building niche. \as quick in
shiting rom the paging business ,Index,
to broadband.
\eaknesses: Lconomic conditions and
slow take-up orced company to cut down
its capex and targets ,100 buildings rom
150,.
\eb site: www.broadbandphilippines.com

Meridian 1elekoms, Inc.
1echnology: ixed wireless
Key stockholders: Victor Villaicencio,
Jose Baltazar, Micro-D International, Inc.

Network: back-bone, last mile links and
direct connections to the US Internet
back-bone, ixed wireless serice uses base
stations called MAN sites
Product lines: ixed wireless broadband
access
Strengths: lirst Internet
telecommunications company.
\eaknesses: las controersial owners,
Vic-Vic Villaicencio o 1riple-V, and
Micro-D`s Myla Villanuea, daughter o
controersial businessman Mark Jimenez.
\eb site: www.meridiantelekoms.com


iaebar: P,ravia rav/ivg.
1hings are not so bad. I only to stress the
point o the importance o goernment,
this research shows that there`s hope yet
or our country.

1ier 1: ligh
Potential
1ier 2:
Moderate
Potential
1ier 1: Low
Potential
1. Sout
h
Kore
a
2. Japa
n
3. lon
g
Kon
g
4. Sing
apor
e
5. 1aiw
an
6. 1he
Phil
ippi
nes
. Mal
aysi
a
8. 1ha
ilan
d
9. Indi
a
10. Chin
a
11. Indo
nesia
Source: Pyramid Research
www.pyramidresearch.com

1ier J
1he rankings produced interesting results
and a ew surprises. Among irst-tier
countries, long Kong was ranked higher
than Singapore. long Kong ared slightly
better in terms o broadband regulatory
enironment and inrastructure. Both
Singapore Cable Vision`s monopoly and
Sing1el`s remaining dominance o the
international capacity market hurt
Singapore in the rankings.

1ier 2
Despite Malaysia`s eorts to become a
high-tech hub within Asia, the Philippines
was rated higher, although only slightly
,by 0.5 point,. 1he decisie actor was
regulations goerning broadband serices.
1he Philippines has a ery progressie
regulatory enironment that is promoting
early market maturation. Operators are
using multiple technologies to delier
serices, a market characteristic typical o
top-tier countries such as Korea. Poor
inrastructure has relegated both the
Philippines and Malaysia to the second
tier, howeer.

1ier 3
\ithin the third tier, India barely
outranked China ,by 0.05 point, because
o China`s limited competition in the
traditional serices sector. China 1elecom
dominates the market, and there is little
room or competitie players. China rated
higher or inrastructure, howeer, due to
a larger CA1V network and better
backbone acilities. Greater market
liberalisation would thereore be more
eectie in China than India, where
inrastructure is lacking. Nonetheless,
India rated higher or broadband potential
because it has a relatiely more
competitie market or traditional and
broadband serices.