Egalitarian: Digital economy and Federalism

I want to share the imperative of making the country a federal country in the lens of information and communication technology. The internet speed of the country improved from 5.5 Mbps to 17.62 Mbps.

Mbps is the industry-standard is measuring internet speed which stands for megabytes per second which is a measurement of the data transfer speed. With a 5.5 Mbps in 2017, the internet speed of the country falls short of the global average of 7.2 Mbps, luckily, the country’s internet speed improved to 17.62 this year which is better than Indonesia (15.31Mbps), Brunei (15.31Mbps), Cambodia (13.23), Laos (11.71Mbps) and Myanmar (8.35 Mbps). However, our internet speed is minuscule compared to Singapore (174.94 Mbps), Taiwan (54.06 Mbps), Thailand (44.0 Mbps). Well, we fall a little short compared to that of Malaysia (26.9 Mbps) and Vietnam (24.8Mbps) per speed test report of Global Index.

Hence, Philippine internet speed is one of the slowest in Asia and the most expensive for that matter. If it is very slow in Manila, then it is slowest in all other places. Internet speed in NCR range from 3.5 to 3.6 Mbps, the further you go south the slower is the speed. Cebu has 2.6 Mbps, CDO with 2.4, Davao at 2.2, Iligan with 2.1 and Zamboanga at 1.6 Mbps as the World Bank Study 2017 reports.

The poor speed is a result of latency problems due to the traffic which is routed to Manila, and then back to other areas such as Mindanao. The jitter also contributes to slowing the speed. Accordingly, the jitters are the fluctuations of end-to-end delays from one packet to the next. The jitter is a normal occurrence in low connection speeds, and for that will be costly regarding economic value to those who are into e-commerce. In addition, those in the e-business are faced with the problem of packet loss where data packets are not received by their expected destination.

Why is this? The Philippine internet is a duopoly, which means two oligopolists. An oligopoly is a market setup where there are many buyers, but there are only two suppliers for the whole market. One supplier player maintains 70% control and the other with 28% control and 2% to all others. The two big market players maintain effective vertical control.

According to the study of World Bank, the duopolists control the international gateway facility (landing station), the backhaul (domestic cable), the middle (wholesale line) and the last mile (retail end). The digital economy’s future will remain bleak unless a fully-open access on the mentioned segments is facilitated. The best way to make internet access, making the digital economy vibrant, is to remove barriers to entry into the telecommunication business.

To do this, the 1987 Constitution’s limitation of telecommunication’s ownership need be visited; the rationalization of Congress as a franchiser of telcos and the license to operate to be obtained from government-regulating body need to be visited.

The most effective way to improve internet speed, the very foundation of a digital economy, is to make investments decentralized, encourage e-commerce to flourish in many different places away from the central. The distribution of powers need be structurally introduced to make it systematic where a general overhaul of the system need be introduced. Decisions must be made in places where these are implemented. Federalism is the key to this.

The systemic shift to federalism will truly bring the potentials of Mindanao. After all, the future of the Philippines is the growth of Mindanao. Even with half of the 25 million inhabitants of Mindanao turning to the internet to sell their goods, buy and supply services through the digital world, it will mean reaching the Arabic-speaking market, the Spanish market through the Chavacanos, on top of the current English-speaking markets.

This is again proof that federalism will catapult the country to better heights unimaginable in unitary setup. The global comparison of internet speed reveals that countries in unitary setup have slow internet speed like in Panama, Colombia, Ecuador, Peru, and the Philippines. Making internet faster and wider in access is already a form of equalization of opportunity, and for those who want to use their talents using the internet will benefit more making way for equity of outcomes, basic in federalism. The maximum economic opportunity of digital world principally rests in federalizing the country.

Posted in Opinion