2024-02-10-世界银行-为所有菲律宾人提供更好的互联网_改革促进竞争和增加宽带基础设施投资-政策说明_77页_2mb

Summary of Better Internet for All Filipinos: Reforms Promoting Competition and Increasing Investment for Broadband Infrastructure

Core Content

This policy note highlights the urgent need for broadband infrastructure reforms in the Philippines to address the growing digital divide and support inclusive economic growth. It outlines the current challenges in internet access, affordability, and speed, and proposes a set of regulatory and policy changes to improve the broadband ecosystem.

Main Issues and Challenges

1. Poor Internet Access and Affordability

• The Philippines lags behind other ASEAN countries in terms of broadband affordability, speed, and access.
• Fixed broadband penetration in 2022 was 33%, significantly lower than Malaysia (50%), Thailand (58%), and Viet Nam (76%).
• Mobile broadband penetration was 70 per 100 inhabitants, the lowest among large ASEAN economies.
• The cost of fixed broadband is more than 11% of GNI per capita, the highest in ASEAN, making it unaffordable for lower-income populations.
• Mobile broadband basket cost is 2% of GNI per capita, 1.5 times higher than the ASEAN average.

2. Digital Divide and Inequity

• Access to digital infrastructure is uneven, with rural and remote areas seeing only a third of the progress made in urban centers.
• Digital skills among Filipino youth and adults are low, with only 2% able to use basic Excel formulas, 6% able to copy and paste, and 7% able to attach files to emails.
• Weak internet access limits the ability of MSMEs to adopt digital technologies and hampers innovation and productivity growth.

3. Market and Regulatory Failures

• The broadband market is dominated by a duopoly of Globe and PLDT, which control the entire value chain from international connectivity to last-mile access.
• Market entry and investment barriers are high, including a complex and lengthy licensing process.
• The Philippines is the only country in the world that requires a legislative franchise for network construction and operation, discouraging new entrants.
• Small ISPs face an unlevel playing field due to lack of infrastructure sharing regulations and anti-competitive practices by large operators.
• There is no requirement for operators with significant market power to provide fair interconnection rates or service obligations.

4. Outdated Spectrum Management

• Spectrum laws are based on analog-era regulations from the 1930s and 1990s.
• Operators can indefinitely hold spectrum without service obligations, leading to spectrum fragmentation and scarcity.
• Procedures for spectrum recall and reassignment are unclear, and spectrum use is not transparent, reducing government revenue and hindering efficient resource allocation.

Key Recommendations

1. Urgent Broadband Infrastructure Policy Reforms

• Simplify and rationalize the entry process for network providers.
• Encourage infrastructure sharing to reduce costs and improve efficiency.
• Expand broadband access to rural and geographically isolated and disadvantaged areas (GIDA).

2. Role of the Government

• Implement pro-competition reforms and support the development of a more inclusive digital ecosystem.
• Strengthen the policy environment to promote investment in broadband infrastructure.
• Complement infrastructure investments (e.g., National Fiber Backbone and Broadband ng Masa) with regulatory reforms to ensure sustainability and efficiency.

3. Spectrum Policy Reforms

• Modernize the spectrum management framework.
• Introduce mobile spectrum restacking and regional spectrum licensing.
• Pilot spectrum auctions and revise Universal Service Fund (USF) pricing to better reflect market conditions and maximize revenue.

4. Legislative and Institutional Strengthening

• Push for the implementation of the Open Access in Data Transmission (OADT) bill, which aims to democratize access to broadband technologies.
• Strengthen government capacity in designing and implementing digital connectivity reforms.
• Improve coordination between operators, regulators, and policymakers.

Conclusion

The Philippines is at a critical juncture in its digital transformation. Outdated policies and market structures have stunted broadband growth and hindered the potential of digitalization to drive inclusive economic development. Addressing these issues through a comprehensive reform package is essential to closing the digital divide, increasing broadband affordability, and supporting the country's transition to an upper-middle-income economy. The OADT bill represents a promising first step, but further reforms in spectrum management and infrastructure sharing are needed to ensure long-term success.

Key Information

• Affordability Driver Index (ADI): The Philippines is among the least favorable in the ASEAN for affordable broadband.
• Investment Trends: The Philippines has invested less in telecom infrastructure compared to other countries, with a decline from 0.64% of GDP in 2018 to 0.44% in 2022.
• Digital Economy Growth: The digital economy contributed 9.4% to GDP in 2022 and grew by 11%.
• Digital Natives: Over 70% of Filipinos are digital natives, ready to leverage digital opportunities.
• IT-BPO Industry: Still constrained in many locations due to weak digital infrastructure, especially in peri-urban areas.

Policy Gaps

• Market Entry Barriers: Lengthy licensing and franchising processes discourage new entrants.
• Unlevel Playing Field: Large operators have no obligation to expand rural coverage and engage in anti-competitive practices.
• Ineffective Infrastructure Sharing: No passive infrastructure sharing framework exists, leading to inefficient deployment.
• Outdated Spectrum Laws: Allow indefinite spectrum holding without service obligations, leading to fragmentation and underutilization.

Conclusion

The cost of inaction is high for the Philippines, as poor broadband access limits growth, job creation, and digital inclusion. Updating the policy framework to promote competition, encourage investment, and improve broadband infrastructure is critical for the country's future.