A Review of the National Broadband Network-ZTE supply contract

Summary

The National Broadband Network (NBN) Project is a scandal-ridden controversy. The project, awarded to Chinese state-owned ZTE Corporation, is the subject of a continuing Senate inquiry for alleged over-pricing and illegality, involving bribery of high-ranking government officials.  Commission on Elections (Comelec) Chairperson Benjamin Abalos, one of those accused of “peddling” the project, has resigned from office, in view of possible impeachment by the House of Representative.

UP School of Economics Professors Raul Fabella and Emmanuel de Dios also raised economic arguments against the NBN. For one, broadband “backbones” already exist, operated by the private sector. The government, according to them, should just take care of the “last mile” connection that the market cannot provide.

Considering also the inexperience and poor track record of government in maintaining telecommunication networks (e.g. the failed Telepono ng Barangay project), as well as the big amount of money that it will borrow for the construction of the NBN, it makes for bad policy.

Former Transportation and Communications Secretary Josefina Lichauco raised legal issues, criticizing the government turnaround from making the private sector provide public telecommunication services as mandated by the Public Telecommunications Policy Act of the Philippines.

On October 3, 2007, after weeks of criticism, President Macapagal-Arroyo finally announced the cancellation of the contract during her meeting with Chinese officials in Beijing. However, recent events do not render moot the issues (economic and political) and the policy findings regarding the contract. Lessons on policy proposals and reform  can still be gleaned from this experience and be adopted, perhaps in better times.

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