Lacking a backbone: The controversy over the “Nat’l Broadband Network” & Cyber-education project

Introduction

Having confounded its critics by weathering the most profound political challenges and having averted what had seemed an ineluctable fiscal crisis, the Arroyo administration is now on a self-proclaimed “legacy mode”. For many, this is a welcome sign, a hopeful promise of relief. What most people think it ought to mean is a stronger commitment henceforth by the administration to a coherent vision and to policies to bring it about; a greater focus on priorities patently accepted as being in the public interest; and a greater devotion to transparency and professionalism in decision-making to gain all-party support and legitimacy for such major initiatives. At the very least, one would have thought, the administration should henceforth steer clear of policies and projects that were so obviously biased and egregiously one-sided that they tended to stir controversy rather than invite cooperation and support – or so one might have thought.

It is unsettling, therefore, that so soon after the mid-term elections (the conduct of which is another issue altogether), the administration should again be embroiled in a mess of its own making. The wonders and mysteries surrounding the government’s most recent initiatives on information and communications technology (ICT) are quickly threatening to abort the administration’s attempts to resurrect its credibility, not to speak of “establishing a legacy”. Two projects in particular have quickly become controversial: the first is the government’s project to build its own digital communications “backbone” called the “national broadband network” (NBN); the second is the proposal to link public schools via a satellite-supported network to enable pupils and teachers to access the internet and other resources.

The bold vision

The irony of it all is how everything began so auspiciously, sensibly, and with the best intentions – on paper, anyway. After all, it is hardly debatable that providing the greater mass of people with digital access to data and communications through greater bandwidth is a matter worthy of national-government attention. It is already evident that the rapid growth of the services sector in the gross domestic product (GDP), for example, is based in no small degree on the increasing utilization of the digital information and communications infrastructure. Unlike the country’s physical transport and logistics infrastructure, which have been neglected for decades, the Philippines’ information and communications infrastructure has been the recipient of recent massive (mostly private) investment. Ubiquitous cell-phones and the network supporting them are only the most visible aspect for the layperson. Unseen for the most part, however, is how a good deal of the digital “information highway” is really built upon two “backbones” or networks of optic fibre, linking the entire country and providing access to the rest of the world. These backbones – one is owned by PLDT while TELECPHIL is jointly owned by all other telecoms companies – have come to support numerous new industries, ranging from business-process outsourcing (BPO), to electronic payments and clearing systems (e.g., ATMs and credit and cash cards), down to internet and gaming cafés. Because of such investments, it is significant to note that the Philippines actually scores respectably on e-readiness and connectivity for a country with its level of income.1 This is more than can be said for other types of infrastructure.

Nor is there any doubt that substantial social dividends are forthcoming from the extension of the same access to data and communications to hitherto underserved government offices and to the country’s vast schools system.

The administration was quite on the mark, therefore, when the president outlined the idea of a “cyber-corridor” in her 2006 state-of-the-nation (SONA). That vision, as fleshed out subsequently in the Commission on Information and Communications Technology’s (CICT’s) strategic ICT roadmap, called for greater broadband access, inter-operability and connectivity, and for the diffusion of such cost-saving technologies as VOIP (voice-over-internet protocol) and digital conferencing. As many ICT experts have pointed out – and as government itself recognized – a major constraint to connectedness in the country was the “last mile” problem. In short, even as “information highways” might connect various islands, provinces, cities, and indeed the world, there are few or no links connecting them to final users, such as communities, households, schools, as well as local units and agencies of government. It is as if expressways had been built but not the municipal and barangay roads that would connect people to such high-speed lanes. A related problem, of course, is that few people own the “vehicles” (read: computers and peripherals) needed to travel such roads, metaphorically speaking.

The original mode the government envisioned to develop and expand that cyber-corridor was also unexceptionable. Government’s plans, as  well as their subsequent elaborations, invariably pressed for a public-private partnership, where the private sector would be “implementor” and the government the “enabler” in the context of the “ICT Roadmap” [Sales 2006 Message of the Chairman]. Indeed, the proposed Government ICT Project (Annex A-2 (2001)) viewed its Alternative Communications Program (ACP) as “a private activity, wherein it will undertake to finance, build, install, operate and maintain telecommunications facilities and provide basic telecom­mu­nications…in 34,000 unserved barangays and telecenters and 1,500 municipalities of the country”.

The DOTC’s Philippine Information Infrastructure Program also envisioned the “development of a robust and expanded digital infrastructure with the private sector playing a major role” (Strategy 1) [Emphasis supplied]. The thrust was to enhance the inter-operability and the connectivity of all networks to attain “universal access” at affordable cost. The currently available broadband backbones (those of the telephone companies (telcos) and the National Power Corporation) would serve to fill the country’s urgent need for ample, universal, and affordable broadband access. The brunt of the work was expected to consist of providing “last-mile” and missionary connections (i.e., connections to remote and inaccessible areas).

It is essential to note that original government plans at no point envisioned a separate backbone to be financed, owned and operated by, and dedicated to the needs of the government. At worst, what was recommended was a market-mediated build-operate-and transfer (BOT) plan. During the cabinet meeting of 21 November 2006, President Arroyo was reported2 to have taken the (correctly) adamant position against government spending for any backbone. Her strongly expressed stricture was at most for a BOT arrangement without “take-or-pay” provisions – and for good reason. After all, such “take-or-pay” provisions – under which government commits to pay a fixed amount to the private supplier, whether or not it makes any use for the service – were the culprit behind the huge losses and stranded liabilities of the National Power Corporation, which were a large reason for the administration’s fiscal woes. A consistent policy to rely primarily on private-sector initiative was also the motive behind the government’s proposal to privatize its own network (the Telecommunications Office, or Telof). This clearly meant that the government planned to rely mainly on existing privately-owned backbones as the conduit for the government’s broadband program.

Up to the early this year, therefore, most of the government’s plans for expanding IT access appeared consistent and benign. Indeed, they seemed to draw and build upon the logic and success of past privatizations, which had either brought in revenue, promoted efficiency, better service, or both (e.g., revenue in the sale of San Miguel and Napocor; efficiency in the privatization of water-supply concessions).

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