Mar 2, 2013

Why are Filipinos paying more for slow internet?

Weeks ago, there is a news article about Susan Crawford explaining why people in the United States are paying way more expensive internet connection and getting slower speeds compared to other countries globally. You should watch it, it's very informative and at least for me, it made me compare and contrast our state here in the Philippines. And what I found out, Filipinos are paying way more than Americans do, and I researched on how much more are we paying, how slow the internet connection are we getting, and most importantly, why are we not getting fast internet connection at home and what is the government doing to solve this?


I want to start by telling you my current ISP at home. It is provided by Comclark, which is a company located in Pampanga. I subscribed to 2mbps connection, for 1,388 PHP (around 34 USD) per month. I think that's fast enough, it is sufficient enough for my daily needs, but I certainly wish it would be faster than that. Unfortunately, the one next to the 2mbps plan has a steep price of 4,000 PHP (around 100 USD).

Now I want to compare that price to other available internet service providers in the Philippines. In my area, unfortunately, I can only go to Comclark or PLDT. But there are lots of locally and nationally available ISP's, and it really depends on where you are if an ISP has service in your area. I decided to list these ISP's and compare them on the speeds they offering: Comclark, PLDT myDSL, Sky Broadband, and Globe Tattoo@home.

So, as you can see, the blue shades on the chart above shows you the cheapest plan for their respective speeds. Now what I'm going to show you next is how much different it is on plans in the United States. Here, take a look:
Now let's be fair though: these prices you see above are not the prices you'll actually pay. These American companies actually don't add the taxes that you have to pay on top of your monthly bill. Plus, these rates are promotional rates, meaning most of these companies will more likely increase the charges after you've been with them say six or twelve months, unless they give you another offer. More likely, all these extra fees and charges will cost you extra around 5 to 15 USD a month.

We're not going to worry about those for our comparison though, that's just incredibly hard to consider. The chart below is the comparison on those best prices in blue shades above, and how much the difference are:


As you can see, it starts to differ a lot in speed around the P2,000 mark, where if you are in the US and Comcast is available in your area, you can get a 20Mbps connection for the same price as a 3Mbps connection here in the Philippines. It even widens the gap when it comes to the P4,000 mark where in the US, you can already get speeds up to 105Mbps, compared to just 10Mbps in the Philippines. 

WHEN IT COMES TO THE P4,000 MARK,  IN THE US YOU CAN ALREADY GET SPEEDS UP TO 105 MBPS, COMPARED TO JUST 10 MBPS IN THE PHILIPPINES

If you live in the Philippines, you might have noticed PLDT advertising their new "Fibr" service, where the implementation of new Fiber Optic cables allows super fast internet speeds. In fact, Sky Broadband  and Globe Tattoo Torque provide similar service, but all of these services can only be afforded by wealthy people that in my opinion, do not know how to spend their money too well. In addition, these services are only available to several villages and housing communities in Metro Manila.

The goal of Filipinos having a low-cost, high-speed fiber optic internet is far, far away from our reach -- as you would see on these absolutely insane prices:

The only thing that is cheaper than the most-expensive internet package in the US is the 8Mbps plan from PLDT Fibr. The rest are all more expensive, mostly slower plans. Let's take a look at what they're all offering: 100Mbps. Comcast in the US offers it for around PHP 3663($90), and all of the three companies who offer 100Mbps here in the Philippines costs PHP 20,000 ($491). That's 5 times more that you need to pay for a similar service in the Philippines. If you can afford that much here in the Philippines, you should just move in the US and have your business there to save money, if you haven't already.

Let's now move on to wireless. Although American wireless carriers are way ahead of us when it comes to internet speeds, we actually beat them in pricing. Here in the Philippines, you can get an unlimited internet access on your mobile phone for as low as P50 a day. Although all networks here in the Philippines limit your browsing speeds and rather have strict fair usage policies (FUP), getting an unlimited connection in the US is a little bit harder to get. AT&T and Verizon both have non-existing unlimited plans, and although Sprint and T-mobile have unlimited plans, they also have slower data speeds and a smaller footprint across America.


Above are the plans for unlimited internet connections both in the Philippines and in the US. What we have here in the Philippines is that you can get pretty much just internet connection for your smartphone and have minimal call and text minutes that's why our Philippine carriers can make it as cheap. Now in the US, plans with all the 4 major networks all require you call and/or text plans included in your monthly bill to get a data plan, and there's no way of opting out of anything just to have unlimited data. That's why normal individual cellphone bill in the US usually costs around $60 and above. 

It's worth mentioning though that there are a lot of regional carriers in the US as well as prepaid plans that offer cheaper unlimited data. Virgin Mobile and US Cellular for example, offers unlimited data with included minutes for $35 and $45 respectively. Both of which, still are more expensive than what you can have in the Philippines for unlimited data.

Unfortunately, unlimited data doesn't mean faster speeds. Smart, Globe and Sun Cellular all have 3G and HSDPA+ towers all throughout the country, for sufficient internet connection speeds.Smart claims they have more than 1501 HSDPA+ towers in the country. And for my whole stay in Metro Manila last year, they are able to provide a constant, reliable 5Mbps connection most of the time using my phone as a mobile hotspot.

It's a different story here in the province, as Smart is only offering EDGE connection where I live and it is unusable. That is also the case to many provinces and rural areas not getting proper 3G service from their local carriers. Globe has a better service in my area, but if you don't have a postpaid plan with them, Globe disables your connection once you've reached 800 megabytes. Sun Cellular on the other hand, limits their connection for around 800 kilobits per second during most of the day, and would only provide 3.2 Mbps connection precisely around 1am to 5am in the morning.

But then there's Long-Term Evolution, or what is more familiarly advertised as LTE. LTE gives us faster internet speed connections wirelesly than traditional 3G or HSDPA+ connections. In theory, the technology allows up to 100mbps speeds, but real life tests involves around 10mbps up to 42mbps connections based on what we've seen so far.

Smart Communications and Globe Telecom both launched their LTE campaigns here in the country last year,  and already released LTE capable devices in their lineup. But both carriers' rolling out of LTE sites are very slow, to say the least. Smart had a head start in the LTE race, and according to their website, they are now offering LTE in areas within around 25 provinces. Globe on the other hand has very little public information about their current rollout of LTE sites and only provides information if they have "upgraded" their towers in your area, but don't really answer if it would be LTE-ready or not. According to Inquirer.net, Globe has released LTE in a handful of areas of the country as well.

The slow roll-out of LTE towers in the Philippines maybe a blessing to some users that has access on these very limited areas, as both Globe and Smart offer unlimited LTE access temporarily until their services gain momentum. In the future though, these Philippine companies might follow the same track as US carriers had implemented in their LTE plans: tiered data. Only Smart had proposed tiered plans for their LTE network, and on the next chart, let's compare that to the current prices per gigabyte with US carriers.
Smart is almost twice as cheap as to its US counterparts, and that is a good thing. However, speed-throttling and data caps are still bad for consumers, and I really wish Smart would provide us unlimited data under LTE.

BUT WHY?

So now that we pretty much have compared all of the prices and speeds with our internet access here in the Philippines against the United States, I wanted to ask the same thing you're probably thinking: "Why?" 

Don't look at me for answers, I actually don't know the exact reason neither. Once I finished this article, I will be forwarding it to the Philippine National Telecommunications Commission (NTC), the agency that regulates communication services here in the Philippines. I will give you an update once they have contacted me back.

In the meantime, what we can do is just guess why. The most prevailing theory that I can think of is that our internet service providers lack competition. Going back to Susan Crawford, who provided an example that in Hong Kong, they can get speeds up to 500mbps for just $25 a month, she said it is because of fierce competition. Let's analyze that for a second: maybe except for Metro Manila, there are just two or three internet providers in a specific area or maybe even less. It's even worse with Fiber-optic access, where in their current state, they're pretty much nonexistent. 

But then let's look at our mobile lanscape -- PLDT owns Smart, Talk & Text, and Sun Cellular, and their only competition in this market is Globe. And yet, our mobile services specifically with text messaging is still incredibly cheap.

Let's look at another possibility: Crawford also explained that in the United States, ISP's are unregulated. Which may also be applicable in our country as well. Unlike wireless communication being viewed as a necessity by our government, fast internet connection might be not, that's why they're allowing these ISP's to charge ridiculous amounts for fast internet access. 

I myself told you that I am satisfied enough with 2mbps, and this same behavior might be what our government is thinking. Until we view high speed internet connection as a right, and not a privilege to every Filipino, we might never see a change.

Let's hold on for a second and let's think about the ISP's for a second. Maybe it's harder to implement high speed internet access here in the Philippines than any other countries. Because for one, we are composed of thousands of islands, that's why building towers and connecting wires underground or under water can be very difficult and very expensive. We are also being ravaged by yearly tropical storms and flooding that's why maintenance and repair can be difficult and expensive too.

But I want you to think about this: the minimum salary of every American per hour is almost as high as the minimum pay for a Filipino a day. And the prices for our internet connection is more expensive than what a typical American is paying. Something is definitely wrong there. 

In conclusion, we've almost talked about everything here in this article. We've figured out how slow and how expensive the internet access is here in the Philippines, and listed the possible reasons on why that so. I'm looking forward on what will the NTC will tell me, or if they ever reply back, and I am also looking forward on what you think about this matter. How much are you paying for your internet, and are you happy about the speed? Let me know in the comments below. And be sure to share this article so that our voice can be heard!


 
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