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Why Internet In The Philippines Is So Damn Slow

Four big reasons that will make you scratch your head
by Neps Firmalan | Feb 26, 2016
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The Philippines has been labeled as the social media capital of the world, with local Facebook penetration at over 90-percent. That's a very impressive—and peculiar—fact because, while we are very visible in social media, we also have one of the slowest Internet speeds in the world.

But why do our online speeds, as a nation, suck big time? Much has been said—mostly complaints—on the issue, and we know you're tired of the same old rants. So this time, we'll make it quick and instead delve on the possible reasons why Internet in the Philippines is so damn slow.

Of topography and purchasing power

We're a country of over 7,100 islands—a fact that we're proud of (our world-class beaches say hello). But although that's good for tourism marketing, the same cannot be said for creating and maintaining local Internet infrastructure. Logistics and transportation of pipes, cables, and materials to create things like cell towers for mobile data and posts for wired connections become much harder. And when it becomes harder, expect the expenses to shoot up as well.

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This becomes a business problem for Internet Service Providers (ISPs). With the increased costs come increased risks in terms of reduced ROI. For example, is Company X willing to spend, let's say, P100 million to bring a far-flung island online? Maybe, if the said island had the subscriber base to justify the expenses. However, that's not always the case. We're not exactly a nation of rich people, so ISPs have to think hard before rolling out the resources, which slows down the process further.

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To put things into better perspective, the local Average Revenue Per User for prepaid SMS and voice (ARPU) is at P300, according to Now, if only a fraction of a community's population is willing to shell out that amount consistently, then ISPs will have a hard time regaining their investment. They'll probably lower their allocations and instead go for the "bare minimum" and just set up one or two cell towers in a municipality (instead of, say, a dozen) to ensure revenue with minimal risks and still have the distinction of putting a group online. This leads to congestion and slow Internet speeds.

And then there's the issue of licenses and permits. ISPs have to contend with both the local and national governments to secure the needed documents, which obviously takes time. And when talks do push through, the government fees come along, which can be quite high according to this report. Another deterrent, it seems.

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Willingly stuck on previous standards

We do have 4G connectivity, but the local penetration is only at one-percent. Compare that to the Asian average of 12-percent—we're obviously lagging behind. Most Filipinos still prefer to use 3G since it's deemed more reliable, given that 4G is still far from mainstream locally. In fact, our country ranks second to the last in terms of LTE coverage in the world at a measly 39-percent.

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With the poor coverage comes slow adoption, which is understandable. And with slow adoption comes less necessity for service providers to focus on newer wireless standards. This is reflected on our average online speed as a country, and we all know 4G beats 3G any day. Again, it's all about demand and investment.

But the problem persists on wired networks as well. Local wired Internet users usually use older systems such as xDSL compared to newer technologies like Fiber-To-The-Home (FTTH), which brings much faster speeds in exchange for a higher monthly subscription fee. According to market research firm International Data Corporation (IDC), the Philippines' FTTH adoption is only at two-percent, compared to an average of over 30-percent for the rest of Asia. FTTH is also not available in many places even in Metro Manila, so consumers opt for good ol' DSL connections, which cost much less (as low as P999 a month vs. as much as P25,000 a month for FTTH) and is available in more areas. It's the 3G vs. 4G dilemma once again.

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ISPs not playing well with each other notes that there is a level of connectivity inefficiency associated with the lack of local Internet peering or the sharing of networks for free for a wider, faster, and cheaper connection. Apparently, our ISPs charge each other for the use of their own networks, which have a direct effect on your bill. This lack of "openness" can lead to slower speeds, as the network owner has the ability to block connections from its rivals.

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And when access is denied, content will have to go through another path, possibly a longer route that takes it outside the country and back again. And when shit happens, like when international network cable lines are damaged, speeds will slow down to a crawl or even to a halt, depending on the severity.

It's understandable why ISPs are protective of their own networks (or backbone in geek terms). They slaved and spent on it, so the feeling of entitlement is at least logical. Also, they'd want to monetize it if given the chance. We're talking about businesses here after all.

All this is a stark contrast to our Asian neighbors, like Singapore which practices IP peering. And we all know how fast the average Internet speed there is (13Mbps).

Lack of major league players

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To be technically correct, there are still a number of local ISPs, from Wi-Tribe to BayanTel. The problem is, the two biggest ones—PLDT and Globe—own majority of the pipes, and the smaller ones must pay "toll" for the use. Again, this hinders efficiency and cost-effectiveness. So in the end, while it's not exactly a duopoly, the competition is not balanced either.

And without balance, innovation is compromised. We're not saying current ISPs don't innovate. They do, but if there's more competition, the improvement of services will be faster since it's now basically a bigger necessity. Which is why the potential entry of Australian network giant Telstra was such big news. At last, here comes a company with the resources to play with the big boys. What makes things more interesting is that San Miguel is backing up Telstra. However, possible legal issues and the underestimation of needed expenses are threatening the telco's entry in the Philippines. Bummer.

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Here's to hoping the next administration will be able to solve these issues so we won't be as "backwards."


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