Tags: Internet, Technology Industry
By Alexander Villafania
MAKATI CITY, METRO MANILA – Internet growth in the Philippines is by no means steady, but not in a way that would allow for the growth that was expected for the country.
In fact, the estimated number of Internet users in the Philippines is somewhere around 30 million or roughly 19 percent of the country’ population. Many of these users are in urban areas.
Although telecommunications firms are making headway in reaching out to more users, cost remains a major barrier for putting Internet access especially in the home.
According to Judith Duavit-Vazquez, the recently appointed director of the Internet Corporation for Assigned Names and Numbers (ICANN), the cost of Internet in the Philippines remains high though it is not a factor of native supply and demand but rather the cost of the data itself.
Thus, Vazquez is urging the establishment of a domestic open Internet exchange.
Currently, all Internet data in the Philippines, local or international, are transmitted to Internet Protocol (IP) exchanges hosted abroad before reaching users. Internet service providers in the Philippines have to pay these offshore Internet exchanges for the transmission, and the cost is transferred to use.
Essentially, the user is paying for the transmission of data even if it is found within the country.
On the other hand, a local IP exchange essentially closes the loop for local data to transfer within the country. Economically, this is cheaper as Internet service providers only need to pay the operator of the local exchange for the cost of the transmission. This lowers transmission cost and essentially lowers the price of Internet access to subscribers.
Vazquez said that apart from the cost of transmitting data to offshore Internet exchanges, it is the lack of local content that is also keeping Internet usage costs high in the Philippines.
“It is my personal opinion that the Philippines has yet to own a critical mass of data,” she said. “We need to gather our telecommunications leaders to sit down, talk, and create a national open IP exchange.”
Indeed, the topic of creating a domestic IP exchange has made rounds in the technology industry in the country. During a recent conference, several technology leaders have stated their opinions regarding the establishment of a domestic IP exchange, particularly on the cost-benefit of having one, as well as improving quality of service.
Alex Samson, head of Globe Telecommunications’ network technology strategy, said that having a domestic open IP exchange should save on cost for all the telecommunications providers. However, building one could be an issue especially due to the initial cost and maintenance. Investments in it would only be returned after a certain period.
Samson also stressed on security as a domestically managed IP exchange can track rogue IP addresses that are conducting intrusions or launching malicious attacks.
“But I think the higher quality of service, security, and the long-term cost benefits that the subscriber has to should outweigh the cost consequences,” Samson said.
Apart from the technical and cost benefits of a domestic IP exchange, another long term benefit of such a facility is business competitiveness and stability of local companies.
As the Internet is becoming a powerful tool for business operations, including back office requirements, the ability to conduct operations at a fracture of a cost should give cost savings to a company and reinvest it in expanding their business.
On a regulatory standpoint, Rene Huergas, IP-Converge president, said there should be a framework to be followed by all those working to build a domestic exchange. In addition, an important factor why an IP exchange has to be built is content delivery as it maximizes usage of the facility.
“We need a regulatory stimuli and formulation of policies that would get all the carriers to connect. We have to eliminate rivalries at least in this aspect if we are to build a successful domestic IP exchange,” Huergas said.
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