University of the Philippines Diliman

Science, Technology and Society

STS Group 2: Term Paper
16 March 2011

On the Issue of
Broadband Capping
As Proposed by the National Telecommunications Commission

Alejandrino, April
Batanes, Bryan
Chan, Hannah
Delas Alas, Abraham
Gunio, Melanie
Isidro, Homer
Mauricio, Omar
Peralta, Lea
Regonia, Paul
Romero, Margaux
Introduction

Existence of Broadband in the Philippines

On March 1, 1995, the Republic Act No. 7925, an act to promote and govern the devel-

opment of Philippine telecommunications and the delivery of public telecommunications

services, has been approved in the Third Regular Session of Congress. Back then, in the Sec-

tion 3 of Article 1, broadband was defined as a value-added service provider (VAS) – “an ent-

ity, sometimes referred to as carrier’s carrier or national backbone network operator, autho-

rized to install, own and operate facilities which connect local exchanges within the Philip-

pines and to engage in the business of inter-exchange national long distance services.” How-

ever, with the advancement of technological innovations at the turn of the decade, amend-

ments to this law seemed to be inevitable for the redefinition of what has become such a

dynamic industry.

Regarding the state of the use of the Internet in the country, the Global Technology Re-

port 2009-2010, has revealed that the Philippines ranked 85 out of the 133 countries stu-

died (Jose, 2011). In terms of access, despite the fact that not all Filipinos are financially

able to provide themselves with computers and broadband subscription, the Yahoo-Nielsen

Index 2010 has recently showed that 69% of Internet users in the Philippines use Internet

cafes (“An Open Letter,” 2010). Moreover, it has been noted by the President and CEO of

the consumer group TXTPower.org, Inc., Anthony Ivan Cruz, that the Philippines has be-

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come one of the social media capitals of the world, due in part to the encouragement of tel-

cos (Tuazon, 2010).

Due to its increasing necessity at the present times, issues regarding the use of broad-

band in the country have widely been raised and debated on. A paper titled “Broadband

and the Economy” which was published by the Organization for Economic Cooperation and

Development (OECD), has recently declared, “Broadband, when combined with Information

and Communications Technologies (ICTs), has many channels through which its effects can

operate. Direct effects result from investments in the technology and rolling out the infra-

structure itself. Indirect effects come from all aspects of economic activity affected by broad-

band and which drive economic growth and prosperity e.g. firm efficiency and increased

productivity, reduced costs, innovation, globalization, and new employment opportunities

from the gains achieved” (Jose, 2011).

Proposal to Limit Broadband Activity in the Philippines

In the Philippines, the use of the broadband has been wide-ranging. However, recent re-

ports have it that there had been an increasing number of complaints against telecommuni-

cation companies which amounted to 622 from January to September of 2010. These con-

cerns were brought up to DTI which consequently, according to National Telecommunica-

tions Commissioner, Gamliel Cordoba, was addressed by NTC by drafting the Memorandum

Order on the Minimum Speed of Broadband Connections (Jose, 2011).

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 This draft memorandum states that “WHEREAS, it has been observed that few subscrib-

ers/users connect to the Internet for unreasonably long period of time depriving other users

from connecting to the Internet…NOW, THEREFORE…Broadband service providers shall spe-

cify the minimum broadband/Internet connection speed and service reliability and the service

rates in their offers…The minimum service reliability shall be 80%...Service providers may set

the maximum volume of data allowed per subscriber/user per day” (“Draft NTC Memo Or-

der,” 2010). Statistics has recently revealed that the country’s Internet bandwidth per

10,000 population is at 1.1 Mb/s (Jose, 2011). With this memorandum, Internet Service

Providers (ISP) will be asked to provide a guaranteed speed on subscriptions at the same

time allocate bandwidth capping on subscribers on a daily basis. When this is implemented,

a limit on the volume of data downloaded on the net shall be imposed to every user.

This broadband cap purportedly aims to protect consumers from users who abuse the

use of the Internet especially software and movie pirates. There are also those who instead

of the intended person-to-person use of their subscription, abuses it for commercial pur-

poses. Director Edgardo Cabarios, the NTC Common Carriers Authorization Department

Director said, “There were apprehensions raised (by telecommunications companies) over

abusive users. This is meant to discourage unfair use, to give everyone a chance. The idea is

to protect the majority of consumers” (Jose, 2011).

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Oppositions to the Proposal

The general public, as well as a number of institutions and academic groups on the other

hand, outrightly rejects this memorandum order, for they believe that it is not actually an

answer to the real problem, but an escape from it. The reason for complaints of poor ser-

vice, majority believe, is not rooted in the voluminous amount of data downloaded in the

Internet but rather in the network congestion caused by ISP’s networks which are not up-

dated or the perceived deceit in the allocation of bandwidth to users.

Moreover, due to broadband capping, consumers and businesses would suffer for being

limited in their use of the Internet, thereby inhibiting market growth. Much of the trans-

mission of information and technology happens online, and with this bandwidth capping,

consumers and businesses would always need to be aware of the consumption of the allot-

ted space for them (“An Open Letter,” 2010). A clear example would be for developers

working in the IT industry, which upon implementation of this law would be detrimental to

their advancement as web developers (Tuazon, 2010).

A paper published by World Bank in January 2010 titled “Building Broadband: Strategies

and Policies for Developing the World” described broadband as an ecosystem. “The paper

identified that for low to medium income countries, a 10 percent point increase in broadband

penetration accelerated economic growth by 1.38 percent points. This is more than in high

income countries. It noted a similar study conducted by McKinsey & Company, a 10 percent

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increase in broadband household penetration would result in a boost to a country’s GDP be-

tween 0.1 percent to 1.4 percent” (“An Open Letter,” 2010).

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General Issues on Broadband Capping

Consumers are not Benefactors

Considering the main purpose and the reason behind proposing the memorandum, the

target beneficiaries are supposedly the consumers. The broadband cap, on the other hand,

is clearly only beneficial for the service providers. A group of the country’s biggest tele-

coms, Philippine Chamber of Telecommunication Operators or PCTO, declared that it is

against requiring minimum speed, but it supports the broadband cap. Their stance is clear-

ly against the main intention of the proposal of the NTC memorandum, and in this it only

seems to benefit them rather than the consumers (“Telcos,” 2011).

Broadband Capping in More Developed Countries

Broadband bandwidth capping is not a situation alien to the Philippines. In other more

developed countries, issues regarding Internet use was also much debated on. In Canada,

The Canadian Radio-television and Telecommunications Commission (CRTC), an indepen-

dent public authority that regulates and supervises broadcasting and telecommunications

in Canada, issued news release that will review the decisions on billing practices applied to

residential customers of Small Internet service providers (Small ISPs).

"The great concern expressed by Canadians over this issue is telling of how much the In-

ternet has become an integral part of their lives," said Konrad von Finckenstein, Q.C., Chair-

man of the CRTC. "Our approach is based on two fundamental principles:

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 1. As a general rule, ordinary consumers served by Small ISPs should not have to fund the

bandwidth used by the heaviest residential Internet consumers, and

2. It is in the best interest of consumers that Small ISPs, which offer competitive alterna-

tives to the Large Distributors, should continue to do so.

With these principles in mind, we will be reviewing our decisions with fresh eyes and look

forward to hearing the views of Canadians."

The CRTC had given the Large Distributors the permission to change their billing prac-

tices for Small ISPs. They will be subjected to additional charges for going over specific

bandwidth caps (“CRTC to Review,” 2011).

Another issue is between bandwidth capping and cable providers. President Neil Smit of

Comcast Corporation said that the cable giant has no plans to charge broadband subscrib-

ers by the level of their bandwidth consumption. Usage-based billing is widely viewed as a

potential investment for cable companies against the possibility that online video would

replace cable services.

At an investor conference, Mr. Smit noted that Comcast has set a monthly band-

width cap for its broadband subscribers of 250 gigabytes and it has provided a meter

to its customers so they can see how much bandwidth they use.

He said the average user consumes two to four gigabytes a month. "We have a lot

of room there," said Mr. Smit. "Right now, we have no plans to activate usage-based

pricing."

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 Video streaming and downloading uses more bandwidth than other traditional web con-

tent like e-mail. As it grows online, companies of broadband networks might adopt usage-

based billing to replace their lost revenue from traditional video services caused by traffic

issues and higher costs. Cable industry view Netflix Inc, which built its U.S. business on

mail-order DVD rentals and generated US$1.4 billion last year, is planning to launch a tele-

vision and movie streaming service in Canada. It is considered as an emerging competitor

of cable service providers (Sorensen, 2010).

There are also stark differences between developed countries such as U.S. and Japan,

with their bandwidth policies. Reports reveal that there is a large difference in the usage

limits of consumers in the U.S. Internet service providers allow 1GB for upstream and

downstream traffic, combined. While Japanese ISPs allow 5GB per day or approximately

150GB per month it’s just for upstream bandwidth with no limit on downloads.

Chart 1: Lowest bandwidth cap proposed or implemented in the U.S.and Japan.

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 Japan and U.S. also have different policies on the excess use of these bandwidths. For ex-

ample, in the U.S., they have to pay an additional fee for every 1GB excess in bandwidth

caps, given that the subscription is 1GB per month. If the costumer cannot pay, their sub-

scription will be suspended or they have to subscribe to higher plans. In Japan, ISPs notify

their users through e-mail or letter. Then, if they cannot really pay the fee for their excess

consumption beyond the time stated in the letter, the ISPs may suspend or terminate the

service.

High bandwidth caps in two countries also differ a lot.

Chart 2: High bandwidth capimplemented/proposed by U.S. and Japanese ISPs

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 There are also ISPs in both countries that do not offer bandwidth caps.

Chart 3. No bandwidth cap implemented/proposed by U.S. and Japanese ISPs

ISPs in U.S limit their users more than ISPs in Japan. Most ISP in Japan limit upstream

trafiic only, whereas, in U.S. both upstream and downstream are covered in bandwidth

caps. Japan gets high speed with also high limits as compared to United States (Li & Losey,

2009).

Several countries, like the ones mentioned above, have their ISPs policies on bandwidth

caps widely implemented. The only difference is how they implement those policies. In U.S.,

ISPs based their charges on the plans that their consumers subscribe to, the lower the sub-

scription, the lower the allowed bandwidth cap. More or less, users who subscribe to low

bandwidth caps also get low speed of connection. Compared to Japan, they do not restrict

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their users too much. They offer high bandwidth caps with low amounts. Although it is

widely implemented, there are still ISPs who do not offer bandwidth caps to their users.

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Issues on Broadband Capping in the Philippine Educational Sector

Unheard Voices of Students and Teachers

The Memorandum Order draft by the National Telecommunications Commission (NTC)

aims for a minimum bandwidth for broadband connections in the country, in an attempt to

address Internet users’ concerns in its services.

A few reminders should be taken into consideration as regards the order, and its effects

on students and teachers, the first of which is that the memorandum was drafted without

consulting Internet users. Just as NTC did before in its bid to cap digital content via licens-

ing, the NTC did a public consultation without informing the public, and involved only tele-

communications companies (The Pro Pinoy Project). No hearing was held to consult with

what will be the most affected sector if and when the order is passed, and that is the stu-

dents.

Internet is an Important Tool for Education

As the draft permits telcos to set the maximum volume of data transferred per day, the

Internet users, especially the academe, are up in arms. The main point of the Internet is “to

remove barriers to socializing—everything else is secondary”, so a popular maxim goes. It

may be host to various abuses ranging from scam to pornography, but the Internet remains

an important tool for communication and research for professionals and the academe. It is

an infrastructure in itself that provides mobilization for people (especially in terms of ge-

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nerating income). Teachers utilize video conferencing in order to lecture on the Internet.

Students download huge chunks of research data and presentations of their lessons. That

data and broadband caps will affect productivity is a statement that merits emphasis.

In the realm of copyright, libraries and academicians (at least those in the United States)

have all recognized the need for a policing of electronic reproduction (whether via scan-

ning or photocopying), and this increased awareness is being manifested in the implemen-

tation of rules that explicitly limit the number of pages of a book that may be photocopied.

Here in the Philippines, the University of Santo Tomas Miguel de Benavides Library has

such a policy in place.

Internet is an Invaluable Source of Information for Filipino Students

In a country where there is a growing need for Internet use within the field of education

(as evidenced by the birth of distance learning programs like the UP Open University and

virtual classrooms and class facilitation such as UP’s UVLE), broadband capping will deal a

deadly blow to the students and academe. In addition, the annual subscription to online da-

tabases and academic journals (as part of the library’s offerings) as paid for by universities

for their patrons may no longer be worth the hefty price tag (here in UP alone a single sub-

scription may run as high as 5-digits—IN DOLLARS), as their patrons are in grave danger of

not being able to access as much data as before.

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 Limiting the amount of data transferred limits the amount of information Filipinos can

acquire from the Internet. A lot of students use the Internet to do research and to study.

With a broadband cap, students are restrained, if not deprived, of the information that they

could gather from the Internet.

Internet for Filipino Software Developers

Technologies that require heavy data transfer will surely exist in the future. If broad-

band capping pushes through, Filipinos will have a hard time using these technologies. Ex-

ample of these technologies are software development tools and Integrated Development

Environment (IDEs). Some of these tools go as high as 3-4 GB. A lot of these are used not

only by students but also by employees and freelance workers. More and more of these

software tools are available by online purchase only (especially open source software). If

broadband capping pushes through, even if these tools and technologies are bought, people

will not have as much freedom in obtaining them.

Broadband Capping is a Stumbling Block

Broadband capping will also be a smokescreen solution for the slow and unreliable

Internet connection already experienced in the country. This mediocrity, long evaded by

telcos, will always have people especially students, downloading more and subscribing to

more Internet providers. It’s a domino effect: Internet connection is not reliable, the people

pay more, but then NTC orders capping. People have cried foul over the memorandum, and

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rightly so: it means less opportunities to learn for students, less access to journals and

information for the academe, but it is a moneymaking scheme for some.

Ultimately, the draft lacks provisions that include: full information regarding the

subscription, full information with regard to privacy, and standard monitoring tools and

protocols that are necessary to accurately track Internet use (Jose). It is clear then that the

draft was made hastily, without due consultation with affected sectors, and without the

transparency needed to ensure that no consumer rights, or even the right to privacy, is

abused. It will not leverage social networks, but will empower NTC unnecessarily,

compromising people’s jobs, research, academic needs, and their privacy.

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Proposed Alternative Solutions

Stand Against Broadband Capping

The proposed broadband capping of the NTC is close to being an anti-consumer act, and

thus, we, as University students who primarily depend on the Internet for research and

other academic purposes, are in opposition to it.

According to some Internet service providers, they agreed to this decree believing that

it’s best for all consumers, because (1) now we have a standard and equal bandwidth usage

with each other and therefore we don’t need to haggle all the bandwidth. Another state-

ment made by one reseller of bandwidth is that (2) this act will try to help regular users

have faster and fairer Internet service from among those who are heavy users that eat up

all the services available, hence, lessens Internet traffic. They also said that in this way, (3)

the Internet service providers can now improve their services and enhances more real-

time productivity as it endorses less virtual entertainment. Contrary to these statements,

the amount of files that students (as well as teachers) can transfer through the Internet is

more important than the speed in which they can make the transfer.

As students of a developing country, there is a great need for us to be able to connect

with the world in as much time as we can. Through the internet, we learn new knowledge

that are not yet present in textbooks or any other educational materials. For us, bandwidth

capping means knowledge and information deprivation. Therefore, we are against this.

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Infrastructure Upgrades for Internet Service Providers

Instead of pushing for bandwidth caps, ISP companies should be improving the facilities

they use to provide service to the people. Internet users pay for the service advertised by

the providers, and if they can’t meet what they advertised, then they are not providing their

service justly.

Capping the amount of data may also prove counter-productive in terms of improving

the speed, because it is the data that is capped and not the speed. Should a certain number

of users use the internet at the same time, then bandwidth will still be shared.

Eliminate Overbooking by Internet Service Providers

It should be noted that the main reason for the poor connection performance being ex-

perienced by users is caused by the overbooking or sharing of the bandwidth. Overbooking

is the ISP’s way of optimizing the use of the bandwidth on the assumption that most of the

users, most of the time, aren’t using their connection at full capacity. But as most applica-

tions and services are being migrated to the cloud, users are starting to increase their con-

nection activity. As this goes on, the aforementioned assumption is becoming outdated. Al-

though overbooking is still a valid way of optimizing the use of bandwidth, the policy needs

to be updated. For one thing, the ISPs should start decreasing the number of users sharing

bandwidth up to a reasonable number.

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Sources

Jose, Ria. (2011, Jan. 12). Position Paper Re: NTC’s Broadband Capping.

http://propinoy.net/2011/01/12/position-paper-re-ntc%E2%80%99s-broadband-

capping/

Li, C. & Losey, J. (2009). Bandwidth Caps for High-Speed Internet in the U.S. and Japan. New

America Foundation. Retrieved March 10, 2011 from http://www.newamerica.net/

publications/policy/bandwidth_caps_high_speed_internet_u_s_and_japan

Jose, Ria. “No to Broadband Capping: Official position of Davao Bloggers and Mindanao Me-

dia on Proposed broadband capping.” Emptied Spaces. 12 January 2011. Accessed March

12, 2011 from http://emptiedspaces.blogspot.com/2011/01/no-to-broadband-

capping.html

Kwak, Nojin, Marko Skoric, Anne Williams, and Nathaniel Poor. “To broadband or not to

broadband: the relationship between high-speed Internet and knowledge and participa-

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shake up Canadian TV with an 'all you can eat,' on-demand Internet-based service.

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ID: 2162641071).

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%E2%80%98big-blow%E2%80%99-to-local-it-firms-startups/

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Minimum-Speed-of-Broadband-Connection-December-2010

(2011, Jan 01). Telcos: Yes to Broadband Cap, No to Minimum Speed. Retrieved from

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http://newsbytes.ph/2011/01/10/telco-group-yes-to-broadband-cap-no-to-minimum-

speed/

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