Dean Michael Berris

So finally I've gotten my personal pipe to the Internet set up this afternoon. Got the wireless router set up too. Now my lovely wife and I are able to sit beside each other, mind our own businesses when we're online, have snacks in an airconditioned room with a cable TV movie showing. Of course, I would have loved having bucket seats or a lazy boy couch and maybe watching on an HDTV but that's for another day. Having said this, I've got some gripes about how things in the Philippines aren't exactly as easy as they should be. Let me start with one in this blog post, and the others in the following blog posts:

Communication.

For one thing, in the Philippines, to communicate with other people is really expensive. Sure, there are many forms of communication and I'm talking about the verbal/visual. Let me go through a short list of examples:

• If it means communicating in real life face to face, that means being at the same place at the same time. Travelling and blocking off time to be in the same place at the same time costs much: coffee at a coffee shop, dinner at a restaurant, bus/train fare, gasoline in case you've got your own car, etc.
• If it means communicating over a phone conversation or SMS, you're talking per-minute or per-second charging, per SMS charging, the cost of the actual phone, a subscription if it's a landline, even pre-paid service cost a premium compared to post-paid plans.
• If it means sending messages from person to person, you're talking about mail and that means (expensive) stamps and envelopes, the time it takes to write down the stuff, and the days/weeks it takes for it to get from one place to another.

In other parts of the world communication means are taken for granted. Heck, travelling from one point to another is almost ignored because it's never as hard as it should be. In more developed parts of the world it's a given that getting from one place to another should be made easier all the time. It's a conscious effort by people to make things easier to do, for processes to get more efficient, to maximize the utility of anything and everything around them.

Here in the Philippines it's just too hard to get connected. The up-front cost of getting phone service is too high still for my liking: buy a phone, a SIM, buy service credits, etc. Let's take a hypothetical sample situation: a college student with a budget needing to buy a phone for themselves to get connected with people around them:

1. Buy a phone -- ranges from Php 2,000 up to Php 11,000 for the 2G phones, Php 8,000 to Php 25,000 for the 3G phones, Php 20,000 up to Php 50,000 for the smartphones. Any option here is just too expensive.
2. Get a SIM card -- prepaid SIMs cost around Php 50 to Php 100. These typically include Php 50 initial credits to be used for sending SMS and/or making calls. This is about as cheap you can get pre-paid; you can forget post-paid if you're not sponsored by your parents that have work.
3. Maintain the connection and actually use it -- Call rates cost somewhere around Php 6.00 per minute; contrast to Php 7.00 for the first 4 kilometers of a jeepney ride, one minute of conversation almost costs as much as travelling from one end of Ayala Ave. to the other end. One SMS has 160 characters and costs Php 1.00, meaning if you used all 160 characters you're paying Php 0.006 per character -- but if you send an average of 20-40 characters, you're paying Php 0.025 - 0.05 per character. Not cheap at all if you look at it in that context.
4. Try and get Internet Access via the phone -- Data rates play around the Php 20/hr level. One hour lets you do enough, but consider when you breach that one hour barrier, you're talking about just being able to get from Makati to Sampaloc, Manila via a Taxi (~ Php 120) while getting just six hours of Internet access. I think this is crazy.

So consider how the ideal world in my view would look like if:

• Everybody had easy access to a sufficiently powered mobile device (say ~Php 3,000) that can enable calling, sending/receiving SMS/MMS, and access the Internet sufficiently well.
• There is a flat service fee on a monthly basis not tied to consumption; pay a flat rate every month and you can call, SMS, Internet all you want.
• Subscription rates vary based on quality: higher monthly rate better quality service or value added services included, better data access/delivery speeds, etc.

Instead of charging based on usage (which is such a greedy model) why don't we change the dynamics and play with the service quality instead. Of course, this is just me wishful thinking but if it was just as easy to get postpaid service as it is as easy to get prepaid service on the mobile networks, then I'd say majority of people would rather use post-paid (or pre-paid but on a flat-rate) services. If the cost of sending/receiving SMSes is equal to the cost of making calls people may well be using the phone to call instead on urgent matters. If the cost of accessing the Internet is the same as it cost to make calls then Internet penetration may very well increase rapidly here in the Philippines.

Question now becomes how do the telecom companies make money? Simple: provide great service and make the subscribers loyal supporters of the telco. I can see how more customers would give the telco's a more predictable revenue outlook on a regular basis with flat-rate pre-paid service (say, pay Php X for absolutely unlimited usage for the next 30 days) -- and that allows telco's to just get as much subscribers as they can keep on their networks. Once you have a predictable revenue stream you can better plan for improvement and upgrades.

This would translate to:

• More opportunities in other segments of other industries (local call center operations, lower barrier for telecommuting options, better Internet presence and faster adoption of web-based technologies/solutions). The telco's can then enter these markets and diversify their portfolios.
• Enabling cloud-based services as value added service to all subscribers: why not allow storing data on a per-gigabyte over time model, or offer access to online hosted services like calendars, integrated email, etc. These could then be telco-hosted, and the hosting would have a different revenue model.
• High Technology development and upgrading of the local industry and talent pools. Once the Internet is as ubiquitous as the cellular service coverage, you can then create a whole new market that enables everyone to play in the same arena as the other already established online services companies do.

Of course, the disruptiveness of this model is what's preventing it from happening. I'm willing to say that the current telecom companies in the Philippines love the current model because they already make boatloads of money of it. I'd say it would truly take a visionary entrepreneur to actually execute on this model and be a disruptive force in a market that's ripe for new ideas on better ways of doing things. Just like how innovation was the driver for the growth of the Internet, innovation is what's going to get this "Internet Access at Home" as easy as possible in the Philippines.