Philippine Politics, Current Events |

Would The National Broadband Network Possibly Be Beneficial To Us?

By MAJOR TOM | September 26, 2007

It has become such a full-blown issue. The first time I heard about the NBN-ZTE controversy, I felt like it was just merely yet another jar that the administration people had gotten their hands into---and being caught yet once again. For certain, the ZTE issue becomes now an unfastened Pandora's box, and everything now is in wide disarray. In fact, this issue finally became the source of an impeachment proceeding to be filed against COMELEC Chairman Benjamin Abalos, just when he is about to retire from public service. Imagine a cyclone approaching land-base and then the destruction it leaves behind when the faintest wind finally stopped.

It is worth noting at this point how the whole shenanigan had started and progressed into the huge mess that it is right now. GMA News offers this very concise timeline of the ZTE deal, from the time it was offered by the government of China towards the time it was brought to the public eye as a full-blown controversy.

Bingskee over there at Warmstone had presented how the deal was so flawed in its conception that it is actually in direct violation of eight important laws, including the BOT Law and the Anti-Graft and Corruption Law. Being such, it is most probably a contract null and void from the beginning.

The main question or questions that the Senate hearings seem to have aimed at is whether or not the contract was in violation of established government policies and laws, especially the procurement guidelines set in such mode of governmental undertaking. Senator Francis Escudero was at his sharpest this afternoon and was in fact so effective in digging up mud, slowly but surely establishing the defects of the whole NBN-ZTE deal, being so haphazard in its preparation and hugely flawed in its execution.

Considering the amount involved (approximately $329.5 Million), the contract signed by DOTC Secretary Leandro Mendoza with the government of China had not obtained proper documentations such as the DOJ and DBM advises as well as approval from the Government Procurement Policy Board.

Despite that direct contracting is allowed within our governmental system, such is tolerated merely on very special circumstances like the procurement of necessary goods in times of urgency, such rice shortages due to calamities and the like, and only if it is done through a government-to-government agreement, thereby obtaining the character of an executive agreement (mostly undertaken through memorandum of agreements) and bidding and other regular procurement procedures would be set aside and done with in this manner.

Such is the general rule on special procurements done by the government. An example of this circumstance is the implementation of projects by World Bank and the International Bank of Rural Development Bank here in the Philippines, where mostly performance of contracts are done through sub-contracting and where bidding procedures are skipped in order to avoid any delay, selecting merely contractors from an accredited list. Other situations where public bidding is avoided is when the transaction is in consonance with a signed treaty or if the goods are for use by foreign-funded projects.

In the situation at hand, the ZTE contract is for procurement of infrastructure and not of goods as specifically pointed out by Senator Escudero, thereby very far from the safe embrace of executive agreements. It appears now that the contracting parties here have merely circumvented certain restrictions by using the special characteristic of an executive agreement.

Going to other matters, there is one salient issue that the Senate hearings have not so far tackled so thoroughly, or not even a slight indication to it. It should now be a question---while the ZTE deal is under suspension from Malacañang and TRO'd by the Supreme Court---of whether or not a National Broadband Network is necessary and very beneficial to the government and to the State as a whole. Former NEDA head Romulo Neri cited it's very huge rate of return (at 29%) as a very strong motivation to procure it. Aside from that, the DOTC justifies it through a projected 3.6 Billion pesos yearly since the government is presently spending about 4 Billion pesos in telecommunication bills each year. The broadband network would also allow better interconnectivity among various governmental agencies and would allow the smooth and hassle-free implementation of new online services such as those being implemented by GSIS, where loans and other benefits could be obtained by just logging into the Internet and acquiring the proceeds from an ATM-like machine. One aspect of the planned infrastructure that the DOTC is highlighting (in its justification of it) is its VoIP capability that could save the government in long-distance expenses. In fact, it is foreseen that even the lowly barangay level government unit would be able to have access to inter-agency connectivity---broadband and VoIP at that.

Of course, the private sector would frown on this as it would be losing from the income it usually generates from government activities. But that is beside the point if for example it is primordial for the government to be so effective in its communication and at the same time save on expenses. What would be a major issue by then is if ever the government---with an infrastructure like the National Broadband Network---would steal away business from private telecommunication companies, and while the constitution specifically forbid this kind of setup. With the NBN, it is projected that the government could be able to offer very low broadband rates to the public and beat the existing prices currently offered by private companies. Of course, this would particularly be beneficial to the ordinary Internet users, having access to very affordable broadband services. At present, the rates of broadband connection are far from being affordable to the average income earners.

Even Singapore is ambitioning of having a blazing speed Internet broadband network. But over there, the Singaporean government would be tapping the private sector to spearhead the installation of such and would merely be interfering in the initial stages---unlike the NDN deal, where the government plays an active role in its operation.

The NBN would somehow be very beneficial by making available a much cheaper and faster connection into the Internet by government agencies, and possibly by the public in general.

CHED Chairman Neri was right to suggest that any procurement of such infrastructure in the future (in case the ZTE deal would be scrapped entirely) should be done through proper public bidding, in order that the government may gain mostly from it and not be worried with overpricing and substandard implementation as what is feared with this ZTE deal.

Photo: FreeFoto.com

19 Comments »

1. Sidney says; September 27, 2007 @ 10:12 am

   Another fine example of corruption.
   Now they will bury the case under tons of papers and investigations. And guess what... in a few weeks everybody will forget about it and most players will go free...

2. Richmond says; September 27, 2007 @ 6:52 pm

   Natawa ako dati dun sa statement ng wife ni Abalos na di na daw sya tinitigasan.

3. Major Tom says; September 27, 2007 @ 10:28 pm

   To sidney: That's how they usually end but maybe the impeachment proceeding against Abalos would inure some warning to future wrongdoers.

4. Major Tom says; September 27, 2007 @ 10:30 pm

   To richmond: Really? Did his wife made such comments? What a circus this ZTE controversy had turned out to be. Abangan and susunod na kabanata then...

5. snglguy says; September 27, 2007 @ 11:15 pm

   One question, isn't there a law prohibiting public officials and their families from any government projects? So what's Joey the third doing? I say everyone but Neri has an agenda in this deal...

   And why bring in foreign contractors when we already have three telecom companies that can very well bid for the project?

6. Major Tom says; September 28, 2007 @ 8:30 am

   To sngl: Definitely, and besides there's even that requirement of divestion of any existing interest in case of election of appointment to a high position. It is really a wonder why despite that he is COMELEC Chairman, Abalos would put time and effort on this and had repotedly gone to the extent of traveling to China just to smoothen the deal.

   Apparently, the idea of local trelecom companies building the broadband network for the government is one good suggestion nowadays. However, in the beginning, it would have been unpalatable for the local telecoms to build such infrastracture on such a high cost considering that it would be capable of competing with their own system and that of course, they would lose huge revenues from government communication bills.

   But if the government really wants it, then they seem to have no choice but to enter into such undertaking or else, a foreign company would do that for the government.

7. ipanema says; September 28, 2007 @ 9:48 am

   well, these stories are just waiting like time bomb ready to explode. we needn't ask why we are not progressing at the rate that we are supposed to. those corrupt officials must first be exposed before they can be approved. if they do it while in office, fire them!

   there are a lot of anomalous transactions in the government. unless we weed this out, everything will be a cycle.

   I think China offered higher than local telecoms which politicians will not earn much perhaps.

8. Major Tom says; September 28, 2007 @ 2:12 pm

   To ipanema: If perhaps we keep on doing this, exposing anomalies after another, then hope might still exist for this nation, while now considered to be one of the most corrupt nation in the world.

9. eric says; September 28, 2007 @ 8:08 pm

   Neri claimed that mega bit per second costs in the Philippines is about 30 dollars, while it costs about ten cents in the US.

   When I began saying that the costs of high speed Internet connectivity here in the Philippines is staggering (those offered by PLDT, Globe, Smart and etc.) as opposed to the rates in the States, no one bothered to pay attention. Anyway, in protest, to this day, I only have dial up. I refuse to pay such exorbitant fees.

   Nonetheless, this high costs of local high speed connectivity is the primary reason, I believe, why online experience in the Philippines is a few years behind that of the States.

   As for this NBN-ZTE fiasco, personally, I don't think the government should get involved in it. It should be a private undertaking. Most importantly, any high speed connectivity project on a national level should also greatly benefit the public sector, not only the government.

10. bw says; September 28, 2007 @ 11:50 pm

    We all know that payolas in this kind of deals happen all the time but shit hits the fan real hard when a voracious croc who wants most of the pie emerges and starts shoving and bullying people off It is no wonder our long distance rates are still one of the highest in Asia - because government officials sabotage the industry

    Families of politicians are allowed to pursue their own business interests. This part and parcel of the democracy we enjoy. There is no conflict interest as long as the politician does not own shares or sit in the board of a company that bids within the rules set by the government regulation. Incidentally JDV III is not a spring chicken in the telecom business - he's been in the industry for many years now.

11. annamanila says; September 29, 2007 @ 3:14 pm

    I think we really need the national broadband infrastructure. I have seen the comparative table of connection costs between countries ... ours are incredibly high. But this should be private sector led ... government has a dismal record of implementing such projects. Corruption in government -- what else is new? but the scale of corruption. hay naku.

12. Manila Bay Watch says; September 29, 2007 @ 9:40 pm

    Hope this time people do the right thing - not to abandon this issue. No less than the country's election boss is accused. Imagine that? Everything he's done now is suspect, i.e., did he exchange votes for the contract, a retirement gift of sorts?

    Extraordinary nerve!

13. Manila Bay Watch says; September 29, 2007 @ 9:42 pm

    as to benefits - no doubt about it.

    but not at any cost. what I mean here, is not only financial costs but also not at just any sacrifice, i.e., moral and legal.

14. Major Tom says; September 30, 2007 @ 7:13 am

    To eric: Staggering difference I may say. Even if we consider that the local telecoms still had to be secure in their returns on massive investments on cables and relays, I still see it so exhorbitant vis-a-vis the US rates. Some legislators were suggesting just that, not for gov't to enter into such undertaking but negotiate or compel the local telecom to sell at lower prices. Maybe we should follow the Singaporean plan, which is for government to infuse money in it but leave it alone to the privae sector to operate.

15. Major Tom says; September 30, 2007 @ 7:18 am

    To BW: Good information on Joey de Venecia III, at least by that we could sum up his person much better.

    What happened I think is that the ZTE project was fasttracked mainly because of that, huge payolas. If the officials involved were not as greedy, it would have gone through unchecked.

    Al though it was such a feat for the DOTC to hide it from the general public's view considering the amount involved, a staggering 300 Million dollars, and brave enough to face public reaction when it begins implementation.

16. Major Tom says; September 30, 2007 @ 7:25 am

    To anna: We need it but we don't trust the government to operate it. That's the main problem. Maybe we need to see a middle point here where a much cheaper broadband network would be in place but the private telecoms would built it as a consortium. The problem kubng ayaw din ng mga telecoms dito so lugi tayo, nadidiktahan ng mataas na presyo ang connection rates by a virtual monopolistic group. Sana merong middle way dito like PLDT, GLOBE and SMART agreeing for lower rates, at least what the average Asian city is paying. Why should we be paying more?

17. Major Tom says; September 30, 2007 @ 7:29 am

    To Manila Baywatch: I really like to see where all this would end. If the allegations and accusations thrown in this issue were mostly true, then it was such a horrendous conduct for any government officials involved, secretly entering into a sweetened deal, clearly highly disadvantageous to the government, selling the nation down the river.

18. nelson says; October 12, 2007 @ 1:36 am

    The physical separatedness of the broadband network is of little significance for security. Gov't people will not be stopped using their gmail or yahoo account, aside from many other great services hosted on other networks.

    Also, new technologies are being developed and internet is really meant to be a redundant hodge podge of various network systems. If we really want a national broadband, I suggest developing it thru BPL (Broadband over PowerLines) as the powerlines are installed already and what is needed more is the last mile electrification. See http://computer.howstuffworks.com/bpl.htm, http://midas.blogsome.com/

19. Manila Bay Watch says; October 12, 2007 @ 5:12 am

    Major Tom,

    You say, "clearly highly disadvantageous to the government, selling the nation down the river."

    Then, what next is the proper question?

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