POSITION PAPER Re: NTC’s Broadband Capping

In a revised draft Memorandum Order (MO), the National Telecommunications Commission (NTC) will allow internet broadband service providers (ISPs) to cap the daily volume of data allowed for each broadband user.[1]  The MO on the Minimum Speed of Broadband Connections is NTC’s answer to the concerns raised by the Department of Trade and Industry regarding customer complaints on the poor service of ISPs.

Among others, the MO on the Minimum Speed of Broadband Connections directs broadband ISPs should specify their minimum broadband connections speeds, service reliability, and their service rates.  The MO also allows ISPs to set a maximum volume of data allotted per subscriber per day.

There is an assumption that broadband capping will improve the services of broadband ISPs.  I beg to differ.  Rather than improve the services of broadband ISPs and address that concerns of consumers regarding the poor service of ISPs, broadband capping is anti-consumer, regressive, and counterproductive.

Broadband capping will limit the consumers access to the internet.  The policy will not do any good to consumers and businesses.  Furthermore, it will not encourage broadband ISPs to improve their services and will likely increase the current service rates of ISPs.

According to the Yahoo-Nielsen Index 2010, 69% of Filipinos use Internet cafes to connect to the internet.[2]  Out of 133 countries, the Philippines ranks 85 on the Global Technology Report 2009 – 2010 and lists the country’s internet bandwidth per 10,000 population at 1.1 Mb/s.[3]

In a published paper entitled “Broadband and the Economy” by the Organization for Economic Cooperation and Development (OECD), the expected economic impact of broadband is explained:

“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 infrastructure itself.  Indirect effects come from all aspects of economic activity affected by broadband 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.

Broadband also enables the emergence of new business models, new processes, new inventions, new and improved goods and services, and it increases competitiveness and flexibility in the economy….”[4]

The same paper asserts that broadband is an enabling technology with a huge impact on productivity and that the largest productive gain of broadband come from its use, rather than the production of ICTs.[5]

Furthermore, the paper posits that broadband creates a positive impact on consumer surplus by lowering search and information costs and giving consumers access to information, the ability to compare prices easily, increasing competition, and creating a downward pressure on prices.[6] 

Broadband also changes the roles of individuals in the productive process by facilitating user-created content and user-driven innovation.[7]  Examples of these are blog posts, photographs, and audio-video recordings posted online.  The paper posits that as the new creative outlet, the Internet has “altered the economics of information production, and led to the increasing democratization of media production and changes in the nature of communication and social relationships.”[8]

According to NTC Commissioner Gamliel Cordoba the MO was drafted to address the concerns of the DTI regarding customer complaints on the “poor services” of ISPs.[9]  In the first nine months of 2010, there were 622 complaints against telecommunications companies with more than half of the complaints referring poor Internet connections.

NTC’s answer is the MO which orders broadband ISPs to specify their minimum broadband connection speed, service reliability, and service rates in their advertisements, services literatures, and in their service and legal agreements.

However, this disclosure ISPs are allowed by the NTC to set broadband caps or a maximum volume of data allotted to each subscriber per day, thereby limiting broadband usage of subscribers.

Allegedly, the broadband cap is to protect consumers from abusive users.  According to NTC Common Carriers Authorization Department Director Edgardo Cabarios,  “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.”[10]  Allegedly, the abusive users being referred to include software and movie pirates and compromise just one to two percent of Filipino broadband subscribers.  

According to a clause in the the MO,

"WHEREAS, it has been observed that few subscribers/users connect to the internet for unreasonably long period [sic] of time depriving other users from connecting to the internet; NOW, THEREFORE... Service providers may set the maximum volume of data allowed per subscriber/user per day.”[11]

NTC Public Relations Officer Paolo Arceo explains that this clause in the MO was suggested by telecommunications companies

“to prevent network prevent network abuse by unscrupulous subscribers who violate intellectual property laws, particularly on copyright, by downloading movies and software, similar to abusive subscribers of unlimited call/text promotions which were primarily designed for person-to-person use but used for voluminous commercial undertakings.  These types of network abuse limit accessibility to a few instead of providing adequate access for all of the subscribers. Commercial or high volume users may avail of other internet connection packages which have committed higher speeds and allow heavy data exchanges.”[12]

Philippine Chamber of Telecommunications Operators President Atty. Rodolfo A. Salalima, in a letter to Cordoba, reiterates that the clause regarding broadband capping is necessary for fair use in the interest of consumers:

“This guarantees that abusive consumers of broadband/internet service do not monopolize available capacity to the detriment of other paying customers. The definition of the volume cap can be left to the individual telecommunications providers to define based on the different service plan offers they provide, all in the spirit of competition.”[13]

While the clamor for fair use is laudable, the means of doing it by capping broadband is unfair and goes against consumers’ rights.  The complaints against broadband ISPs and telecommunications companies for “poor service” cannot be attributed to the one to two percent of abusive users.  Managing the abusive users via broadband capping subverts the real issues being raised against the ISPs and telecommunications companies.  The problems of “poor service” does not lie on the abusive users who compromise a mere  one to two percent of the consumers.

The clause in the MO is counterproductive for individuals and business that rely on broadband services for their productivity and for the delivery of their goods and services.  Broadband capping will hamper the economic impacts of broadband as stated by the OECD.  It will also greatly hinder the changes in the individual and the society that is supposed to be brought about by broadband and internet connectivity.

Moreover, international rights lawyer Romel Bagares iterates that broadband capping goes against the basic right to information.[14]

Instead of addressing the real reasons for the reported poor services of broadband ISPs and telecommunications companies, the NTC MO on the “Minimum Speeds of Broadband Connections” is regressive and counterproductive.  An online petition has been published that says, “No to broadband cap, yes to better internet in the Philippines.

Broadband capping is not the solution to curtailing abusive users.  It is the role of the broadbands ISPs and telecommunications companies to make sure that their services are not abused and surely there are other means that the NTC and the ISPs can curtail these abuses, other than oppressing the rest of the consumers.

Broadband capping hampers the access of users to the services they are paying for and curtails their basic right to information.  Furthermore, it does not assure consumers that the broadband ISPs and telecommunications companies will upgrade their infrastructure and improve their services.

Broadband capping is counterproductive, regressive, and subverts the issues raised regarding the poor services delivered by broadband ISPs and telecommunications companies.

[1] “NTC Caps Broadband Data Volume,” Manila Times, 27 December 2010, http://www.manilatimes.net/index.php/business-columns/36310-ntc-caps-broadband-data-volume-.

[2] Yahoo Nielsen, “Digital Philippines 2010: Yahoo-Nielsen Net Index Highlights,”Scribd Slideshow, http://www.scribd.com/doc/32801291/Net-Index-2010-Highlights-PD-2010-06-05 (accessed on 10 January 2010).

[3] Cited by Cocoy, “State of the Internet in the Philippines 2010,” Philippine Online Chronicles,  entry posted on 29 June 2010, http://www.thepoc.net/thepoc-features/lintech/lintech-features/8176-yahoo-nielsen-digital-philippines-2010-the-state-of-internet-in-the-philippines.html (accesse 10 January 2010).

[4] Organization for Economic Cooperation and Development (OECD) “Broadband and the Economy,” Scribd Document, http://www.scribd.com/doc/33640345/Broadband-and-the-Economy (accessed on 10 January 2010).

[5] Ibid.

[6] Ibid.

[7] Ibid.

[8] Ibid.

[9] “NTC Caps Broadband Data Volume,” Manila Times, 27 December 2010, http://www.manilatimes.net/index.php/business-columns/36310-ntc-caps-broadband-data-volume-.

[10] Quoted by TJ Dimacali, “NTC’s Proposed Data Caps Violate Consumer Rights, Lawyer Says,” GMANews.TV,  http://www.gmanews.tv/story/209385/ntcs-proposed-data-caps-violate-consumer-rights-lawyer-says, 29 December 2010.

[11] “National Telecommunications Memorandum Order with Subject: Minimum Speed of Broadband Connections,” Google Document embedded  by TJ Dimacali, “NTC’s Proposed Data Caps Violate Consumer Rights, Lawyer Says,” GMANews.TV,  http://www.gmanews.tv/story/209385/ntcs-proposed-data-caps-violate-consumer-rights-lawyer-says, 29 December 2010.

[12] Quoted by TJ Dimacali, “NTC’s Proposed Data Caps Violate Consumer Rights, Lawyer Says,” GMANews.TV,  http://www.gmanews.tv/story/209385/ntcs-proposed-data-caps-violate-consumer-rights-lawyer-says, 29 December 2010.

[13] Ibid.

[14] Ibid.