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July 11, 2013

Why do Filipinos pay more for slower internet?

It’s just one of the many questions that kept on popping out in my head recently; why do we pay more for slower internet? Our neighboring countries such as Japan & South Korea feature the fastest internet speeds in the world, and here we are living with expensive and subpar connections.

filipino oligarchy internet

Here’s a rough comparison: in Japan, 35mbps costs at around Php2k a month more or less, wherein locally, a similar deal would be nearing Php6k.

Let’s tackle the basic economics here. If consumers demand for more data, the supply is supposed to meet it halfway at the equilibrium price – the point in a curve where the buyers and sellers agree on (*loud cough* unless we have no choice *cough*). If that has been the case for years already, then factors affecting supply such as technology & costs of production should have vastly improved already, thus shifting the supply curve to the right.

economics slower internet 2

In short, by this time and with this kind of demand, internet data, and SMS costs should have already decreased in price.

One thing to note though; substitutes are also popping out recently. 4G LTE is becoming the main focus for telcos now, so by increasing the price of broadband internet, demand for 4G LTE will increase – which might have influenced the high price of internet today. But even with that said, the development of our internet speed is still on the slow side.

A similar case is presented in one of our past articles too – “In the age of mobile data, is an SMS still worth Php1?”. Our guess is that, a slight decrease in price (even .20 cents) would decrease a company’s profit by hundreds of millions in a year.

Price control isn’t the best thing to do for economic growth, unless however abuse is shown by the producers. If that’s the case, then our government should step in and implement a price ceiling.

I guess we’re stuck here guys; we’re under oligopolists. It’s the same thing with gasoline, but more complicated because of the oil deregulation law – no government price controls will be there for it.

So what’s the answer? Why do we pay more for slower internet & less data? I guess the answer’s already above; we have no choice. Personally, a good start to fixing the problem would be to talk about it.

Maybe if the government and the companies start hearing that we care so much, or maybe we can push an amendment in the constitution that would trash the 60/40 ownership rule to attract foreign investors (more choices, more competition & more innovation), we’d have cheaper and faster network services in the Philippines.

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78 Responses to “Why do Filipinos pay more for slower internet?”

  1. Dit says:

    Hello mga kababayan! Dito po ako sa US ngayon at magbabakasyon po kami dyan sa atin ng 5 months. Kailangan po ng asawa ko ng reliable na internet connection dahil kailangan nya magtrabaho habang nandyan kami. ANO PO ANG MAGANDA AT MABILIS sa lahat ng internet provider sa atin?

    Maraming salamat po!

    • MannyT says:

      Depende sa area yan. Ang maganda mo gawin mag survey ka sa mga kapitbahay mo kung ayos ba ang service provider nila: swak ba yung internet speed sa subscription na binabayaran, maganda ba at mabilis ang customer service, hindi ba napuputol ang connection 24/7?

  2. Mel says:

    Telco service (both voice and data) in the Philippines is expensive simply because there is no competition in the Philippine telco sector. PLDT has the lion’s share of international bandwidth to/from the ph, and the government’s failure to mandate open access to PLDT (and other telco’s) network (interconnection, etc.) to other competing providers.

    One problem is that the big telcos control both the infrastructure and the retail service to end users, making them charge whatever they want and consumers have no choice but to bend over and pay.

    The PH gov. could learn a few lessons from countries like Australia where despite one big telco (Telstra) dominating the industry, Australian consumers enjoy a very competitive telco market thanks to tight regulations by the Aussie gov. that force Telstra to give competing (and smaller) ISP’s and phone service providers like iinet and TPG access to their network to enable smaller competing providers to sell their services to consumers at a cost lower than Telstra’s own services.

  3. MannyT says:

    If NTC starts caring to the Filipinos, then parhaps we can have a faster internet connection at the right cost. Right now they are more comfortable acting as spokesperson of the two greedy telcos in the Philippines. Pnoy should be aware of this and start revamping NTC personnel.

  4. rhk111 says:

    I wholeheartedly agree, Filipino consumers get shitty service because of the OLIGOPOLY. I live here in Bacoor, Cavite, which is very near Manila and yet my Wimax service is shitty.

    The sad thing is that the government has NOT done anything to dismantle oligopolies and put more players on the field, which means we are stuck with whims of Smart and Globe …

  5. IGO says:

    feeling ko yung sinasabi ni manuel, kinukumpura niya lang yung internet sa ibang pangangailangan. kasi nga naman kung titingnan mo presyo ng tubig sa pilipinas ang mura mura lang. pero pagdating mo sa US umaabot ng 382 dollars bill ko sa tubig lang, talagang magugulat ka eh, wala naman leak. Yung kuryente nga lang ang mura talaga. Pero dapat nga internet mura lang di naman yun tulad ng gas na nauubos. wala naman tayung choice dahil wala naman refinery sa pinas.

    • 'em says:

      Kaya mahal sa US ang tubig kasi kasama sa bill ang waste water treatment. Sa Pilipinas, wala pang ganoon, mahal na tubig.

  6. Volfield says:

    This is what will ALWAYS happen if the government will not change the policies in corporation ownership here in the Philippines.

    70% owned by the Filipino wealthier businessmen and 30 % owned by foreign investors(with their name on as the carrier)? Shit! Then no competition in favor of consumers will come to fruition

    And here we are, being exploited and deprived by our own Filipino richer class! Doesn’t change a thing since Spanish time isn’t it? Just more ironic coz its a Filipino oppressing a Filipino.

    • james says:

      yep. I see how it is here, filipinos for sure oppress other filipinos in this FINE country…lol im american but living here, and wow, the shit that goes on in this country that normally an american would BITCH HARD about, the filipinos just take it up the ass…get a bad batch of food..take it up the ass rofl…bad internet…same, well in the usa, we will bitch and bitch at the people responsible until we get our way. simple as that, and normally when it comes to bad food, or even bad internet service. they will get their way, and the problem will be fixed.

  7. angry_bird says:

    Why is internet connection expensive here in the Philippines?

    here are some facts:
    1. very LOW market penetration – only less than 5 million Filipinos have internet subscription, that’s below 5% of our population. Korea, Japan and other countries have more than 70% market penetration, it’s like one internet connection per household. Majority of the Filipinos rely only on internet shops (while that internet shop only subscribed to residential plan instead of a business plan).

    2.Terrain, weather, climate – We all know Philippines is always being hit by calamities like typhoon, so the infrastructure of the telcos in our country needs more maintenance compared to other countries (fiber cut etc.). Also it is harder(costly) to lay infrastructure in the Philippines because of the terrain and also our country is an archipelago.

    3. Equipments – our local telcos were charged higher when buying equipments compared to other foreign telcos.

    • angrypekpek says:

      lols… walang kompetisyon kaya ganun presyo… BS na yung ibang rason. tangapin ang katotohanan, niloloko lang naman tayo sa gobyerno at capitalismo!

  8. HNSCC says:

    Kung matino lang sana ang internet service, most won’t even need LTE (hasn’t even taken off in Europe). Current LTE speed benchmarks clock at 5-20Mbps which is well within the range of HSDPA (up to 21.1Mbps).

  9. hellopo says:

    @yuga and readers, i just want to share that im happy with my PLDT net connection(because i can get their promised speed but still sad because its pricey,anyway) bat ganun po laging nawawalan kmi ng connection?ung nakaconekta siya pero naglilimited access,ung nagkakaroon ng yellow triangle na may exclamation point ang remedy ko po jan ay off-on ng router then ok na pero minsan nabobother ako lalu a pag may diniDL anu po dpaat kong gawin?

  10. jhepoyski
    Twitter: jhepoyskee
    says:

    well i guess the NBN should have fixed this problem. ganda na sana ng plano kaso na overprice pa. we should do our part as well na buhayin ang NBN.

  11. Edwin says:

    We are a slave to the Telcos! There is no doubt there. Our need to satisfy our craving to be always connected and online makes us easy prey for predators–the Telcos. They do not care about our welfare. They only care about business and profit. Even if you switched telcos, its still the same thing. No one will boycott them. No one will give up their precious connection to make a point. The consumers will not band together to correct this. Everyone is sitting on the fence. What can I say? Light at the the end of the price tunnel is like a galaxy…far, far, away. 8-(

  12. hanjo says:

    Isa sa mga reason na nakikita ko ay iyong lockin period. Most internet connections are available thru contracts with telcos. Once youre in, they know it would be difficult for you to get out since mahal yong termination fee. If only the govt can step in sa contract para ang dapat lng bayaran sa termination ay minimal termination fee at yong mga equipment or cables na nagamit. Alam ng telcos paano gamitiin yong law on contracts to their advantage. With that, kaya nilang igapos ang subscribers. At the start ok pa yong connection but in less than a month, ayon na…. mas mabagal pa sa pagbabawas ng constipated person.

  13. jayron says:

    Market forces pa rin yan. Ang liit ba naman ng sales ng PLDT sa isang taon kumpara sa NTt Docomo no? karamihan ng Pinoy may FB nga wala namang computer sa bahay.

  14. chl says:

    Not so simple. The main difference in economic in Japanese and Korean monthly ARPU is about US$40 with about equal voice and data but the Philippines ARPU is not even US$3.50 90% voice. In the case of Korea, the govt even actually subsidized the earliest rollout of high speed network. In fact, now many countries take the initiative to subsidise the rollout of fibre including Indonesia, Vietnam even Singapore.

    No doubt more competition would be make things better in the Philippines but its not the primary reason which is how oligopolies get away with their excuses.

  15. gardo gwapo says:

    why do filipinos pay more for slower internet? isa lang ang sagot ko dyan, mapa-upper class, middle class at lower class ka man, tayong lahat ay uto-uto.

  16. Mr. Butch says:

    Another reason why our country has slow internet speed compared to others is maybe because we can’t afford the bandwidth. So yes, it is important to get investors so that we can afford higher bandwidth. I also think the bandwidth allocation we have as a country is not as accommodating as in the US for example. I mean, we have lower speed and we have a smaller “bowl” of internet connectivity to share amongst us. That’s probably one of the reasons why the price is still high.

    Lastly, something funny to share, I just tried pingtest and speedtest. I have a Globe connection. When I do the test using Globe’s or any local server, the results are fine. But when I used off-shore ones like Seoul and HK, the results were better/faster, hehe–proof that the connections off-shore are faster and more stable.

  17. Smokescreen says:

    Profits from internet services is already hitting a plateau. As expensive as it is now….internet providers have figured out a way to make the expensive internet service….even more expensive!

    Presenting the CAPPING of your internet usage. Mahal na yun internet, gusto nila mag upgrade ka pa to a higher and of course more expensive plan.

  18. Joseph Rayne says:

    Simple. PLDT control the backbone of the internet connection to and from the Philippines. And like one of the comments and PLDT doesn’t want it to be open like in other countries. Ganid lang ba. Don’t tell me cost and stuff… with the copper wires, for telephone, they have installed ages ago nabawi na nila ung investment nun and made more. And ang claims nila na fiber optics na sila, oo, servers nila, pero it is still copper wires na nakalatag outside.So getting the backbone won’t be a problem for them financially.

    Used to be PLDT. Then the habagat happened, took them 2 months to restore it. And during the period, a total of roughly 20hrs sa phone trying to get it restored sa Call Center nila, talked to 2 supervisors, went to their Business Center twice, and gave misleading information. In some instances conflicting pa. That’s the time I tried by brother’s Wi-Max, and to my surprise, wireless ang main connection at 3x speed ng download at 150 kpbs sa torrent, same price lang sa PLDT. After they successfully restored the dsl connection sa area namin, they offered no “pakunswelo” or stuff.

    Now we transferred houses, I’m doing a parallel test with Globe Wi-Max and SkyBroadband. Into my 2nd month, and SkyBroadband is winning by a mile.

    I guess what worked before kaya maganda connection ko sa Wi-Max is because we lived near a Cell site.

  19. Nein says:

    When you have backwater and war torn countries like Ghana and the Democratic Republic of Congo beating the PH in internet connection, there’s no denying something went terribly wrong.

    No, don’t give me the tired excuse of, “but we’re so poor so we take what we can get.” It reeks of complacency and mediocrity that these crooks heading these companies easily take advantage of. When the Philippines is surrounded by tech giants such as Korea, Japan and Singapore on both sides you’d think the country would follow suit, but look where we are. I sometimes wonder if this is a cultural thing wanting to be as less Asian as possible by being shitty, but as already mentioned it’s just good ol’ oligopoly at work.

    The country has the resources and potential to pull off decent internet. It’s just that the current business attitude there is so toxic it’s pulling everyone else back hard.

    • Zobel says:

      PH is just as backwards. Even more so. Even the Neanderthals were far more civilized than this beloved shithole of ours.

  20. xdarkx says:

    Another article which should be bitch-slapped on Bum Aquino…

    ***********

    “One thing to note though; substitutes are also popping out recently. 4G LTE is becoming the main focus for telcos now, so by increasing the price of broadband internet, demand for 4G LTE will increase – which might have influenced the high price of internet today. But even with that said, the development of our internet speed is still on the slow side.” – But then, these LTE’s, as I’ve inquired with Scumbag Globe, also have data caps… >.<

    "Price control isn’t the best thing to do for economic growth, unless however abuse is shown by the producers. If that’s the case, then our government should step in and implement a price ceiling." – But then, even government is f***ing us up. Sigh…

  21. Edward Marsh says:

    Globe recently downgraded 999 peso broadband.Started from may 1 i was told.i paid 999 on may 27 and no one told me about no more unlimited.i and others before me visited the globe store in la carlota.the store circular went out on june 9.its unlawful.complain? yes but who cares.

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Bob Freking writes, edits, & renders for YugaTech. You can contact, follow or tweet him at @bobfreking. For all his social media links, you can go to https://tinyurl.com/bobfreking

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