SLOW: Why a growing economy must keep up speed online

CEBU, Philippines - For online entrepreneur Kenneth John Galano, the Internet is his bread and butter.  At 23 and with P500 as capital, he took the risk of leaving a regular job to open his own online business, selling accessories, dresses, shirts, bags, gadgets, and even mobile phone accessories.

With the help of social media, Kenneth was able to reach out to an international market, getting orders from the United States, London and Greece. He even has celebrity clients.

“Honestly, I can’t live without internet. This is where I started my dreams to fulfill everything what I wanted in life. This is my job, my way of living,” Kenneth said.

Today, he drives his own car, buys the latest gadgets, and even takes care of his siblings’ education and house bills.

But achieving his dreams was not without obstacles. Ironically, the biggest of which is what catapulted him to success – the Internet.

Kenneth admits the Internet speed the telecom company he is subscribed to isn’t necessarily the fastest. In fact, there have been  times it does not live up to what is promised that Kenneth had to call the company several times to have his connection fixed.

“It took them long to solve my problem. And I find it very inconvenient as a customer,”

He said that an entrepreneur, customer satisfaction is his top priority but this will not be the case if he cannot attend to his clients’ orders promptly because  of slow Internet, so much so that photos of his products need to be uploaded online.

“And if we get slower Internet speed, it might discourage our potential buyers since we could not respond to their inquiries right away,” he said.

SLOWEST

Recently, the ASEAN DNA placed the Philippines  among the countries in Southeast Asia with the slowest Internet connection.

Here,  Internet connection is at 3.6 megabytes per second, which is below the average ASEAN speed of 12.4 mbps. Connection here is slower than that in Laos with 4 mbps, Indonesia with 4.1 mbps, Myanmar with 4.9 mbps, Brunei with 4.9 mbps, Malaysia with 5.5 mbps, and Cambodia with 5.7 mbps.

Countries with connection above the regional average include Vietnam with 13.1 mbps, Thailand with 17.7 mbps and Singapore with 61.0 mbps.

Senator Benigno Aquino III has called for an investigation into the situation, saying the amount Filipinos spend for Internet connection – P1000 to P2000 a month – is not commensurate to the speed they are getting.

A solution to this problem is also what Fleire Castro, owner of a social media and digital agency, is asking both government and the private sector to come up with. She says faster Internet connection at a more reasonable cost would encourage more local businesses maximize opportunities in the digital world and penetrate the global market.

She said the Philippines is ripe for social media marketing and engagement since the country has 34 percent internet penetration, which is at par with the global average.

“Out of the 37 million Filipinos who have Internet access, 34 million of those have Facebook accounts. Why not take it as an opportunity to reach potential customers who are active on social media? Why not reach out to these netizens who use the internet at the average of six hours daily with four hours on social media alone?” she said.

Then again, a more dependable infrastructure is necessary.

Like Kenneth, she, too, was not spared from an unpleasant experience with the telecom company her firm, Third Team Media, was subscribed to.

Fleire said that when they were setting up an office at IMEZ in Pueblo Verde, Lapu-Lapu City, they applied for an Internet connection, complied with the requirements, and paid the initial fee. They were told the connection would be established within a week but this reportedly did not happen.

“I was wrong. There was a huge bill on the setup fee for the wirings and cables and other things in between. It is definitely costly. And to think our application was a measly 3MBPs only. Could we get our money’s worth at the cost of P10,000 installation at P2,500 per month? I think we should do better than that,” she lamented.

“Temporarily, we are using an LTE connection from another local telecommunications company which has, mind you, three times the internet speed at zero installation fee (paid only for the device) at only 1/3 the monthly cost. If they put a cap on that soon, I will have to look into the traditional installation again and suffer the same costs and speed,” she added.

Fleire’s firm, too, relies on a stable and fast Internet connection to offer its services – social media management, which includes planning and strategy, profile creation and customization, content creation, community management, ongoing updates and campaign execution to businesses that need to outsource digital marketing strategies.

PITFALL

Economist and The FREEMAN business columnist Fidel Abalos calls the sluggish Internet connection in the Philippines as a “double whammy” for companies since it does not only affect the productivity of the business but also costs them more in their operational expenses.

“It is really expensive. Businesses would consider investing on their Internet services as not cost-efficient,” Abalos said.

He said the slow and costly Internet service in the Philippines not only impedes the productivity of large-scale companies but also hampers the growth of local businesses especially startups.

He said the Philippine economy is counting heavily on businesses that use Internet heavily, more particularly business process outsourcing firms that export human services to the markets abroad.

“If these BPO players suffer from slow web connection, their efficiency would be affected and their services would be questioned by their clients since they are only generating 20 to 30 percent less from what they are expected to produce,” he said.

Banks and financial establishments, Abalos added, are also not happy with the poor Internet service in the Philippines.

Longer queues of those who intend to use automated teller machines could be expected when web connection is slow.

“Their tellers will tell you themselves,” he said.

He said most small and medium enterprises in the Philippines are difficult to convince to bank on the Internet as their access to information precisely because of the slow Internet speed and service charge.

This could lead to lesser competitiveness among small-scale businesses, Abalos said.

He added that local entrepreneurs should realize that they could obtain higher visibility and wider impact to the market if they go digital in their marketing strategies rather than settle on traditional advertising, an approach recommended to new industry players.

“It is good to introduce themselves via the Internet. It would enable them to gain a good chunk of the market via social media,” he said.

However, in a highly competitive business environment, Abalos said local enterprises would have to rely on information provided through the Internet – a value-added service. These pieces of information that are vital to one’s business include target market, supplies, new trends, and competition among other players.

“The faster you get the information, the better for your business,” he said.

This, however, cannot be achieved if the Philippines gets left behind in the global arena.

“Filipinos definitely need a better Internet service from these utility companies. We deserve something better than what we have right now,” he said.

His advice to business owners: “Do not compare yourselves with your neighbors. There is no competition within the country. Instead, look at other countries. You will see how our local businesses here are lagging behind with other global players.”

TOURISM

Aside from its effects on businesses, Abalos said slow Internet speed has the potential to disappoint international tourists, especially the news ones.

“Some foreigners who have already been here and often visit our country may have been aware of the type of web connection we have here but for the newcomers to the Philippines, slow Internet speed would definitely be a bad impression,” he said.

He shares Aquino’s and Fleire’s sentiments, saying that if the Philippines aims to be more competitive globally and fuel its economic performance further, it should work on easier and affordable access to information.

WINDOW

Abalos is optimistic that the upcoming Asia-Pacific Economic Cooperation  leaders’ summit and the integration in the ASEAN Economic Community, which will be in full blast by 2015 will help open up competition in the Philippine telecommunications industry.

“Once you are able to encourage them, that alone even not imposed on local players, could contribute to the success of the industry. Competition begets good services and customers receive better,” he said.

As foreign leaders and representatives of international firms would gather in the country next year, Abalos expressed hope that multinational investors would be interested in putting up Internet facilities here.

“We have to attract foreign investors to consider the Philippines. The existing telecommunication companies in our country, which are only few in number, are inefficient in delivering their services. Liberalization in this industry should have been done a long time ago,” he said.

Fleire agrees.

“For example, can the Google Fiber come any faster for us Filipinos? We would love that,” she said.

“We are dreaming of a future where everyone is a participant in the e-commerce industry of our country through stable and affordable internet connection,” she added.

For Abalos’ part, his personal experience might be something many Internet users can relate to: “I needed the resources as soon as possible to be able to immediately respond to the needs of my clients but I ended up getting the results longer than I expected. It ruined my day and affected my overall mood,” he said.

Certainly, the country cannot afford to ruin and affect the overall mood of its growing economy.