FIBER-OPTIC

" Developing the telecommunications infrastructure and value-added services (VAS) in the Philippines represents the best opportunities for foreign companies because many in the industry feel that there are certain areas in need of telecommunications infrastructure and VAS development. " This quote from the Overview of the Philippines Telecommunication Report of Antenne commerciale du Québec à Manille, demonstrates the importance of the modern telecommunication infrastructures, especially fiber-optics. With an increasing number of Internet users, the development of many telecommunication projects across the country and an opportunity to help develop this network, the fiber-optic industry of the Philippines is emerging at light speed.

According to the IDC, there were approximately 290,000 Internet users in the Philippines in 1998. This number is predicted to reach 1.72 million people by the year 2003. In the last 5 years, the number of Internet cafes and personal computers in the Philippines has increased at an incredible rate. Filipinos are now accustomed to this technology and they have a need for a rapid and efficient network. Internet users feel that telephone line connections do not correspond to their needs. The Filipinos are now ready to reach new standards in telecommunication systems.

Dr Eliezer A. Albacca , Director of the Institute of Computer Science UPLB attributes the incredible growth of the wireless communication industry "because the cost to built a fiber-optic network was too high, we temporarily established a wireless communication systems. "

To be compatible with the needs of the population, telecommunication companies have developed an underground fibre-optic network in the major cities. According to Mr. Gordon Forbes of SR Telecom, the fiber-optic network of Metro Manila has a huge underground system, more efficient than the many cables that we see along the streets. Therefore, these facilities are not expanded nation-wide and they are established on specific or rather financially secure regions of the country. " Fiber-optics is already established in the Philippines, many Universities and cities have high speed connection access. ", declared Dr Eliezer A. Albacca during the Los Banos Youth Forum 2000. 

However, the Philippines’ telecommunication network has some setbacks that could be solved by an efficient fibre-optic system. The huge number of old and useless telephone lines, as identified by Mr. Gordon Forbes of SR Telecom, is an aesthetic and functional problem that could be solved by the use of one underground fibre-optic cable line.

Many development projects in telecommunication infrastructures were brought to our attention. " By the turn of 21^st century (2005) the Philippines would have laid the infrastructures for every business, government, school and home to have access to information technology. " this statement published in the IT21 PHILIPPINES, IT Action Agenda for the 21^st century demonstrates clearly the desire for future developments in telecommunication networking. " We will apply the Information Technology to speed up government offices and services and set up a network to operate transfers between these government institutions. " This affirmation of Dr Eliezer A. Albacca confirms the previous statement.  Many major cities in the country like Cebu and Manila are constructing Information Technology Centres that offer facilities such as a reliable fiber-optic network. These I.T. parks attract companies and industries in the fields of software design, computer pieces, and telecommunication infrastructures.

I.T. Introduction

Information Technology (I.T.) has become the most popular industry in the world, one that is full of potential with vast improvements achieved every day. Information Technology has also evolved into a labour intensive and technical industry deeply engrained into our daily lives.

I.T. is defined as "the integration of hardware so it could be used for mass communication" by Ismael Angelo Jr. currently a 4^th year student studying at Ama computer college. Another student, Gail Manuel, 5^th year student studying at Ama Computer College quotes "If you don’t get into I.T., you will be left behind"

The Information Technology sector of the Philippines is focused around telecommunication, e-commerce, fibre optics, Internet, hardware and software.

The Philippines has much to offer in the field of technology including qualified I.T. professionals. There is great potential for expansion in the Philippines due to the current underdevelopment.

Philippines I.T. Market Overview

The Philippines is a highly populated country, consisting of over 73 million people spread throughout 7000 islands. The Philippines has a 95% English literacy level, as well as being is a member of the WTO (World Trade Organization) and APEC (Asian Pacific Economic Conference).

However there are some serious obstacles that prevent the rapid growth country that include an increasing 55.5 billion USD debt, rampant corruption, and a poverty rate of approximately 55.2% of the population. In addition, the Philippine Peso has dropped from 20 to 44.5 to the U.S. dollar. Therefore, the Philippines is ranked has dropped from 32^nd to 38^th in world competition. The unemployment levels have reached 9%, while the PSE (Philippines Stock Exchange) has plunge from 3200 to 1400 points from 1993 to 2000.

Although the economic environment of the Philippines is not very positive, the establishment of new laws, increased foreign investments and the improvement of peace and order could dramatically boost the performance of the Philippine economy.

Most of the Southeast Asian countries have emerged from the Asian Crisis of 1997-1998. However, Jai Mathu, Political Relations Officer, Middle-East Division at the Department of Foreign Affairs and International Trade (D.F.A.I.T.) posses mixed feelings about the potential of the Philippines, by stating "IT definitely poses a great future potential however because of corruption, it may be at a standstill". Multi-nations are apprehensive about investing in the marketplace, outlined Mr. Mathu, as few incentives exist.

Multi-national corporations such as NEC, IBM, and Toshiba are established in the Philippines marketplace. NEC’s production plant in the Mactan Economic Zone in Cebu shows that large corporations are interested in the market. When asked the reasons why NEC has decided to locate a plant in Cebu, Supervisor of hardware design Dodgie V. Danosos comments "Due to the proximity of Philippines to Japan as well as due to the large supply of good personnel" NEC corporation, no doubts the potential in the Philippines when he notes that a new software business department was just established in the Philippines. The president of NEC Technologies Philippines Inc., Kazuyuki Kobayashi remarked "Philippines was my choice 10 years ago and I see a very good outlook for I.T. here"

Foreign investments are a key to the building of Philippines but with the lack of peace and order in parts of the country, many are hesitant to invest due to risk factors. However the Canadian Embassy in Manila believes that Philippines is "Down but not out…there are lots of opportunity with building infrastructure, and the semi-conductor is developing into a great market here in the Philippines." Foreign investments into the Philippines will boost their economy. Their currency (peso) has a direct effect on their economy, although the peso is low, there are advantages for a low currency; it stimulates tourism and foreign buying power. However at the same time, locals’ have a low standard of living and very little expendable income, so they get poorer and poorer unless they have a high level of education. A trend in the Philippine is the Brain Drain where international companies drain I.T. professionals into another country. If the implementation of new incentives to stay in the country were applied then the chances of these I.T. professional would stay, since many locals agree that family is just as important. They would prefer to stay in their original country as long as they get a fair standard of living.

Internet Applications

In order for there to be a need for Internet applications there must be a mass market for Internet usage. The situation in the Philippines is that there is a huge population of 74.7 million people with major cities like Manila with a population of over 10 million. However, the average income is so low that only a select few can afford the costs of Internet services, let alone afford a computer that would supply an Internet application.

Though there are many obstacles in getting connected to the Internet in the Philippines, the Filipino people are finding ways to overcome these difficulties. Approximately 1500 Internet cafes are in the Philippines which service a large amount of the population with rates from 30 pesos- 250 pesos an hour (approximately $1 CAN- $8 CAN). The Filipino people are technologically driven and with an affordable they become an excellent mass market. For example their WAP text transfer is far more advanced to that of Canada’s. It isn’t uncommon to see 90% of Filipinos with cellular phones instead of landline phones because of the poor infrastructure and geographical obstacles. Text transfer feature is so appealing because of its affordability and efficiency.

The future for Canada Internet application in the Philippines IT marketplace is developing and will continue doing so exponentially in the next year. With a push to lay LAN lines in the form of fibre-optics, they are already heading in the right direction. Once the technology has gone through its current introduction stage it will become more affordable. The most common Internet applications will most commonly be used, such as browsers, Internet call management, and e-commerce applications. However, with their ability to transfer data through wireless connections there is an obvious new market for wireless cellular phone Internet applications.

Hardware / Software

Hardware and software go hand in hand. When a break through happens in hardware, software development is not to far behind. That case is true for the Philippines, as it is the second largest developer of software in Southeast Asia, and its hardware industry is not far behind. Many new companies investing in the Philippines are setting up shop in areas specifically designed for I.T. business, or as these areas are called "Techno-Parks". The benefits of setting up shop in these I.T. Techno-Parks, is that companies have access to the proper infrastructure both in transportation and communication. Also by setting up in the Techno-Parks, companies enjoy a 5-year tax exemption period. The Philippines is also setting up other such areas and deeming these areas "Free Trade Areas".

The Philippines has a great business future, an untapped resource that most business people don’t see. In addition to a labour force that is well trained and educated, proficient in English and cost efficient, the Philippines is currently having a surplus of graduates from the computer colleges and is having problems putting their graduates to work. But this becomes an opportunity for Canadian companies to move in an acquired these skilled people to work for their companies.

Wireless Technology

The wireless technology industry in the Philippines is on the rise and fuelled by the ever-growing need for communication within the youth culture. The Filipino youth have adopted a new form of communication that is both cost-efficient and effective. "Texting" is the transfer of text messages through the portal of a cell phone. The youth of the Philippines send over two hundred million text messages each year, the highest amount of text messages sent a year in Asia. This demonstrates the increasing demand for wireless communication. A growing number of Businesspeople are utilising text messaging joining over fifteen million youth on the wave of new communication as texting is significantly cheaper to operate than cellular voice communication. For example, the sending of a text message in the Philippines costs only 1P or 3 cents Canadian, while cellular conversations cost a average of 8 pesos a minute or 26 cents Canadian. A new market has been formed in the Philippines within the wireless industry and manufactures and service providers alike have capitalized on the opportunity.

Due to a lack of funds and difficult geographic obstacles, the Philippines infrastructure is underdeveloped. However, the government is taking steps to solve this by creating new opportunities by building and expanding on the current infrastructure. The lack of a solid infrastructure has caused gaps in communication within the rural areas. These areas are located on some of the 7000 islands that comprise the Philippines standard land based wiring systems are both un-practical and not feasible. To combat this problem there have been companies such as SR Telecom who utilise the latest wireless technology to effectively link the rural areas and the rest of the Philippines. This revitalisation of the current infrastructure with the use of wireless technology has and will have a positive effect on the economy. The wireless industry has proven to be very lucrative business, with SRTelecom having total sales of over $200M in just the radio communications industry. There is potential in this field though Gordon Forbes, Regional Project Director feels that despite the large sales number, that it is coming near a close, with most of the commercial islands are connected.

Technology has invaded the Philippines much like it has with the world. WAP technology and Internet on your cell, is just one of the new innovative technologies which have been introduced and have been flourishing in the Filipino market. New technology has been introduced onto the Philippines, as it is an excellent market with which to introduce a new product and test new technology. The wireless industry in the Philippines is filled with potential. It is going through a period of rapid expansion. There are plenty of opportunities, which enables many IT companies to set up business and capitalize on the wireless niche located in the Philippines.

Opportunities

Specifically, a project called Inter-Governmental Information Technology Ssystem, which can be used to share financial data among member agencies is currently under development. FINLINK, created by the Bureau of Internal Revenue (BIR), offers opportunities for Canadian companies that want to provide communication equipment including cables, transmission lines and test equipment. In the next couple of years, FINLINK will be establishing a nation-wide network, which currently connects more than 15 major Governmental and financial institutions.

In the years to come, fibre-optics offer opportunities for companies interested to create local networks as well as fibre-optic test equipment. As indicated by Dr Albacca "the technology is available all over the country and we have a qualified labour force to supervise the network. You can plan to establish your company abroad and hire a local qualified labour force, which is well informed about the new developments in the telecommunication network. Even if wireless communication is the fastest growing industry in the Philippines’ IT marketplace, there is no specific choice of technology that will be used in infrastructure projects. There is an open market for every kind of efficient technology."

To obtain contracts to share your expertise abroad, you will have to work in partnership with the major telecommunication companies of the Philippines. The First Pacific Group and the Ayala Group are the two major enterprises in telecommunication, but other companies like ISLACOM, PLDT and BAYAN TEL have a growing market share. Dr. Albacca reflected that the choice of technology used is up to the companies. The quality and the efficiency of a product will be directly responsible for the success of any company in Southeast Asia.

IT - Super-corridor

The Philippines is becoming a major I.T. hub, three major I.T. zones include Eastwood City, Fort Bonifacio, and Filinvest, which are attracting the investments of foreign and local I.T. Firms. The Philippines has an increasing rate of multinationals firms setting up back-u offices and all centres for North America and other parts of Asia. "The Philippines is good for backup centres." Quoted by Gordon Forbes, the regional Project Director for SR Telecom. Mr. Forbes believes in the potential of wireless technology of the Philippines and that a connection is required to being successful in Asia and the ability to play politics would be a major factor. However, Mr. Forbes noted that Hong Kong and Singapore were probably better locations to work. All this is created because of the low wages and peso value and would ultimately lead to an increase in sales of computers as well as contributing greatly to the development of the Internet and E-Commerce market.

The future

Jim Evans, a representative of ISM.BC and is a professional in the I.T. Sector. He quotes "IT technology and capabilities catching up in Philippines" but he states that in order to develop a business partnership in the I.T. industry, capital, relationship and trust is essential. "The market here is excellent and labour is cheap, there is an abundance of supply of well educated people". Mr. Evans finds the market in Philippines to be very positive and will be alongside the growth of Southeast Asia within the next 10 years. "Small Market relative to North American Market" he says but will pick up. I.T. professionals educated in the Philippines are leaving the country and should be retained for their expertise; that way the country will grow.

Luningning Achacoso, foresees Philippines to be aggressive and competitive in I.T. but the Asian Crisis was a great time to pull ahead for the Filipinos, unfortunately they were unable to take advantage by extending infrastructure, reinvesting in human capital and establishing links with another economy. "The Philippines are growing over other SEA countries…the Philippines has a high export growth and potential, but it was unable to capture the chance to pull ahead from the Asian crisis. There is only 7% Foreign Direct Investments (FDI) and it continues to decline. Philippines is untapped and provides overwhelming potential". Ms. Achacoso is very positive about the future of the Philippines. Like many others, she believes that the Philippines has a slow growth and slow development of infrastructure. However progress is commencing in the Philippines but time will be an issue.

Dr. Eliezer A. Albacea, an IT Prospecto in the Philippines believes that the Philippines should aim to become the Asian Hub of software development. The I.T. market in the Philippines will continue to strive for improvements in building its infrastructure including transportation, sewage, and airport. In the meantime, the I.T. sector will continue to grow in its telecommunication, e-commerce, fibre optics, Internet, hardware and software. The many aspects of I.T. will greatly benefit from foreign investments into the technical market. The I.T. sector will expand and grow as time consumes.

Contacts

Gordon Forbes

Regional Project Director

SR Telecom Inc. Asia Pacific

22/F Orient Square, Emerald Ave.

Pasig City, Philippines

[email protected]

Dr. Eliezer A. Albacea

Director

Institute of Computer Science

University of the Philippines

Los Banos College

Laguna, Philippines

4031

Ninging Achacoso

Program Head

Global Competitiveness Program

Asian Institute of Management

123 Paseo de Roxas

Makati City 1260

Philippines

Tel (632) 751-9182

Fax (632) 751-9183

Kazuyuki Kobayashi

President

NEC Technologies Philippines, Inc

MEZ

Lapu Lapu, Cebu

6015

Philippines

Tel (632) 340-0451

Fax (632) 340-0458

Dodgie Danosos

Supervisor Hardware Design

Engineering Department

NEC Technologies Philippines, Inc

MEZ

Lapu Lapu, Cebu 6015

Philippines

Tel (632) 340-0451

Fax (632) 340-0457

Jim Evans

1st Vice President

The Canadian Chamber of Commerce of the Philippines

18/F Solidbank Corporation Building

777 Paseo de Roxas St. Salcedo Village

Makati City 1200

Philippines

Tel (632) 811-4707 to 09

Fax (632) 811-4710