Daily Archives: August 12, 2007

House vows full-dress probe on broadband deal

The House committee on information and communications technology (ICT) will definitely conduct “an exhaustive inquiry” on the government’s controversial $330-million contract with ZTE Corp. for the supply and construction of a national broadband network (NBN).

The new committee chairman, lone Catanduanes Rep. Joseph Santiago, vowed to launch the probe shortly, once the panel is fully organized.

“Instead of focusing on the players in the project, we want to look into the concept itself — whether government really needs to establish this network, or we would all be better off just leaving this entirely up to the private sector,” Santiago said.

The “players” alluded to by Santiago include the Chinese government, which owns a big chunk of ZTE; the U.S. government, which is subtly protesting the ZTE contract, after an American company that had wanted to bid for a similar project was sidelined; and House Speaker Jose de Venecia Jr.’s son, Jose III, who is the principal of yet another firm that had also wanted to undertake a comparable venture.

Santiago, former chief of the National Telecommunications Commission, was the first member of Congress to publicly question the NBN contract with ZTE. Two months ago, he expressed “grave concern” that the planned state-run NBN might just end up as another “costly and burdensome white elephant,” or might only be overtaken swiftly by new and cheaper technologies.

“The government’s lack of core competency is definitely an issue. But this is not the only issue. Cost-efficiency is another issue. Unlike private enterprise, state agencies are inherently inefficient,” Santiago said.

He was referring to a study by the University of the Philippines’ School of Economics (UPSE), which warned that the government lacked the “core competency” to own, maintain and use an IT backbone on top of the two already being run separately by Philippine Long Distance Telephone Co. and a league of its rivals.

Santiago, for his part, said that one of the strongest arguments against a government broadband system “is the fact that even the highly advanced governments of other countries do not have state-owned (broadband) networks.”

“In many countries, governments agencies simply rely on existing, more efficient and highly reliable privately owned networks that provide universal access and connectivity,” he said.
Those to be summoned to the House inquiry include officials of the National Economic and Development Authority; Department of Transportation and Communications; National Telecommunications Commission; and the Commission on Information and Communications Technology.

Representatives of ZTE Corp. and rivals Amsterdam Holdings Inc. and Arescom Inc. will also be invited to the public hearing, along with the authors of the UPSE study that listed many reasons why the government should not pursue the NBN project and another $460-million plan to build a satellite-based IT backbone for “cyber education.”

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Posted by on August 12, 2007 in Government


Broadband project’s national security implications troublesome — Senator

Sen. Gregorio “Gringo” Honasan has expressed concern over “the potential national security implications” of the government’s controversial $329-million national broadband network (NBN) project to be put up by ZTE Corp., an entity controlled by the Chinese government.

“We are unsettled by the project’s national security ramifications, apart from the huge cost of developing and maintaining a system that might just end up as another massive non-performing government asset,” Honasan said.

“At the center of this project is the highly sensitive matter of government communications,” the senator pointed out.

“Assuming the bureaucracy becomes wholly dependent on the NBN, and the network suddenly crashes, resulting in the complete breakdown of government communications, whom do we call to restore the system?

“Is it possible that the government, out of desperation, may be forced later on to ask ZTE or another private entity to take over the network’s maintenance as well? These are valid questions that beg answers,” Honasan said.

A study by the University of the Philippines’ School of Economics earlier warned that the government lacked the “core competency” to maintain the proposed NBN, and that this inadequacy was “one of the strongest arguments” against the project.

Honasan, meanwhile, said Congress should now also “look at the bigger picture,” and not just the controversial NBN project.

He cited the possible need for new legislation patterned after the US Foreign Investment and National Security Act (FINSA), which reinforces (US) government and intelligence oversight of foreign takeovers of sensitive infrastructures and entities.

“We absolutely support the open investment policy. We strongly favor foreign capital in the country. However, we must have sufficient oversight with respect to foreign entities putting up or taking over communications, energy, water and similar vital facilities,” Honasan stressed.

“If a powerful and totally open country such as the US deems it appropriate to closely watch foreign stakes in sensitive sectors, then surely a far more vulnerable nation such as the Philippines should also see it necessary to exercise similar oversight,” Honasan added.

US President Bush signed the FINSA into law only last month. The FINSA strengthens the US Committee on Foreign Investment, the interagency body that reviews foreign acquisitions of companies that own, operate or manage critical US infrastructures such as power plants, ports and tunnels.

The US Congress passed the new law in the wake of the agitation sparked by Dubai Ports World’s acquisition of shipping operator Peninsular & Oriental Steam Navigation, including its subsidiaries that operate six key US ports. The Emirate of Dubai owns 100 percent of Dubai Ports World.

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Posted by on August 12, 2007 in Government