The Bangko Sentral ng Pilipinas (BSP) is proposing to allow banks to set up their own satellite broadband similar to Bank Rakyat of Indonesia’s $250 million satellite for its digital or branchless operations.
BSP Governor Benjamin E. Diokno, the Duterte administration’s former budget chief, has reached out to Malacanang last November for the use of satellites to extend digital or online banking to the unbanked sectors, and on March 10 Executive Order (EO) 127 was issued, expanding internet connectivity via satellite services.
Diokno said Thursday that BSP has submitted its proposals for the EO’s implementing rules and regulations (IRR). “One such input is to allow banks, or a consortium of banks to register under EO 127 so they can operate their own satellite broadband for their operations, for the benefit of their consumers,” he said.
He cited as example Bank Rakyat which put up its own banking satellite in 2016. “(The Indonesian bank) deployed 51,000 antennas or teleports to connect their regional branches and ATMs nationwide. We hope that many of our local financial service providers can replicate the Bank Rakyat experience.”
Diokno said the EO will apply not only to banks or a consortium of banks but also banks in conjunction with other local financial services provider. “The more open it is, the less constraints or restrictions there are, the better in the spirit of openness,” he added.
The BSP was able to secure this EO as chair of the inter-agency Financial Inclusion Steering Committee (FISC).
The IRR was supposed to have been released last April 10 but Diokno said the Philippine Space Agency (PhilSa) requested for an extension in submitting its own comments to the Department of Information and Communications Technology (DICT).
“The DICT promises to issue the IRR shortly after receiving the (PhilSA) comments,” said Diokno.
The new EO permits non-enfranchised but registered Internet Service Providers ISPs and value-added service providers to directly access satellite systems to build broadband facilities. There are currently 14 satellites that cover the Philippines.
Diokno said the EO promotes competition, more investments in the satellite broadband market and will bring down the cost of internet services in the country.
Banks with their own satellites will also be able to reach the unserved and underserved areas via digital financial services and improve remittances, bills payments and the opening of transaction accounts, added Diokno.
“By leveraging on liberalized access to satellite technology, banks and other financial service providers in remote areas may now be able put up more access points such as ATMs, cash agents, and branch-lite operations. They can also offer digitalized payment transaction services accessible via the internet,” he also said.
Based on the BSP’s 2019 Financial Inclusion Survey, internet access penetration is uneven in the Philippines, with 60 percent in Luzon, 40 percent in the Visayas, and 30 percent in Mindanao.
The 20-member FISC, when it endorsed the EO to Duterte, said that internet connectivity “is a critical enabler of financial and economic inclusion as transactions and services increasingly move online” and that banks and other financial service providers can reach more areas for ATMs and cash agent services that are internet-based.
“Satellite technology is ideal for areas where it is more expensive to roll out wired or mobile networks, such as islands like the Philippines. This supports the government’s goal of connecting the whole country in the shortest possible time,” said Diokno.
The BSP-led FISC is also advocating for the approval of the proposed Open Access in Data Transmission Act. Last February 2, the FISC endorsed the bill to the Legislative Executive Development Advisory Council or LEDAC as a priority legislative measure. It later also endorsed the bill to the Senate President and the Speaker of the House of Representatives.
“The bill seeks to liberalize the ICT industry by, among others, lowering barriers to entry of new ISPs,” said Diokno.