Unveiling the Truth (Part 2)

Published June 6, 2021, 12:07 PM

by MB Technews

By Eliseo M. Rio Jr.

Former Department of Information and Communications Technology (DICT) acting chief Eliseo Rio has accused the agency of undertaking a P466.5-million internet connectivity project he described as “unnecessary” and “overpriced”. During House blue ribbon committee hearing held recently, Rio questioned the DICT for its planned establishment of the 1,035 very small aperture terminals (VSAT) in the Philippines, when a similar project, also of the department, is already ongoing. Below is Rio’s Facebook post expounding his points on the said hearing:

In its latest press statement, DICT tried to veil the truth with an illogical computation that on a price per Mbps basis, the MIS-VSAT cost is only P14,285.71 per month per Mbps while the DICT-UNDP VSAT cost is a whopping P63,826.67 per month per Mbps. But no matter what magical computations DICT makes to bring us to wonderland, on the actual basis that the government is spending real money, the cost of the MIS-VSAT will never go lower than P90,000/month/site, nor will the DICT-UNDP VSAT go higher than P19,148/month/site.

We Are IT (WIT), on its website, is offering BIGSKY35 for a subscription of P8,500/month for a Download Speed of up to 35 Mbps, which is more than the Maximum Information Rate (MIR) of 25 Mbps required by the MIS-VSAT of DICT. Yet, it was awarded a P90,000/month contract by DICT. Can DICT Undersecretary Manny Caintic come up with his magical computations to show how a P90,000/month managed service from WIT will be more beneficial to the government than a simple P8,500/month subscription from WIT? Even if, for the sake of argument, we triple the P8,500/month to accommodate the three Access Points and the questionable 6Mbps CIR, that would come to only P25,500, still way below the P90,000/month awarded to WIT.

While waiting for Usec Caintic’s response, let us ponder on these facts/information:

1. All four awardees, PhilComSat, WIT, IONE, and EBIZOLUTION, got their Notice of Awards on the same date, December 18, 2020. The total expenditure of DICT for the four awards is P466,594,250 for only 1,035 sites for a period of only five months. It looks like there’s something that forces DICT to obligate its funds before the end of the year 2020, or it will be questioned for underutilization of its budget, which will adversely affect its 2021 budget. So the focus is on how to obligate P466.6M the fastest means possible and not on the project’s cost-effectiveness.

2. The Terms of Reference (TOR) for the MIS-VSAT is for the provision of VSATs only, the most expensive means to access the internet. The fact is, most of the sites are in areas where terrestrial telcos or ISPs have a presence. It appears that RA 11494 was conveniently used so that bidding will no longer be done. However, why limit the selection only to VSAT Providers when other telcos/ISPs can give better and much cheaper services in Quarantine Centers and Medical Facilities that are primarily in urban and well-served areas, the centers of gravity of the pandemic.

3. It seems that DICT negotiated not for the most cost-effective rates available in the market, but for the highest rate offered as shown by the almost similar rates of P90,000/month awarded to the four favored VSAT Providers, as follows: 1) PhilComSat – P90,000/mo; 2) WIT – P90,000/mo; 3) IONE – P91,000/mo; and 4) EBIZOLUTION – P89,850/mo.

4. A recipient of the MIS-VSAT of DICT is the Infirmary in UP Los Banos, which has already a fiber subscription from an Internet Service Provider (ISP). While appreciative of the DICT VSAT “back-up,” the Infirmary did not know that the Back-Up costs the government P90,000/month good only for five months, while their subscription is less than P8,000/month.

5. The DICT MIS-VSAT started January 2021, and its 5-month managed service is about to end or has ended by now. So how come DICT can not prove that the VSAT Providers gave a MIR of 25Mbps and a CIR of 6Mbps, measured by an independent third party, in all its 1,035 sites are all supposed to be operational by now. What it is giving the public is how much cheaper the MIS-VSAT is than the DICT-UNDP VSAT through theoretical computations when it should be showing how fast the internet speed is and if the internet data usage matches these speeds. All those complicated computations fall flat if the required MIR and CIR are not met for the whole 5-month duration, and it is the only justification for the P90,000/month expenditure. DICT must also show that these VSATs can compete with available telcos/ISPs near these VSATs. It should not be competing with the DICT-UNDP VSATs because all these are in unserved locations not reached by any telcos/ISPs, and sometimes electric power.

6. And by the way, the DICT-UNDP project, which cost the government P1.3B, is actually for 5,000 VSAT installations in the most remote unserved areas of the country. The project includes a Phase 3 of 1,000 sites (Access Points) connected by Fiber Optic Cable with Download Speed of up to 6Mbps and Upload Speed of up to 6Mbps for SUCs, especially in the provinces. PLDT won Phase 3 and got the award on April 08, 2021. Thus, the average cost of the 6,000 sites for P1.3B for a managed service of 12 months is only P18,055/month as against the P90,000/month of the DICT MIS-VSAT.

Below are the files that support the points raised by the author:

The market price of WIT

Notice of Award of We Are IT Phlippines

The purchase order (PO) for WIT