No go for broadband deal–Palace adviser

Apostol: Where’s copy of contract?

By Michael Lim Ubac, Riza T. Olchondra, Jeannette Andrade
Inquirer
Last updated 00:24am (Mla time) 08/07/2007

THE CONTROVERSY over the $329-million national broadband network (NBN)
contract that went to ZTE Corp. of China was reduced Monday to a paper chase.

 

President Gloria Macapagal-Arroyo’s legal adviser, Sergio Apostol, said the project could not be implemented because the contract was nonexistent.

 

“How can we implement? There are no papers. Show me the contract,” Apostol said when asked about the status of the ZTE contract.

 

The Philippine government’s copy of the contract was stolen shortly after Transportation Secretary Leandro Mendoza and Yu Yong, ZTE vice president, signed it on April 21 in the presence of Arroyo.

 

Also stolen was the Philippine copy of the $460-million contract to build a satellite-based backbone for the Department of Education’s Cyber Education Program (CEP).

 

Both the NBN and CEP contracts were signed in Boao, China, on the same day. The projects were to be financed by a concessional loan from China.

 

Two professors at the University of the Philippines’ School of Economics said there was no need for the NBN and CEP deals.

 

Economics professors Raul V. Fabella and Emmanuel S. de Dios said the two projects were likely to end up being a waste of funds partly because it was not in the government’s “core competence” to own, maintain and use an information technology infrastructure separate from two existing ones owned by private telecommunication firms.

 

Moral backbone
They said government should address “last-mile connectivity” to government agencies and public school computers instead of building another network.

 

“The only backbone that the government needs today is a moral one,” Fabella and De Dios said in a paper titled “Lacking a backbone: The controversy over the National Broadband Network and Cyber-education projects.”

 

Apostol said before Malacañang would answer the criticisms heaped on the project, there should be proof that the contract ever existed.

 

Details of the NBN project remain hazy at this time although the Department of Justice has ruled that the contract is legal.

 

In broad strokes, the NBN will exclusively cater to the telecommunication needs of the national government and local government agencies. It is also aimed at reducing the telecommunications spending of the government.

 

Budget Secretary Rolando Andaya Jr. said the NBN project, to be funded through a loan by China’s Eximbank, carried a sovereign guarantee, which means that the government will have to pay for every yuan spent for the project.

 

Andaya, however, said the ZTE deal was not covered by the Government Procurement Act, which requires a transparent bidding process.

 

“There are exceptions under that law, and if it’s a government-to-government (contract), then there’s no need for it to go through that,” he said.

 

Contract didn’t reach Palace
But Apostol pointed out that legally speaking, the contract was nonexistent because there were no documents to speak of.

 

“Somebody has stolen it–(all) two copies. So there’s no contract. We don’t know what kind of contract it is,” the President’s legal adviser said.

 

He noted that the ZTE contract did not pass through his office for scrutiny.

 

“It did not pass through Malacañang because it was lost. How can it pass through me when the documents were gone? I haven’t seen the contract,” he said.

 

Never impartial
Apostol described Fabella and De Dios as “never impartial.” He said the UP professors “have not even seen the contract, (yet) they made conclusions already.”

 

The Department of Transportation and Communication (DOTC) disagreed with Fabella and De Dios’ claim that the country does not need another broadband network.

 

“This is one of the few cases in which outsourcing does not make sense,” said Lorenzo Formoso, assistant secretary for telecommunications.

 

“Using existing telco services is costing us almost P4 billion a year. If we make last-mile connections by buying more airtime from them, we will have to budget this again. In contrast, if government has its own network, the savings will actually pay for the loan,” Formoso said.

 

Savings
DOTC data show that government can save P2.51 billion from the NBN project set to be undertaken by ZTE. At present, the cost of all telecommunications for government is P3.5 billion.

 

With the loan-backed contract, government is set to pay P990 million in annual amortization, giving the government P2.51 billion in savings that can be used for other purposes, according to the DOTC.

 

But the savings would exclude those for mobile communications because the NBN does not have a mobile component.

 

The DOTC said the offer of Amsterdam Holdings Inc. (AHI), the company that submitted an unsolicited to build a broadband network, and that of another bidder, US-based Arescom, would be more expensive than that of ZTE’s.

 

This is because AHI is offering a $240-million satellite-based network with 87 stations but the government must buy its own Voice over Internet Protocol or VoIP service.

 

Arescom has offered a bid-price of $135 million but can only provide 21 base stations. “So, in reality, they are more expensive,” Formoso said.

 

House probe
In the House of Representatives, the chair of the committee on information and communication technology wants to grill executives of the National Economic and Development Authority, DOTC and Commission on Information and Communications Technology on the NBN deal.

 

Catanduanes Rep. Joseph Santiago said representatives of ZTE, AHI and Arescom, along with Fabella and De Dios, would also be invited to the public hearing.

 

The Alliance of Concerned Teachers (ACT) asked the government to sober up on its “Cyber Education” program, calling it a white elephant that has nothing to do with cutting-edge technology.

 

ACT chair Antonio Tinio said the money to fund the project could be better spent on building classrooms, subsidizing the education of children who cannot afford to go to school, hiring more teachers, and producing quality teachers.

 

Simply broadcasting
“The project is very expensive with little or no proven benefits to the students. It is simply broadcasting a 20-minute lecture to selected schools via satellite. If that is the only thing the Department of Education (DepEd) wants to do, it might as well tape the lectures, place them in compact disks and distribute them to the schools for viewing,”
Tinio said.

 

The project aims to set up television production and satellite broadcasting facilities at DepEd’s central office and satellite-based facilities in 26,618 schools nationwide, each of which will be provided with a multimedia classroom equipped with four television sets, two desktop computers and a printer.

 

Fifteen- to 20-minute lectures conducted by education experts in all subjects for all grade or year levels will be aired live via satellite to all schools on 12 television channels.

 

Tinio said the project would not provide students with computer-based learning as the name connotes.

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