Business vs Government or Something Else?

I know that people will think that this entry is going off tangent, but this, being my blog, is about my thoughts and feelings as an individual. I think it goes hand in hand with my previous entry on meeting design (the ideal) and real to achieve sustainability.

As a person what do you value? Family, friendship, fame, power, justice, security, honesty? Why in the world would I ask that? Well, the question for this week is affected by this. Is it possible for free market forces to implement national information infrastructure to support health and healthcare without the intervention of the government in the Philippines? The short answer for me is no, and even with government regulation, will it really help?

First, for all of the non-economics specialists here (that includes myself) what exactly is a free market? Based on dictionary entries I’ve read, it is a system where the basic concept of supply and demand is what determines the prices of services or products sold by companies to users - no other things can interfere. This means that there is no intervention by the government like taxes, price controls, restrictions etc. Simple enough, but there is a problem: free market is ideal and the real world is far from ideal.

As an example as I was doing research for the infographic on advancing health informatics in the Philippines, I came across a frustrating fact - we have one of the slowest internet speeds in the world (with an average of 3.6 Mbps) and yet, for this slow speed we are charged similar or even higher prices by current internet service providers (with an average consumer spending ₱1000 a month). Why use this example? The companies involved are the ones who control telecommunications - the roads of information in the entire country. Even if all government and private health units agree to the standardization of electronic health records and sharing of information between each other and a governing body, without telecommunications they’ll be forced to go back to sending papers. Also, the leaders of some of these companies are also in the health business. Philippine Long Distance Telephone Company chairman Manuel Pangilinan is also chairman of the Metro Pacific Investments Corporation, which runs several hospitals, while Jaime Zobel de Ayala is the chairman of the Ayala corporation, which has ownership of Globe Telecom, QualiMed, and Generika Drugstore. 

The demand for internet service is high (okay 37% of the total population seems small, but that’s over 37,000,000 people), but the cost is not going down. Why? Because it’s basically a duopoly. Right now, PLDT/Smart and Globe are the 2 biggest telcos in the country. See why I listed those two chairmen? All the rest are small fry. In fact, some of them have already been absorbed by the “Big 2” (PLDT acquiring Sun in 2011 and Globe bought Bayantel just this year). The problem with monopolies is that since only a single company provides the product or service, they have full control of the price. It’s either you get it or you don’t. Quality of products and services can deteriorate because of the lack of competition. And in the current “information age,” internet is very important. So based on the concept of competition what needs to happened is that more companies should be formed to challenge the Big 2 so that prices will go down and services will improve right? Well, it’s not that easy.

In the Philippines, internet service is considered a public utility based on the National Telecommunications Act (R.A. 7925), meaning foreigners can only own 40 percent of a new ISP based on the Constitution (Article XII, Section 11). So if a foreign company wants to come in, they have to find a Filipino partner. Next, it needs to go through congress to establish the franchise. Finally, the National Telecommunications Commission activates the franchise. This takes 4 years or longer. The worst part is that other telco companies can protest applications. That’s right. You have to go through the Big 2 to even get a chance to compete, and who knows what kind of back room deals are involved (rates are probably part of it) for them to agree.  Take note, only step 1 is a problem for foreign investors wanting to compete. It’s not a welcoming environment for anyone.

Why is the law then enabling monopolies like this to exist? The intention is to protect national interests. In a debate between the pros and cons of government intervention in healthcare information infrastructure of the U.S.A., they discuss other products such as cars and even potatoes, where regulation by the government protected local companies from losing to outside competitors (other countries or even other states) and closing down. It also protects the country’s safety. For example, if say China, had a large amount of control over a specific service, like electricity, in our country, and relations sour between the two (like now), there is a risk that they can cut us off from the service, which could paralyze all sectors needing that service. No electricity would be catastrophic, and could be used as an advantage if ever armed conflict breaks out between the two.

These laws designed with good intentions did not foresee our current situation. Again, design versus reality. The problem here is that they assumed that local business interest is equal to national interest. Sadly, it isn’t. No matter how much we claim to be a republic, the truth is that we’re still effectively under an oligarchy. Only the few elites are in control of politics and business. Meaning it is their interests that are given the highest priority instead of the general public's. There is a strong link between the two groups as they have family members and friends who are members of each or sometimes both. Going back to PLDT, the previous president of the company was Antonio “Tonyboy” Cojuangco. You know, the same Cojuangco family that has multiple politicians and businesspeople, including a president? Sure we have the ability to vote for our leaders, but who hasn’t heard of politicians buying votes from the masses? So whose interests will be protected by laws, policies, and standards created to regulate health information infrastructure? Even if they are made to protect public interest, will the government enforce such regulations when their own friends and family are the ones breaking them? Is our government free from graft and corruption? Did I breathe today? I’m sure that based on our experience and knowledge of our country’s history, the answers are pretty clear. 

So the solution is a change of leadership in the political and business sector? It’s a possible solution, but the reason why these problems came up in the first place is because of something more basic and this is involves my first question. If we don’t change that, no matter who leads, the outcome stays the same.

The problem is in the values of humans in general. We are driven by our nature - and that includes greed. Every person has needs, and our drive to acquire such needs fuels greed. In the U.S. debate, something that one of the debaters, Mr. Caine, said struck me. He claims that “people are actually in business to deliver something of value to people.” Notice that service is the priority, not monetary gain. I wouldn’t be able say that after seeing what is going on with our internet situation. In general, based on the news, stories from friends and family, as well as my own experience of crime and corruption (in government, business, and elsewhere), humans are selfish beings. “What can I get from this? How can I take advantage of the situation? Nobody will catch me, so I can get what I want.” This is the mentality that even the common person has. I am sure there are individuals who are the exception to this rule, but they are few and far between. And some of them, disillusioned by the society we live in, even become a part of it.

So the solution is to be perfect? Are we supposed to be gods? That’s not a realistic goal. We’re human after all, we make mistakes. However, if we always aim for what is the reality and not strive for an ideal, the outcome will always be mediocre. In order for something to get better we have to try to become better. It doesn’t matter what your religious affiliations are (even if you don’t have one), each one of us has beliefs and values. Only we, as individuals can change these. This is important because our surroundings are a reflection of us as people. This will take a long time - years, centuries, across many generations. But there is no patch-up solution for this problem.

We have to remember that health is a right of every human being. This entire process of creating information infrastructure for the healthcare system is to give the best possible service to uphold this right. To do this, we have to think of the wellbeing of others before our own. This is the first and most important step, before the government and private sector can work together to form a meaningful and effective national information infrastructure for health. It will be a long and arduous journey. However, if there is anything else I know about humans, it is our ability to overcome adversity, and this time the adversity is within each of us. We should not just hang up our coats because it looks impossible, that’s what made us this way in the first place. Going back to Mr. Caine, in a question to him about the motivations of private companies to improve the welfare of their country, “As people, we all have an obligation, regardless of the organization for whom we may work, to do what is socially and morally right.” Maybe someday any government official, businessperson, even a common citizen can say this with all their heart. Until that day, we have to keep struggling to make an ideal become real.

Sources:

1. Ayala Unit Acquires 50% stake in Generika. (2015). Retrieved from Ayala Corporation website. http://www.ayala.com.ph/news/page/ayala-unit-acquires-50-stake-in-generika.
2. Board of Directors. Retrieved from Globe Telecom website. http://www.globe.com.ph/corporate-governance/board-of-directors/.
3. Board of Directors, Management and Executive Officers. Retrieved from Metro Pacific Investments website. http://www.mpic.com.ph/our-company-board-of-directors-management-team-and-executive-officers/.
4. Company Leadership. Retrieved from PLDT website. http://www.pldt.com/about-us/company-leadership.
5. Company Timeline. Retrieved from PLDT website. http://www.pldt.com/about-us/company-timeline.
6. The Constitution of the Republic of the Philippines. (1987). Retrieved from Official Gazette: http://www.gov.ph/constitutions/1987-constitution/.
7. D.C. Dumlao. Ayala Land, Mercado Launch ‘QualiMed’ Healthcare Chain. (2014). Retrieved from  Inquirer website. http://business.inquirer.net/164399/ayala-land-mercado-launch-qualimed-healthcare-chain.
8. K. Luces. Software Exec: ‘Real’ Competition Among Telcos can Fix PHL’s Slow, Pricey Internet. (2014). Retrieved from GMA News Online: http://www.gmanetwork.com/news/story/368398/scitech/technology/software-exec-real-competition-among-telcos-can-fix-phl-s-slow-pricey-internet.
9. A. Macaraig. Probe Slow, Expensive PH Internet - Bam Aquino. (2014). Retrieved from Rappler website. http://www.rappler.com/news/57937-bam-aquino-neophyte-senator.
10. Republic Act No. 7925 An Act to Promote and Govern the Development of Philippine Telecommunications and the Delivery of Public Telecommunications Services. (1994). Retrieved from National Telecommunications Commission website: http://www.ntc.gov.ph/laws/laws/LAW%207925.pdf.
11. E.H. Shortliffe, H.L. Bleich, C.G. Caine, D.R. Masys, D.W. Simborg. The Federal Role in Health Information Infrastructure: a Debate of the Pros and Cons of Government Intervention. (1996). J Am Med Inform Assoc;3(4):249-257. Retrieved from National Center for Biotechnology Information website: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC116307/.