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Web Philippines, Inc.



Press Release




Virtual Bubble?
by Jennee Rubrico
Kampus Magazine, March 1997

Fresh graduates, young pioneering entrepreneurs, are eagerly shaping the Internet industry-- risks and uncertainty notwithstanding.

Bon Moya manages the marketing and sales functions of the E-mail Company (EMC), a pioneer among e-mail service providers in the Philippines. EMC was created in 1990, long before Internet was commercially available in the country and at a time when competition was almost non-existent.

Today, competition has kept Bon, and everyone else in the Internet business, on their toes. Hundreds of young entrepreneurs are flocking to invest their time, money, and effort in an industry that everybody says has a lot of promise, but that, ironically, has so far produced very few winners.

Since the Philippines went online, there has been a continuing proliferation of Internet businesses---from service providers, to Internet cafes, to web page designers---despite its uncertain future.

Mr. Victor Calanog, faculty member of the Department of Management in Ateneo de Manila University, describes the Internet business as amorphous---"wala pang shape. That's why it's very exciting. There's room for so much growth. There are a lot of opportunities for people to shape the industry. It's just a baby right now."

That baby has a huge appetite is undisputable. The country's existing service providers are having a hard time just keeping up with the demand for hook-up. For a time last year, Sequelnet, one of the largest Internet companies in the country, had to slow down in taking in more subscribers. Some customers of Skyinet, meanwhile, suspect that their provider is oversubscribed: as supposedly evidenced by a slower "download time"---that is, slower moving traffic on the information superhighway.

It's a phenomenon that "surfers" (Internet users) from all corners of the globe can relate with. America Online itself---one of the biggest Internet providers in the world---is being sued by its own subscribers, after it bit off more of the market than it could chew. AOL last year slashed prices, only to be flooded with new subscribers, and inevitably choking its own lines.

But the market's bane is precisely its attraction: its continually expanding base. For Bon, everyone who owns a telephone line and a computer is a potential customer.

With the introduction of new lines for land phones and of cellular phones, the potential market of Internet businesses, especially of service providers, can only increase.

Mr. Calanog says, "everyone who has access to a computer or a paging device is theoretically a potential user."

Roger Chua, a 33 year-old engineering alumnus of the University of the Philippines, who founded his own web design and content development company is similarly convinced of this fact.

His company, Web Philippines, makes web pages for companies which want to advertise through the net.

In this kind of business, Roger says, small businesses can make a difference.

Bon agrees, saying that on the Internet, bigger is not always better. Bon believes that any business, for example, must compete on the level of service: the personal touch, the company's capability to actually deliver.

The potential gains of going into the business, however, come with many risks.

On a very basic level, the infrastructure needed to exploit the full capability of the Internet still need to be built. Mr. Calanog says, "I don't feel that a serious infrastructure has been laid down. Fiber optic cables are not there. That's why sometimes when you log-on, it's slow because so many people are logging on. The physical requirements aren't there."

Roger adds that the need for more powerful computers, higher resolution monitors and more telephone lines must be addressed. "The government is a big part of the solution," he says, "They are responsible for the entry of other players in the communication sector, for fostering competition, and for pushing for the allocation of funds and resources needed for the education sector."

The entrepreneurs also encounter resistance from some skeptical consumers. "This is part of the basic human nature." Roger says. "Things are okay, why mess with it?"

Ironically, concerns about all the things the Internet offers add to this resistance. Parents---who, let's face it, will ultimately decide and pay for that decision to hook up---are wary of just what may be available online. Pornography, false information, consumer items---and, all in all, another distraction from studies---may be lurking online, they're afraid. It's hard enough monitoring the good and bad shows on TV, why add to their headaches?

Bon says people are turned away by their fear of the unknown---and by misconceptions. "There are ways to protect minors from access to bad sites," he stressed. Some programs were created specifically to monitor a child's surfing habits---what websites he visited, for how long, etc.---and to block off whatever the parent says is undesirable.

Whatever the safeguards, the future of the internet is still shaky. Many predict that the "bubble" will soon burst.

On the other hand, there are those who insist that the future just has to be in computers and information technology. Even education officials now tell us so. The Commission on Higher Education (CHED) recently advised students to take a more serious look into the sector.

Computer programming and all courses related to the information technology (IT) are opening up opportunities for good paying jobs here and abroad, the CHED said.

Dr. Reynaldo Pena, the Commission's director for programs and studies, said United States and European countries come looking for Filipino IT professionals at least twice a year. At the same time, the commission noted a rapid growth of international computer companies establishing branches in the country.

Mr. Calanog however cautions that while the demand for Internet is undeniable, no one seems to have made serious money from it. In the ultimate providing ground for the commercial viability of the Internet---in the United States---advertising revenues on the net are dismally low.

"A lot of companies are betting on something that is yet very unstable. A lot of people will lose their shirts," Mr. Calanog says.

So why do people insist on investing?

The entrepreneurs are aware of the risks. But because they are young, they are more open to take chances.

In Mindgate Inc., for instance, a company founded by a fresh graduate of Ateneo de Manila, the average age of the employees, from the president to its system analysts and managers) is 24 years old.

"The young of every generation is more prone to take chances and risks [because] time is on their side [and] there is not much to be lost," says Roger. He adds that, as in any business, there are risks, and "it is up to the individual to evaluate the risks involved and make their decisions."

He stresses that the Internet is here to stay, "but not in its present form. What the Internet will evolve into in the future, we cannot tell."

Merging is one possibility. Bon says that the Internet "will most likely be a permanent fixture in the economy. However, it will follow a pattern of consolidation. The inefficient ones, not necessarily the smaller ones, will close down. Some will be gobbled up by larger ISPs, while others will merge."

One programmer from Skyinet summed it up thus: "Everybody knows that the market can't sustain too many players. But is expected that some people set up companies, and then just wait to be bought out PLDT or the Lopezes or any other big player."


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