LUZON BYPASS INFRASTRUCTURE

EXECUTIVE SUMMARY12 December 2017

#PartnerForChange

$30*

$22-$50*

*monthly rate paid by

consumers

13.20 13.4118.33 19.18 20.74 24.43 25.52

37.4544.23

57.0364.32

69.87

121.49

145.17

156.67

TH

AIL

AN

D

ASIA PACIFIC STATE OF INTERNET Q1 2017

IND

ON

ES

IA

PH

ILIP

PIN

ES

Source:

www.Speedtest.net

www.Numbeo.com

IND

IA

SR

I LA

NK

A

MA

LA

YS

IA

VIE

TN

AM

AU

ST

RA

LIA

TA

IWA

N

CH

INA

NE

W Z

EA

LA

ND

JAPA

N

SO

UT

H K

OR

EA

HO

NG

KO

NG

SIN

GA

PO

RE

$ 40.96

$ 33.99

$ 16.82

$ 23.71

$ 38.03

$ 22

$ 25.70

$ 56.41

Mbps

Average APAC

Internet Speed

55.40Mbps

Average Global

Internet Speed

30.85Mbps $ 14.58

$ 17.73$ 20.19

Luzon straits is a popular corridor for internet connectivity

11 cables

75,640 Gbps

240,000 Gbps additional capacity is forecasted in the next 10 years.

The Luzon Strait is a

dangerous place for

submarine cables

Red lines indicate

cables destroyed in

2006 Hengchun

earthquake.

SINGAPORETOTAL AREA: 719.1 km2

POPULATION: 6M

LANDING STATIONS: 7

JAPANTOTAL AREA: 377,972 km2

POPULATION: 126M

LANDING STATIONS: 17

PHILIPPINESTOTAL AREA: 300,000 km2

POPULATION: 105M

LANDING STATIONS: 7

“I have also ordered the

newly created DICT to

develop a national

broadband plan to

accelerate the deployment

of fiber optics cables and

wireless technologies to

improve internet speed.

WIFI access shall be

provided at no charge in

selected public places

including parks,

plazas, public libraries,

schools,

government hospitals, train

stations,

airports and seaports.”

President Duterte (SONA,

2016)

Continue current economic policies

Institute tax reform

Increase Philippine competiveness

Increase infrastructure spending

Promote rural productivity

Automate land titling process

Invest in human capital

Promote inclusive growth

Improve social programs

Strengthen implementation of RH law

NATIONAL BROADBAND INFOSTRUCTURE

1

INTERNATIONAL

SEGMENT

2

DOMESTIC

SEGMENT

3

LAST MILE

SEGMENT+ +

Luzon strait is a popular corridor for internet connectivity

11 cables

75,640 Gbps

240,000 Gbps additional capacity is forecasted in the next 10 years.

SOLUTION TO DRASTICALLY IMPROVE

PHILIPPINES’ INTERNET

Luzon Strait is an earthquake prone area

dangerous for submarine cables. It causes

billions of pesos of damage each year.

Luzon Bypass Infrastructure provides

international submarine cables a safe

alternative path across Luzon Strait.

In exchange, international submarine cables

provide PH government use of their cable,

initially 2,000,000 Mbps (50x increase of

current government capacity*).

*As of October 2017, total government capacity is 40,000 Mbps based on

DOST-ASTI data

LUZON BYPASS PROJECT IMPACT ON INTERNATIONAL SEGMENT

PROJECT

IMPACT

SOURCE OF

INTERNET 1SUBMARINE

LINK

TOTAL COST / Year

2,000,000 Mbps

Local Private Telco $ 0.35 /Mbps $ 21.32 /Mbps 2 Php 26 B / Year

With Luzon Bypass Infra $ 0.35 /Mbps$ 0.00 /Mbps

+ Php 97M O&M 3

Php 0.53 B / Year

1

INTERNATIONAL

SEGMENT

2

DOMESTIC

SEGMENT

3

LAST MILE

SEGMENT

+ +

1 Quote from Hurricane Electric 3/23/17

2 Quotes based on PLDT 4/6/17 and Hurricane Electric 3/23/17

3 Project implementation cost is P975M OTC

$1 = Php 51

BCDA and DICT will be responsible for the development of

the following:

Luzon Bypass Infrastructure (BCDA) – a 240 km multi-duct

cable conduit path which will connect the western (Poro

Point, La Union) and eastern (Baler, Aurora) modular

information technology facilities

Backhaul Infrastructure (DICT) – internet network between the

landing station in Poro Point, La Union and mutually agreed

location within BCDA economic zones

Last Mile Infrastructure (BCDA) – internet network within the

BCDA area of jurisdiction

PROJECT COMPONENT

San

Fernando

Baler

Poro Point

Camp

John Hay

New Clark

CityClark

Freeport

Bataan

TechnoparkBonifacio

Global City

DOMESTIC BACKBONE

Backbone with Middle Mile

Legend:

Population per square kilometer

Connection to

international

submarine

cable linked

TO ASIAConnection to

international

submarine

cable linked TO

USA

Outline the framework of a joint development

project which will be implemented through mutual

beneficial collaboration and sharing of resources

BCDA to assist DICT on Luzon Bypass Infrastructure’s

funding and construction. DICT to share portion of

the exchanged capacity to BCDA for its economic

zones.

FRAMEWORK AGREEMENT

Signed

08 Dec 2016

Purpose:

Framework:

+

Outline the exchange of usage of and payment

for the Luzon Bypass Infrastructure by the

submarine cable owners

Cable Owner to use a portion of the Luzon Bypass

Infrastructure, in exchange for DICT and BCDA to

use a portion of its submarine cable spectrum

(2,000,000 Mbps at the minimum).

LANDING PARTY AGREEMENT

Signed

15 Nov 2017

Purpose:

Framework:

+CABLE

OWNER+

FIRST CABLE TO USE LUZON BYPASS INFRASTRUCTURE

Notable Features

• Highest capacity transpacific cable in the history

• First direct connection from HK to US (12,800km)

• Backed by world’s best technology companies

How much is 2,000,000 Mbps?

2,000,000 Mbps

e-Healthcare

e-Education

Inclusive growth

e-Government

PLDT

1,100,000 MbpsDICT / BCDA

2,000,000 Mbps

PLDT self-reported

total international

capacity during

August 2015 Senate

Hearing

DICT/BCDA initial

international

capacity upon

signing of the

Landing Party

Agreement

TRADED CAPACITY

C A B L E O W N E RConstruction: PhP 6,700 M (now - 2018)

O&M: PhP 8,375 M (2019 - 2043)

B C D AConstruction: PhP 975 M (now - 2018)

O&M: PhP 0 M (2019 - 2043)

D I C TConstruction: PhP 23 M (now - 2018)

O&M: PhP 2,438 M (2019 - 2043)

Construct, Develop, Operate,

Maintain and Secure the Submarine

Cable System (with other system

owners)

Construct and develop the Luzon

Bypass Infrastructure

Operate, Maintain and Secure the

Luzon Bypass Infrastructure

2,000,000 MbpsEquivalent to

PhP 4.8B* / year

* Based on DOST-ASTI procurement of international capacity in HK / Tokyo

MILESTONES

CONCEPTFRAMEWORK

AGREEMENT

LANDING PARTY

AGREEMENT

� Project Concept

� MOU signed between

DOST-ICTO and Cable

Owner

� Letter of Intent

� OGCC Contract Review

� OSG Contract Review

� Framework Agreement

� OGCC Contract Review

� OSG Contract Review

� DBM Clearance

� DOF Clearance

� GPPB Clearance

� NEDA Certificate

� Waiver of Sovereign

Immunity

� Landing Party Agreement

MILESTONES

PREPARATORY WORKSCABLE LANDING STATION (CLS)

� Bidding of the Project Fronthaul

� On going survey of the 240km

Terrestrial Roadwork

� Finalization of the Detailed

Engineering Design

Baler, Aurora CLS

Poro Point, La Union CLS

Construction

2018

Ready for Equipment

2019

Benefits of the Luzon Bypass Infrastructure

eGovernment eHealth eEducation eBusiness eGovernance eServices

Gov Agency

Connecitvity

Hospital

Connectivity

School

ConnectivityGo Negosyo! PhilGEPS

Free Public

Wi-Fi

National

Datacenter

Telehealth

CenterseClassroom

Community

eCenterBIR E-reg MOSES

eLGUPhilHealth

OnlineTech4ed

Next Wave

CitieseVoting

Project

NOAH

PHOpenIXCHITS Med

Recordse-Library BaLinkBayan

E-NBI

Clearance

Traffic

Cameras

NaRMIS RxBoxPublic School

eLearningLEAP

Business

ePermit

TV White

Space

Photo credit: National Telehealth Center

For every 10 people connected to the

internet, roughly 1 person gets lifted out

of povertyBased on Deloitte research

For every 10% increase in nation’s

broadband penetration, GDP

increases by 1.34%Based on World Bank and numerous other publications

LONG TERM VISION

High technology industries Land Value Capture

Photo credit: National Telehealth Center

Thank you

Government can create an enabling environment by

promoting competition through sound regulation

and liberalization

The Global Technology Report 2015