Page 1

Analytic Research by the Center for Strategy, Enterprise & Intelligence

“The Philippines should be as easy to sell as Chickenjoy.”

~ incoming tourism secretary Ramon Jimenez Jr.

Bird flu scare good for chicken exports

~sept 2 story on selling local chicken to China and Vietnam on the

heels of a new bird flu strain in those countries

Vol. 1. No. 3 • August -----, 2011

WORLD 02 Threat and Opportunity

What the West’s economic crisis means for Asia

07 Renewable Energy - The Global Score

The wave of the future may come sooner than we think

13 A Billionaire’s Challenge: The Great Toilet

Makeover

Why is Bill Gate interested in remaking the toilet

NATION

BUSINESS 18 Winning the Fight Against

23 The Apple of our i

Poll Fraud

The innovation giant’s rise marks a sea change in the world economy

Increased vigilance and informa- tion technology may run up against the system itself • Bedol emerges after years of hiding • 2004 Presidential Elections • 2010 automated elections

28 Digital TV: Are We Ready?

Philippines’ long and winding road from analog to digital • DTV standards: A quick survey • iDTV: The future of digital television

NEWS ON THE NET WORLD

NATION

BUSINESS

Strauss-Kahn returns to IMF, gets warm applause

DOST pushing for P800-M gov’t broadband project

ADB: Growth across Asia, Pacific ‘moderate’ in H2

China dissident Ai Weiwei launches scathing attack on govt

House approves distance education system

Economy’s growth pace likely unchanged in Q2

Space junk at tipping point, says report

Mangudadatu, Kabalu, 49 others want ARMM gubernatorial post

DOF: P2.4B revenue lost sans new sin-tax law

Virtual Supermarket Opens (video)

Ex-PNP chief, 35 others tagged in anomalous deal

ECCP tells palace: Settle BOCShell tax row

Marketing exec tapped to helm

WORLD

NATION

Meralco poised to collect less power charges under performance-based scheme

BUSINESS

Center for Strategy, Enterprise & Intelligence provides expertise in strategy and management, enterprise development, intelligence, Internet and media. For subscriptions, research, and advisory services, please e-mail report@censeisolutions.com or call/fax +63-2-5311182. Links to online material on public websites are current as of the week prior to the publication date, but might be removed without warning. Publishers of linked content should e-mail us or contact us by fax if they do not wish their websites to be linked to our material in the future.


world

2

Threat and Opportunity

What the West’s economic crisis means for Asia By Ricardo Saludo

POINT & CLICK You can access online research via your Internet connection by clicking phrases in blue letters

Who will rescue the lifeguards? That, in somewhat oversimplified terms, is the predicament America and Europe now find themselves in. As various timelines have chronicled, the West’s financial crisis in 2007-09, when leading U.S. and E.U. financial institutions tanked over bad investments in risky securities and loans, their governments leapt to the rescue, taking over shaky banks and pumping cash and credit into their financial systems. But today, it is the governments in trouble, swimming in debt and deficits which threaten to engulf the world in another economic and financial tsunami.

CONTENTS

In report after report last week, stock markets across the planet sank in unison over fears of another global economic downturn even before the world had fully recovered from the 2008-09 slump. Market sentiment was just recovering from Standard & Poors one-notch downgrade of U.S. sovereign debt, helped a bit by major credit firm Fitch Ratings joining Moody’s Investor Service in keeping America’s triple-A mark. After the panic, more worries. Then came a trio of worried pronouncements from some very heavy hitters, warning of further economic dislocation in the West, with unwelcome impact on the developing world.

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Threat and oppurtunity

First, World Bank President Robert Zoellick, told an Asia Society dinner in Sydney that “events in Europe and America ... led many market participants to lose confidence in the economic leadership of some of the key countries” (see video).

The former U.S. Trade Representative then warned: “I think that those events combined with some of the other fragilities in the nature of the recovery have pushed us into a new danger zone. And I don’t say those words lightly. ... What will now be important to watch is whether that hit to confidence also extends to consumers and businesses and also how the governments respond.” ‘Dangerously close to recession.’ After the missive from Down Under came two missiles from opposite sides of America, further damaging confidence. In a report titled “Dangerously Close to Recession”, New York-based investment bank Morgan Stanley, whose stock and bond indices are global investment benchmarks, cut its world economic growth forecast for 2011 and 2012 by a hefty one percentage point combined. Industrial countries, the report forecast, would grow just 1.5% this year and next, down from 1.9% and 2.4% in previous projections. Developing economies will also slow from 7.8% in 2010 to 6.4% this year and further to 6.1% in 2012. And both America and Europe are “hovering dangerously close to a recession — defined as two consecutive quarters of contraction — in the next 6-12 months.” Then, in a talk with Reuters news agency, William Gross, co-chief investment officer (CIO) of the world’s largest bond investment company, Pacific Investment Management

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Co. (PIMCO) of Newport Beach, California, cautioned that current dampened prices of U.S. Treasury bills point to recession ahead. “They certainly reflect, in terms of their yields, not only a potential for a recession,” said Gross, “but the almost high probability of recession.” If bond rates stay down, it suggests investors expect economic downturn to curb future inflation.

Stuck in damaging feedback loop? Gross’s fellow co-CIO, PIMCO CEO Mohamed El-Erian, admonished in an August 12 column, “Policy Dithering Will Further Fuel the Crisis”: “The world economy is now in the grips of a damaging feedback loop involving deteriorating fundamentals, lagging policy responses and destabilized financial markets. If policymakers do not act boldly, and do so in a globally coordinated fashion, the world risks tipping into a prolonged recession with worrisome institutional, political and social consequences.” Morgan Stanley’s report also cites the negative feedback loop, and “this should be aggravated by the prospect of fiscal tightening in the U.S. and Europe.” Many economists have criticized both the Washington debt ceiling deal and Europe’s interest-rate hikes and drastic budget cuts in troubled countries, for squeezing state spending just when it is needed to keep the West’s economic recovery from stalling. At the same time, substantial long-term measures, such as taxation and entitlement reform in the U.S., and measures to harmonize budget policies in Europe, are needed to shore up confidence in financial markets and loosen the purse strings of cash-rich investors. Only then would private enterprise revive and enable economic output to catch up with economic potential, now about $1 trillion higher (see chart from Wells Fargo report on the next page). PIMCO CEO El-Erian points to “multinational companies with pristine balance sheets and a string of impressive business results [but] this healthy part of the global economy has been held back by economic and market uncertainties. Companies refrain from deploying their profits and cash hoards to new investments and additional hires.”

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Output Gap in the U.S. Trillions of Dollars, Potential vs. Actual GDP, Inflation Adjusted

$14.5

$14.5

$14.0

$14.0

Output Gap = $980 Billion

$13.5

$13.5

$13.0

$13.0

$12.5

$12.5

$12.0

$12.0

$11.5

$11.5

$11.0

Potential GDP: Q2 @ $14.3 Trillion Actual GDP: Q2 @ $13.3 Trillion

$10.5

$11.0 $10.5

2000

2002

2004

2006

The triple warning for American and European political leaders echoed widespread dismay in financial and business circles over indecision, bickering, and major policy errors in Western capitals. All this at a time when fiscal and economic woes demand decisive leadership. Hence, the wholesale hemorrhage of value in capital markets worldwide, while gold soared hit record prices above $1,900 an ounce as investors sought safe havens for funds exiting stocks. The impact on Asia. For Asia outside Japan, Morgan Stanley sees “No Escape from Weaker Growth in the Developed World,” as its Hong Kong unit predicts. It cut regional

2008

2010

growth forecasts slightly to 7.6% this year and 7.3% next, with export-driven economies like South Korea, Malaysia, Singapore, and Thailand likely to slow down more than domestic-oriented China, India and Indonesia. The Philippines straddles both groups, with consumer spending being the main growth driver, with high reliance on service exports. Morgan Stanley’s outlooks for China, India, and Korea warn of dampening impact due to the West’s downturn. So too for ASEAN and Taiwan, although fiscal strength in Southeast Asia and robust consumption in Taiwan should sustain growth.

GLOBAL SLOWDOWN

Morgan Stanley Economic Growth Forecasts for 2011 and 2012 GDP Growth Forecast

2011

2012

Previous

Revised

Previous

Revised

World

4.2%

3.9%

4.5%

3.8%

Developed Markets (GM)

1.9%

1.5%

2.4%

1.5%

Euro Area

2.0%

1.7%

1.2%

0.5%

Emerging Markets (EM)

6.6%

6.4%

6.7%

6.1%

Asia ex-Japan

7.7%

7.6%

7.8%

7.3%

Japan

-1.2%

-0.6%

2.9%

1.3%

China

9.0%

9.0%

8.0%

7.6%

Hong Kong

6.0%

5.0%

4.0%

4.0%

India

7.7%

7.2%

7.7%

7.2%

Korea

4.5%

3.8%

4.0%

3.6%

Taiwan

5.0%

4.2%

4.3%

3.6%

ASEAN

5.7%

6.4%

6.0%

4.8%

Source: staff compilation of data from Morgan Stanley Global Economic

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Chart 1

Business Business Executives’ Executives’ Assumptions Assumptions on on Key Economic Indicators andIndicators Drivers Key Economic Source: Asia Business Barometer Survey, Corporate Executive Board

32%

Energy Costs

64%

41%

Major Non-Energy Commodities Local Interest Rates 6%

67% 61%

25%

Value of USD Against Major Crnc.

53%

26%

15%

Access To Local Credit*

75% 55%

31%

55%

25%

61%

Economic Growth (China) 13%

24%

Economic Growth (Asia, No China) 10%

28%

62% 82%

36%

Availability of Qualified Labor

13% 63%

16%

Local Inflation

42%

39%

Local Consumer Spending 14% Local Government Incentives

24%

33%

Local Competition 3% 22% Value Chinese Renminbi Against USD 6%

Q3/10 - Q2/11 Trend % rated Higher

Higher

No change

lower

35%

29%

*For Access to Credit, “Higher” means “Better”

Chart 2

Source : Asia Business Barometer Survey, Corporate Executive Board

Asian Real Interest Rate

Still negative, or already neutral? 1-year Government Bond Yield (% p.a.)

Core CPI Inflation Rate (% yoy)

Real Interest Rate (base on core infaltion) (% p.a.)

Headline CPI Inflation Rate (% yoy)

3.5 8.1 3.4 0.2 3.3 0.4 5.3 3.0 3.4 3.1

2.5 7.2 3.7 4.4 1.2 2.1 4.6 1.9 3.3 2.6

1.0 0.9 -0.2 -4.2 2.1 -1.7 0.6 1.1 0.0 0.5

6.4 9.4 4.4 5.3 4.1 4.5 5.5 3.3 4.6 4.1

Real Interest Rate (based on headline inflation) (% p.a.) -2.9 -1.3 -1.0 -5.1 -0.8 -4.1 -0.3 -0.4 -1.3 -1.0

Real interest rates (based on headline inflation)

6 %pa 4 2 0 -2 -4 -6 -8

Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11

China India Korea Hong Kong Taiwan Singapore Indonesia Malaysia Philippines Thailand

India Korea

Singapore China

Note Latest June 2011 data. May 2011 data used for Hong Kong, Singapore and Malaysia.

Chart 3

Asian Equities

Current valuation versus long-term history Asia ex Japan P/E 30 25 20 15 10 5 Jan-75

Jan-79

Jan-83

Jan-87

The Washington-based Corporate Executive Board (CEB), which groups or advises 5,300 organizations worldwide, said in its third quarter Asia Business Barometer that 83% of respondents from among CEB’s 225,000 member executives expect higher Asia revenues in the coming 12 months. That’s significantly down from 93% in the previous quarter. And just over half of respondents believe consumer spending would increase, down from about seven out of ten in the past three quarters. And while more than 60% expect higher economic growth, they also see increasing costs, competition, and interest rates (see chart 1).

Jan-91

Jan-95

Jan-99

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Jan-03

Jan-07

Jan-11

The inflation-and-interestrates spiral. Besides global economic uncertainties, moderating the continued optimism are rising prices and monetary tightening, with headline inflation pushing real interest rates below zero in most of the region’s major economies (see chart 2 from Asia Pacific Fund’s August 2011 Investment Outlook and Strategy). That could point to more measures to restrain money supply growth, further dampening spending and growth. And amid investor anxieties, stock valuations have fallen below the historic average (see chart 3 of priceearnings ratios (p/e) in Asian markets outside Japan). Will the West repeat Japan’s lost decades? However, the real global problem lies in the West. Both America and Europe are mired in unemployment, fiscal debt and indecisive, self-serving leadership — the very malaise blamed by scholars for Japan’s economic stagnation for the past two decades. Many economist are now asking whether the U.S. would follow the same moribund path and what lessons America should learn in order to avoid its own decades of decline. The same questions apply to Europe, where economic policymaking is further complicated

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by having several governments tussling over issues. Reflecting widely espoused views among economists, New York University Professor Nouriel Roubini, renowned in recent years for predicting the 2007-08 U.S. financial crisis, spells out in his article “Is Capitalism Doomed?” the sweeping measures required for recovery: “We need to return to the right balance between markets and provision of public goods. That means moving away from both the Anglo-Saxon model of laissez-faire and voodoo economics and the continental European model of deficitdriven welfare states. Both are broken.”

Roubini’s policy wishlist: more jobgenerating infrastructure spending, higher taxes on the well-off, immediate pumppriming spending combined with long-term fiscal discipline, and help and safety nets for debt-ridden families and other distressed sectors. While pushing for continued lenderof-last-resort support to prevent bank runs, he urges “stricter supervision and regulation of a financial system run amok; breaking up too-big-to-fail banks and oligopolistic trusts.” Failure to act, Roubini warns, would lead to “unending stagnation, depression, currency and trade wars, capital controls, financial crisis, sovereign insolvencies, and massive social and political instability.” The Asian Century beckons — along with more crises. As the West strives to sort out its economic and financial problems, Asia seems well positioned to continue setting the pace for global growth.

CONTENTS

Lessons from the 1997 Asian Financial Crisis have steeled the region against currency contagion and enhanced its resilience in the face of global economic turbulence. In their draft paper, “From the Asian Miracle to an Asian Century”, finished just last month in a joint Beijing University and Australia National University research project, Yiping Huang and Bijun Wang presented several major trends. While slowing from the miracle years, growth would still give Asia 40% of global economic output based on purchasing power parity, by 2020. The region would help address global trade and financial imbalances by currency appreciation and structural reforms like more domestic consumption. But the paper warns that financial crises may still strike, hence the need for international coordination and cooperation to head off destabilizing forces. The crucial dialogue is between America and China, the world’s largest economies in this century. The economic talks in Beijing last week between visiting U.S. Vice-President Joseph Biden and his Chinese counterpart Xi Jinping should be regularly reprised to forge consensus on policies and initiatives that prevent crises. In their seminal 2009 paper “The End of Chimerica”, economists Niall Ferguson and Moritz Schularick warned that the decadesold relationship which enabled China to grow rapidly by exporting to America, would need to change, or else it would lead to unsustainable economic imbalances. Two years after that Harvard Business School report, the skewed money and trade flows have now spawned full-blown crises. Now, it’s time for the world to recast its creaking economic paradigm. And that difficult and painful rebalancing, like the Chinese characters for crisis, presents both the threat of global dislocation and the vehicle for forging a new and better world order.

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7

Renewable Energy The Global Score

The wave of the future may come sooner than we think By Gary B. Olivar As the world heads into the second decade of the new millennium, the most vexatious problems on the economic front continue to center on the persistence of recessionary trends in the developed regions and chronic poverty in the developing ones. Nonetheless, it is in the latter areas where most of the dynamism is still to be found today and prospects for growth remain high, particularly among such leading countries as the traditional export-oriented tiger economies of Asia (Hong Kong, South Korea, Taiwan, Singapore) and the new BRIC (Brazil-Russia-India-China) grouping of large and populous states. The quest for growth always carries with it an insatiable hunger for energy – to power a country’s factories, keep its cars on the roads, and sustain the amenities of modern life to which today’s consumer culture aspires. Among developing countries – where growth is

mandatory if populations are to lift themselves from poverty and stay ahead of their own increasing numbers – there has thus been little sympathy for the angst in the developed world over what is seen to be a major cost of economic growth – namely, unsustainable environmental damage, most visibly the climate change caused by the carbon footprint being generated from the continued burning of fossil-based fuels for energy. Today, however, the picture is changing. Even in the developing world, there is a growing recognition and acceptance of its share of responsibility to minimize energy usage that enlarges the carbon footprint, and shift to energy sources that reduce it. Indeed, as the chart below from British Petroleum’s global energy report shows, energy use per unit of economic output or GDP has been dropping for a couple of decades.

Historical trends and patterns of development... Energy use per unit of GDP 0.6 POINT & CLICK You can access online research via your Internet connection by clicking phrases in blue letters

toe per thousand $2009 PPP

Forecast

0.4

China US

0.2

World India

0.0 1820

1840

1860

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1880

1900

1920

1940

1960

1980

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2000

2020


Renewable energy - The global score

Problem of climate change begets And the report forecasts that East Asia will opportunities in climate-smart goods lead the world in climate-change technology and technologies. In its latest annual report investments, including those designed to on trade and investment opportunities in Asiareduce energy use (see chart). Pacific, released in July, the THROWING MONEY AT CLIMATE CHANGE Cumulative Investments in Technology, 2010-2030 United Nations Economic and $ billion $US bn Social Commission for Asia and Regional Divergence 1600 the Pacific (ESCAP) identified Delayed Action 1400 regional trade and investment 1200 opportunities in climate-smart 1000 goods and technologies. As 800 its executive director, UN 600 Undersecretary General Dr. 400 Noeleen Heyzer, stated in her 200 introduction: “As the region 0 EU US Japan China/East Asia Russia India/South Asia will have to come to terms with Source: Mercer computations based on IEA WEO (2009), as defined in the Methodology the expected effects of climate change, there is a collective imperative to The message isn’t lost on the Philippines, who increase trade and investment in these goods.” is already the world’s second-largest producer of geothermal energy, and is pledging to triple The UN agency noted that the Asia-Pacific its renewable-energy resources, to 15,304 MW region will need to invest up to $600 billion by 2030, as the Department of Energy (DOE) by 2050 in order to reduce greenhouse gases launched its National Renewable Energy in the region to desired levels. This will Program in June. The country’s renewable simultaneously also create opportunities energy resources currently comprise 33.2% of to develop and export these technologies, its total installed generating capacity. especially in water, energy and resource efficiency. China is expected to account The ambitious targets of the National for more than half of this new investment, Renewable Energy Program include more followed by India with 17%. In other words, than doubling the geothermal and hydro renewable energy can make a lot of sense power-generating capacities – which economically as well as environmentally. contributed 98.7% of the country’s renewableenergy capacity in 2010 – while expanding East Asia to lead the world in climatesignificantly the share of wind, solar, biomass, change investments? Indeed, investment in and ocean power-generating capacities from climate-change ventures could top $5 trillion 1.3% of the renewable-energy capacity in 2010 — equivalent to China’s GDP — in the next to 13.84% by 2030 (see table below). By then, two decades, according to Climate Change the country’s projected renewable-energy Scenarios, a study by consulting firm Mercer generating capacity should comprise 62.4% on investment strategies to hedge against of the country’s projected power demand of and gain from coming environmental trends. 24,534 MW.

Installed Capacity, (MW) as of 2010

SECTOR

Target Capacity Addition by 2015

2020

2025

2030

Total Capacity Addition (MW) 2011-2030

Total Installed Capacity by 2030

Geothermal

1,996.0

220.0

1,100.0

95.0

80.0

1,495.0

3,461.0

Hydro

3,400.0

341.3

3,161.0

1,891.0

0.0

5,394.1

8,724.1

Biomass

39.0

276.7

0.0

0.0

0.0

276.7

315.7

Wind

33.0

1,048.0

855.0

442.0

0.0

2,345.0

2,378.0

Solar

1.0

269.0

5.0

5.0

5.0

284.0

285.0

Ocean

0.0

0.0

35.5

35.0

0.0

70.5

70.5

TOTAL

5,438.0

2,155.0

5,156.5

2,468.8

85.0

9,865.3

15,304.3

Source: DOE, National Renewable Energy Program Executive Summary

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Renewable energy - The global score

Opportunities for foreign investment in climate-change ventures. In “Climate change investment and technology transfer in Southeast Asia”, a chapter in Climate Change and East Asia: The politics of global warming in China and East Asia, Dr. Tim Forsyth of the London School of Economics notes that the Kyoto Protocol enhances opportunities for foreign investment in climate-change ventures. He outlines several modes for renewable energy investment, based on such variables as level of control, vertical or horizontal integration, on- or off-grid, and competition with fossil fuels (see graphic). MODES OF INVESTMENT IN RENEWABLE ENERGY Mostly grid connected technology FDI mostly Category 1 unrestricted access/ private e.g. mainland ownership territory of encouraged Thailand, Malaysia, and Singapore

FDI mostly heavily regulated/ privatization undeveloped

Mostly off-grid

Category 4 e.g. outer islands of the Philippines

Category 2

Category 3

e.g. mainland coastal territory of China and Vietnam

e.g. outer islands of Indonesia, plus rural Vietnam and China

High competition from fossil fuels

Investment tending towards horizontal integration (i.e. using joint ventures and technology sharing

Investment tending towards vertical integration (i.e. dominated by larger companies and subsidiaries Low competition from fossil fuels

Forsyth expounds further on building publicprivate partnerships in renewable energy in his 2005 study on the Philippines and Thailand: “Successful public–private partnerships between investors and communities depends on minimizing transaction costs, strengthening collaborative (or assurance) mechanisms, and in maximizing public trust and accountability of partnerships.” The renewable energy picture: clean, renewable, inexhaustible. A popular definition of renewable energy (RE) refers to potential sources of energy that are readily found in nature – the sun, the wind, the ocean waves and tides, running water, geothermal reserves – and are clean and renewable, i.e. either inexhaustible or naturally replenished. This category generally also includes the burning of biomass and biofuel, which unlike

CONTENTS

the others does add to the carbon footprint, but presumably in amounts that are an order of magnitude less than the traditional villains of fossil fuels: oil, coal, and (though much cleaner than the first two) natural gas. What about nuclear energy? It is virtually inexhaustible, does not add to the carbon footprint, and supplies enough dependable power to serve as the mainstay of baseload (24/7) power generation capacity. However, it does present unique problems of its own, such as the perennial challenge of how to dispose of nuclear waste (e.g. spent nuclear fuel and cooling water) and the ever-present risk of catastrophic damage (e.g. the recent partial meltdown of the Fukushima nuclear power plant in Japan in the wake of a recent tsunami disaster). It’s for environmental rather than technical reasons that nuclear energy is typically excluded by the most passionate RE advocates from these discussions. Because of its characteristics in nature, the global potential for RE has been described as virtually limitless, as may be summarized below (excluding running water, which is the oldest renewable-energy source):

Source

Resource potential

Energy conversion options

Geothermal

Several orders of magnitude larger than current usage

Only hydrothermal and shallow geothermal systems currently viable

Wind

Very large, especially offshore

Large and Small-scale power generation systems

Biomass

Varies greatly across countries (Phil reportedly third largest in world)

Combustion, gasification, pyrolysis, digestion systems

Ocean

Not yet fully assessed, but large

Systems based on wave movements and tidal cycles

Virtually unlimited

Photovaltaics, solar thermal power generation, solar water heaters

Solar

Over the five years from 2005-2010, these various RE sources grew capacities by average annual rates of 15% to 50%, with wind power

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Renewable energy - The global score

adding the most capacity and now present in over 80 countries. Solar photovoltaic (PV) capacity was added in over 100 countries last year alone. As a booming new industry, manufacturing leadership in RE is now shifting from Europe to Asia (China, India, South Korea). Globally, over 3.5 million direct jobs have been created in RE, half of them in the biofuels sector. In its report, The Economics of Climate Change in Southeast Asia, the Asian Development Bank declares: “Southeast Asia has considerable potential to harness renewable resources, including biomass, solar, wind, and geothermal resources; and to use emerging technologies on oceanic energy resources, such as tidal power.” This year, for instance, Thailand aims to utilize renewable energy and alternative fuels equivalent to more than 6.6 million tons of oil (see table).

oil spill in the Gulf of Mexico, the Fukushima nuclear plant disaster in Japan, and the oil price volatility caused by the “Arab Spring” unrest in some Middle East countries. In 2010, RE supplied 16% of global final energy consumption and accounted for half of the nearly 200 GW of new global energy capacity added last year. RE represented 25% of global power generation capacity last year, delivering nearly 20% of the world’s power supply. In particular, solar capacity more than doubled due to dramatic price reductions. RE investments reached $211 billion in 2010, a third higher than the $160 billion a year before. To this may also be added some $15 billion in (unreported) investment in solar hot water collectors, plus another $40-45 billion in large hydropower projects.

Thailand’s Targets for Renewable Energy and Alternative Fuels Power Generation Targets in 2011 Solar Wind Hydropower Biomass Municipal solid waste Biogas Ethanol Biodiesel Existing in 2006

(MW) 3,276 45 115 156 2,800 100 60 1,621

Process Heat

(ktoe) 1,047 4 13 17 941 45 27 530

(ktoe) 4,035 5 3,660 370 2,424

Alternative fuels (millions litres/day) 5.4 2.4 3.0 0.5

(ktoe) 1,606 654 953

Source: Ministry of Energy, Thailand, cited in Asian Development Bank report

Major developments in 2010. The global picture for renewable energy in 2010 was somewhat mixed, though predominantly positive. In its 2011 global status report, the Renewable Energy Policy Network for the 21st Century (REN21) notes the economic setbacks from the global recession, which forced several governments especially in Europe to cut solar energy subsidies, as well as recent, technologically driven price reductions in natural gas which made it more competitive with RE. Global temperatures in 2010 were similar to 2005, making the target ceiling of 2 degrees above pre-industrial levels more difficult to achieve. On the other hand, events supporting RE included the 3-month British Petroleum (BP)

CONTENTS

For the first time ever, the share of developing countries in RE exceeded that of developed countries in 2010, with China accounting for over a third of total RE investments the second year in a row. Of the 119 countries with RE targets and policies, half are developing countries – an encouraging sign, because it is in developing countries, after all, where energy demand is expected to grow the fastest. The REN21 report highlights the following important countries in RE development last year:

• United States: RE represented 10.9% of domestic primary energy production in 2010 (compared to nuclear’s 11.3%), up by 5.6% from the previous year.

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Renewable energy - The global score

• China: This fast-growing giant added 29 GW of grid-connected RE capacity, a 12% increase over the previous year, bringing its total RE capacity to 263 GW. China is now the top installer of wind turbines and solar thermal systems and the world’s largest hydropower producer.

• Germany: RE met 11% of total final energy consumption, with wind power accounting for over one-third of RE production.

• Brazil: Produces virtually all of the world’s sugar-derived ethanol.

Supportive policy landscape important for driving RE growth. A supportive policy landscape in many parts of the world has been a major growth driver for RE globally:

• National RE targets now exist in nearly a hundred countries, generally relating to target shares for RE in total energy production (usually 10-30%), heat supply, installed capacities of various technologies, and the share of biofuels in road transport fuels.

• Renewable power generation policies exist in 95 countries, with feed-in tariffs (FITs) the most common form of support, in at least 61 countries and 26 states/provinces.

• Renewables portfolio standards (RPS) and quotas have been enacted in at least 10 countries and 15 other jurisdictions, including 30 US states.

• Other forms of official support include: net metering or net billing policies in at least 14 countries and almost all US states; “green energy” purchasing and labelling programs reaching 6 million “green power” customers worldwide; subsidies and tax incentives; and public financing schemes.

• Biofuel blending mandates exist in 31 countries and 29 states/provinces.

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At the same time, tensions have often arisen as a result of the ways by which these policies were arrived at. The most prevalent source of conflict is the inevitable choice that must be made between populist programs – such as FITs and similar subsidies – that further burden public coffers on one hand, and hardheaded economic decisions aimed at attracting RE investors – e.g., direct rate increases – that provoke resistance and social unrest on the other. According to Davida Wood, a project manager of the Electricity Governance Initiative with the World Resource Institute (WRI) in Washington, D.C., the forms of public support for RE development projects must result from a policy-setting process that is formal, consultative, transparent, and takes account of various consumer group interests as well. As Wood writes, historical differences must be acknowledged. In the United States, regulatory institutions came about as a result of consumer protest against market manipulation by monopolies. By contrast, the background of regulation in the developing world is primarily to encourage and enable private investment. This can lead to the lack of an effective regulatory mandate, which if combined with lack of transparency and consultation in regulatory decision-making, can lead to loss of consumer confidence and public support. Thus there is a role for civil society organizations in improving the decisionmaking on RE subsidies and related issues. In Thailand, consumer groups want to bundle RE development with broader energy efficiency and demand management initiatives. In Indonesia, civil society organizations argue that RE subsidies – like any other – must be linked to public policy objectives and regulatory oversight. In the Philippines, marginalized sectors like indigenous peoples and local communities are often sidelined from decision-making, leading to compromises on the environment and social resistance. The stakes in effective decision-making are high – for economic growth, for the requisite energy capacity, for the social consensus that makes these initiatives sustainable especially in the developing parts of the world. In the rural sector, there are already hundreds of

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Renewable energy - The global score

millions of households worldwide that rely on renewable energy: from small solar photovoltaic household systems, through villagelevel micro-hydro facilities, to biogas made in household-scale digesters for heating and cooking, and more efficient biomass cooking stoves.

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In general, RE solutions for off-grid power requirements are acknowledged as the cheapest for the rural sectors of the developing world. The challenge is to mainstream these solutions without leaving too many people behind.

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A Billionaire’s Challenge: The Great Toilet Makeover

Why is Bill Gate interested in remaking the toilet By Tanya L. Mariano

The unglamorous toilet needs a makeover, says Bill Gates.

POINT & CLICK You can access online research via your Internet connection by clicking phrases in blue letters

The Bill and Melinda Gates Foundation recently announced US$45.1 million in grant money to improve basic sanitation facilities for the world’s poor. The amount includes US$3 million to support the Reinvent the Toilet Challenge for universities around the world to develop sustainable latrine systems. The Foundation is financing efforts by eight universities in Britain, Canada, Holland, Singapore, South Africa, Switzerland, and the United States to create toilet designs appropriate for most parts of the developing

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world. The toilets should not require pipedin water, a sewer connection, or outside electricity. They should cost a person only US$0.05 a day to use. They should be capable of generating energy and recovering water, salt, and other nutrients. So far, promising designs have included a toilet that produces clean water, biological charcoal, and minerals; a toilet that functions as an electricity generator, a solar-powered toilet, and a community bathroom block that recovers water and carbon dioxide from urine. Why redesign the toilet? Why is Bill Gates so interested in remaking the toilet?

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A billionaire’s challenge: The great toilet makeover

Various histories of the flush toilet, including a scholarly paper from the Sulabh International Museum of Toilets, amply demonstrate that people have long known of the need for devices for receiving and disposing of human waste. Several accounts suggest that oldest example of flushing toilets could date back to Crete between 3,000 and 1,500 B.C.

Millennium Development Goals seeks to cut by half the proportion of the global population without access to safe drinking water and basic sanitation. According to the U.N. MDG 2010 report, the world is on track to surpass the target for drinking water, but will fall short significantly in terms of improved sanitation facilities.

The forerunner of the modern toilet was first patented in England in the late 18th century. This invention sparked “a sanitary revolution of waterborne sewage systems that have saved hundreds of millions of lives by keeping communities safe from diseases,” says Sylvia Mathews Burwell, head of the Gates Foundation’s Global Development Program, in a speech during the AfricaSan3 Conference in Kigali, Rwanda. And yet, today, according to data from the World Health Organization and Unicef, some 2.6 billion people—nearly 40% of the world’s population, most of them in Asia and SubSaharan Africa—still lack access to improved sanitation, and 1.1 billion still defecate in the open. To address this unhealthy, even lifethreatening deficiency, a Singapore tycoon, Jack Sim, set up the World Toilet Organization in 2001, which will hold the World Toilet Summit in November in Hainan, China. The Gates Foundation has now joined this sanitation and health crusade. This 1½-minute Flash video in the foundation website presents an engaging case for reinventing the toilet:

Missing the U.N. sanitation target. Among its targets for 2015, the United Nations

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If the sluggish rate of progress continues, the number of people lacking access to improved sanitation will actually increase to an estimated 2.7 billion from 2008 to 2015. The U.N. Development Programme finds wide regional disparities, with the majority of populations in South Asia, Sub-Saharan Africa, and Oceania enjoying least access, as the 2010 UNDP Human Development Report as well as country statistics show. The contrasting progress in drinking water is consistent with the historically low demand among policymakers for investing in sanitation systems. In a survey of 38 developing countries, the WHO found that half continues to lack an investment program for sanitation. A 2008 World Bank study says this is because policymakers in these countries have a poor understanding of the economic and social benefits of higher spending on sanitation. The double threat of population growth and climate change, and the absence of demand for toilets in some populations (see box on Going beyond subsidies on the next page), make it all but certain that the world will not reach the MDG sanitation target for 2015.

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The growing effects of climate change may threaten sanitation systems even in developed countries. According to a WHO report, climate change will put established water and sanitation services at risk. Although the developing world will still bear the brunt of climate change, increased occurrence of floods and droughts will render global sanitation systems vulnerable to damage.

Going beyond subsidies It would seem logical to give free toilets to people who can’t afford them in order to solve the sanitation problem, but recent findings prove that it isn’t as simple as that. In fact, there is growing concern over the failure of sanitation subsidies. The World Health Organization (WHO) reports that an internal review of the initiatives by the Water and Sanitation Program (WSP) of the World Bank shows that projects with lower levels of subsidy were more effective than high-subsidy initiatives. In the same WHO bulletin, World Toilet Organization (WTO) founder Jack Sim adds that many toilets go unused because some people do not see the need for them. Residents of rural communities, for instance, do not think twice about defecating in nearby rivers not just because the water’s flow brings the waste out of sight and out of mind, but more importantly, because they have been doing it for generations. To Sim, the solution is clear: create demand where there is none. According to him, “…charity cannot solve such a massive problem. We need to transform the world toilet crisis into a great business opportunity.” Through the SaniShop micro-franchising mechanism, the WTO promotes entrepreneurship among community members by training local poor to become producers of small stand-alone toilets and training village women to sell the units at a commission. The WSP likewise believes that only by developing and stimulating the market for sanitation will there be a sustainable approach to meeting the needs of the developing world, and that public subsidies for toilet construction should be avoided as much as possible. This does not, however, relieve national governments of their duties to promote better sanitation. In the field note, The Case for Marketing Sanitation, the WSP says that the public sector should instead focus on activities such as facilitating the development of a sanitation industry, and managing the transport and disposal of wastes.

Impact of poor sanitation. Poor sanitation places heavy economic and social burdens on developing countries, according to a series of studies by the World Bank’s Water and Sanitation Program.

Another approach that seems to be producing remarkable results is Community-Led Total Sanitation (CLTS). Pioneered in 2000 by Kamar Kal, a development consultant from India, together with the Village Education Resource Centre (VERC), a non-governmental organization also based in India, this approach focuses on investing in community mobilization rather than hardware solutions, and promotion of “open defecation-free” villages instead of toilet construction.

The impact of poor sanitation can be estimated in terms of economic losses in health, water resources, welfare, and tourism. Annually, this has been estimated at US$448 million in Cambodia, US$53.8 billion in India, US$6.3 billion in Indonesia, US$193 million in Lao PDR, US$1.4 billion in the Philippines, and US$780 million in Vietnam.

Without action to effect a change in beliefs and behaviors, purely technological and high-subsidy solutions are sure to go down the drain.

Source: UN, Progress on Sanitation and Drinking-Water, 2010 Update

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Children 4 years old and below are the prime victims, with more than1.5 million dying every year from diarrheal disease and other diseases transmitted through water contaminated by human waste.

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A billionaire’s challenge: The great toilet makeover

Other age groups suffer as well, reports WHO and Unicef. Absence of improved sanitation facilities and clean water leads to a decline in school attendance among children aged 5-14, causes loss of income for those 15-59 years old, and increases the likelihood of disease among the elderly aged 60 and over.

Gains from investing in sanitation In Evaluation of the Costs and Benefits of Water and Sanitation Improvements at the Global Level, the World health Organization (WHO) estimates that it will cost US$9.5 billion annually to reach the MDG sanitation target (US$11.3 billion, when water supply target is included) and US$136 billion to serve the entire world with household connection to sewage and regulated water supply. Although these figures seem intimidating, the potential benefits of investing in sanitation far outweigh the costs, according to Securing Sanitation – The Compelling Case to Address the Crisis, a study prepared by the Stockholm International Water Institute (SIWI), with input from WHO and the Norwegian Agency for Development Cooperation (NORAD). According to the report, every year, 391 million cases of diarrhea will be averted and economic gains will reach some US$65 billion if the sanitation target is reached. If 100% clean water and sanitation coverage is attained, the benefits can rise up to US$260 billion annually. Based on cost-benefit analysis, it is estimated that every dollar invested in water supply and sanitation yields benefits worth between US$2.8 to US$23.2, depending on the region. Time savings derived from productive time that is not lost due to illness and reduction in time spent finding a safe place to defecate contribute the most to these financial gains. Rebooting the focus on sanitation. Catching up on badly needed sanitation investments worldwide will not be so easy: a WHO report calculates that US$142 billion needs to be spent on new sanitation facilities if developing countries are to achieve the MDG target. Moreover, the price tag for maintaining existing sanitation services is an additional US$216 billion. The international donor community, including civil society groups and private philanthropy organizations like the Gates Foundation, are urging stronger action on global sanitation improvement. UN Secretary-General Ban Ki-moon has launched the Sustainable Sanitation: FiveYear Drive to 2015 to keep sanitation a top

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priority in the political agenda. The World Bank continues to support initiatives in promoting hygiene, improving access to basic sanitation, building sewer systems, and increasing wastewater treatment. Earlier this year, a multi-sector group of stakeholders developed the Water, Sanitation, and Hygiene Sustainability Charter to promote collaboration and provide a framework for the development of sanitation improvement initiatives. The Charter contains six sets of “Sustainability Guiding Principles” in the areas of strategy and planning, governance and accountability, service delivery support, financial management, and reporting and knowledge-sharing. Sim’s Singapore-based World Toilet Organization, a non-profit body dedicated to improving sanitation conditions worldwide, engages in advocacy, capacity-building, and social entrepreneurship projects. In 2001, it declared November 19 as World Toilet Day—now celebrated every year by member organizations in 19 countries. Hardware and software solutions. In welcoming the Gates Foundation grant, Catarina de Albuquerque, UN Special Rapporteur on the Human Right to Safe Drinking Water and Sanitation, notes that hardware solutions are an important aspect of the solution. She adds that improving sanitation services for the world’s poor also should include “investments in software solutions, like awareness rising among the people on the vital importance of sanitation…to make sure the hardware solutions are actually used.” The multi-million dollar value of the Gates grant—and the high-profile stature of the foundation giving it—considerably raises the visibility of sanitation as a global development priority. It comes at a time when donor countries are expected to reduce financial aid for sanitation projects in developing countries to fund other projects such as the construction of schools and hospitals. “Sanitation still needs to be shouted about,” blogs Rose George, author of The

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The toilet through the ages According to Time magazine, it’s still unclear who first invented the toilet, but it’s looking like a toss-up between the Scots, whose stone huts from 3,000 B.C. were believed to have sanitation fixtures in the form of recesses on the walls that were connected to drains, and the Greeks, who had “large, earthenware pans connected to a water supply that ran through terra-cotta pipes,” which were discovered in the Palace of Knossos in Crete. For another presentation on how people throughout the ages answered the call of nature, visit this page from Toilets of the World, a website of frequent traveler and self-proclaimed “toilet guru” Bob Cromwell. The site features toilets from the Neolithic settlement of Skara Brae off the coast of Scotland to early- and mid-20th-century America. And if that weren’t too much information already, this slideshow from Scientific American provides a quick look at the evolution of the toilet, from antique latrines in Rome that fed directly into sewers, to a commode designed for use in the U.S. space shuttle.

Source: Scientific American, A Brief History of the Toilet

Big Necessity: Adventures in the World of Human Waste/ The Unmentionable World of Human Waste and Why it Matters (selected as one of the top 10 science books of 2008 by the American Library Association). ”The authority of the foundation,” she adds, “and its willingness to acknowledge this ‘taboo’ of sanitation, this vital human need, is more than welcome.” Quite simply, reinventing the toilet will give better and longer lives to millions of people across the planet. And that goal deserves support not just from billionaires, but all of humanity.


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Winning the Fight Against Poll Fraud

Increased vigilance and information technology may run up against the system itself By Marishka Noelle M. Cabrera

POINT & CLICK You can access online research via your Internet connection by clicking phrases in blue letters

On August 11, the four-year battle of Aquilino Pimentel III finally ended with his official proclamation by the Senate Electoral Tribunal as the true winner of the 12th slot in the 2007 senatorial elections. This comes after the resignation of Senator Miguel Zubiri on August 3 and his subsequent withdrawal of the counter-protest filed against Pimentel. The Senate body concluded that there was massive cheating in the 2007 elections due to many spurious ballots. In his pleading, Pimentel contested the results in 44 municipalities from seven provinces in Mindanao on the basis that the results canvassed by the Commission on Elections (Comelec) and the National Board of Canvassers were manufactured and padded.

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Doubts as to the legitimacy of Zubiri’s mandate as senator plagued his entire term, and more so with recent revelations of widespread cheating in the 2007 polls made by former Maguindanao provincial election supervisor Lintang Bedol and suspended Autonomous Region in Muslim Mindanao Governor Zaldy Ampatuan. In his resignation speech, Zubiri denied any knowledge of cheating that happened in Maguindanao, and maintained that he was resigning because the “unfounded accusations“ against him were taking a toll on his family. The midterm elections of 2007 – and the presidential elections in 2004 – still linger in recent memory, for the damaged credibility of government institutions entrusted with safeguarding the integrity of the people’s

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Winning the fight against poll fraud

votes. In this light, the Pimentel victory can be considered a big step in the fight against electoral fraud, along with the computerized 2010 presidential elections, with their generally accepted results. This is not to say that there are no more skeptics.

2007 senatorial elections: Maguindanao delivers ‘statistical improbable’ results In May 2007, former Maguindanao election supervisor Lintang Bedol appeared before the National Board of Canvassers and announced a 12-0 sweep in the province of Maguindanao by senatorial candidates of Team Unity, the administration ticket. The results were so incredible that even then-Comelec chairman Benjamin Abalos Sr. found it “statistically improbable.” Bedol would later surrender to the Department of Interior and Local Government after years of hiding and claim that widely orchestrated cheating did occur in the elections of 2004 and 2007. In the report Bantay Eleksyon 2007, several electoral anomalies at the precinct level were also detected in the 2007 polls, such as vote-buying, coaching of voters, including names of the dead in lists, harassment, and even abduction.

In its quick count, poll watchdog National Citizens’ Movement for Free Elections (Namfrel) decided to exclude election results from Maguindanao because Namfrel officials believed election returns (ER) from the province had been tampered with, after the delivery of Namfrel’s copy of the ER (6th copy) was said to have been delayed. According to Namfrel Maguindanao and Shariff Kabunsuan chair Fr. Eduardo Tanudtanud, OMI, “in view of what we perceive as systematic withholding of ERs to Namfrel that casts doubts on the integrity of the 6th copy of the election returns.” A new joint inquiry into 2004 and 2007 polls. In the light of the freshly minted allegations of Bedol and Ampatuan, along with new evidence and testimonies from witnesses, the Department of Justice (DOJ) and the Comelec released a joint order to begin a new inquiry into allegations of massive cheating in the 2004 and 2007 elections. The fact-finding team will be composed of six members—two representatives from the National Bureau of Investigation, two from

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the DOJ, and two from Comelec. It will be chaired by the Assistant Secretary of the DOJ. Is the problem in the system itself? Economist and political analyst Solita Collas-Monsod posits in her Philippine Daily Inquirer column that “the electoral system itself, in particular the handling of election protests, actually encourages cheating.” She stresses that those who are known to have been involved in election fraud do not get “punished enough for there to be a significant deterrent effect on future irregularities.” And then there’s the question of punishment for the candidate on whose behalf the cheating occurred, seeing that the said candidate “does not get penalized in any way” since he can always say that he was unaware of it. Procedural defects also invite opportunities for committing fraud, as pointed out by political science professor Julio Teehankee in “Electoral Politics in the Philippines,” part of a 2002 book on Electoral politics and Southeast & East Asia, published by the German foundation Friedrich Ebert Stiftung. Reforming the electoral system, he says, “requires a rethinking of the established political institutions in the Philippines. These institutions have long served entrenched interests that have blocked efforts at widening the democratic space.” Cheating the norm rather than the exception. In addition to defects in the election process, the inherent problem that makes cheating the norm instead of the exception lies in the nature and dynamics of Philippine society and politics. One can argue that the ruling class, comprised of political clans, the landed elite, and local strongmen, have dominated the political arena, challenging our precepts of democracy with force and money. This is not to say that the rich will necessarily cheat, but rather to show that if they wanted to, they very well could, given their power, influence, and resources. In the end, it’s all about the money. “The mobilization of money instead of issues and policies in Philippine election campaigns has

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Winning the fight against poll fraud

resulted in the proliferation of clientelism and fraud that reinforces elite democracy,” taken from Reforming the Philippine Political Party System: Ideas and initiatives, debates and dynamics, also published by Friedrich Ebert Stiftung. The paper adds, “Philippine elections are ironically governed by a multitude of laws aimed at safeguarding the entire electoral process from beginning to end.” In the article “Beyond Machine Politics? Reformism, Populism and Philippine Elections,” Dr. Eva-Lotta Hedman of London School of Economics IDEAS, a research center for international affairs, writes, “Poverty and economic insecurity have combined with a highly decentralised political structure to render the majority of

Filipinos susceptible to clientelist, coercive, and monetary inducements and pressures during elections.” In “Restudying the Filipino Voter Today” by the Institute for Political and Economic Reform, assessment of voters in 2003 revealed that “Powerlessness or the perception of powerlessness represents the single most influential factor in the relatively passive acceptance of Filipino voters of electoral fraud. Conversely, it implies that organizing and mobilization—and the confidence these bring—can potentially and actually bring about reforms in the political and electoral system.” Furthermore, factors such as transparency, accountability, and the quick delivery

The 2004 presidential elections: Still in doubt? The 2004 presidential elections that gave Gloria Macapagal-Arroyo a chance to serve as president with an electoral mandate were widely perceived to be tainted with fraud. Calls for her resignation were fueled by the belief that she stole the presidency from her closest rival, the late movie star Fernando Poe Jr. In July, suspended Autonomous Region in Muslim Mindanao Governor Zaldy Ampatuan came forward, claiming to have information that would implicate Arroyo in the alleged 2004 poll fraud. However, the prospect of Ampatuan becoming state witness was met with much disdain because of the perception that he was leveraging information on alleged 2004 poll fraud in order to win immunity for his alleged involvement in the November 2009 Maguindanao massacre, in which 57 people comprised of journalists, relatives, and supporters of Ampatuan rival Esmael Mangudadatu were killed. In an article by Manuel Alcuaz Jr., which was written in March 2006 but published only posthumously five years later, in the Philippine Daily Inquirer on Aug. 13, the management consultant-systems integrator attempted to determine how vote-padding and -shaving in favor of Arroyo might have occurred during the 2004 elections by comparing the congressional canvass of the provincial certificates of canvass (COCs) and the final report of the National Citizens’ Movement for Free Elections (Namfrel). Three weeks before, prior to the publication of Alcuaz’ piece, Tiglao cited fellow Inquirer columnist Solita CollasMonsod’s analysis, quoting extensively from her 2005 column, “Truth is Arroyo Won,” all the way down to using her column title. Monsod’s assessment: “All figures from different sources are within the same ball park, and all indicate that Ms. Arroyo won.” Alcuaz showed a table summarizing the “impossible discrepancy [between the two] that can only be produced by dagdag-bawas.” But Inquirer columnist Rigoberto Tiglao disputed Alcuaz’s arguments. The former Arroyo presidential chief of staff and ambassador to Greece noted that Congress and Namfrel national tallies yielded percentages of votes won by presidential candidates that were nearly identical. Three weeks before, prior to the publication of Alcuaz’ piece, Tiglao cited fellow Inquirer columnist Solita CollasMonsod’s analysis, quoting extensively from her 2005 column, “Truth is Arroyo Won,” all the way down to using her column title. Monsod’s assessment: “All figures from different sources are within the same ball park, and all indicate that Ms. Arroyo won.” Meanwhile, results of the fact-finding panel tasked to investigate irregularities in the 2004 polls known as the Mayuga report was recently declassified by the military, allowing individuals like Bayan Muna Representatives Teodoro Casino and Neri Javier Colmenares to obtain a copy. They labeled the report a “cover-up,” since it overlooked evidence pointing to fraud in the 2004 polls and the alleged involvement of some officials of the Armed Forces of the Philippines (AFP).

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of election results still rank high in the improvement of elections, presumably still automated, in the coming years. Professionalism in the Commission on Elections, the Armed Forces of the Philippines, and other government institutions should help restore faith in the electoral process.

Genuine representative democracy begins with a renewed value for the sanctity of the vote and the creation of a thinking, discerning, and empowered citizenry through voter education and economic development. Throughout the tumultous history of Philippine elections, local and foreign election monitors have played a pivotal role

2010 automated elections: Our great leap forward? In 2010, the Philippines saw its first-ever nationwide automated elections that installed Benigno Aquino III as the 15th president of the Republic. While automation is a great leap forward for elections and electoral reforms in the country, skepticism still ensued regarding the Optical Mark Reader technology and the Precinct Count Optical Scan system that was adopted by the Comelec. The Center for People Empowerment in Governance, in its policy critique, says that the automated system favors big-time election cheats because of questions regarding the transparency of the whole process. In his book “Lost Vision,” former congressman Matias Defensor Jr. recounts the irregularities experienced in the different provinces during the 2010 polls, which he attributes largely to what he claims as inadequacies of the Comelec and the automated system itself. The former Senior Vice-chairman of the House Committee on Suffrage and Electoral Reforms says that while the electronic voting machines that were used are recognized worldwide, “It has been observed however that their performance has been erratic, inconsistent, and in many cases, downright unreliable.” After the elections, the Philippine Computer Society issued an assessment citing irregularities that cast doubt on the accuracy and integrity of the results, in a Philippine Daily Inquirer story. According to the group, the shortcomings or “sins” of the Comelec and its technology-partner Smartmatic-TIM include: delays in the preparations, lack of certification attesting to the 99.995-percent accuracy of the system, removal of security safeguards such as digital signatures, failure to have an independent review of the hash/source code, among others. Nonetheless, former Comelec chairman Christian Monsod, in his assessment of the 2010 automated elections in The Philippine Star, says that the past elections were generally successful. “There was no failure of elections, no catastrophic failure of technology or logistics, no outrage over its conduct or results,” Monsod says. However, the problem was that of transparency, as well as the inability of the Comelec to handle glitches along the way. The post-election report by the Comelec Advisory Council gave recommendations for future automated elections such as: allowing enough time to make the necessary preparations, transparency in the procurement process, and better implementation of the system, from revisiting the clustering of precincts to make sure they have enough manpower to shortening the ballot in order to address ballot secrecy, printing, and logistics issues to the adequate preparation of the Board of Election Inspectors (BEI) for the random manual audit of election results, among others. Despite all this, it seems automation is the way to go, if you ask Comelec Chairman Sixto Brillantes, as quoted by Inquirer columnist Neal Cruz, “We will no longer go back to manual elections. Poll fixers and election lawyers will go out of business. There will no longer be election protests. They would be a waste of time and money. The last automated elections have shown that they (the results) are accurate. Not one of the poll protests that were filed after the elections has progressed. The case of Koko (Pimentel) and Migz (Zubiri) will not be repeated.”

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22 in the election process as the “Guardians of the ballot,” as described in a 2007 Philippine Center for Investigative Journalism article. These poll watchdogs, mostly comprised of volunteers, act as deterrents against electoral fraud since they are able to witness the conduct of elections on the ground. However, the article reports the watchdogs “are admitting they are no match to the election cheats … They had hoped, however, that their larger numbers would minimize poll ‘irregularities’.” With the continuing modernization of the electoral process, poll monitors have to step up their efforts. The International Foundation for Electoral Systems study “Assessing Electoral Fraud in New Democracies: A Basic Conceptual Framework” advises that, “The time has come for democracy and governance practitioners to move beyond the generic guidelines provided by electoral observation groups and electoral management bodies, which cover only the most visible parts of the

electoral process, and to instead employ holistic tools that will systematically and comprehensively undermine fraud.” Lastly, electoral fraud can be lessened in the future through the resolution of present cases. The certainty that

institutions and individuals will be held accountable and consequently punished for violating the law can radically change the feudalist and oligarchical political culture that has saddled for decades, ironically, the oldest democracy in Asia.


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The Apple of Our i

The innovation giant’s rise marks a sea change in the world economy By Marishka Noelle M. Cabrera

POINT & CLICK You can access online research via your Internet connection by clicking phrases in blue letters

In 1976, when the United States turned 200, Apple Computer was born in a Cupertino, California, garage, the brainchild of two college dropouts. Today, at 35, Apple, Inc. (it dropped ‘Computer’ in 2007 to signal its much broader business) boasts a triple-A credit rating — higher in Standard & Poors book than the U.S. government itself — and on August 9, momentarily became the largest company in the world by market value. Boosted by its hit products, from Mac computers to iPhones, iPods and iPads, the consumer technology company hit a market valuation of $337.11 billion, topping oil behemoth Exxon’s $333.57 billion at the time. Heck, Apple even has more liquid

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assets than the United States government. CNN cites U.S. Treasury accounts showing an operating cash balance of $73.8 billion in late July, while Apple has $76.2 billion in cash and marketable securities according to its latest earnings report in June. A brief reign, but a sea change just the same. Though Exxon regained its No. 1 spot among all stocks by trading day’s end on Wall Street, Apple’s brief reign as the planet’s most valuable company demonstrated the sea change in a world economy where knowledge and the products and programs that process it are the biggest creators of value, far more than the coal, oil and steel ruling since the 19th Century Industrial Revolution.

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The Apple of our i

The global economy’s tectonic shift is reflected in Apple’s own rise, marked by exponential leaps in profits with every new hit idea. From the year Steven P. Jobs and Stephen G. Wozniak started the company at Job’s home, Apple has grown into a multibillion dollar global enterprise on the back of innovation after innovation, with no hint of slowing. After all, the innovation economy is a relentless treadmill, where every runner is just as good as its last hit idea. Well, this week, one of the innovation game’s marathon men decided to slow down. On Aug. 24, Jobs quit as Apple CEO, stating in his resignation letter the time has come when “I could no longer meet my duties and expectations as Apple’s CEO.” The company announced that Jobs remains Chairman of the Board, leaving to Chief Operating Officer Tim Cook the helmsman’s post. With Jobs’s second departure as CEO, Apple shares promptly fell, as much as 7% in some trades, amid fears that its innovation magic would fade with his diminished role. While his first exit came in a 1985 boardroom battle amid sagging profits, this time the Apple co-founder is bowing out apparently for health reasons and with the company more profitable than ever. Repeated innovation is the key. And the key to its success is repeated innovation, especially the amazing, even inspiring and liberating kind. When Jobs returned to the helm in 1997 as CEO after being booted out 12 years before, Apple began redefining consumer technology. “Apple Inc: Five Elements Of Making Great Products” lists performance, design, durability, ease of use, and innovative technology as its winning formula.

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But what Apple sells is just half the story. How it sells is the other half: superb marketing that makes hit stars of geek gadgets, as “11 Effective Strategies Apple Uses to Create Loyal Customers” explains. A Newsweek article entitled “Think Really Different” sums up the founding CEO’s genius: “Jobs is a relentless perfectionist whose company creates such beautifully designed products that they have changed our expectations about how everything around us should work. He has an uncanny ability to cook up gadgets that we didn’t know we needed, but then suddenly can’t live without.” Redesigning how people do things. Indeed, more than making hit products, Apple is redesigning how people use the grey matter between their heads, from listening to music and watching shows to chatting with friends and processing information. And because it has lured tens of millions around the world to do things the Apple way, this mammoth following draws other innovators and enterprises to its hardware and software platforms, as Forbes magazine reports. Thus, software developers have also found a platform for their applications, or apps, in the form of the iPhone and the iPad. Apps can range from games to music, photography, reference, learning, newspaper and magazine subscriptions, entertainment, lifestyle, social networking, and the list goes on. “Apple has created an ecosystem that consumers trust. It’s a very compelling place to be as a developer,” Bart Decrem, founder and CEO of Tapulous, maker of games like Tap Tap Revenge and Riddim Ribbon, tells Newsweek. ‘An entirely new business model.’ According to Fortune magazine, the tech company has indeed “set the gold standard for corporate America with an entirely new business model: creating a brand, morphing it, and reincarnating it to thrive in a disruptive age” with products that “have upended one industry after another: consumer electronics, the record industry, the movie industry, video and music production”. With that, Apple landed the 35th spot on the Fortune 500 list.

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The Apple of our i

“Apple’s stellar rise is a testament to the growing influence of the digital world in the global economy,” The Economist’s “Big Apple v. Big Oil” reads. Surely, the digital age is steadily defining the global marketplace. And while in the industrial world, businesses succeeded by providing age-old material needs at lower cost and better quality, in today’s innovation world, enterprises win by devising new hardware and software that make consumers crave them. In short, innovation creates demand.

Nevertheless, a lot of investors are still wary to invest in tech stocks mainly because of the pain brought about by the Dot Com boom and bust in the late nineties to early 2000’s. Back then, the concept of the Internet was a whole new thing and everyone wanted to cash in on its potential success. Some threw caution to the wind for fear of getting left behind, investing in tech companies without a solid business plan and then losing a fortune after these companies went under. In his paper “The Boom and Bust in Information Technology Investment”, Mark Doms, senior economist with the Federal Reserve Bank of San Francisco, explains, “In the late 1990s, the dot-com industry was growing and there was a sense that the way business was conducted around the world was changing, creating a “new economy.” Businesses believed that they had to invest heavily in IT if they wanted to be part of this new economy.”

The knowledge-based economy. The emergence of technologies that are so ingrained in daily life has ushered in the shift from an industrial economy to one that is knowledge-based. “The Knowledge Economy” by Walter W. Powell and Kaisa Snellman of Stanford University defines it as the “production and services based on knowledge-intensive activities that contribute to an accelerated pace of technological and scientific advance as well as equally rapid obsolescence.” In this new economy, human capital—knowledge, creativity, and innovation—is the driving force of industries, especially those in the technology sector.

More tech companies going public. Today, the success of the consumer technology segment and social media has fueled the move for more tech companies to go public this year like LinkedIn, the networking site for professionals. The

Keys to the Old and New Economics 8 ISSUE Economy - Wide Characteristics: Markets Scope of Competition Organizational Form

OLD ECONOMY

NEW ECONOMY

Stable National Hierarchical, Bureaucratic

Dynamics Global Networked

Importance of Research/Innovation Relations With Other Firms

Mass Production Capital/Labor Mechanization Lowering Cost Througgh Economics of Scale Low-Moderate Go It Alone

Flexible Production Innovation/Knowledge Digitization Innovation, Quality, Time-To-Market, and Cost High Alliances and Cllaboration

Workforce: Policy Goal Skills Requisite Education Labor-Management Nature of Employment

Full Employment Job-Specific Skill A Skill or Degree Adversarial Stable

Higher Real Wages and Incomes Broad Skills and Cross-Training Lifelong Learning Collaborative Marked by Risk and Oppurtunity

Government: Business-Government Relations Regulation

Impose Requirements Command and Control

Encourage Growth Oppurtunities Market Tools, Flexibility

Industry: Organization of Production Key Drivers of Growth Key Technology Driver Source of Competitive Advantage

8 A similar set of Old and New Economy characteristics has also been developed by John Doer, of Kleiner,

Perkins, Caulfield & Byers (Menlo Park, California).

From “The Digital Economy and the ‘Rise of Knowledge Workers’ ”

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The Apple of our i

Wall Street Journal reports that LinkedIn shares “opened at $83 on the New York Stock Exchange, up 84% from its initial public offering price of $45. By the market’s 4 p.m. close, the stock had soared 109% to $94.25. At the end of the day, LinkedIn was worth $8.9 billion.”

But the question on people’s minds: if this is another tech bubble, is it going to burst anytime soon? Experts are divided on this one. Some say that a tech crash looms large, while others are adopting a thistime-it’s-different attitude.

PAST AND PRESENT TECH IPOs

Facebook

Approximate market value $80 billion

Bigger circle shows market value at end of first days trading

Yandex $12.5 billion

Smaller circle shows previous year’s revenue

Netscape

$2.2 billion

Yahoo

@Home

$848 million

$2 billion

eBay

$1.9 billion

Estimate revenue: $2 billion

$440 million

LinkedIn

$8.9 billion

Groupon

Approximate $20 billion

Pandora

$713 million

$2.8 billion

Zynga

$0.7 million

$0.7 million

$1.4 million

$5.7 million

Approximate $20 billion

$243 million $138 million

1995

1996

1997

SEEN THIS MOVIE BEFORE?

1998

J

F

M

A

M

J

J

$597 million

2011 11

UPCOMING

The current market has been closely tracking the performance of the Nasdaq in the late 1990s. But it has a long way to go until it peaks.

NASDAQ’S CURRENT UPWARD TREND PRESENTS SIMILARITIES WITH THE 1990s TECH BUBBLE.

1999

NASDAQ’S RISE AND FALL

YEAR 4 YEAR 1

YEAR 2

600%

YEAR 3

140

500

1998 120

400

100 1997

80

300

60 200

1996

2011

40 20 0

1995

DETAIL

100

2010 CURRENT TREND

1990s TECH BUBBLE 1995

2009

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The Apple of our i

In “Tech Stock Crash: End of the Bubble?” by the Huffington Post, Russell Hancock of Joint Venture, an industry coalition, points out that the “hype and excess” of the dotcom bubble is “not the case this time. Companies are behaving prudently, bringing genuine product and value -- and investors recognize it.” In the same report, the steep decline in tech stocks may have been caused by the nature of the market in general. “Stocks always fall faster than they go up…The fundamentals of tech leaders are better than ever -- and those that are suffering have oodles of cash,” shares Howard Lindzon of StockTwits, a financial idea network. Find companies capitalizing on massive technology shifts. For investors looking to put money in tech companies, Money magazine advises, “The key is to find companies that can take advantage of massive shifts in the way consumers and businesses use technology.” Some trends that the tech sector could be looking at in the next 10 years include on-demand software or software that is downloaded over the Internet, smartphones, data management and storage, and software that can manage the efficient use of utilities like electricity. Meanwhile, online financial publication The Market Oracle suggests looking at how tech companies compete in relation to growing Asian markets, saying that investors need to “steer clear of all tech companies that are competing against low-cost Asian competitors and get “long” any tech stocks that get most of their sales from Asia”. For his part, investment guru Warren Buffett would still rather invest in companies whose future is more predictable like Coca-Cola. “I simply look at businesses where I think I have some understanding of what they might look like in five or 10 years,” Bloomberg quotes Buffett.

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“There are four elements, all technologically driven,” writes the University of London professor. “The first is the development of a new infrastructure of communication, commonly called the Internet, and its probable successor, the information superhighway. The second is the increasing interconnectivity of different electronic machines — telephones, computers, faxes, modems — both in terms of numbers of connections, and the bandwidth of connections. The third is perhaps the most fundamental: the fact that almost all information is becoming digital. The fourth is the development on this basis of new applications — the so called killer applications that will constitute the new basic industries of the information age.” And if we may add a fifth but nontechnological element: the boundless minds, hearts and souls of people. Jobs said in his resignation letter: “I believe Apple’s brightest and most innovative days are ahead of it.”

Bear in mind that while movements and trends in the tech market are somewhat harder to decipher, basic imperatives of investing such as prudence, foresight, good timing, and a little bit of luck are still one’s best bet in an everchanging market environment.

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Generating new markets with every new idea. Whether the market surge is real or surreal, however, there is no doubting the innovation economy generating new markets with every new idea, from gadgets and apps to show-stoppers and chart-toppers. Urban development thinker Peter Hall expounds the ingredients of the ‘iEconomy’ in the first chapter of his book Cities in Civilization.

Why not? Indeed, in the markets of the human fancy, as the company’s spectacular successes show, the only recession is the failure of the imagination.

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Digital TV: Are We Ready?

Philippines’ long and winding road from analog to digital By Maria Carmina Olivar Couch potatoes, advertisers and non-English speakers should be thrilled.

POINT & CLICK You can access online research via your Internet connection by clicking phrases in blue letters

With the National Telecommunications Commission (NTC) planning to roll out digital television (DTV) by 2016, Filipinos can look forward to the many benefits of using digital, not analog signals for TV transmission. From high definition (HDTV) images and CD-quality sound to multiple-language audio and subtitles, not to mention loads of text, sound and images about programs and products, the DTV revolution that has swept more advanced countries is set to jazz up our TV screens. A report by the U.S. Congressional Research Service calls digital TV “the most significant

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development in television technology since the advent of color television in the 1950s.” An inquiry by the House of Representatives of Australia agrees that DTV is more efficient than the old standard of analog television (ATV). Simply put, digital’s signal transmission using billions of separate bits of data delivers video and audio faster, clearer and more efficiently and completely than analog’s unbroken waves, much like the difference between CD and cassette tape music. America switched to DTV in mid-2009, Japan in 2003, and parts of Europe began trials in the 1990s. So why hasn’t Philippine TV gone digital up to now? Actually, we have — in fits and starts.

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Digital TV: Are we ready?

As recounted in reports compiled by the Digital Video Broadcasting Project (DVB) , NTC adopted Europe’s DVB-T standard in November 2007, and ASEAN endorsed it in 2008. ABS-CBN, GMA7 and Channel 5 owner MediaQuest, tycoon Manny Pangilinan’s broadcasting arm, all did trials in 2007. The following year, NTC endorsed DVB-T for implementation by 2015, and analog broadcasting licenses no longer be issued after 2009. However, as recounted in this video, NTC changed its mind in 2010 and went for the Japanese ISDB-T before again reconsidering and eventually choosing DVB-T2, the second-generation European system.

So what’s so great about DTV? Digital TV digitizes sound, image and other information into billions of data packets with tags that allow the jumble of packets to be reassembled into the original material. Thus, like online content on the Internet, the packets of one TV program can be split up and sent through different transmission modes (radio, wire, satellite, microwave, etc). Moreover, packets of hundreds of different programs can go down the same wire or radio bandwidth at the same time. Even if billions of packets are mixed up and bumped around during transmission, the digital tags enable them to be delivered and put back together into the original shows at millions of home TVs. This system is much, much less affected by the interference that plagues analog signals, since DTV data packets do not have

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to maintain the unbroken and properly sequenced stream of waves used to transmit analog signals. Thus, the kind of interference that causes ghost-like images, static or snow analog television (ATV) does not affect digital. Only a breakdown of the entire transmission channel or one of its major hubs can stop DTV signals. Since digital signals share transmission paths, they take up significantly less bandwidth or transmission capacity, and more information can be sent down the pipes. Thus, broadcasters can use the same bandwidth size to supply consumers with added features. One of the most prominent of them is high definition television (HDTV), which requires far more bandwidth than standard definition video. Other features like multiple language audio and subtitles, electronic program guides, and true widescreen may also be made available. Still another are various options for transmission such as through Internet networks, as cited in the Government of Lesotho’s Digital Broadcasting Migration Strategy, so that DTV signals do not all have to crowd into the same radio frequency. Thus in its DTV information website, the U.S. Federal Communications Commission (FCC) says DTV “freed up parts of the valuable broadcast spectrum for public safety communications (such as police, fire departments, and rescue squads).” Even more enticing for governments, the extra radio bandwidth capacity can be auctioned off to other commercial users besides the TV networks, like new telecommunications and wide-area wireless Internet services. The world goes digital. With so many advantages over ATV, it is no wonder that many countries are now migrating to DTV. A press release by the International Telecommunication Union cites a regional agreement to transition to digital terrestrial broadcasting by June 17, 2015 by countries from Europe, Africa, and the Middle East, including Iran. The Digital Terrestrial Television Action Group (DigiTAG) explains that after

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that day, countries may use frequencies presently designated for ATV for digital services, without repercussions in terms of possible interference of analog services of bordering nations. According to the ITU press release, the date coincides with the deadline of the Millennium Development Goals of the United Nations, highlighting the potential of information and communication technologies to help achieve the MDG goals. Europe spearheaded the ATV to DTV migration drive. As detailed in a government communique, Luxembourg was the first country to comply with the agreement in 2006. The Netherlands also switched to DTV in the same year; Finland, Andorra, Sweden, and Switzerland followed suit in 2007. Germany and parts of Belgium completed their ATV switch-off in 2008.

In the same year, the U.S. Public Broadcasting Service (PBS) released a video to educate consumers about the country’s plan to eventually shift to DTV, one of many national efforts to prepare and inform people for the transition. According to dtv.gov, on June 19, 2009 Ameica stopped all full-power ATV broadcasts and became the first nonEuropean nation to switch off analog signals. In Asia, Japan is leading the way and is expected to completely switch off ATV broadcasts by July 24, 2011, according to the country’s Association for Promotion of Digital Broadcasting. China’s State Administration of Radio, Film, and Television (SARFT) formulated an official ATV switch-off timetable that sets 2015 as the deadline. China is a bit delayed in its analog switch-off because of trials on a myriad of broadcasting standards

DTV standards: A quick survey There are several digital TV standards, similar to the multi-standard state of analog. Just as ATV has NTSC and PAL/SECAM, DTV has DVB, ATSC and ISDB. Digital Video Broadcasting or DVB is more commonly found in European countries, and is one of two standards being considered by the Philippines. It usually replaces PAL/ SECAM services, and is quite easy to receive: existing TVs can receive DVB via a set-top device. Guidelines for the standard technology’s use are outlined in a report created by the DVB Project. This selfproclaimed “cookbook” also explains the many patented facets of the technology, such as elements of its video and audio coding. DVB is transmitted in MPEG transport streams like Internet video and audio. Thus, it can be distributed via satellite, cable, microwave, and terrestrial television. It has also worked on defining a new standard for 3D video broadcasting, developing secure conditional access systems (providing added operational and commercial options for broadcasters), and expanding upon content protection and copy management ATSC is more common in North America, and is the DTV standard in South Korea. It is regarded as a replacement for the ATV standard NTSC, which is the Philippines’ current analog system. The Advanced Television Systems Committee drafted a report outlining the ATSC standard. For audio encoding and transmission, ATSC uses Dolby Digital AC-3 (standardized as A/52), while ISDB uses Advanced Audio Coding (AAC) — both with a 5.1 audio multi-channel configuration. DVB allows for both audio systems. As for video, ATSC supports many different aspect ratios, resolutions, and frame rates. Finally, like DVB, ATSC uses transport streams to carry data packets. While DVB dominates Europe, and ATSC North America, Integrated Services Digital Broadcasting (ISDB) is a Japanese standard being widely adopted in South America, where more than a dozen countries use the system. Brazil developed the ISDB-T International or SBTVD standard based on the original Japanese ISDB. It is this derivative that has spread to all over South America, and, if its proponents win, also the Philippines. ISDB is maintained by the Association of Radio Industries and Business (ARIB). According to a technical report prepared by the organization, ISDB-T is based on MPEG-2 audio and video coding. Like the other main DTV standards, it uses MPEG transport streams as well. ISDB-T International uses a different video compression standard – H.264/MPEG-4 AVC instead of H.262/MPEG-2 Part 2. As such, the presentation rate for ISDB-T International is a constant 30 frames per second even when using portable devices; with this particular limitation, the original’s frame rate drops to 15 per second.

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as discussed in “A survey of digital TV standards in China.” Are Filipinos ready for DTV? In the Philippines, the DTV switch-over is set to take effect on January 1, 2016. If this deadline pushes through, it will be the culmination of a very long and very tedious transition process that by the start of 2016 point will have spanned nearly 10 years. The snail’s pace at which this procedure has moved forward through the years can be traced to the fact that the Philippines, unlike other members of the Association of Southeast Asian Nations (ASEAN), did not definitively and cooperatively accept DVB-T (a derivative of DVB) as its national standard of choice even though the NTC had allowed test broadcasts in the DVB format early on in the transition process. Why didn’t the NTC accept DVB-T as its favored platform? The answer could be that, like China, the Philippines wanted to weigh its options carefully before committing to one standard. While DVB was an early

frontrunner, in 2010 Japan and the Philippines reached an agreement and adopted a memorandum of cooperation cementing the NTC’s belated decision to choose ISDB-T International. A Manila Bulletin article sheds light on what could have been key deciding factor in this choice for the Philippines: general affordability; on top of the Japanese government’s commitment to guide the Philippines through the transition process, both procedurally and in part economically. Japan’s Ministry of Economy, Trade and Industry (METI) has stated that its government promotes the ISDB standard globally because of the national pride involved in the growing usage of their technology. The Philippine ATV to DTV transition story doesn’t end there, though. The current situation has the NTC reevaluating the ISDB-T International platform, and comparing it to the second-generation DVB standard called DBT-2 or DVB-T2. A Malaya article confirms that this is due to a

iDTV : The future of digital television A particularly exciting and potentially huge offshoot of DTV is interactive DTV (iDTV), as discussed in the “UK Consumer Responses to iDTV Report” by Karolina Brodin, Patrick Barwise and Ana Isabel Canhoto of the London Business School. iDTV allows for two-way communication between the consumer and the service provider or broadcaster, such as having viewers choose and vote from an array of choices presented by a TV program (such as “”American Idol,” for example) and ordering services, such as video-on-demand or home shopping channels. BBC has made headway into iDTV with its Red Button feature where viewers simply press a button on the TV remote to “join in with programs, see extra news stories and sports coverage, check latest sports results, travel information and weather forecasts, even play games, go shopping, place bets and interact with favorite programs.” DTV also presents interesting educational applications. A 1998 US Report of the Advisory Committee on Public Interest Obligations of Digital Television Broadcasters, entitled “Charting the Digital Broadcasting Future”, highlighted the advantages of DTV in terms of improving public education and disability access to information-subtitles will aid the deaf, and dubbed dialogue will aid multilingual areas in the distribution and marketing of educational programs. Language learning courses are already being provided by the BBC. This is an example of distance learning, which may very well be bright in the future of DTV, as laid out by Anders Hedman, Sören Lenman and Cecilia Heinig for Sweden’s Centre for User Oriented IT Design (CID). Formerly primarily via internet, distance learning may possibly be a lucrative marketing venture if massintroduced to the DTV audience. Using iDTV as a primary means of teaching could be a way to reach people who are daunted by more formal educational settings. It could be “edutainment,” or education and entertainment combined, as asserted by Sari Walldén and Anne Soronen of the University of Tampere Hypermedia Laboratory in Finland. This TV-based interactive education process – “turning passive viewers into active learners” – is further discussed by Desislava Paneva of the Institute of Mathematics and Informatics in Bulgaria.

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team representing DVB from the European Union (EU) meeting with NTC officials, and also due to the support conveyed by two major broadcasting firms, GMA Network, Inc. and TV5, for DVB.

and major Philippine broadcasting firms be so directly involved in DTV negotiations? And why else would they invest millions of pesos for both promotion and transition?

What about the money? In the midst of speculations and arguments both for and against either side of the issue, one thing is clear: DTV in the Philippines is coming. Whether we are ready for it or not seems to just be an issue of indecision in terms of the national standard platform of choice. DTV in its mobile and terrestrial forms have been a part of the Philippine milieu for years now, largely in trial broadcasts. However, through these test rollouts of the new technology, the seed of a new and upgraded TV industry has been planted.

In this scramble, it’s important for the government to keep in mind three imperatives. First, the system chosen must serve the interests of the viewing public first and foremost, and it is those interests that the government must advance in its negotiations and policy making on DTV. It would be a good idea, too, to invite consumer advocates like Raul Concepcion to observe and comment. Better to address the public’s DTV concerns now and not let them erupt into controversies that provoke nationally televised hearings in Congress, especially with elections coming in two years. (Like cellphones, TV is sure to get the attention of millions of voters.) Second, the transition arrangements and funding must make sure that millions of poor households depending on TV for news and entertainment are not cut off when ATV switches off. One idea: the proponents behind the winning DTV format, whether Europe or Japan, should provide assistance for the poor to be given free or cheap DTV decoding devices for their home television sets.

There is, of course, much money to be made, with many times more programs and services to provide, plus the billions of pesos worth of DTV equipment for broadcast networks as well as the millions of televiewers nationwide. Why else would Europe and Japan be pushing their respective formats,

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Third, when radio bandwidth is freed up, the government should not make the mistake of giving capacity away, as it did with 3G and 4G frequencies now raking in billions of pesos in profits for telecom companies. Next time, auction the bandwidth or give the government a share in future profits. The broadcasting and telecom companies may hate it, but the extra billions in franchise fees would do wonders for our credit rating and development spending.

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