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Hong Kong’s underused military land a potential goldmine — but a minefield for government

HONG KONG — As Hong Kong seeks more land to help ease a worsening housing crisis, some lawmakers and activists are urging officials to take a fresh look at little-used swathes of more than $100 billion worth of real estate controlled by the Chinese military. The Hong Kong garrison of the People’s Liberation Army (PLA) still occupies some 19 sites across the global financial hub it inherited from the British military when the former colony was handed back to China in 1997.

While several sites, such as the high-rise barracks near the Central financial district, are neon-lit and busy, others appear overgrown, rundown and little used, according to Reuters investigations, activists and diplomats monitoring military activity.

The parcels range from mansions in the exclusive Peak district and once-luxurious officers’ apartments in Hong Kong and Kowloon, to firing ranges and decades-old Nissen huts across the semi-rural New Territories, near the border with mainland China.

With Hong Kong property prices at record highs, Denis Ma, head of research at property consultancy JLL, said a mid-range estimate of the total land value could reach HK$1.06 trillion ($135 billion).

Based on the recent sale of a nearby plot, the Central site alone could be worth $29 billion and deliver 4.5 million square feet of floor space if developed into a commercial site.

Suitable residential land among the 19 sites could yield 65,000 family-sized apartments, Mr. Ma added.

Across Hong Kong, the PLA occupies some 2,700 hectares (6,670 acres), according to local government records, nearly half the size of Manhattan.

HOUSING PROBLEM
A lack of housing is a source of rising social and political tension in Hong Kong, one of the world’s most expensive property markets where owning even a 600-square foot flat is beyond the reach of many families.

A recently formed government task force on land supply acknowledged public calls for some military land to be returned for housing, but its chairman has said their development potential “may not be large.”

The task force’s initial meetings have instead advocated developing 1,400 hectares of new land through reclamation.

The preference for costly reclamation over re-purposing PLA land has led some to believe the Hong Kong government does not want to confront the Beijing leadership over a potentially sensitive issue of national security.

Under the laws that enshrine Hong Kong’s freedoms and autonomy, Beijing is given direct control of defense and foreign affairs.

Reuters sent questions to Hong Kong leader Carrie Lam, the government’s development bureau and the task force. In reply, a spokesman told Reuters the task force would consider ideas from the community, “their facts as well as their pros and cons.”

It would finalize its recommendations by the end of 2018.

“As far as we understand, all existing military sites in Hong Kong are currently used for defense purposes and none is left idle,” the spokesman said, quoting Hong Kong’s security bureau.

Lawmaker Eddie Chu, part of Hong Kong’s democratic opposition, said even though it was common sense to open up some military sites for housing, the local government would likely avoid asking tough questions of Beijing.

“The Hong Kong government must know this is a solution, but I expect them to pay lip service to it,” he said.

The PLA garrison and China’s Defense Ministry did not respond to faxed questions from Reuters.

WELL-DEFENDED
Security experts say while some PLA presence is a fact of life, the city’s defense needs are easily met by Beijing’s rapidly modernizing forces — a vastly different situation to that faced by the British in defending their outpost during the Cold War.

“Hong Kong has never been so well-defended … it is a tiny segment of the mainland and is surrounded by the now significant forces of the Southern Theatre Command of the PLA,” said Trevor Hollingsbee, a former Hong Kong security official and naval intelligence analyst with Britain’s Defence Ministry.

“Rather than serve a vital strategic interest, the PLA presence in Hong Kong is essentially to show the public who is boss.”

After inspecting the garrison as part of 20th handover anniversary celebrations in June, Chinese President Xi Jinping told the troops they were “an important embodiment to national sovereignty,” according to state media.

As well as its Central barracks, security experts and diplomats believe a naval base and small airfield are considered key local sites to the PLA, along with a Kowloon barracks that houses light tanks and anti-riot units.

Another 10-hectare Kowloon site and residential blocks near Shek Kong appear barely used, according to activists and Reuters’ own checks. Soldiers armed with rifles and bayonets guard the entrance to the Kowloon site, but some buildings appear dilapidated, others rundown and many are unoccupied.

At Shek Kong, the residential blocks appear little used, day or night, and security is lax. In camps closer to the border, small deployments of troops drill at dawn outside ageing British-era huts and weed-choked fences. The 122 hectares of the Stanley fort on Hong Kong’s prime southern coast is also underutilized, according to diplomats.

About half of the 8,000-10,000 soldiers of the Hong Kong garrison are based in the city at any time, security experts and diplomats believe. Key units are kept in southern China, along with its most advanced weaponry, including jet fighters and air defense weapons.

Chinese laws covering the garrison state that any unused land, after central government approval, should be handed back “without compensation” to the local authorities, so any deal would likely have no benefits for the PLA’s coffers.

Community organizer Sze Lai-shan, who assists some of the city’s 200,000 people living in wire cages and partitioned homes, said all options for the land should be on the table.

“I think using some for temporary housing shouldn’t be a big issue,” Mr. Sze said. “We could perhaps use some existing buildings for temporary housing, or even build temporary housing on some sites.” — Reuters

Prepaid mobile ‘load’ expiry extended to 1 year

THE VALIDITY of prepaid mobile credit, otherwise known as “load,” has been reset to one year, officials said.

The extended validity was ordered in a memorandum circular jointly issued by the Department of Trade and Industry (DTI), the Department of Information and Communications Technology (DICT) and the National Telecommunications Commission (NTC). The circular takes effect on Jan. 5.

DICT Officer-in-Charge Eliseo M. Rio, Jr. on Wednesday said that the validity period was agreed with telecommunication companies and represents a balancing of the latter’s interests with those of consumers.

“We came up with a realistic solution… the one-year expiry date is very safe for consumers because that one year assures that they will be able to use the load,” he said.

Trade Secretary Ramon M. Lopez said that the government initially pushd for no expiry but found this not to be feasible.

However, he noted “the openness of the telcos to cooperate to extend validity. I think one year is a long time.”

The new rules do not apply to user credit purchased in conjunction with certain promotions or other services with a specific period of use.

Mr. Lopez said the next step is new rules for billed mobile users, otherwise known as “post-paid,” focusing on ensuring their mobile phone plans deliver as advertised.

“I hope we can help ensure that (consumers) get what they are promised, in terms of the speed and the megabytes and that needs more technical preparation. That’s the next project,” he added.

According to the DTI data, 130 million customers had mobile lines at the end of 2016. The NTC estimates that the overwhelming majority of the market is pre-paid, with only 3% of users billed. — Anna Gabriela A. Mogato

MinBC chair calls on companies to stop paying revolutionary taxes as NPA vows to step up attacks

MINDANAO BUSINESS Council (MinBC) Chair Vicente T. Lao has reiterated his call on companies to stop paying the so-called revolutionary taxes to the communist New People’s Army (NPA), which has expressed intent to intensify attacks as it aims to unseat President Rodrigo R. Duterte. Mr. Lao said paying the revolutionary taxes “maybe a short-term solution to their problems (of being attacked), but the long-term impact is not beneficial to the business community as a whole.” “Doing this, however, will embolden the rebels to continue their activities,” he told BusinessWorld over the weekend.

‘MONSTER’
Meanwhile, the NPA in the southern Mindanao area said they will use their might to oust Mr. Duterte, who has officially tagged the group, along with the Communist Party of the Philippines, as terrorists. In a press statement, NPA regional spokesperson Rigoberto F. Sanchez called Mr. Duterte a “drug-crazed monster and rightly called the country’s number one terrorist brazenly sitting at the Malacañan Palace.” Mr. Sanchez said that under Mr. Duterte’s administration, 57 activists and members of legal democratic organizations have been killed, aerial bombings have affected 7,600 individuals, and about 13,800 farmers and members of indigenous communities have been displaced. He added that the rebels, who have waded through the insurgency programs of Mr. Duterte’s predecessors, “will not only continue to do so under the Duterte reactionary regime but will further help advance the people’s war throughout the country.” — Carmelito Q. Francisco

Packers end Rodgers season

To no one’s surprise, the Packers placed starting quarterback Aaron Rodgers on injury reserve yesterday. Having already been eliminated from the playoffs following their loss combined with the Falcons’ victory earlier in the week, they rightly believed continuing to play him at center would have subjected him to undue and unnecessary risk. As coach Mike McCarthy noted, “we felt as an organization this was in his best interest.”

McCarthy didn’t say it, but the Packers’ best interest was also what prevailed. It was, not coincidentally, the same interest that had Rodgers suiting up against the Panthers in an effort to keep their slim hopes for a postseason berth alive. He had missed seven outings after breaking his right clavicle, but took to the field in an effort to run the table and extend their season much in the same way they did last year. And it was the same interest that got them to shut him down for their last two matches.

All the same, Rodgers was not a happy camper. Even as the Packers’ fate was sealed by their defeat and the Falcons’ triumph, he felt he was healthy enough to compete in the last two contests. Never mind that he was far from sharp, as evidenced by his up-and-down turn. He had three touchdowns, sure. More telling, however, were the three picks he threw, a blemish not seen in eight years and only the fourth in his career.

In any case, Rodgers will be back, and for the better. He remains one of the best in the National Football League at his position, and he could well have had the Packers crowding the top were he not injured. Where he goes, they go — which is why they’re confident of their future, however, disappointing their present may be.

 

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is the Senior Vice-President and General Manager of Basic Energy Corp.

Between reaction and response

By Raju Mandhyan

A FEW weeks ago I was flying to Singapore and had just a kilo more than allowed on hand carried luggage. The excess weight was due to a few training manuals that I wanted to browse through on the flight. The lady checking me in said it won’t do and I will have to lessen the weight.

I offered to hold the training manuals in my hand but she said it wouldn’t help. I tried placing my cables and accessories in my check in baggage and that didn’t work too. I pleaded that it was just a kilo more and it was all paper, laptop, and laptop accessories. “The rules are on the ticket,” she said.

“May I speak to your supervisor, please?” I begged. She was the supervisor, she replied firmly. I was getting a little hot under the collar and then offered to tie my toiletries around my waist, which luckily happened to be in an old-fashioned fanny belt. It lessened the weight by less than half a kilo.

She agreed with an admonition, “Please make sure that next time your hand-carried is always less than seven kilos!”

“Next time, I am not flying your wonderful airline,” I tersely replied.

“We’ll take note of that!” was her quick comeback.

I walked away with my boarding in my hand and my fanny bag bouncing angrily on my fanny. The nonexistent hair on my nape and back were standing in rage and shame.

After I crossed immigration and security and while bending down to put my shoes back on my eyes connected with my reflection in the steel of the security tables.

In that bent down position, for that quick moment I looked into my own eyes and said: “What an idiot you are! Whatever happened to all that training and coaching you give and undergo in charm, in subtle influence and exercising charisma?”

It struck me if I’d just not reacted so quickly I would have been able to go through that scene in a hundred different ways and still come out a winner. The fanny bag would have happily stayed in your backpack than on my fanny throughout the trip.

The difference between reacting like I did and a very cool response that would have assuredly been so much better would have been to simply pause, step back , take a few careful breaths and come back with an open mind and an open heart. That lady supervisor was, in fact, just doing her job and doing it well, I reflected.

This was not a very major issue but the error we make for all kinds of situations is that we fail to create and give space to another human being.

Many years ago, my friend Adrian Martinez and I had developed a model, based on Viktor Frankl’s Man’s Search for Meaning, called STOPP-Stop, Think Other Person Perspective and Process. It simply meant and requires that we stop for wee moment, step back and away from reaction, look at the situation from the other person’s perspective and then process or better still respond.

In that momentary stopping and stepping even as we may have no solution at hand for a flagrant situation, the space in time we create offers the person across to, maybe, offer a way out because by stopping and stepping back we allow our common humanity to fill the gap. We pay respect and offer kindness to the other person’s image of self and that makes them step out and offer us the same. We move from reacting to responding.

Viktor Frankl’s original words are “Between stimulus and response there is a space. In that space is our power to choose our response. In our response lies our growth and our freedom.

When we are no longer able to change a situation, we are challenged to change ourselves.

Everything can be taken from a man but one thing: the last of the human freedoms — to choose one’s attitude in any given set of circumstances, to choose one’s own way.”

He went on to add that in today’s world, “the Statue of Liberty be supplemented by a Statue of Responsibility.”

Yes, it makes sense to exercise our freedom and our rights or grasp for liberties that we think may be our rights but it also makes a larger sense to let others also travel their chosen paths in small interactions and also in the journey of life.

Here in the Philippines when we throw in a bit of Kapwa, a bit of Malasakit, and Bayanihan and make a Halo-Halo of these values we can then get a taste of what I am talking about.

A new year is coming up ahead very soon and of all the new goals that you might set yourself, think of setting a goal where you can a lot more responsible than reactive in life because, after all, our reactive nature does more harm to ourselves than to others.

For hours and days after that scenario at the airport, I am still living and processing that event. Part of me disapproves of how I behaved and a large part of me wants to go apologize to that lady supervisor. The issue is not huge but it is a scratch on my image of myself. Yes, it will heal and yes, I will work at healing and it and learning from it but if I can create a life where I learn less from wounding myself and more from being open-minded and kind in the first place then why shouldn’t I?

Have a great year ahead, folks!

I may be running a few workshops on communications, creativity and leadership in your neck of woods. Look me up.

Adios!

 

Raju Mandhyan is an author, coach, and trainer.

www.mandhyan.com

California may usurp Florida as US orange king

IT’S BEEN A miserable few years for Florida’s orange crop. And now to add insult to injury, California is gearing up to steal the Sunshine State’s crown as the king of US citrus production.

After a decade of the citrus-greening disease devastating Florida oranges, Hurricane Irma smashed into groves this year, inflicting yet another blow to the crop. Farmers in the state are set to collect 46 million boxes of the fruit this season, the US Department of Agriculture said Tuesday. That would be the smallest since 1945 and would match California’s harvest. A box weighs 90 pounds (41 kilograms) for Florida, and California changed its weight since 2009-2010 to 80 pounds.

Michael Sparks, chief executive officer for Florida Citrus Mutual, the state’s largest grower group, expects the situation for the crop “to get worse before it gets better.” If that’s the case, and California ends up with the bigger crop, it would be the first time in 73 years the state would best Florida.

“We think the actual size of the 2017-2018 crop will not be known until the season is over and all the fruit is picked” in the early summer, Sparks said.

Most of the oranges grown in California are used for the fresh fruit market, while Florida’s fruit is generally used to make fresh juice. — Bloomberg

The gift of food

WHO DOESN’T like a gift of food? Here are some places where one can score cakes, pastries, ice cream, or a holiday hamper or two to give as a present — or keep for yourself.

Dean & Deluca offers hamper choices for every type of foodie, filled with wine, jams and jellies, coffee, tea, canned and bottled savory goods, sauces, and pasta. Adding mugs, a coffee press, a tumbler, or tea pots and cup is an option to personalize the gift. Gather the goodies in wooden crates, canvas bags, or red boxes. Cakes and pastries — mango crème brûlée, dark chocolate dome cake, pistachio, salted caramel chocolate cake and various flavors of Hokkaido cheesecakes — are also an option for those with a sweet tooth. Dean & Deluca has branches at Eton Tower, Dela Rosa St., Legaspi Village, Makati City, and at the Edades Tower and Villas, Rockwell, Makati City.

Meanwhile, Dusit Thani Manila has decorated hampers available at the lobby’s holiday counter, with sweet treats and gourmet items. A purchase of five to nine hampers earns one a free bottle of wine; and a purchase of 10 would come with one free hamper with the same items ordered.

Decadent, Sumptuous, and Indulgent are the names of three unique gift baskets from Marco Polo Ortigas. The gift baskets are filled with Mackays Scottish fruit preserves, English fruit cake, hand-crafted pralines, and Mrs. Bridges banoffee curd. Personalize the hampers by choosing from chocolate characters, chocolate bars, soft and moist cakes, freshly baked cookies, nuts and biscuits, or Scottish fruit preserves. Before sealing the gift basket, a bottle of Talamonti Moda, Batasiolo Barolo Boscareto, or NV Moët & Chandon Brut Impérial completes the set.

Treat the kids to ice cream cakes from Baskin-Robbins. The different design options include a freezing snowman, an ice cream cake shaped like a hot cocoa mug, and a pretty present. Or make a customized ice cream cake that allows you to add your favorite ice cream flavor and personalized message. Baskin-Robbins ice cream cakes are available in all store branches.

Stocks down as volume thins ahead of holidays

EQUITIES fell on Wednesday following the passage of the tax reform program, as analysts said the market has already priced in its effects earlier this year.

The benchmark index dropped 3.35 points or 0.04% to finish the session at 8,362.61.

The broader all-shares index likewise gave up 0.17% or 8.52 points to 4,893.62.

“The market has already priced in the tax reform program of the Duterte administration starting as early as the 2Q (second quarter) this year,” Timson Securities, Inc. equity trader Jervin S. de Celis, noting that the main index’s rally toward the 8,600 level earlier this year was due to optimism on the tax reform program. 

“It’s also a ‘sell on news’ event and apparently foreign investors have been selling their shares due to the expensive valuations of our index. They’ll be back for sure when the effect of the TRAIN (Tax Reform for Acceleration and Inclusion) bill is felt in the economy by next year,” Mr. De Celis added. 

Regina Capital Development Corp. Managing Director Luis A. Limlingan meanwhile noted that most investors will now be taking their holiday break.

“Philippine markets were flat even though the TRAIN has been signed into law, most investors are on the sidelines already enjoying the holidays,” Mr. Limlingan said. 

Sectoral counters were split between gainers and losers. Ending in positive territory were the mining and oil sector, adding 1.14% or 128.40 points to 11,330.62; services, which climbed 0.43% or 6.87 points to 1,601.23; and industrials, which gained 0.08% or 8.87 points to 11,098.60.

On the other hand, the property sub-index logged a 0.44% or 17.29-point decline to 3,882.82. Financials shed 0.17% or 3.77 points to 2,140, and holding firms dipped 0.01% or 1.45 point to 8,481.53.

Wednesday saw 830.54 million issues change hands for a total value turnover of P5.26 billion, lower than the P6.87 billion booked on Tuesday. 

Decliners beat advancers, 110 to 84, as 50 names remained unchanged.

Net foreign outflows widened to P225.82 million yesterday from the P186.94 million recorded on Tuesday.

US stocks fell on Tuesday as excitement over the likelihood of a tax code revamp was offset by concern over its effect on years of monetary policy stimulus and the future of interest rates.

The US House of Representatives initially passed the tax legislation in an afternoon vote, but the bill included provisions that did not comply with Senate rules. The Senate was expected to vote this evening on a revised version of the bill, with the offending provisions removed. If the Senate approves the bill, as is expected, the House will vote again on Wednesday.

The Dow Jones Industrial Average fell 37.45 points or 0.15 % to 24,754.75; the S&P 500 lost 8.69 points or 0.32% to 2,681.47 and the Nasdaq Composite dropped 30.91 points or 0.44% to 6,963.85. — Arra B. Francia with Reuters

Metro Pacific secures P10-B loan facility

METRO PACIFIC Investments Corp. (MPIC) said it has signed a loan facility agreement with a couple of banks totaling P10 billion to finance the company’s projects and operations. 

In a disclosure to the stock exchange on Monday, the infrastructure conglomerate said it has entered into separate agreements with BDO Unibank, Inc. and Union Bank of the Philippines. MPIC will be taking 10-year fixed rate term loan worth P5 billion from each bank.

“Proceeds (of the loan) will be used by MPIC to finance its investment in various projects and for other general corporate purposes,” the company said in the disclosure. 

The conglomerate earlier announced it will be allocating P100 billion for capital expenditures in 2018, out of the P653-billion five-year spending plan.

This capex program will be funded through a combination of equity partners, internally-generated income, value crystallization in its portfolio, and banks. MPIC will also be offering P30 billion worth of bonds to be issued in tranches in the next three years. 

Of the total spending, MPIC has allotted P38 billion for toll roads through Metro Pacific Tollways Corp., P17 billion for rail through Light Rail Manila Corp., P21 billion for Manila Electric Co., P12 billion for Maynilad Water Services, Inc., P6 billion for Metro Pacific Hospital Holdings, Inc., and P6 billion for logistics in 2018. 

The aggressive spending comes as MPIC aims to grow its toll roads, power, water, hospital, and rail businesses. The company is also looking to take part in the government’s “Build, Build, Build” program, which involves a rollout of P8 trillion worth of infrastructure projects during President Rodrigo R. Duterte’s term. 

The listed conglomerate booked P11.13 billion in attributable profit in the first nine months of 2017, 17% higher than the P9.5 billion posted in the same period in 2016. Revenues accelerated 30% to P43 billion during the same period. 

MPIC is one of three Philippine units of Hong Kong-based First Pacific, along with PLDT, Inc. and Philex Mining. Hastings Holdings, Inc. — a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. — maintains interest in BusinessWorld through the Philippine Star Group, which it controls.

Shares in MPIC were unchanged at P6.71 apiece at the Philippine Stock Exchange on Wednesday. — Arra B. Francia

It’s o-fish-al: Tokyo’s Tsukiji market to move on Oct. 11

TOKYO — Tokyo’s famed Tsukiji fish market will move to a new site on October 11, the capital’s governor said Wednesday, ending years of delays marked by scandals and emotional divisions among fishmongers.

Yuriko Koike’s decision should also clear the way for a key transport hub for the 2020 Olympic Games to be situated on the market’s site in eastern Tokyo.

“We believe the schedule will give us enough time to prepare for a smooth relocation,” she told reporters.

The market, a popular tourist attraction in an area packed with restaurants and shops, will move to Toyosu, a former gas plant a bit further east.

Ms. Koike’s decision is drawing close to a charged debate over what to do with the dilapidated but beloved Tsukiji market that handles 480 kinds of seafood worth $14 million daily — as well as 270 types of fruits and vegetables.

The market is best known for its pre-dawn daily auctions of tuna, caught from all corners of the ocean, for use by everyone from top Michelin-star sushi chefs to ordinary grocery stores.

The market opened in 1935 and has fed Japan’s hunger for fresh seafood ever since.

But in recent years the antiquated facility has prompted its users, such as seafood wholesalers, to voice concerns about its earthquake resistance, sanitation and fire safety, as well as the structure’s use of asbestos and its crumbling walls.

They have also discussed the need for upgraded technology, such as better refrigeration systems.

However, the move, originally slated for late 2016, also faced loud opposition from various businesses that operate at or around the market, an extremely popular attraction located conveniently within walking distance from the Ginza shopping district.

Many businesses were emotionally attached to the Tsukiji brand as well as the location, which also had its own problems with soil contamination as it used to house a dry cleaning plant before the market was built.

Ms. Koike, a former TV anchorwoman, put the relocation plan on hold shortly after being elected Tokyo’s first female governor last year.

She then found a series of problems with the new site in Toyosu, including soil and groundwater contamination as well as the discovery that contractors had inexplicably failed to fill in a basement at the new site with clean soil as a buffer against underground pollution.

The local government has paid hundreds of millions of dollars to clean up the new facility.

Tsukiji’s wholesalers have voiced frustration over the delay, arguing that postponing the move was costing them millions of dollars a month.

The decision will also officially make the upcoming new year tuna auctions the last at the beloved market.

In January, Kiyoshi Kimura, Japan’s self-styled “Tuna King,” paid more than $600,000 for a 212-kilogram (467-pound) bluefin tuna at the first auction of the new year.

In 2013, the restaurateur paid a record $1.8 million for a bluefin — a threatened species — outbidding a rival bidder from Hong Kong. — AFP

Repealing net neutrality: Much ado about nothing

By Michael R. Wade 

On December 14th, the US Federal Communications Commission (FCC) repealed the American net neutrality rules that went into effect in 2015.

Net neutrality is somewhat of a misnomer — a better descriptor is ‘content agnostic’. What net neutrality implies is that Internet Service Providers (ISPs) in the U.S. — cable companies and telcos like Comcast and Verizon – must treat all content equally, regardless of what it is or who owns it.  For example, AT&T is not currently allowed to provide its subscribers faster access to DirecTV, which it owns, and slower access to Netflix, which it does not own. The end of net neutrality would, in theory, allow ISPs to charge more/less for, or slow down/speed up, different types of content.

Removing net neutrality has generated a huge amount of media coverage in the U.S., mostly casting the debate in terms of an epic story of victims and villains.

The victims are American consumers and businesses. As certain content is priced out of reach, the story goes, the Internet will become less rich, small enterprises will suffer, public schools and universities will see their Internet connections slow to a crawl, the best minds will leave the country in frustration, and everyone will pay more for Spotify and Netflix.

The villains are the ISPs, long reviled for high prices, poor service, and aggressive retention tactics. The ISPs lobbied the government hard for this change, and stand to benefit the most at the expense of long-suffering subscribers. Networking and infrastructure companies are also likely to gain, as the rule change will require upgrades to networking hardware and software.

This is a gripping narrative, but how much of it is actually true? Will the end of net neutrality really make a big difference to the average Internet user? We think not.

First, it is worth pointing out that net neutrality rules are quite new – the law was only enacted in mid-2015—although the concept has been around since the 1990s. Prior to 2015, there was no net neutrality and, well, the Internet worked just fine for most people. Occasionally, an ISP was caught slowing down (throttling) certain sites, but public pressure or legal action tended to keep them honest. There is little reason to believe that a future with no net neutrality regulation will be very different from the past.

Second, the issue with net neutrality is multispeed Internet service, not web censorship. An ISP might be frustrated that Netflix consumes 35% of its bandwidth at peak hours, but it cannot legally block it, with or without net neutrality. Even with no net neutrality, the most that an ISP could do would be to slow down access to Netflix, and charge people for higher speeds. In reality, this is not likely to happen – the public backlash would be too severe. More likely, the ISPs would discriminate by offering their own preferred content faster and cheaper. Ironically, this is already happening under net neutrality regulation – AT&T, for example, offers DirecTV access as a ‘zero rating’ product, i.e. it does not count towards data caps.

Third, the end of net neutrality rules will lead to a closer link between cost and consumption. While net neutrality may be conceptually appealing, it is not equitable. Is it fair that a few super-users are allowed to clog up networks by downloading movies, playing data-hungry online games, and not paying more for it? Why shouldn’t ISPs be allowed to price data according to volume, type, or speed?

Fourth, ISPs could use any extra revenue generated from high-bandwidth users to subsidize the cost to regular users or improve network infrastructure. If they start to charge more for content, then there will be a lot of pressure from subscribers and regulators to improve services levels in return.

Fifth, the practical difference for most subscribers will be minimal. Most ISPs already charge higher prices for higher speeds, or bundle less attractive services (like TV channels you never watch) with more attractive ones (faster Internet access). The only difference without net neutrality would be that slow speeds could affect some sites more than other sites.

Sixth, net neutrality, however intuitively appealing, is a form of government control. History has taught us that government control and intervention often inhibits progress and innovation. If ISPs are less regulated, one might imagine companies springing up that would provide better, faster and cheaper service, thus promoting innovation!

Finally, ISPs are unlikely to make any quick moves to change the status quo. Legal challenges to the removal of net neutrality are likely, mid-term elections are coming in 2018, and public opinion of ISPs is already low. Most large ISPs have also pledged not to make any dramatic moves in the event that net neutrality is repealed.

Net neutrality is an attractive concept, and its removal might instinctively rub you the wrong way, but that doesn’t mean it should be kept in its current form. Reid Hoffman, CEO of Netflix, has stated that net neutrality is ‘not our primary battle at this point’. If he is not worried, why should the rest of us be? And it goes without saying that if this is overblown in the US where the legislation is happening then the rest of the world will be spared the impending doom that some are predicting. — with Heidi Gautschi

Michael Wade is director of the Global Center for Digital Business Transformation at IMD, and co-author of Digital Vortex: How Today’s Market Leaders Can Beat Disruptive Competitors at Their Own Game.  

Which Asian markets are adopting electronic payments?