By Lorenz Marasigan
Conclusion
DESPITE the headwinds that the telecommunications industry will face this year, the overall outlook for the sector remains bright.
Consumers, in particular, will likely benefit from the possible entry of a new market player that promises to provide Internet services with better quality than the incumbents.
The threat of having another player to battle with will force the incumbent vendors to be more aggressive in terms of pricing and even content, said Mary Grace Mirandilla-Santos, an independent researcher on information and communications technology and telecommunications policies.
“Incumbent telcos will be more aggressive in increasing capital investment and infrastructure upgrades, which can be a sign that telcos are feeling the threat of competition. This is important in any competitive-market environment. Even the possibility of a new entrant always keeps service providers on their toes. Consumers will benefit from this. What more with the actual participation of a new player?” she said.
Telstra Corp. Ltd. has signified its interest of offering its mobile-broadband services in Manila through a joint venture with San Miguel Corp., which has significant holdings in telecommunications assets. The new mobile-service provider is expected to debut in the Philippines sometime this quarter through Bell Telecommunications Philippines Inc.
National Telecommunications Commission (NTC) Deputy Commissioner Edgardo V. Cabarios said the possible entry of the new core player—meaning that it will build up capacity through its own infrastructure—will help consumers enjoy better services at lower costs.
“There will be decreases in prices and/or increasing in quality and speed of the Internet,” he said. “However, if you are a newcomer, you will have to expand the market and not rely on existing markets. The solution to this is to increase the base, which essentially means that you have to lower your prices to the level of affordability of the subscriber.” The deal between San Miguel and Australia has yet to be signed, but industry sources said the holding company for the new telco player will likely be established anytime soon.
“There are huge opportunities for new entrants in various segments of the market. If the San Miguel-Telstra finally seals a deal, there’s a huge potential for the 4G mobile market that remains unserved,” she said. “The challenges would come from how aggressively the incumbent telcos respond to the entry of new players, whether by more fierce competition, using their advantage in terms of existing market share and economies of scale, or even legal means.”
Top player to beef up digital content, improve network
THE two largest telecommunications providers in the Philippines are gearing up for the prospective entry of a new market player, which threatens to break the duopoly that has been lording over the sector for almost half a century now.
Experts believe that local telcos will continue to introduce more digital services —developed through internal innovation through partnerships and investments this year, as it prepares for the possible entry of a new player and the continuous global migration to the digital space.
The Philippine Long Distance Telephone Co. (PLDT), in particular, will be more aggressive in beefing up its digital content through various partnerships with international content providers. It has also set up a holding firm for the acquisitions of Internet companies abroad.
“Obviously, a new player will impact how we conduct our business. But it will not change our strategy. Our focus remains on improving the customer experience by providing a growing array of innovative digital services supported by a strengthened and expanded network,” PLDT Spokesman Ramon R. Ibserto said.
Broadband, he said, is clearly the largest opportunity for his company, noting that his company will likely see its bottom line eroding due to its large legacy-service business.
“Data is clearly the biggest opportunity. At the same time, data also poses a major challenge, because of its negative impact on our text, international long-distance revenue streams. In any case, the shift to digital is unstoppable. So, we are focused on maximizing the opportunities and managing the challenges that this structural shift in the industry presents,” he said.
Isberto noted this transition will allow the PLDT group to have “some unique advantages.”
“The group occupies the leading position in both fixed and mobile businesses and is, thus, able to leverage its extensive fixed line and mobile networks to provide both consumer and enterprise customers converged fixed or wireless offerings,” he said. This means that the consumers will see the introduction of new digital innovations, which is part of the company’s adoption of a digital strategy.
“You will see more innovative digital services. These include offers that combine or converge fixed and mobile services. At the start of this year, for example, PLDT HOME launched the country’s first data-sharing plan where customers can share 6 gigabytes of their 50 GB monthly data allocation with up to four Smart mobile phone lines bundled with the plan,” Isberto said.
He added that the company will also focus on developing financial technology services through Voyager Innovations Inc., which currently operates the virtual mobile wallet service PayMaya.
“More financial technology or fintech service innovations from Voyager will be also part of the menu. There will also greater focus on improving customer experience as we step up our investments aimed at expanding network coverage, capacity and resiliency,” Isberto said.
The largest telecommunications company in the country will likely spend more than P43 billion this year to improve its network capacity, expand its base and build more sites for better customer experience.
This year the enterprise business groups of the telco led by Manuel V. Pangilinan are combining connectivity services with digital solutions that will enable companies to undertake their own strategic pivots as their own industries embrace more and more digital technologies.
“To support this effort, we are beefing our data infrastructure. For example, we are opening up two state-of-the-art data centers this year in major business locations—Makati City and Clark. This will bring our group data-center count to eight with unparalleled capacity of over 8,000 racks,” Isberto said.
“There are opportunities to help corporate customers to execute their own transition to the digital economy by offering such cutting- edge services as data analytics, cloud and data-center services—all of which the PLDT Group is well-positioned provide,” he said.
Globe commits to ‘change the Internet landscape in PHL’
GLOBE Spokesman Yolanda C. Crisanto said her company welcomes the competition, as Globe is now at the forefront of the battle in the digital space.
“Globe has never shied away from competition before. And prior to having two major players currently, the Philippines had the experience of having many players in the market previously. In the end, market forces will prevail and customers will always have their say,” she said.
This year Globe will continue to focus on its strategy of providing a differentiated superior-customer experience.
“Globe Telecom is committed to change the Internet landscape in our country so that every Filipino will have a great Internet experience and enhance their digital lifestyle,” she said. “This year we see broadband products with more data capacity and faster speeds being bundled at affordable prices. We also anticipate more infrastructure build to future proof the network even more as customers become hungrier for data.”
Demand, based on customer feedback, will spell out the very strategy that the company will likely adopt, she added.
“As Internet consumption continues to increase at an exponential rate, we will continue to invest in upgrading our network infrastructure ahead of the trend to make sure that we provide the capacity and speed that will enable our customers to continue enjoying what they love doing online,” Crisanto said.
Globe has set an $800-million capital requirement for the year, bulk of which will be devoted in enhancing bandwidth capacity to enable the company to “stay ahead of the curve amid growing proliferation of smartphone and data-intensive multimedia applications.”
“The main challenge is having the right regulations and environment to help mobile operators like Globe to be more agile in building the much-needed Internet superhighway this country needs. Every year, we set aside substantial investments to build, but the government should enable us to build faster and easier so we can bring down the cost of the network to eventually benefit consumers,” she said.
Globe President Ernest L. Cu said this includes the passage of legislations that are aimed at developing the digital economy in the Philippines, particularly a law that mitigates bureaucratic red tape and other political hurdles that stand in the way in the deployment of telecommunication and broadband infrastructure, such as cell sites.
Specifically, an Open Access law for the telco industry would expedite the issuance of all the relevant permits for all telecommunications facilities at the local government level.
Telecommunication companies are required to secure several permits, Cu said, adding that Globe has about 500 cell sites waiting to be built at any given time.
“Prioritizing the Open Access law for the telco industry would help fast-track fiber builds that will increase Internet access and speeds in the country,” he said, as “a robust Internet infrastructure provides tremendous opportunities for business and greatly impacts economic growth.”
Competition to become stiffer
WITH all these plans waiting to be executed, Mirandilla-Santos advised consumers to be more intelligent in making decisions as to the services that will suit their lifestyles.
“Consumers can expect telcos to develop more creative ways of luring them to subscribing to bundled services, such as cable broadband with exclusive content, broadband with on-demand Internet streaming media, among others,” she said.
“They can also anticipate lower prices for broadband plans. However, with the shift from speed to volume-based plans, consumers should be more aware of their data needs and choose the best plan that suits them,” she said.
Competition—be it a price war or a content war—will become more and more intense with the anticipated entry of a third player. This year, industry observers believe, that Globe will continue to outpace its competitor due to PLDT’s declining legacy business.
“Globe today is reaping the benefits of the network upgrades that it had invested in over the past years. It’s slowly growing its market share in both mobile and data services, and revenue growth remains steady. I think PLDT needs to catch up in modernizing its infrastructure since it has the largest legacy network and the demand for broadband will likely keep growing exponentially,” Mirandilla-Santos said.
