4 Oct 2011The Philippines Broadband Overview

The Philippine telecommunication sector has come a long way since the 1990s. The nation’s domestic and international fixed-line provider, the Philippines Long Distance Company (PLDT) initially controlled the sector. Following liberalization in 1993, there were 10 new entrants into the Philippine telecoms market. Consequently, tariffs came down in price and the country’s fixed line population penetration improved considerably.

However, in spite of the heavy investments made in the fixed-line sector in accordance with the Service Area Scheme (SAS), only 50 per cent of the fixed-line capacity has been utilised so far. Fixed teledensity remains at less than 5 per cent in 2011. In contrast, there has been good progress in the roll-out of national fibre-optic infrastructure as a number of the larger operators build IP-based Next Generation Networks, and there has been considerable investment in the mobile market, followed by a surge in interest in wireless broadband services.

Internet penetration is relatively low compared to its Asian neighbours. However, with a deregulated market, strong government support for IT development and an increasingly Internet savvy population the sector is well positioned for growth. In 2006 there was a significant surge in broadband uptake, and from 2009 to 2011, the annual increase in broadband subscribers has been running in excess of 100 per cent. Much of this growth can be attributed to the expansion of PLDT’s SmartBro wireless broadband service as well as the rising availability of PCs in the country.

Growth could have been further improved by the National Broadband Network (NBN) that the government was planning to roll-out across the country from late 2008 at a cost of USD 329 million. However, allegations of bribery and overpricing lead the government to scrapping its original contract with ZTE Corp. This not only put a dent in plans to raise broadband network coverage, but also undermined potential investor confidence. For future growth to be sustainable the provision of reliable infrastructure remains critical.