THE Philippines is reportedly the only country in the Asean region where the government does not provide any infrastructure funding support for the telecommunications sector, leaving subscribers and industry players at a severe disadvantage when compared to their counterparts in the region.
Commissioner Gamaliel Cordoba of the National Telecommunications Commission reported in the recent Philippine Telecoms Summit that all other Asean countries have telecom networks that are either wholly-owned, partly financed, or operated by their respective governments.
“It is only in the Philippines that the broadband networks are constructed, owned and operated by private companies,” Cordoba said.
Cordoba said there is an urgent need for a national broadband network (NBN) to deliver fast internet service to far-flung areas. The program, recently approved by President Rodrigo Duterte, would establish a National Government Portal and a National Broadband Plan, as well as accelerate the deployment of fiber optic cables and wireless technology throughout the country.
The cost of the project would range from P80 billion to P200 billion, depending on the type of network to be built and on how it will be operated or managed. It would take about three years to complete the network, according to the DICT.
Cordoba cited the example of Singapore, where the government finances the telco infrastructure and is constructing an ultra-high national fiber broadband network in partnership with the private sector.
The National Broadband Plan in Malaysia, meanwhile, was deployed way back in 1998. Its NBN is operated by Telekom Malaysia, which is 80 percent owned by the government. Myanmar’s telecoms infrastructure is also government owned, while Thailand’s government is investing US$1.1 billion to enhance their national broadband network, which is being rolled out by government-owned companies.
The principal telco in Cambodia, Telecom Cambodia, is a state-owned corporation. Likewise, major telecoms firms in Indonesia, Vietnam, Laos and Brunei are either partly or wholly-owned by their governments. Fiber optic cable networks are also expanded through public-private partnerships and are mainly funded by government.
Industry comparisons show that about half or 19 of 37 telecommunication operators in the Asean region receive some form of support from their respective governments. Telecoms operators with government interest include Progressive Cellular in Brunei Darussalam, Mentone in Cambodia, Telkomsel and Indosat Ooredoo in Indonesia, Lao Telecom, Unitel and Beeline in Laos, Telekom Malaysia and P1 in Malaysia; Myanmar Post Telecom in Myanmar, Singtel of Singapore and Truemove H of Thailand.
Local operators PLDT and Globe had earlier cited the importance of government support in the deployment of telecommunication infrastructure most especially in rural and far-flung areas which pose significant business viability concerns. In addition to investments in “missionary routes”, telecommunication operators also need government support in minimizing, if not eliminating bureaucracy in relation to the permitting process for ICT-related infrastructure such as cell sites.
These were among the challenges that the NTC and the Department of Information and Communications Technology said that they would help address moving forward, in cooperation with legislators, local government units, and other stakeholders.
Meanwhile, Philippine telecoms firms have spent about 25 percent of their revenues on capital expenditures in the past few years. This figure, according to data from global ICT firm Ericsson, was higher than most Asean countries and is way above the global average of 16 percent.
In a report at the recent Philippine Telecoms Summit of the Department of Information and Communications Technology (DICT), Ericsson Philippines and Pacific Islands President and Country Manager Sean Gowran said that from 2012 to 2015, local telecom services providers have been investing in network infrastructure at a level significantly higher than the global average in terms of CAPEX/Revenue.
Neighboring Asean countries such as Thailand and Myanmar put back 20 percent of their revenues into CAPEX over the same period, while Vietnam’s ratio was at 17 percent. Countries such as Singapore and Malaysia were even lower, with a CAPEX level of less than 15 percent. Only Indonesia spent more than the Philippines at 27 percent.
Both PLDT and Globe increased their CAPEX to revenue ratio even further in 2016, as they spent 30 percent of their total revenues on network improvements and expansion.
Gowran said that the significant investments in PH networks are a result of the enormous growth in data traffic in the country, which is driven in large part by video demand and the increased adoption of smartphones.
“Migration to newer technologies such as LTE is the key to providing an efficient network and better customer experience to subscribers, said Gowran, adding that “service providers must also capitalize on various business industries’ digitalization revenue opportunities.”