Broadband services in the Philippines have vastly improved in recent months, but the government needs to support the telecom sector to attain world-class status.
This is the summary of the report presented by the National Telecommunication Commission to Congress and Malacanang Palace recently, as public demand for data and communication surged amid the community lockdown which the government imposed to contain the spread of the pandemic.
A World Bank economist confirmed that the Philippine government should take the lead in transforming the economy into a digital one. “In a society-wide digital transformation, the government itself must lead by example,” World Bank economist Kevin Chua said.
Governments in other Asian countries are spending billions of dollars to develop their telecom infrastructure, with the South Korean government pouring $24 billion for the country’s public internet backbone.
Japan allocated $162 billion on ICT annually while China budgeted $298 billion for telecom infrastructure between 2016 and 2020. Indonesia’s IT spending amounted to $21.16 billion in 2017.
The NTC said the unprecedented health crisis this year and the subsequent government declaration of Enhanced Community Quarantine in March had considerably changed the way data was being consumed by Filipinos.
It said that despite the increased demand from gaming, video streaming, video-conferencing, online banking, work-from-home connectivity and commercial transactions, internet was stable throughout the country during the crisis.
“It is important to note that since the onset of ECQ until now, internet connectivity did not fail in our country, notwithstanding an estimated 500-percent increase in demand as reported by Converge,” the NTC said in its presentation.
The NTC noted that the Philippines was initialy left behind in telecom tower development because of its initial preference for voice services which did not require as many towers. “Unlike the rest of the world that mainly rolled-out telecom infrastructure for voice service, the Philippines went crazy with text messaging, earning it the title of ‘the texting capital of the world. This technology did not require so many towers until the era of the smartphone began in 2012,” it said.
It said that local government units, seeing the revenue potential from texting, came up with so many permits and recurring annual fees for revenue regulation. “Thus, when smartphones started to dominate by 2012, the above red tape and its costs were felt as telcos started overhauling its network for 3G and 4G. Adding towers got mired in red tape starting 2013,” the NTC said.
The government then issued an order to reduce red tape in the permitting process, and telecom companies were under pressure to improve broadband speed.
As a result, the number of construction permits issued from July to November this year reached 4,644, including 2,311 for new player DITO Telecom; 1,857 for Globe; and 476 for Smart. The average monthly construction permits received by Globe increased 590 percent to 371 from 63 last year while those for Smart went up by 190 percent to 95 from 50.
The total number of telecom towers built from July to November also reached 2,510. Data from the NTC showed that as of November, the Philippines had a total of 22,405 towers, including 10,270 for Globe; 10,069 for Smart; and 2,066 for DITO.
The local telecom sector also had 534,960 kilometers of cable nationwide, including 422,290 km for PLDT; 66,518 km for Globe; 42,000 km for Converge ICT Solutions; and 13,152 km for DITO Telecom.
DITO Telecom will commercially launch its services by March 8, 2021, which is expected to spur the local telecom competition.
“Since 2016 to the present, improvements in internet speed for both fixed and mobile broadband has been monitored,” the NTC said. “As of November 2020, fixed broadband increased by 262.70 percent, while mobile broadband likewise grew by 148.52 percent compared to July 2016 tests [based on Ookla Speedtest Global Index].”
Despite the improvement, the Philippines ranked just 32nd among Asian countries in terms of fixed-broadband speed at 27.07 megabits per second as of October 2020, compared to Singapore’s 229.42 mbps, Thailand’s 183.58 mbps, and South Korea’s 162.4 mbps which were the top three countries in the region.
The Philippines also ranked 34th in terms of mobile broadband speed at 17.83 mbps, compared to South Korea’s 145.03 mbps, the United Arab Emirates’ 129.61 mbps and China’s 124.39 mbps, the top Asian countries in this area.
Private companies in the Philippines spent billions to roll out telecom infrastructure, which enabled the country to land 10th place in the world in terms of internet speed and telecom infrastructure investments in 2020.
Fitch Ratings said PLDT Inc.’s Globe Telecom’s capital expenditures, representing above 40 percent of their total revenue, were among the highest among Asia-Pacific countries under its review.
The past four years saw Globe and Smart invest heavily in telecom service and infrastructure. This year, Globe Telecom is spending P50.3 billion while Smart allocated P70 billion. Despite the significant private sector capex, mobile data in the Philippines is among the cheapest in the world at $1.42 per 1 gigabyte, compared to South Korea’s $10.94. All ICT price baskets of the Philippines are also below the global average.
The NTC said to further improve the local telecom sector, the government should increase the budget of the Department of Information and Communication Technology for the national broadband, remove the 60-50 nationality requirement, mandate telco-ready buildings, require subdivisions to provide utility areas for telecom infrastructure; increase the penalty that the NTC can impose and pass the Open Access bill.