Telecommunications in the Philippines

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Telecommunications in the Philippines are well-developed due to the presence of modern infrastructure facilities. The industry was deregulated in 1995 when President Fidel Ramos signed Republic Act No. 7925 (The Public Telecommunications Policy Act of the Philippines). This law opened the sector to more private players and improved the provision of telecom services are better and fairer rates, [1] leading to the creation of many telecommunication service providers for mobile, fixed-line, Internet and other services.

Contents

History

Pre-reform

Colonial period

Two private companies offered telecom services namely Eastern Extension Australasia and China Telegraph Company which is a subsidiary of Britain's Cable and Wireless. The Spanish authorizes Eastern Extension to construct and operate the first submarine cable linking the Philippines and Hong Kong.

A telephone network was established in Iloilo City in 1894. Jose de Olagier y Feliu requested permission from the Spanish Officials in the Philippines in 1892 to operate a telephone network covering the Spanish Cities of Iloilo, Jaro, and the town of Molo. Permission was granted for a 10 km radius telephone network with bidding for the public works done in Madrid and Manila. By May 1894, all necessary posts and ridges was installed. The telephone network in Iloilo City was operational by June 1, 1894. [2]

The Philippine Islands Telephone and Telegraph Company is American-owned which started operations in 1905 in the present-day Metro Manila. In 1928, merged with Cebu, Panay, and Negros Telephone and Telegraph companies to form the Philippine Long Distance Telephone Company (PLDT). In 1932, the colonial Philippine congress granted PLDT a 50-year franchise to operate a national telephone system.

The establishment of the Public Service Commission to regulate the industry as well as other utilities, meanwhile the Bureau of Posts was created to operate telegraph services nationwide. [3] : 102 

Post-independence, 1946–1969

Initially, PLDT was managed by Americans, including the American company General Telephone and Electric Corporation (GTE) as a major stockholder. However, in March 1967, GTE disposed of their 28% controlling interest in PLDT. Which is why on November 7, 1967, the Philippines Telecommunications Investment Corporation (PTIC) was registered to buy GTE's controlling interest. Ramon Cojuangco, who was part of one of the most influential clans in Philippine history, was a main incorporator. PTIC formally took control of PLDT on January 1, 1968. This led to the takeover of PLDT by the Filipinos, becoming a dominant player in telecommunications because of its authorization to operate a national network. Company officials however dispute that they were a monopoly because of the existence of a government telephone system, and over 60 provincial companies operating in the country. The Bureau of Telecommunications (Butel) handled the government telephone system, which by 1975 had 34,643 operational telephone lines, or about 10.2% of the total telephone capacity of the country. [3] : 102–105 

There were also four major companies with license for international data communication.

  • Eastern Extension, a franchise was transferred to the Eastern Telecommunication Philippine Incorporated (ETPI) in 1974. Eventually, they restructured its ownership, with 60% now owned by Filipino businessmen.
  • Globe Mackay Cable and Radio Corporation (GMCR) was established in 1928 which is owned by the Ayala family, which is one of the oldest and most established elite families in the country.
  • Capitol Wireless Inc (Capwire), established in 1962, which is owned by the Santiago family which is also the group which owned Retelco, then-second largest telephone company.
  • Philippine Global Communications (Philcom) was established in 1977. During the term of Ferdinand Marcos, he gave Philcom exclusive rights to handle calls to Japan, Australia, Korea, Guam, and Thailand.

Paptelco vs. PLDT

In 1976, the Philippine Association of Private Telephone Companies was organized to protect the interest of small telephone companies. By 1975, around 60 small telephone companies provided 11.7% of the total telephone capacity at the time. These small companies were dependent on PLDT to place inter-provincial and overseas calls, in which PLDT used this interconnection to their advantage.

PLDT could allow, slow down, or deny interconnection at will. Some companies which found it financially impossible to operate without interconnection sold their companies to PLDT. They also dictated the interconnection access rates, which meant that PLDT cornered most telecommunications revenues. Eventually, by 1991, PLDT had 94% of the total lines. [3] : 108–110 

Martial law developments

Ferdinand Marcos's Presidential Decree No. 217 in 1973 mandated all PLDT subscribers to invest in PLDT to raise its equity and finance its expansion program. [4] This law, known as the Subscribers Investment Plan (SIP) required all PLDT subscribers to buy non-voting shares in the company. Mandatory investors held about 85% of the total company equity shares but had no actual power in controlling the company.

PLDT also had access to international loans from the World Bank. These loans assisted PLDT's dominance, and PLDT became the single largest private recipient of foreign loans to the Philippines.

In 1981, a National Telecommunications Development Plan was released. A section of the plan recommended the integration of all private telephone companies under one monopoly. Marcos issued a presidential directive to Retelco, PLDT's main competitor in Metro Manila, to merge with PLDT. [5] The merger was met with objection by the owners of Retelco, but the merger was continued because Marcos threatened to withdraw the companies' franchises. [3] : 110–113 

Developments under Aquino

The Corazon Aquino government's policy was two-pronged: it was to increase public spending in underserved or unserved municipalities, and allow entry of new players. In 1987, the DOTC adopted a series of policies aimed at rationalizing the development of the industry. This led to the reversal of Marcos' push towards the integration of the telecommunications system under a monopoly. It also affirmed that development of the national telcos needs an introduction of competition and regulated entry into the market. During the end of Cory's term however, telecommunications was poor but PLDT prevailed with their tactics in maintaining their monopoly. [3] : 119–123 

Reform

Liberalization

Under the Ramos administration, a coalition named the Movement for Reliable and Efficient Phone System (MORE Phones) was formed with the goal of liberalizing the telecommunications industry. Until the mid-1990s, MORE Phones continued to pressure PLDT to be more transparent and accountable. Ricardo Manapat, who wrote about the illegitimate activities of the Marcoses and their cronies, wrote a follow-up report entitled "Wrong Number" the PLDT Telephone Monopoly." The report revealed PLDT's questionable management practices as well as how the Cojuangco family controlled the company, despite owning only 1.6% of the total stock. [3] : 232–232 

As a countermeasure against PLDT's earlier attempts at refusing interconnection with its competitors, President Ramos signed an Executive Order 59 on 24 February 1993. EO 59 required interconnection among all authorized telecommunications companies, in order for subscribers on one operator to reach the subscribers of another. In the Senate, anti-monopoly bills were filed in the House of Representatives and it was reported that PLDT was the main target of these bills. The Congress had already approved nine telecom franchise, their applications pending at the NTC for provisional authority to operate international, cellular, or value-added services. This also led to the Congress controlling who could obtain a franchise. But PLDT would successfully block new entrants to the industry by filing various legal challenges. [3] : 234–235 

In 1994, the NTC and several other industry players devised the Service Area Scheme (SAS) This scheme was in response to imbalanced demand of telecom companies in urban areas over rural areas.The SAS attempted to allow companies to earn profits but also ensure that part of those profits would be channeled to serve less profitable areas. Companies were allocated both profitable and unprofitable areas to ensure operational viability and the provision of rural telephony. [3] : 242–245 

Prominent Industry Players

Globe Telecom

Globe Telecom (Globe) was a joint venture between Ayala Corporation and Singapore Telecommunications Limited (SingTel). Globe was the first foreign company to be granted entry into the Philippine's liberalized market. In 1994, Globe launched its digital cellular services, pioneering the use of Global System for Mobile Communications Technology (GSM). In fact, Globe popularized the short messaging service (SMS) through adding it for free with their basic services. [3] : 263 

When the 1997 financial crisis stuck, there were two consolidations that happened in the industry. In June 2001, the Globe-Islacom Merger was completed. This merger resulted to providing improved services and a wider coverage for the two companies subscribers.

Smart Communications

Smart Communications (Smart) was the first company to enter the liberalised market. In September 1999, PLDT purchased Smart Communications absorbing it as a 100-percent owned subsidiary. [6] Smart was financially supported by First Pacific. This partnership resulted to a rapid construction of Smart's network and more importantly, the subsidization of handsets. Smart was also authorised to offer both international gateway and cellular telephone services. At the end of 2005, Smart became the largest cellular operator in the Philippines with over 15.4 million subscribers. [3] : 264–265 

Dito Telecommunity

Dito Telecommunity (Dito), formerly known as Mindanao Islamic Telephone Company, Inc. (Mislatel), is a consortium of Davao businessman Dennis Uy's Udenna Corporation (through its subsidiary Dito CME Holdings Corporation) and Chinese state-owned China Telecommunications Corporation, a parent company of China Telecom. [7] As the third player, it began its commercial operations on March 8, 2021. [8] [9] As of February 2023, Dito's total mobile subscriber base reached 13.1 million. [10]

Now Telecom

Now Telecom, owned by Now Corporation will begin its commercial operations by 2024. The NTC renewed its permit to operate as one of the four mobile players. [11]

Facts and figures

Telephones

Telephones – main lines in use
6.782 million (2011)

Area codes

Mobile

A DITO Telecommunity cell site tower in Bukidnon Cell site tower (Central Mindanao University) 02.jpg
A DITO Telecommunity cell site tower in Bukidnon
SIMs in use (registered)
105.9 million (2023) [12]

Mobile prefixes used

Mobile Numbers are coded base on network providers ranging from 0813 to 0999, [13] [14] [15] and international code for Philippines replace the zero to make an international call to the Philippines that would make it +63813 to +63999.

Mobile market

Considered one of the most profitable industries, telecoms have emerged in the country due to it becoming a necessity and its product life cycle. [16] The mobile market of the Philippines has been run by the duopoly of Smart together with Globe Telecom. [17] The two companies have a very tight hold on the industry but they continue to fight for more subscribers and they are in a race to introduce new services. [17] However, both still lost subscribers during 2017 as the market went through consolidation. [17]

Although based in the Philippines, there is foreign ownership in PLDT (76%) and Globe (73%)—resulting a duopoly in the telecom industry. Anthony Salim is one of them, which is the biggest controlling stockholder of PLDT through Hong Kong based First Pacific Company Limited, which led him to establish and expand in the Philippines as a conglomerate. [18]

It is expected that for the next five years to 2023, the growth of mobile subscribers will be low due to a highly mature and highly competitive market. There will be a movement from 4G to 5G services for faster browsing. [17]

The mobile average revenue per user (ARPU) levels have been decreasing in the Philippines due to the visible competition in the mobile industry. In order to grab market share, aggressive price competition is done by these operators. There has been a drastic increase in mobile broadband penetration, as well as an increase of wireless broadband users over the past five years. It is predicted that over the next five years will have a strong growth. On the other hand, it could decline and slow down as the market matures. Currently, the Philippines is preparing from the move from 4G to 5G. A “5G technolab” is currently in the works in PLDT. Meanwhile, Globe Telecom announced its plans to release 5G within the middle of 2019. [17]

SMS

SMS services are very common in the Philippines, from news briefs to multimedia services. Cellular mobile services began in the country only in 1991. In May 2000, the number of cellular phone subscribers exceeded the number of fixed line subscribers. This is because of the spotty telephone service and high cost of fixed line subscriptions. It was also seen how SMS is affordable. This led to the Philippines has become the global capital of text messaging, which was a feature of the mobile phone that was ignored by other countries. Meanwhile, in 2001, the popularity of the text messaging in the Philippines has created a subculture called Generation Txt, where teenagers and young mobile professionals have developed their own language in text. [19]

Civilian logistical communication through SMS was an important part of the EDSA II revolt in 2001 that overthrew the government of President Joseph Estrada. [20]

Mobile network operators in the Philippines

Radio

Radio broadcast stations
AM 369, FM 583, shortwave 5 (2003)

Radios

11.5 million (1997)

Television

3.7 billion (2018)
233 + 1373 CATV networks

Internet

In the Philippines, there is barely any growth in the fixed broadband market. This is because most Filipinos use mobile phones and very few have fixed lines (landlines). Mobile broadband use is more popular in the country and fixed broadband penetration in the Philippines is still low. Since market leader PLDT is now offering fibre-based services and will soon be introducing hybrid technology such as G.fast, it is pushing its competitors like Globe Telecom to match them. In general, Internet service in the Philippines is still too unaffordable for majority of the population. The prices are declining but the market continues to struggle against low entry level packages. [21]
From being the "texting capital of the world," the Philippines has one of the heaviest social media usage globally. The average Filipino spends around 4 hours on social media. Despite most Filipinos wanting to be connected, the Akamai Q3 2016 report states that the Philippines ironically has the second slowest fixed line broadband Internet speed in the world. [22]
Based on this Q2 2017 report by Akamai, the Philippines' average internet speed (IPV4) was a lowly 5.5 Mbps, which was below the global average of 7.2 Mbps during the time of the study. Ookla, the company behind the popular internet speed testing service Speedtest, shows that the country's average fixed broadband and mobile speeds as of June 2018 sits at 17.9 Mbps and 13.7 Mbps respectively. [23] [24]

List of Internet Service Providers (ISPs) in the Philippines

As of June 2021

Internet users
76 million (2018) [25]
Country code (Top level domain)
.ph

Government laws affecting telecommunications

Telecommunications regulatory environment in the Philippines

LIRNEasia's Telecommunications Regulatory Environment (TRE) index, which summarizes stakeholders' perception on certain TRE dimensions, provides insight into how conducive the environment is for further development and progress. The most recent survey was conducted in July 2008 in eight Asian countries, including Bangladesh, India, Indonesia, Sri Lanka, Maldives, Pakistan, Thailand, and the Philippines. The tool measured seven dimensions: i) market entry; ii) access to scarce resources; iii) interconnection; iv) tariff regulation; v) anti-competitive practices; and vi) universal services; vii) quality of service, for the fixed, mobile and broadband sectors.
The prominent companies providing telecommunication services are Philippine Long Distance Telephone (PLDT) and Globe Telecom (Globe). [26] The two aforementioned companies are the leading players in the industry, causing a duopoly. The Filipinos continually pay expensive prices for slow internet without the presence of a third player. The dismay in the Internet and Communications Technology (ICT) of the Philippines can be seen simply through their pricing points and comparing that to the neighboring countries in South East Asia.
In 2016, an Australian telecommunications company called Telstra was having talks with San Miguel Corporation (SMC) to enter the Philippine market as the third player. However, Telstra did not push through. The Australian company did not give any explicit reason for their repudiation. However, some analysts would assume that Telstra was turned off with the pricing battle caused by the duopoly. [27]

Importance of telecommunications to the Philippines

A lot of Filipinos work outside of their country and they keep contact with their families back home using calling cards to the Philippines because those are cheaper than direct calling. According to the TNS Digital Life Study of 2012, about 81% of urban Filipinos use the internet to keep in touch with their relatives abroad. 90% of overseas Filipino workers (OFWs) belong to social media networking sites such as Facebook wherein they. [28] Some people use e-mail or instant messaging, but the preferred method is still the phone. The use of a mobile phone for offers the cheapest way overseas Filipino workers (OFW) to send money or remittances to their families back in the Philippines.

Furthermore, in a study done in 2015 by the US-based Pew Research Center, 88% of Filipinos consider the internet good for education. The survey also notes that 76% of Filipinos see the internet as good for the maintenance of personal relationships. 73% believe that the internet is good for the economy, especially with the boom of online or electronic commerce. [29]

Apart from that, telecommunications is used in the Philippine establishments. According to the 2015 Survey on Information and Communication Technology, 61.9% of establishments have local area network (LAN). 13.7% of establishments utilize the internet for their business. This includes e-commerce. 17.6% of establishments conduct business transactions using the mobile phone. [30]

Telco tower operators

Cell site towers in Santo Tomas, Batangas SantoTomas,Batangasjf0546 06.JPG
Cell site towers in Santo Tomas, Batangas

Common towers or cell sites that allow co-sharing arrangements between separate telecommunications services is currently being rolled out across the Philippines. The policy for common towers is meant to encourage a rise in investment activities and broad market-led development on the part of ICT providers. [31]

Presently, there are over 20 tower companies with licenses to operate but only six of these companies as having the capabilities, wherewithal, and customer support to secure meaningful build-to-suit (BTS) commitments from mobile network operators for new sites. [32]

See also

Related Research Articles

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References

  1. ↑ "Deregulation And its Effects On PLDT's Financial Performance" (PDF).
  2. ↑ Hernandez, Policarpio F. (2006). Iloilo, the Most Noble City: History and Development 1566-1898. Quezon City: New Day. p. 67. ISBN   971-10-1127-1.
  3. 1 2 3 4 5 6 7 8 9 10 Salazar, Lorraine (2007). Getting a Dial Tone: Telecommunications Liberalisation in Malaysia and the Philippines. Institute of Southeast Asian Studies. ISBN   9789812303813.
  4. ↑ Presidential Decree No. 217, s. 1973 (16 June 1973), "Establishing Basic Policies for the Telephone Industry, Amending for the Purpose the Pertinent Provisions of Commonwealth Act No. 146, as Amended, Otherwise Known as the Public Service Act, as Amended, and All Inconsistent Legislative and Municipal Franchise of the Philippine Long Distance Telephone Company Under Act No. 3436, as Amended, and All Inconsistent Legislative and Municipal Franchises Including Other Existing Laws", Official Gazette of the Republic of the Philippines , retrieved June 21, 2023
  5. ↑ Executive Order No. 632, s. 1980 (20 November 1980), "Creating a Special Committee to Determine the Terms and Conditions for the Merger of the Philippine Long Distance Telephone Company (PLDT) and the Republic Telephone Company (Retelco)", Official Gazette of the Republic of the Philippines , retrieved June 21, 2023
  6. ↑ Tiglao, Rigoberto, “Colossal deception : how foreigners control our telecoms sector : a case study of corruption, cronyism and regulatory capture in the Philippines”, p. 9, Strong Republic Books and The Manila Times Publishing Corp., 2016, ISBN   978-971-945-353-6
  7. ↑ "DITO CME Approves UDENNA CME Share Swap". Udenna Group. November 9, 2020. Archived from the original on June 26, 2021. Retrieved June 26, 2021.
  8. ↑ Marasigan, Lorenz S. (January 8, 2021). "DITO all set for month-long technical audit". BusinessMirror . Archived from the original on January 13, 2021. Retrieved February 4, 2021.
  9. ↑ Fenol, Jessica (8 March 2021). "DITO now available in Visayas, Mindanao; will be in NCR 'in a few weeks'". ABS-CBN News. Archived from the original on March 8, 2021. Retrieved 4 July 2021.
  10. ↑ Mercurio, Richmond (February 9, 2023). "DICT: SIM card registration hits 30 million". The Philippine Star . Archived from the original on February 8, 2023. Retrieved February 25, 2023.
  11. ↑ Amojelar, Darwin (October 9, 2023). "NTC renews permit of NOW Telecom as one of four mobile providers". Manila Standard. Retrieved October 9, 2023.
  12. ↑ "NTC: No more SIM registration deadline extension". The Philippine Star. July 25, 2023. Retrieved July 27, 2023.
  13. ↑ "2023 Complete List of Philippine Mobile Network Prefixes". Prefix PH. January 1, 2023. Retrieved May 27, 2023.
  14. ↑ "Philippine Cell Phone Prefix Access Codes". Filipination.com. Archived from the original on 2019-02-15. Retrieved 2019-02-15.
  15. ↑ "List of Globe and TM prefixes in the Philippines 🇵🇭". Aide Libon. Retrieved 2021-10-31.
  16. ↑ Tiglao, Rigoberto, “Colossal deception : how foreigners control our telecoms sector : a case study of corruption, cronyism and regulatory capture in the Philippines”, p. 7, Strong Republic Books and The Manila Times Publishing Corp., 2016, ISBN   978-971-945-353-6
  17. 1 2 3 4 5 "Philippines – Telecoms, Mobile and Broadband – Statistics and Analyses".
  18. ↑ Tiglao, Rigoberto, “Colossal deception : how foreigners control our telecoms sector : a case study of corruption, cronyism and regulatory capture in the Philippines”, p. 1-2, Strong Republic Books and The Manila Times Publishing Corp., 2016, ISBN   978-971-945-353-6
  19. ↑ "The Philippine text messaging phenomenon". philstar.com. Retrieved 2019-08-16.
  20. ↑ "People Power II in the Philippines: The First E-Revolution?" (PDF).
  21. ↑ "Philippines – Telecoms, Mobile and Broadband – Statistics and Analyses – BuddeComm". www.budde.com.au. Retrieved 2019-08-16.
  22. ↑ "The State of PH Telecoms Service".
  23. ↑ "5 Best Internet Service Providers (and Plans) in the Philippines". Grit PH. 2018-07-12. Retrieved 2019-08-16.
  24. ↑ "Global Average Connection Speed Increases 15 Percent Year over Year, According to Akamai's 'First Quarter, 2017 State of the Internet Report' | Akamai". www.akamai.com. Retrieved 2019-08-16.
  25. ↑ "PH takes top spot as heaviest internet users worldwide — report". Archived from the original on 2020-04-12. Retrieved 2020-04-12.
  26. ↑ "Developing communication". The GUIDON. 2016-04-09. Retrieved 2019-08-16.
  27. ↑ Charm, Neil (27 May 2018). "Telstra not interested in bidding for 3rd telco slot | BusinessWorld". BusinessWorld . Retrieved 2019-08-16.
  28. ↑ "OFWs use Internet, not landlines, to keep in touch". ABS-CBN News. Retrieved 2019-08-16.
  29. ↑ Geronimo, Jee Y. (21 March 2015). "Growing Internet use in PH good for education – study". Rappler. Retrieved 2019-08-16.
  30. ↑ "2015 Survey on Information and Communication Technology – Information Economy – Preliminary Results | Philippine Statistics Authority". www.psa.gov.ph. Retrieved 2019-08-16.
  31. ↑ "A Short Guide to the Philippines' Evolving Common Tower Policy". Journal Online. March 6, 2023. Retrieved October 9, 2023.
  32. ↑ Simmons, Adam (May 2, 2022). "SBA Communications to Build 1,470 Towers in the Philippines for $205m". dgtlinfra.com. Retrieved October 9, 2023.
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