BuddeBlog

Despite considerable effort over the last decade or so, the Philippine government, working with the country’s telecom operators, has not succeeded in its efforts to extend the basic fixed-line telephone network to reach the wider population. Fixed-line teledensity stands at less than 5%; only a little more than half of all Philippine towns and cities have a telephone service. A fixed-line teledensity of 12% by 2002 was the original target set for the government as part of its Service Area Scheme (SAS). The plan fell well short of target and since then fixed-line penetration has remained relatively static.

The mobile market has been a totally different story. No doubt contributing to the problems experienced in the fixed-line sector, the Philippines has witnessed a strong focus on and a rapid take-up of mobile services. Penetration has grown quickly to reach 60% (55 million subscribers) by early 2008. The continued growth has confounded the market; there have been times when the sector looked to have reached a plateau, but then it found a new ways to grow. Of particular note has been the remarkably high national usage of SMS. The mobile phone has captured the imagination of the population; not surprisingly, mobiles have well and truly overwhelmed fixed-line services. A large proportion of the recent growth has also been coming from outside the main city of Manila, with the big operators, Globe and Smart, vigorously competing for lower income segments of the population by offering a range of cheap prepaid products.

Further mobile growth will depend on pricing and marketing strategies of the operators, and, most importantly, the growth level in the overall economy. Growth is expected to ease over 2008-2010, with mobile penetration only expected to rise to about 75% (about 15 million new subscribers) over that period.

The Philippines has been lagging badly in its roll-out of Internet and broadband services. 2006 saw the the start of a significant surge in broadband uptake, with an estimated 340,000 subscribers by year-end, rising to almost 1 million in mid-2007, providing a much needed boost to a market where over half the users are still accessing the Internet at cyber cafes and other such venues. The jump followed the expansion of PLDT’s SmartBro service, a wireless broadband product similar to WiBro in South Korea. Despite the fresh new growth, overall broadband penetration remains low; there were only 11 broadband services for every 1,000 people in the country early in 2008.

The Philippine telecoms and IT market continues to exude considerable optimism despite the ups and downs; the sector has been contributing more than 10% to the country’s GDP, obviously being given a massive boost by the mobile segment.

Key highlights:

• The mobile market in the Philippines managed to grow another 20% in 2007, on top of 30% in 2006, with subscribers continuing to increase through 2008 despite expectations that the market was saturating. Mobile penetration reached almost 60% by early 2008;
• Broadband Internet access finally started to grow in 2006, continuing into 2007 with a massive surge of almost 200% over the year, but this was still only 4% of the population.
• The fixed-line market continued to be a problem for the Philippines; fixed teledensity stands at less than 5% with no sign of increased expansion in sight.
• The Philippines telecom sector continues to contribute over 10% to the country’s GDP.

Peter Evans Senior Analyst Asia

BuddeComm has just released an new report on this country: 2008 Asia - Telecoms, Mobile and Broadband in Malaysia and Philippines.

This entry was posted on Monday, August 11th, 2008 at 5:08 pm and is filed under BuddeBlog. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.