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Internet costs forecast to remain expensive in PH

/ 12:25 AM June 06, 2016

CONSUMERS should not expect mobile internet costs to soon decline, following last week’s surprise deal that saw Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom secure their industry duopoly, an official of global research company International Data Corp. said.

Jubert Alberto, IDC’s country head in the Philippines, also noted the recent P70-billion deal involving PLDT and Globe’s joint acquisition of conglomerate San Miguel Corp.’s telco unit did not bode well for prospects of a third telecommunications player entering, unless the government intervened.

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Both PLDT and Globe were seeking to unlock SMC’s unused radio frequencies, especially in the 700 Megahertz (MHz) band, which they claimed was needed to improve the quality of mobile internet given bottlenecks in securing permits that prevented the expansion of cell sites across the country.

But while PLDT and Globe promised mobile internet services would improve in the next three to six months, both gave no guarantees to lower broadband costs, described as among the most expensive in the region.

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“Prices would most likely not decline dramatically since we still have only two players, there is not much competitive push for them to do so,” Alberto said in an e-mail. “I believe what the two will do is to just try to outdo each other by being creative with their packages.”

A TechInAsia survey in 2015, which considered the earning power of a country’s population, showed the cost of mobile broadband in the Philippines was among the most expensive in the Asean. It said the price of 1 gigabyte (GB) of data in the Philippines was at $7.10, just below the $7.11 per 1 GB in Singapore, one of the region’s wealthiest economies. In terms of average connection speed, Singapore was ranked 14th globally (13.9 mbps) while the Philippines was at 107th (3.2 mbps) in the fourth quarter of 2015, data from Akamai showed.

“They (PLDT and Globe) definitely can do more to lower costs and this should follow as the number of users increase,” Alberto said.

Despite PLDT and Globe strengthening their respective market position in the Philippines, the country could still accommodate a third player, he noted.

The opportunity is in the fast-growing mobile broadband segment, driven by smartphones sales especially those sold at lower price points.

About 40 percent of 100 million Filipinos owned a smartphone last year and this could hit 70 percent in two years, Ericsson said. Newer LTE devices would also benefit from the faster rollout of the 700MHz across the Philippines.

But Alberto said the government needed to lend its support and some form of “protection” for new challengers.

“The local market is hungry for a third player. This, of course, props up competition and having a potentially disruptive third player would definitely be good for the country. The next administration should make sure to encourage the entry of other players,” he added.

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TAGS: Globe telecom, Infotech, Internet, News, Philippine Long Distance Telephone Co.
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