PLDT eyes big jump in broadband subscribers

Banking on its emerging businesses to provide the impetus for growth in the coming years, telecommunications giant Philippine Long Distance Telephone Co. (PLDT) expects the number of its broadband subscribers to reach 250,000 by yearend.

As of end-September this year, PLDT’s broadband subscribers totaled 219,000 while narrowband subscribers stood at 422,000. The number of broadband subscribers is more than double the 144,000 subscriber base as of end-2005 and almost triple the third quarter 2005 subscriber base of 88,000, company officials said.

PLDT chairman Manuel Pangilinan said that with the still low penetration of broadband in the country, the potential for growth is "quite huge."

The company has been diversifying revenues streams by investing in new growth areas, such as in broadband, he pointed out.

Company officials said the potential market for broadband services include approximately the more than one million dial-up Internet subscribers in the country today. In the case of PLDT, it hopes to encourage its narrowband subscribers to finally go broadband.

According to a leading global telecommunications research company, compared with many of its Asian neighbors, the Philippines is moving slowly on the adoption of Internet. Of the estimated six percent of the population who are the Internet users population, only a fraction of these go online with a broadband connection.

Nevertheless, the research group said the Philippine data and Internet markets are well positioned for growth. Future growth will depend on the provision of reliable infrastructure, especially in the area of broadband Internet.

Combined revenues of PLDT DSL (wireline broadband), SmartBro (wireless broadband) and PLDT Vibe (narrowband) surged to P3 billion during the first nine months of the year, or a 50 percent growth from the P2 billion registered during the same period in 2005.

Consolidated data revenues, meanwhile, grew 14 percent to P40.7 billion during the Jan-Sept. 2006 period, offsetting a five percent decline in traditional voice revenues.

The company is spending billions of pesos to transform its legacy or traditional copperwire network to the next generation network (NGN).

Capital expenditures during the first nine months of the year increased to P16.9 billion due to the installation of 125,000 NGN lines in selected cities such as Cavite , Batangas, Bulacan and Cebu , as well as the increase in wireless broadband-capable cellsites to 2,270 as of end-Sept. 2006.

Pangilinan emphasized that 2006 is a year to lay the foundation for earnings growth in 2007 and onwards as the company expands coverage and enhances broadband and data capabilities through NGN upgrade and rollout of multi-purpose cellular network elements.

As part of its objective to develop new businesses beyond cellular, PLDT’s wholly-owned subsidiary Smart Communications increased its wireless broadband subscribers to 93,000 as of end-Sept under the Smart Bro brand. In the third quarter alone, Smart Bro grew its subscriber base by 35,000.

Smart now has over 2,270 wireless broadband-enabled base stations providing high-speed Internet access in 386 cities and municipalities all over the country. The increased network coverage of Smart Bro provides the group with a complementary broadband service in areas that are not currently covered by PLDT’s fixed line DSL network.

PLDT president and CEO Napoleon Nazareno said the encouraging growth of Smart Bro has helped sustain the company’s performance, despite the historical tendency of a slowdown in the third quarter and puts them a step ahead in moving beyond cellular.

He added that the company is repositioning the fixed line business by growth data revenues which increased 32 percent year-on-year and now represents over 25 percent of fixed line revenues. "The NGN rollout is now being concentrated in priority areas where corporate data and residential demand have been identified. Together with Smart Bro, we effectively have a dual-pronged approach in our goal of broadbanding the country," Nazareno emphasized.

But even as wireless broadband gains momentum, industry players agree that the old copper line will not go away, at least in developed markets.

Robert Healey, director of hardware products group at Juniper Networks Asia-Pacific, said copper lines will still be the dominant infrastructure for fixed-line broadband.

A PLDT official earlier said the affordability of broadband services is still an issue in developing countries, adding that most Filipinos consume broadband services in time blocks. If the price of DSL modems can decline further, it would help spur the uptake of monthly broadband subscriptions, the official noted.

Worldwide DSL subscriptions surged past the 150 million mark in the twelve months to March 31, 2006, according to the latest data produced for the international DSL Forum by industry analyst Point Topic.

This growth of 39 percent in the year means that more than 43 million business and residential users selected DSL (digital subscriber line) for broadband access, with 11.5 million new subscribers signing up to DSL in the first quarter of 2006.

"DSL continues to grow with the subscriber demand for broadband residential and business services," according to Michael Brusca, chairman and president of the DSL Forum. "This is driven by the global demand for multiple applications – including new video and voice services."

The European Union accounted for 34 percent of the DSL subscriber market, followed by South and Southeast Asia with 21 percent, Asia Pacific with 19 percent, and North America with 17 percent.

At the end of the first quarter of 2006, there were 22 countries with more than one million DSL subscribers.

China added almost 10 million new subscribers in the 12 months to March 2006 – three million in the first quarter of 2006 alone – and is now close to the 30 million DSL subscriber mark. Both Germany (up 3.8 million) and France (up three million) now have more than 10 million DSL subscribers.

Of the established nations, with more than one million DSL subscribers as of March 31, 2006, India topped the percentage growth ranking, increasing its subscriber base by more than 700 percent in twelve months. Significant subscriber increases were also made in Turkey (190 percent increase), Mexico (99 percent) and Australia (84.6 percen).

"This amazing sustained growth of DSL around the world reflects how broadband DSL is becoming essential to the average family, student and business," Brusca added.