Internet service to propel growth in postpaid, mobile subscriptions

MANILA, Philippines - While the Philippines remains a huge prepaid mobile market and is expected to remain so until 2015, the rise of mobile Internet and broadband is likely to influence an increase in postpaid numbers in the same period, according to international research firm Frost & Sullivan.

Frost & Sullivan partner Nitin Bhat said data services, which include Internet access, is projected to increase to 55 percent of total average revenue per user (ARPU) in the Philippines.

During the Philippines Telecoms International Summit 2010, he said this growth is a result of increasing voice usage, SMS or text messaging bundling, and mobile Internet adoption.

Bhat, however, stressed that mobile operators need to ensure that their back-haul networks are upgraded to cater to this increase in data traffic.

He cautioned that failing to do so would aggravate a dump pipe risk.

Also during the conference, Marc Einstein, industry manager for ICT Practice at Frost & Sullivan, noted that at present, mobile data already comprises over 50 percent of ARPU in the Philippines, with non-messaging contribution currently at an estimated level of seven percent.

The country also has the highest data usage figures in this area with 54 percent of the total data usage in the region coming from the Philippines.

“Further revenue growth is expected to be driven by wireless broadband adoption and the possible entry of more wireless competition. Moreover, the regulatory reforms underway promise rising competition, leading to further growth opportunities in the Philippine telecom market,” he added.

Meanwhile, Commission on Information and Communications Technology (CICT) chairman Ivan John Uy said the information technology and business process outsourcing industries, including call centers, currently employ 500,000 workers and are expected to generate revenues of $9 billion this year.

With a 19-percent growth posted in 2009, Uy emphasized that the sector helped the country escape the global crisis.

“We believe in developing a digital strategy that supports good governance as well as the creation of new niches in the global market,” he said.

Uy also emphasized that he agrees with the International Telecommunications Union (ITU) when it said that 2010 marks the beginning of what must be a decade of broadband.

“Broadband will become a basic infrastructure, just like transportation, energy, and water. But we have to address the problem of digital divide,” he said.

Noting that the price of broadband services in the country currently ranges from P895 to P999 a month for speeds of 512 kbps and P1,299 to P1,500 for one mbps, Uy said there is a need to further bring down prices to levels that will encourage more subscription.

He also expressed confidence that with increased private and public sector partnerships, the country’s ranking as to e-readiness will improve.

Also Qualcomm Southeast Asia & Pacific president John Stefanac in an interview expressed confidence that with more and more devices being made available and at more affordable prices, 3G or the third generation of mobile communications technology will definitely gain wider usage.

There are now 667 3G operators worldwide, or about 80 percent of the total number of telecommunications operators, with 4,900 3G devices made available by 235 vendors.

Stefanac, however, admitted that 3G adoption in the Philippines has been quite slow, although the last 12 months has seen a rise in usage due to the availability of lower priced data dongles and a reduction in broadband service cost.

He also said that the increasing popularity of social networking sites such as Facebook as well as of devices using 3G such as Apple’s iPhone as well as the iPad has made the technology more in demand.

In the Philippines, there are only five 3G licenses made available by the National Telecommunications Commission (NTC), of which four have been awarded to Smart Communications, Globe Telecom, Digitel and CURE. The awarding of the last 3G slot has been entangled in a web of lawsuits, although companies like San Miguel Corp.’s Liberty Telecom as well as the four existing 3G license holders have expressed interest in acquiring it. Those claiming a right to have the last slot in court include Bayan Communications of the Lopez group, Multi-Media Telephony Inc. (MMTI), Next Mobile, among others.

Stefanac said that adoption of 3G is a function of four factors, namely the quality of coverage, price, availability of applications, and the quality of experience with it.