Philippine market not yet ready for 3G, says Smart

By Erwin Lemuel Oliva, INQ7.net

HONG KONG – An official of Philippine mobile phone operator Smart Communications Inc. has said that the Philippine market is not ready for third-generation (3G) mobile phone networks and operators risk bankruptcy should they deploy it at this time.

"Government is pushing us to deploy 3G [for a market] that is not mature," Rogelio Quevedo, Smart Communications head for legal and external carrier relations, told INQ7.net in a chance interview here. He was referring to the recent decision of the National Telecommunications Commission (NTC) to issue government guidelines in bidding for licenses to operate a 3G network.

Quevedo pointed out that 3G handsets are still too expensive for most Filipinos and that local operators do not see good returns on investments in 3G.

"I still maintain that the Philippine market is not yet ready for 3G;" the Smart official said, "it is the suppliers who are pushing [it]."

Quevedo noted that it took five years for the existing second-generation mobile networks running on GSM technology to mature in the Philippines.

A local operator would need to invest one to three billion pesos initially to deploy third-generation mobile networks in Metro Manila alone, he said.

At least seven Philippine firms have applied for license to operate a 3G network in the Philippines, including Smart Communications. According to the NTC, other applicants are Globe Telecom, Digital Telecommunications (Digitel), Connectivity Unlimited Resources Enterprises Inc. (Cure), Multimedia Telephony Inc. managed by Jose de Venecia III (son of House Speaker Jose de Venecia), Next Mobile, and AZ Telecommunications, owned by Antonio “Tony Boy” Cojuangco, former owner of PLDT.

The NTC released the 3G licensing guidelines in August 2005 despite opposition from the local industry. The government deadline for 3G license application expired on October 15, 2005.

NTC rules have allocated the following frequencies for 3G use: 825-845 Megahertz (Mhz), 870-890 MHz, 1880-1900MHz, 1920-1980MHz, 2110-2170MHz, and 2010-2025 MHz.

The 825-845 and 870-890 Mhz frequency bands are currently being used by a local operator in the country. Based on NTC rules, once the 3G frequencies are assigned, qualified telecommunications firms would be obliged to allocate capital to build their 3G networks and start commercial operations by 2008.

Operators applying for 3G licenses would also have to put up initial 300-million-peso performance bonds. Eventually, they will have to increase their paid up capital and pay user fees.