The Broadband Internet access market just grows and grows

Broadband Internet service in the Philippines continues to be on the priority list of many local telecommunications companies as it will be the emerging focus of competition nowadays, according to the International Data Corp. (IDC) Philippines said.

The IDC projected that the Philippines’ broadband services market will grow at 23-percent CAGR (compound annual growth rate) in terms of subscribers and at 21 percent in terms of revenues over the next five years.

IDC expects annual revenues to reach $239 million in 2010 from $91 million in 2005.

Total number of broadband subscribers, on the other hand, is seen to grow from 165,000 in 2005 to 475,000 by 2010.

According to IDC, initiatives from technology suppliers have been key to spurring interest in wireless broadband among operators. Furious growth in technology improvements and trials are also key to fast paced development in the wireless broadband space.

“Looking forward, IDC sees the wireless broadband offering to be the next area of competition among the Internet access service providers in the Philippines,” the research firm said.

Furthermore, the Internet access services market remains to be a dynamic telecommunication segment in the Philippines.

Data from the National Telecommunications Commission (NTC) shows that there were an estimated 1.44 million subscribers in 2005 compared to only 1.2 million in 2004.

“Dial-up continues to be the most popular Internet access service, though broadband access, particularly ADSL [Asy-metric DSL], is on the upswing,” IDC said.

With the rising popularity of Internet broadband in the country, IDC sees the entry of more VoIP service offerings to drive the market’s growth in the Philippines over the next five years.

VoIP is a much less expensive alternative to traditional telephony, which transmits voice via the Internet.

Connectivity

Manuel V. Pangilinan, PLDT president, has said that the onset of broadband products, services, applications and solutions will raise consolidated revenues for PLDT in the coming years by double digits.

“It is our aim to make broad-band access widely available in both our fixed and mobile networks,” Pangilinan said.

“Connectivity was our game. In the future, it will increasingly become: connectivity plus—meaning connectivity plus value-added services. The reason for this is simple: connectivity will eventually become a commodity,” he said, adding that the company’s competitive advantage will increasingly come from value-added services.

Pangilinan further said that PLDT also worked to improve its physical strengths. “We’re now shifting our core network from circuit-switches to packet-switch technologies. Our move to Internet protocol-based systems or next generation networks (NGN) will give us the flexibility to offer a wide array of innovative products and services at lower cost,” he added.

Napoleon Nazareno, president and chief executive officer of both PLDT and Smart, believes that the company’s growth will come from broad-band services.

He also projected that the company will have one million Internet broadband subscribers in three years as it focuses to upgrade its network to NGN.

NGN is the latest technology for voice and multimedia communications based on open architecture design made possible through Internet protocol (IP) technology.

Nazareno said his company will spend about P7.7 billion for NGN expansion or 35 percent of the total capex this year at P22 billion.

For this year, PLDT will install 600,000 to 700,000 NGN lines from an initial rollout of 150,000 in 2005.

The company’s expansion and upgrade of NGN is in line to enhance PLDT’s voice and data service offerings.

“Our ability to stay ahead in the broadband revolution is particularly important for the fixed line business as it enables us to manage the transition from traditional voice services to other revenue streams that can deliver growth for the future,” Nazareno said.

“We expect NGN to have stronger contributions in 2007 and the coming years,” Nazareno said.

He said Internet users surged from 3.4 million in 2005 to nine million last year. About half of the nine million access the Internet through Internet cafes.

Gerardo C. Ablaza Jr., Globe’s president and chief executive said the bulk of the company’s capital expenditure amounting to $350 million will fund its future growth such as broadband and wireless business.

“Capex for 2007 will grow relatively in 2006 as we invest in broadband for future growth,” Ablaza said.

Of the total capex this year, $190 million is for the infrastructure rollout of its broadband business and 3G (third generation) High-Speed Down-link Packet Access and the remaining $160 million will invest to expansion of the company’s 2G business.

“Our ambition is to trigger mass adoption of broadband Internet services in the country,” he said adding that the company will focus on the class D and E market, small entrepreneur and large market
By Darwin G. Amojelar - Manila Times