Telcos nix Remonde’s media plan

By Philip M. Lustre - Manila Standard Today

We were amused to read Economic Planning Secretary Romulo Neri’s answer to our series on the $435-million Cyber Education Project (see Standard Today, May 24, 28, and 31). Published on June 9 issue of the Standard Today, Neri’s explanation was brief to avoid any complications and mistakes, but it did not in any way assail or clarify what we earlier said about the project. In short, Neri did not deny that the project is an expensive march of folly that uses obsolete technology.

Neri, who looks more of a choirboy than a political illusionist that he has become after three years in the Arroyo Cabinet, has forgotten what transpired in the Nov. 21, 2006 Cabinet meeting, which tackled among other things the Cyber Education Project. We are publishing unedited portions of that meeting, a transcript of which we got in our sleuthing about details of this project. President Gloria Macapagal Arroyo, Neri and Secretary Ramon Sales, who recently resigned as chairman of the Commission on Information and Communications Technology, had a vigorous exchange of views in that meeting.

Excerpts:

Sales: Okay. So, the summary for the [Medium-Term Philippine Investment Plan] is the government broadband at P5.1 billion ...

PGMA: Do we need a government broadband?

Neri: Physically, Ma’am we need a backbone but who will provide this is the issue, but there’s the private sector... plus later on, we will probably need on-site...

PGMA: At saka ano, remember what happened to the... itong distance learning. Ito ba iyong kay Jesli Lapus?

Neri: That’s right.

PGMA: That becomes the backbone because you’ll gonna reach all the barangays.

Neri: The way it was structured, Ma’am, it’s not broadband but it’s satellite-based.

PGMA: If it’s satellite-based so what wrong with that?

Sales: The satellite is among the most expensive medium today.

PGMA: But if it is already going to be provided, we might as well maximize the use of it so that we will have another second backbone.

Neri: The way it’s emerging, it can stand alone...

PGMA: Which one?

Neri: Itong education, Ma’am.

PGMA: But even it can stand alone, it doesn’t stop from using it as a backbone. Because otherwise we have to spend another P5 billion.

Neri: We analyzed it Ma’am. Mukhang puedeng two systems because one is TV-based...

PGMA: But not if we will spend. If we will spend only one.

Neri: ’Yang backbone, Ma’am, posibleng gawing BOT iyan...

PGMA: That’s why you have to make sure it’s BOT, that’s why I asked where is the money coming from. So government broadband network parenthesis BOT.

Neri: But we will spend for is only the education component.

PGMA: But the education is already in no. 2 so iba ’yon, it’s a separate project. That’s why I wanted that education becomes the backbone to maximize the... [inaudible] that we gonna spend. If somebody else would provide additional, BOT unsolicited, therefore, no subsidy.

Neri: That’s right Ma’am. The only way to make it work, Ma’am, is for government to be the customer for this backbone if we also have them revive the TELOF.

PGMA: Ang mangyayari n’yan take or pay, which is the whole issue of MRT 7.

Neri: What we need to do, Ma’am, is to structure it in such a way that there is no government subsidy, but the government will become just a main customer for this backbone.

PGMA: But not take or pay.

Neri: We will avoid the take or pay provision, Ma’am.

PGMA: It has to be you use, you pay.

Neri: Oho, that’s what we will tell. But the way it is emerging, Ma’am, mukhang magiging separate system itong education.

PGMA: So you have to specify that government broadband is BOT, not government would gonna spend for it.

Sales: Yes.

Judging from the exchange of views, the emerging plan at that day was to pursue the cyber education project, which is distance learning through satellite, at a modest scale of around P5 billion, which was the same as the national broadband network’s. The plan was also to put it under build-operate-transfer scheme so that the government would not spend for it.

But the projected entry of the Chinese money had pushed the Arroyo administration to pursue the projects at a much grander scale—the cyber education project at $435 million (P26.7 billion) and the national broadband network at $330 million (P15.5 billion). They were to be pursued as government-to-government projects, not BOTs. This was what we were saying in the earlier published series.

Strangely, the Department of Education has yet to make its own explanation on this dubious project. Let’s wait how Lapus will tell his side when Congress starts investigating these two highly questionable projects in August.

* * *

Presidential management Staff chief Cerge Remonde got the shock of his life when major telcos had rejected his overtures for them to finance his media plan to promote the government’s Cyber Corridor Project. According to the grapevine, Remonde had sought the telcos’ help to bankroll to the tune of slightly over P3 million a media plan to disseminate details of the Cyber Corridor, which seeks to install Internet connectivity to all public schools in major urban centers—from Baguio City through Subic. Clark, Metro Manila, Central Visayas up to Davao City .

The grapevine said Remonde apparently misread the telcos, probably thinking that they would finance a laudable project without something or anything in return. Telcos do not know much about Remonde, who, as a broadcaster, was based mostly in Cebu City. Remonde, of course, was mad on the rebuff.

* * *

The resignation of Sales as CICT chief had somehow stirred the hornet’s nest. Speculations abound, but the most plausible explanation was that Sales was aghast by the confusion on his job description. With the transfer of the Telecommunications Office and National Telecommunications Commission from the Department of Transportation and Communications, CICT was left with no office, except the National Computer Center, to supervise.

Earlier, CICT commissioners, including Emmanuel Lallana, had resigned and left for some more financially and morally fulfilling jobs elsewhere. Sales found himself the only one remaining at CICT. As CICT chief, Sales did not have to implement projects but oversee several ICT related projects. No less than the President had spelled this out to him. But this did not sit well with Sales, who wanted a more active role. Unfortunately, Congress has yet to enact a bill creating the proposed Department of Information and Communications Technology. E-mail: telecom_digest@yahoo.com

AIM goes into outsourcing business

BIZZFIZZ
BY Rene Martel - Manila Times
AIM goes into outsourcing business

In a unique business deal that would have many of its budding student entrepreneurs in awe, the Asian Institute of Management (AIM), in a continuing effort to strengthen its entrepreneurship programs, has outsourced its Asian Center for Entrepreneurship (ACE) program name and brand through an agreement with five of its own professors.

The move coincides with the establishment of ACE, Inc., an establishment which will use the ACE brand for its non-degree and certificate programs.

Included in the new setup is the Masters in Entrepreneurship (ME) degree program, along with other nondegree and certificate programs. These programs complement the institute’s ongoing strategic restructuring efforts that will expand its executive offerings.

Closing the deal with AIM was the professorial quintet of Eduardo Morato, Tomas Lopez, Alejandrino Ferreria, Danilo Antonio and Francisco Bernardo 3rd. All five professors are credited for their contributions in the development of small-scale entrepreneurship programs.

Under the Agreement, ACE, Inc. will continue to manage the ongoing ME 12 and 14. A prospective ME 15 program will also be offered under the AIM framework.

AIM President Francis Estrada expressed confidence in the expected outcome of the agreement based upon the institute’s own plans toward enhancing its entrepreneurship programs.

“AIM will continue to offer its own Masters in Entrepreneurship degree program beyond the full transfer of rights to ACE, Inc. after the conclusion of ME15 on December 2008.”

He added: “The institute sees the role and relevance of entrepreneurship as critical in a rapidly integrating Asia. It accordingly seeks to focus on potential industry-shapers.

“The new AIM entrepreneurship program will combine the academic rigor that the institute’s degree programs have been known for with the risk-taking and other characteristics of real world entrepreneurship. More importantly, it will have the portability that will allow the program to be conducted in other local and regional urban centers.”

k k k

The Treaty of Rome may appear far removed from the likes of SM Appliance Center, The Podium, XFM, Café Mediterranean, Contract Design, Joey 92.3, and Montre, but they are about to be interconnected.

On June 24 the Delegation of the European Commission to the Philippines is staging a drawing competition to mark the 50th Anniversary of the Treaty of Rome and celebrate the long-standing partnership between the EU and the Philippines.

And the above named companies are all on board the artistic project as sponsors to promote the EU’s mission to generate a deeper interest in Europe among the young.

Ambassador Alistair Mac-Donald, Head of Delegation of the European Commission to the Philippines said: “We want to ask Filipino children to draw on their artistic talents, in expressing what they think about the European Union and the integration of Europe.

“Many global talents come from the Philippines and this contest is an opportunity for Filipino children to express their creative potential and at the same time discover the European Union.”

Entries must adhere to the theme “Europe Ko ’To: 50 Years of European Union in the Eyes of the Filipino Youth.” Drawings must be able to present perceptions about the European Union and European integration.

Students should submit their names, addresses, phone numbers, name of school and school adviser either by hand or by mail with The Delegation of the European Commission to the Philippines, 30th Floor, RCBC Plaza, Tower II, Ayala Avenue, Makati City, email address: http://www.delphl. ec.europa.eu or The Podium, ADB Avenue, Pasig City until 12 noon on or before 20 June 2007.

Mandatory registration for all cell phones being proposed

Owners of mobile phones will soon have to register their units and pay a P150 fee for each phone.

A new circular from the National Telecommunications Commission (NTC) requires all cell-phone manufacturers, dealers and users to register their units.

The circular, which is up for public hearing, came about after the NTC found that an earlier draft circular requiring all cell phones being sold to have tamper-proof stickers did not solve prevalent problems like smuggling, terrorism, theft and text spamming attributed to mobile-phone use.

Efren R. Cabanlig, NTC director for Radio Regulations & Licensing Division, said it was proposed that a new circular must consider not only the administrative concerns, but the effect on the use of cell phones as well.

The new draft circular, titled “Rules and Regulations for the Registration of Mobile Phones,” aims to monitor and control the legal entry and sources of mobile phones and regulate their importation, sale, purchase, possession and ownership.

As of last year there were about 40 million mobile-phone subscribers in the country.

Under the draft circular, before imported phones are released from the Bureau of Customs, they must be first registered with the NTC. The importer must submit an accomplished application form, a copy of the permit to import, bill of lading and packing list, international mobile equipment identity (IMEI), maker/type/model/serial number and pay of corresponding registration fee.

Cell-phone owners, on the other hand, should submit an accomplished application form, IMEI number, maker/type/model/serial number and pay the registration fee.

Mobile phones used by minors should be registered by their parent or guardian, while individuals using company-issued phones are responsible for registration.

End-users are required to activate their phones by providing verifiable information to the blank information fields in the application interface of the mobile phone registration system (MPRS).

Verifiable information includes the name of the owner, home address, IMEI number, dealer source of equipment, PIN (personal identification system) of dealer, and two identifications.

The end user is then required to text to the NTC hot line number all the verifiable information to compete the process.

The circular lists penalties for violations which include confiscation of stocks, suspension, cancellation and revocation of permits and closure of operations.

Nonregistration of IMEI/maker/type/model/serial number is fined P5,000 per unit.

Once the circular is approved, cell-phone users have six months to register their units, while existing suppliers, distributors, and dealers are given three months.
By Darwin G. Amojelar, Manila Times Reporter

Ex-NTC chief backs end to broadband deal

LONE Catanduanes Rep. Joseph Santiago has backed the business community’s clamor for the Philippine government to “diplomatically abrogate” its controversial $330-million contract with ZTE Corp. for the supply and construction of a national broadband network.

“This is definitely the right thing to do -- for the Philippine government to find ways to persuade the Chinese government, which controls ZTE, that a mutually agreed voluntary dissolution of the contract has become imperative,” said Santiago, former chief of the National Telecommunications Commission.

Santiago made the statement shortly after an influential alliance of business groups put out newspaper advertisements criticizing the “highly questionable” deal with ZTE, and urging the diplomatic cancellation of the contract.

The paid advertisements, titled “Broadband for Barangays or Better Education and Health?” were put out by the Management Association of the Philippines, the Bishops-Businessmen’s Conference for Human Development, Makati Business Club, Foundation for Economic Freedom and the Financial Executives Institute of the Philippines.

“A central government that is electronically linked to local government by broadband is a good idea. However, spending on an expensive broadband technology, instead of maximizing and expanding existing networks, is not the best option,” the business groups said.

“There already exist national broadband networks that our telecommunications companies operate. Our national government agencies can lease bandwidth from them at market rates,” they pointed out.

According to the business groups, the law clearly states that a fundamental objective of government is to develop and maintain a viable, efficient, reliable and universal telecommunication infrastructure using the best available and affordable technologies. “In doing so, the law emphasized that public telecommunications services shall be provided by private enterprises,” they said.

They added: “The country still lacks 41,000 classrooms, even as our Constitution mandates that education should be the top priority in the national budget. Ask any poor family what their greatest fear is and the answer would most likely be health-related.”

“In remote barangays and in quite a few municipios, access to water is still a basic need. The ZTE contract value of $330 million (P15 billion) could be spent inbuilding 36,000 classrooms, or 6,000 rural health centers or 120,000 artesian wells,” the business groups said.

“Building a national broadband network puts government in the business of business, and in one that it regulates. This sends wrong signals to those who have already invested in the telecommunications industry and to potential investors in this country,” the groups warned.

“The government should have learned from its failed Telepono sa Barangay program. The dwindling number and deteriorating condition of public calling stations are also proof of the government’s lack of capacity to operate and maintain its own network. As a result, the infrastructure has deteriorated and the investment was unsuccessful,” the groups lamented.

“We strongly oppose the contract with ZTE. We respectfully call on the President to diplomatically abrogate the contract and to commit the funds to education instead, where the nation can benefit the most,” the business groups concluded

The duel over broadband

The Globe versus Smart contest has moved up from the cellular phone business to ROUND 2 OF THE TELCOS WAR

THE telecommunications war—fought by the country’s two largest telcos, Smart and Globe (and their giant mother companies)—has entered the Second Round.

Now they are dueling over the Broadband Internet Access market. Broadband Internet service, both companies believe as do the best minds of the industry, is the telecoms industry’s future source of mega profits.

Smart Communications Inc., a subsidiary of telecoms giant Philippine Long Distance Co. (PLDT), owned by Manuel V. Pangilinan, and Globe Telecom Inc., owned by Jaime Zobel de Ayala and his corporations, are still heavily engaged in making their mobile-phone services continue to rake in billions but they are adjusting their focus and looking at broadband infrastructures, providing broad-band Internet access to their present customers and drawing outsiders into the loop.

Just as in the mobile-phone business, Smart and Globe are competing in luring new customers into the world of Broadband Internet Access and provoking dial-up Internet subscribers they already have to upgrade.

Experts and industry leaders say the growing numbers of overseas Filipino workers (OFWs), who mainly know broadband Internet in their locations abroad, as well as Filipinos working here at home in call centers and various other business process outsourcing (BPOs) establishments, are the market for broadband. They—and their families—plus the fact that Internet penetration in this country of more than 85 million is rather low, are the main factors that persuaded Globe and Smart to invest a good part of their capital and their time and talent in Broadband Internet.

Industry sources also see that, with profits from the cellular-phone business starting to taper off, the impulse to go into Broadband Internet has become more urgent.

Napoleon Nazareno, PLDT and Smart president and CEO, said broadband is the future of the telecommunication industry.

He projects that in the next three to five years, Broadband Internet Access will become a major basic service to vast numbers of the country’s population.

Gerardo Ablaza, Globe president and CEO, says his company is excited by the growth opportunities in the broadband sector and will accelerate the roll-out of the Globe network to tap into the huge demand for affordable Internet access.

“I would like Globe to have a significant presence in the broadband market starting in 2007,” Ablaza said, and that is why his company is giving Smart/PLDT a good fight.

Promo sale

To outdo each other and serve the huge Philippine demand for cheaper Internet services, Smart and Globe are offering great promotional discounts.

The promotions are attractive enough to attract even members of the so-called mass market or the hoi polloi. These after all are also loyal users of mobile phones even if they are only “tingi” (or mini-retail size) customers of loads.

One of the early Smart promos is “Smart Bro.”

For one, Smart introduced the “Smart Bro” a revolutionary high-speed broadband Internet service as low as P999 a month with a speed of up to 384 kbps or seven times faster than dial-up.

According to Smart, the service works by installing a Smart Bro antenna at subscriber’s home which is directed to the nearest Smart cell site to give faster connection signal.

The company started its wireless broadband service in June 2005 called Smart WiFi, a wireless broadband connectivity to homes and small businesses without the need of a landline phone.

However, after months of operations, the company started being bombarded with complaints because of its low speed.

Later on, Smart in April 2006, relaunched the service and renamed as Smart Bro.

Ramon Isberto, PLDT and Smart spokesman, said the aggressive promo of the company is designed to persuade users to avail themselves of the new products while addressing the problem of the limited ownership of personal computers (PC) in the country.

The PLDT moved to increase the use of broadband services among small and medium scale businesses but running a promotional campaign that bundled free personal computers along with DSL (digital subscriber line) packages.

This program immediately addressed one of the key obstacles to the massive growth of Internet usage—the high cost of computers.

Also, the PLDT increased Internet usage by providing myDSL services to thousands of Internet cafés all over the country. About half of the 10 million regular Internet users in the country connect to the Web via Internet cafés.

“Our target market is the traditional consumer like individual houses and Internet cafés that are able to serve a large number of consumers,” Isberto. His company is also targeting the corporate and the small and medium enterprises (SMEs) markets.

“Broadband service is now cheaper compared to before,” he added.

Smart-PLDT’s Nazareno also said that the market potential for broadband is expanding rapidly. He said that the PC penetration grew by 58 percent to about 1.4 million year on year or 8 percent of total households in 2006.

Internet users also surged to 9 million from 3.4 million, half of whom access the Internet through Internet cafés.

“The current broadband market in the country more than doubled to about 340,000 subscribers while narrowband Internet usage is increasing in the lower income households,” he added. These narrowband Internet users will eventually become broadband customers, of course.

Globe introduced the same service called Globelines Broadband Budget Bundles, a landline service with unlimited access, with speed of up to 384 kbps for only P995 a month.

Globe Broadband subscribers may also activate their VoIP (Voice over Internet Protocol) account and use Globelines Broadband VoIP softphone service to call overseas for a special rate of $0.05 or about P2.50 a minute.

Innove also introduced a speed upgrade for its broadband consumers, increasing speeds from 384 kbps to 512 kbps, at no extra charge to customers.

“Our direction for 2007 is really to deliver affordable Internet business to the people particularly the mass market,” Jones Campos, Globe spokesperson said.

One of the company’s strategy, Campos said is to offer an affordable price. Price in relatively poor Philippines always never fail to attract new subscribers.

“The demand for broadband Internet is robust and encouraging. We feel in a matter of time we can be able to serve the demand,” Campos said noting that the company’s target is the population of professionals, students, OFWs and both small and large companies.

Next growth frontier

Since the mobile-phone business has started showing indications of a slowdown, telecommunication companies now more actively seek other opportunities to grow.

The 3G (third generation) technology service offered by telecom companies failed to match the popularity of 2G when introduced in early 2000. Until now the subscriber growth has not been growing despite the companies’ promo and advertising for 3G. This is because even if there are enough customers who afford the more advanced cell phones to use 3G products—like streaming video, video calling, conference calls, TV programs and movies—the content is very prohibitive in the Philippines.

It is also rather expensive for the telecoms giants to invest in making or hiring US and European content to feed 3G customers.

As a result, the earlier hopes to develop great business from 3G technology have not been realized.

In addition, the growth in cellular-phone users has also slowed compared to the surges in growth of the early 2000s. In an earlier interview with Edgardo Cabarrios, chief of the National Telecommunications Commission (NTC) Common Carriers Authorization Division, The Times learned that the increase of mobile-phone subscribers this year may not be bigger and faster than in 2006.

Data from Smart Communications Inc. and Globe Telecom show that the number of subscribers reached about 40 million last year from 34.78 million in 2005. Smart and sister-firm Pilipino Telephone Corp. have a total of 24.2 million subscribers, while Globe and Touch Mobile subscribers stood at 15.7 million.

“We believe that the Internet access space in general and broadband connectivity in particular, are on the cusp of witnessing a swell demand similar to the exponential growth we saw in the mobile-phone industry a few years back,” Gerardo C. Ablaza, Globe president and chief executive said.

“We intend to be at the forefront of this opportunity, harnessing the capabilities of both wired and wireless broadband technologies to make the Internet available and relevant to all,” he said.

Ablaza said that his company’s broadband business continues to show robust growth, registering a year on year increase in subscribers of 129 percent bringing its cumulative base to 51,426 as of end 2006.

To be continued tomorrow

“This growth is attributable to the increasing affordability of our consumer broadband offerings which are now bundled with free landline service with waived monthly fees in selected franchise areas,” he said.

As of December 2006, Innove increased its total wireline voice subscribers by 5 percent to 383,876 from 362,143 in 2005. This subscriber base is comprised of 63-percent postpaid and 37-percent prepaid with business to residential mix ratio of 22:78.

As of 2006, Globe wireline voice service revenue slightly dropped by 2 percent from P4.4 billion in 2005 to P4.3 billion in 2006.

The company has 5,884 cell sites at year-end and currently serves 98 percent of the population with 94 percent geographic reach.

Ablaza said that for this year, the company allocated a substantial portion of the company’s capital budget for infrastructure investments in 3G (third generation) technology with HSDPA, DSL and other broadband technologies as Globe work toward establishing a pervasive access network.

On the other hand, consistent with PLDT’s intent to develop new businesses beyond cellular, its unit Smart has grown its wireless broadband subscriber base to about 122,000 by end of 2006 under its Smart Bro wireless broadband service.

Smart has close to 2,500 wireless broadband-enabled base stations providing high-speed Internet access to about 500 cities and municipalities all over the Philippines.

The increasing network coverage of Smart Bro continues to provide the PLDT with a complementary service in areas that are currently not covered by PLDT’s fixed line DSL (digital subscriber line) service.

“The strong performance of Smart is underpinned by its commitment to push back barriers to drive both subscriber activations and usage. We are not content to uphold merely our leadership position in the industry. We continue to pursue innovation and to build new businesses around our mainstream voice and text services with the objective of bringing positive and practical changes to people’s lives,” Nazareno said.

Fixed line service revenues decreased by 1 percent to P49.1 billion in 2006 from P40.7 billion in 2005.

The company’s retail DSL continued to grow as broadband subscribers exceeded 133,000 at the end of 2006 with another 300,000 subscribers using PLDT’s Vibe dial up Internet service.

PLDT DSL and Vibe contributed P3.5 billion in revenues for 2006 or 32 percent from P2.7 billion in 2005.

PLDT DSL and Vibe made up 69 percent of the PLDT group’s broadband and Internet revenues for 2006.

Broadband and Internet revenues grew 49 percent to P5.2 billion as PLDT DSL and Smart Bro subscribers more than doubled to 265,000.

“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.

“In 2007, we will work on the integration of our information technology and other convergent platforms. We will maximize the opportunities provided by our large subscriber base and our extensive infrastructure, especially in the rapidly expanding broadband space where we can harness our fixed and wireless capabilities to capitalize on its huge potential,” Nazareno added
By Darwin G. Amojelar - Manila Times Reporter

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