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Executive Summary
The Philippines prepares for the transition from 4G to 5G
Telecommunications investment in the Philippines will continue to see increasing emphasis on supporting high speed broadband access. The bulk of the fixed services are in urban areas. In contrast, the fixed line market in the Philippines remains underdeveloped and fixed line penetration continues to show stagnant growth. A major reason for this is due to the dominance of the mobile segment and the rapid expansion of the mobile broadband segment.
Despite competition from new carriers and mobile operators, PLDT has continued to be the Philippines’ dominant fixed-line provider. However, in recent years, Globe Telecom in particular has been pushing hard to overhaul the incumbent and now is the leading mobile provider in term of overall subscribers.
In 2018 the Department of Information and Communications Technology (DICT) published its guidelines to accommodate the entry of a third major telecoms operator in the local market.
In recent few years, the major operators have also been forced to cope with the pressures of slowing growth in traditional areas. In particular, there has been good progress in the rollout of optical fibre infrastructure. PDLT announced plans to accelerate a network modernisation plan that will see it switching to fibre over the following two years.
Fixed broadband penetration in the Philippines remains relatively low mainly due to a limited number of fixed lines and the dominance of the mobile platform, which has in turn driven the mobile broadband market.
Despite declining prices in both fixed and mobile broadband, this type of service is still not affordable for the majority of the population. Operators have been pushing hard with competitive low entry-level packages, but the market continues to struggle.
However, the market has grown very strongly over the past five years from a small base. Over the next five years to 2023 strong growth is expected to continue from this very small base as both major fixed broadband operators, PLDT and Globe Telecom continue with their rollouts.
There has been a major push by market leader PLDT to offer fibre-based services; Globe has been trying to match the PLDT push where it can. PDLT is also deploying hybrid technology, such as G.fast, under a wider three-year program.
PDLT’s ongoing nationwide fibre-optic rollout program, has already set up a number of so-called ‘PLDT Smart City’ areas. In 2018 a consortium of Filipino-Chinese developers were scheduled to begin work on an extensive smart city project that will give rise to a mixed-use development off the coast of Manila.
A feature of the Philippines mobile market has been the near duopoly with Smart together with Globe Telecom maintaining a tight hold on the industry. The two leading providers continue to battle to win subscribers and introduce new services, and both lost subscribers during 2017 as the market went through consolidation.
Mobile ARPU levels have been on a downward trend for a long time in the Philippines as competition in the mobile industry has intensified. The operators continue to engage in aggressive price competition in an effort to grab market share.
The Philippines has seen a very rapid increase in mobile broadband penetration over the past five years driven by a rising level of wireless broadband users. Strong growth is predicted over the next five years to 2023, however at a slower and declining rate as the market further matures.
The Philippines is already preparing for the move from 4G to 5G. PLDT Inc. has set up what it is calling a ‘5G technolab’ into the research and development of the next generation platform and Globe Telecom announced its intention to launch 5G services in the Philippines by the middle of 2019.
Key Developments
- Telecommunications investment will continue to support high speed broadband access.
- The fixed line market in the Philippines remains underdeveloped.
- Globe Telecom is now challenging PLDT in both the fixed and wireless markets.
- Fixed broadband penetration remains relatively low but is growing strongly from a small base.
- DICT has published its draft terms of reference for the selection of a New Major Player (NMP).
- An extensive smart city project off the coast of Manila is scheduled to begin.
- The Philippines has seen a rapid recent increase in mobile broadband penetration.
- Mobile subscriber growth is expected to be relatively low over the next five years to 2023.
- The Philippines is already preparing for the move from 4G to 5G