Philippines Strives for Universal Phone Access

After five years of deregulation in the local telecommunications industry, most Filipinos still don't have basic access to telecommunication services, and the dream of giving universal access to the masses remains largely unfulfilled.

Government efforts to bring telecommunication services to the people have met some success but have fallen short of the intended goal. One particular initiative that wasn't very successful was the Basic Telephone Program (BTP), which was initiated shortly after the deregulation of the industry in 1995.

At the end of the BTP, the country's teledensity stood at a measly 9.08 percent. This means that only nine out of every 100 Filipinos could access a telephone line. By the end of 1998, there were a total of 6,276,870 installed lines serving a huge population of 73,130,998 people. Out of those total installed lines, there were even fewer actual subscribed lines at 2,443,386.

After the BTP's deadline lapsed in the third quarter of 1998, growth in the fixed lines sector seemed to slow down. A year after, the number of fixed lines only grew by 8.52 percent. Some carriers were still struggling just to be able to install the required number of phone lines under the BTP.

So in 1999, there were a total of 6,811,616 installed lines for a Philippine population pegged at 74,723,379 people. This showed that only 9.12 Filipinos out of 100 had access to a telephone, which wasn't much better than the 9.08 percent the year before.

There was at least one bright spot for the year, though: the number of subscribers grew to 2,892,333, up 18.37 percent from the previous year.

On a per region basis, much of the attention of the telecom companies remained focused on the National Capital Region (NCR), where there were 3,251,164 installed lines and 1,481,269 subscribed lines in 1999. The NCR also has the highest teledensity compared to any other region in the country, with 29.63 percent.

Perhaps the most underdeveloped region for telecommunications is Region II, with only 41,246 phone lines installed. The war-torn Autonomous Region for Muslim Mindanao (ARMM), however, had the least number of subscribers, with only 8,702 subscribed lines, and the second lowest number of phone lines installed with 48,959. ARMM understandably had the lowest teledensity at 0.4 percent, although Region VIII is not far behind with a teledensity of 0.58, followed by Region XII with 0.58 percent and Region IX with 0.86 percent.

Among the phone companies, Philcom led the other players in installing phone lines last year. The company grew its telephone network by 27.57 percent, putting up 64,620 lines compared to 50,655 lines in 1998. Bayantel and Piltel came close behind, growing 22.46 percent and 22.17 percent respectively.

Islacom and Smart reported the same number of phone lines for 1998 and 1999. Rounding out the bottom were Easter Telecommunications Phils. Inc. (ETPI) with 0.09 percent growth; Globe Telecom with 1.75 percent; the Philippine Long Distance Telephone Co. (PLDT) with 4.25 percent and Digital Telecommunications Philippines Inc. (Digitel) with 10.52 percent.

By being able to attract more subscribers, ETPI and Globe were also winners last year. ETPI had 11,170 subscribers or 219.14 percent more subscribers than last year's 3,500. Globe, on the other hand, increased its subscribed lines to 144,671 or 168.76 percent more than the 53,830 subscribers the previous year.

Despite the entry of nine other telecom players in the country, however, PLDT still remains the dominant phone company. PLDT, acquired by First Pacific in 1998, took a whopping 58.83 percent market share last year.

PLDT's closest rival, Digitel, only owns 9.23 percent of the market, followed by Bayantel with a 7.30 percent share, then Islacom with 5.2 percent. Rounding out the top five is Globe, with a market share of 5 percent. The previous year, Bayantel was at second place, but the strong showing of Digitel last year moved it in front of the Lopez-owned telephone company.

Although it's still too early to tell, PLDT's market share could steadily go down as the other players continue to eat into the phone giant's pie. PLDT's market position actually slipped from 68.57 percent in 1998 to 58.83 percent last year.

That doesn't mean, though, that PLDT has fewer subscribers for 1999. Last year PLDT still had 1,701,607 subscribed lines to its credit, up 1.57 percent from the 1,675,367 the previous year. Second- running Digitel had a subscriber base of 269,600, up 33.82 percent from the 201,459 subscribed lines it had in 1998. Bayantel is not too far behind with 211,032 subscribed lines or 4.62 percent higher than 1998's 201,713.

MODEST SUCCESS

The BTP had some modest success, but it is obviously not enough, said Edgardo Cabarios, head of the Common Carriers Authorization Division of the National Telecommunications Commission (NTC).

Under the BTP, the country was divided into 11 service areas. The nine new telecom companies were each given one developed service area and one underdeveloped service area.

"The Service Area Scheme (SAS) was the strategy in 1994 to improve access. However, the SAS is premised on the high profitability of international services as well as cellular mobile phone system (CMTS). What is happening today is that international and CMTS services are not as profitable as it used to be given the competition from international simple resale and voice over IP," said Cabarios.

He added that carriers also struggled during the economic crisis in 1997, a big reason for the slowdown in the installation of phone lines. Some companies now are also burdened by huge debts inflated by the decline of the value of the peso against the U.S. dollar.

Aside from the missed targets of the BTP, interconnection between the carriers was another big problem, said Cabarios. The real problem is not technical, but companies are having a hard time agreeing on interconnection charges. That is why the NTC is coming up with a consultative document on a wholesale pricing regime with the end view of coming up with a new set of rules governing access and interconnection charges, he said.

The emergence of newer technologies, particularly voice over Internet Protocol (VoIP), is another tricky issue, he added. While there is no law in place preventing anyone from offering the service, some issues arise because international gateway facility (IGF) operators are not allowing value-added service providers such as VoIP providers to use the IGF network to offer telecommunication services.

To resolve this, the government is drafting an order to set the rules on VoIP very clearly. Cabarios explained that the order will allow IGF operators to be paid by the VoIP providers. In cases where the IGF operator itself is offering the service, it will be simply a matter of "getting money from your pocket and putting it in your other pocket," said Cabarios. With this, the government is hoping it can speed the development of VoIP, because this type of service is much cheaper for the consumers to use, he said.

Convergence is another issue that has only recently come up. Cabarios said convergent services are complicated because the country's laws do not really recognize convergence, perhaps except the newly-signed E-commerce Law. Aside from spurring the growth of e-commerce in the Philippines, the law acknowledges universal access, Cabarios said. The law recognized that local carriers can use cable television and wireless broadcasts for the provision of local telecommunication services.

OTHER LAWS

The problem, however, involves the country's other laws on broadcast and telecommunications. There are separate laws for each that don't really allow the growth of convergence services.

The government is hoping that the convergence bill will soon be passed in Congress. Cabarios said the NTC was working with the Department of Transportation and Communication in drafting a convergence bill that is "reflective of the needs and conditions of the country."

"However, convergence and technology cannot wait for this proposed measure. So we hope the E-commerce Law will facilitate convergence in the country," he said.

The ultimate goal, however, is to provide universal access to telecommunications services. With the SAS failing in its goals, the government needs a new strategy, Cabarios said. There is none yet, but they're hoping a solution will come soon.

"The SAS can no longer satisfy the telephone access requirements of the country. A new mechanism and strategy are needed," he said.

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