Presentation at the 1st National Competition Conference organized by the Department of Justice, Office for Competition, December 9, 2014, PICC, Pasay City, Philippines.

1. Competition Issues
in Philippine
Telecommunications Sector
Challenges and Recommendations
Mary Grace Mirandilla-Santos
1st National Competition Conference
December 9, 2014, PICC

2. PH Telecom and ICT
ICT Statistics per 100 inhabitants (ITU, 2013)
Mobile-cellular subscriptions 104.5
Fixed (wired)-broadband subscriptions 2.6
Mobile-broadband subscriptions 20.3
Individuals using the Internet (%) 37
0.0 10.0 20.0 30.0 40.0 50.0 60.0
Philippines
Viet Nam
Indonesia
Thailand
Broadband subscriptions per 100 inhabitants
Fixed Mobile

3. PH Fixed and Mobile Telecom (1992-2013)
0.0
20.0
40.0
60.0
80.0
100.0
120.0
1992 1993 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Subscribed Fixed Line Teledensity (per 100 people, ITU) Subscribed Mobile Teledensity (per 100 people, ITU)
Interconnection
crisis brewing
EO 59
EO 109
RA 7925
GSM tech
introduced;
SMS offered
Prepaid
introduced
PLDT/Smart & Globe
sign interconnection
agreement
Estrada calls PLDT
& Globe to a
meeting
Sun Cellular
enters,offers
“Unlimited
Call/Text”
Sun
subscribers
skyrocket to
1M
Smart & Globe
start to offer
"bucket"plans
PLDT buys Smart
Globe completes
share-swapw/ Islacom
NTT (Japan)raises
stake in Smart/PLDT
Smart
absorbs
Piltel
Globe merges w/
Clavecilla; partners
w/ Singtel
New mobile players
enter; Congress
grantsfranchises
PLDT buys Digitel
(Sun Cellular)
• More players = better service, lower price, innovation
• Mergers and acquisitions not harmful as long as there’s real competition

4. Internet Access Value Chain
International connectivity : Connecting users to the wider internet (submarine cables)
National backbone : Delivers to national aggregation points (IXPs), and to submarine
cable landing stations (optical fiber or microwave)
Middle mile: Infra that carries traffic from telephone exchanges or mobile base
stations to central switching locations
Last mile : Final link from the network to the user
Source: (2013)

5. PH Internet is a different story
• No real competition in the market
– Only two major players control infra, therefore pricing
– Smaller players being bought; 100+ ISPs in 1997, >10 in 2014
• High barriers to entry
– Congressional franchise + license (CPCN)
– Negotiating LGUs’ “territorial connectivity”
– Telecom is a vertical, monolithic whole
• Lack of interconnection among ISPs
– Local traffic between two ISPs gets sent abroad to be
exchanged and then routed back!
– Each data “hop” costs time and money.

6. PH Internet is a different story
• Inadequate infrastructure vs. demand
– Extremely limited copper distribution (landlines)
– Wireless/mobile technology is only way to expand, but:
• Towers expansion is expensive
• Base station requires users to be within 0.5km - 2km radius
– Rolling out fiber is expensive; each telco has to: (i) dig up
their own utility corridor and (ii) deal with LGUs
– DepEd: Of 38,569 elementary schools, 83% has no
Internet access in their area, wired or wireless.
• Outdated laws and interconnection rules
– Weak regulator, with poor record in consumer protection
– No anti-trust law to check on big business

7. Very expensive!
• Wholesale: Business-grade bandwidth (1 Gbps)
• Retail: 2nd most expensive out of 62 countries
Manila $25 to $45 per Mbps
Cebu $70
Australia/NZ $6
Hong Kong $5
USA 35 cents to $2
Source:RhettJones,2014
Philippines $20.35 per Mbps
Indonesia $16.83
Malaysia $10.29
Singapore $2.56
Thailand $2.29
Viet Nam $2.25
Source:Ookla,Dec2014

8. Poor Quality = Low Value for Money
Philippine ISPs vs. Select South Asian & Southeast Asian ISPs
0
50
100
150
200
250
300
0800 H 1100 H 1500 H 1800 H 2000 H 2300 H
Airtel 3G (4Mbps)-Bangalore,IN
Tata (3.1Mbps)-Chennai,LK
Airtel (4Mbps)-Delhi,IN
Airtel LTE (4Mbps)-Bangalore,IN
Ooredoo Data 99 (7Mbps)-Male,MV
DhiraaguData 200 (1Mbps)-Male,MV
Ncell (7.2Mbps)-Kathmandu,NP
PTCL Evo (9.3Mbps)-Karachi,PK
Etisalat (7.2Mbps)-Colombo,LK
Telkomsel Flash Ultima(3.6Mbps)-
Jakarta,ID
SMART Bro Starter Plug-it (7.2
Mbps)-Manila,PH*
Globe Tattoo Tattoo Stick (3.6
Mbps)-Manila,PH*
Sun Broadband Plan 799 (3.6Mbps)-
Manila,PH
kbpsperUSDSource:LIRNEasia,2014

9. Way Forward to Better Internet (1)
• Amend RA 7925: Structural separation
– Separate, individual segments can be provided by non-
franchise holders because they don’t serve public directly
(e.g., landing stations, towers, and fiber optic cables)
– More providers of carrier-neutral, non-discriminatory services
• Pass the Fair Competition/Anti-trust Law
– Public interest is better served when there is real competition
– Framework for government to intervene “appropriately”
• Push for legislation that promote innovation
– Magna Carta for Philippine Internet Freedom (MCPIF)
– Convergence Law
– Department of ICT?

10. Way Forward to Better Internet (2)
• Local IP peering: Keep local data within national border
– In 2011, 15-23% of internet traffic was domestic
– Promote efficient use of international bandwidth
– Ensure security of local data, especially of government
• A.O. 39 (2013) requires government offices to ensure their ISPs are
peered through the Philippine Open Internet Exchange (PHOpenIX)
• Shared infrastructure for telcos and ISPs
– Tower co-location:
• Telcos can save up to 75% of capex and 60% of opex
• New business and incentives for 3rd party, especially for LGUs
– Shared utility corridor:
• Neutral 3rd party to set up conduits in civil works, railways,
transmission lines where all utilities can connect

11. Way Forward to Better Internet (3)
• But under present laws, NTC can:
1. Regulate ISPs for quality of service
• Consumer welfare protection mandate under RA 7925
2. Broadband QoS testing and infrastructure audit
• Monitor service performance standards for internet
services under existing (and updated) NTC rules
3. Determine penalties for violation of industry
• No need to amend CA 146 Public Service Act
• NTC has the mandate to ensure competition and
protect consumers.

12. THANK YOU.
Mary Grace Mirandilla-Santos
Independent telecom and ICT policy researcher
Research Fellow, LIRNEasia
gmirandilla at gmail dot com