RIDING the wave of growth can be an exhilarating thing, but the sober-faced Raj Pangrekar, president and country manager of Ericsson Philippines, is focused on what drives that growth.

“No market is driven by technology,” said Pangrekar in an interview with BusinessMirror. “It is always driven by consumer choice.”

It is reassuring to hear these words from the country representative of a global company whose bread and butter are telecommunications products, solutions and services. Pangrekar, indeed, has his ears to the ground.

“We are always careful about reminding ourselves that it’s not what we want to sell, it’s what the consumer will pay for. You very much tune in yourselves with the service provider, and also the third person in the end,” he continued.

Ericsson, which turned on its first switchboard in the Philippines in 1898, is behind the technology being used by many of the telecommunications providers in the country. The Stockholm-headquartered company has been in the Philippines as a legal entity since 1984.

Ericsson has seen the development of the Philippines’ telecommunications industry, and has gone with the ebb and flow of the market, especially in the last two decades.

“If we look at 1997, that’s when the new shift in technology happened,” recalled Pangrekar. “That was the move from the traditional, the old analog systems to the GSM [Global System for Mobile communication] system.”

With GSM came wider mobile communications, and rapid deployment of wireless service by the two dominant wireless service providers—Smart Communications Inc. of the Philippine Long Distance Telephone Co. and Globe Telecom of the Ayala Group.

Until about 2001, Pangrekar notes that the rapid deployment gave rise to a “stable, two-operator country.”

Since then, new operators, including the Gokongwei Group’s Sun Cellular, had entered the fray, hoping to capture a piece of the pie of mobile-service users in this country.

This year “the market shifts again,” says Pangrekar. “In most cases, the emergence of new players actually offers more competitive choice when it comes to service, and also tariff, to the consumer. That drives the market and subscriber uptake. We’ve seen that over the last two years.”

THE numbers attest to the expansion of the market in the last few years, globally and in the Philippines.

Ericsson notes in its six-month report to June this year that, worldwide, the total number of mobile subscriptions has reached three billion, “a milestone for our industry,” the report quoted Carl-Henric Svanberg, president and CEO of Ericsson, as saying.

“GSM shipments reach new record levels every quarter, and we see a growing demand for mobile and fixed broadband. We see dramatic data traffic increases in the HSPA [High-Speed Packet Access] networks that we monitor.”

Of the three billion mobile subscriptions worldwide, Ericsson reports that 2.6 billion are GSM/WCDMA subscriptions, while 135 million are WCDMA (Wide-Code Division Multiple Access) subscriptions. WCDMA is broadband technology; broadband typically allows data transmission speeds of more than two Megabits per second.

Ericsson also reported that there are 164 WCDMA networks in 173 countries, 117 of which are upgraded to HSPA, the first step in the WCDMA evolution.

HSPA allows mobile broadband with mobile TV, mobile music, high-speed Internet connectivity and fixed wireless services.

In the Philippines, at about 50-percent wireless service penetration, there are about 40 million to 42 million mobile subscribers.

Pangrekar sees a growth of 15 million to 20 million new mobile subscribers in the next three to four years. “We’re quite confident about that,” he said. “And that’s good news all around. The higher the number of subscribers grows, you will see more offerings in the market, more competitive offerings in the market.”

THE topic of broadband communication broke the sometimes solemn demeanor of Pangrekar during his interview with BusinessMirror.

Broadband, in contrast to wideband that denotes speeds of 200 kilobits per second (kbps) to 2 Mbps (Megabits per second), offers much faster data-transmission speeds. Anything that is above 2 Mbps could be considered broadband.

However, two Megabits—the current offering of wireless broadband operators in the country—is nothing compared with what Ericsson is capable of offering at present.

“[In relation] to wireless broadband in the Philippines, we are ready to offer 14-Megabit-per-second speeds,” said Pangrekar.

As if that were not enough, he expects a more than fivefold growth of data-transmission speeds in two years. “Next year [2008], we anticipate that to grow to somewhere around 50 Mbps and, in 2009, it will be a hundred Mbps,” he said.

This reflects what Svanberg is quoted to have said in the six-month report: “We continue to outpace the market.… Our services business continues to expand faster than the market.”

Wireless broadband, apart from making the Internet accessible to more people, also does away with the physical inconvenience brought on by laying or putting up the lines. “You have that offering [broadband] now in wireless, so what you essentially are doing is cutting out a lot of the work, when it comes to digging the road. And you’re making it easier for the Internet to reach everybody,” Ericsson Philippines’ Pangrekar said.

Broadband penetration, both wireline and wireless, in this country is still very low at about 5 percent of the population, or less than a million out the 85 million to 86 million population. In the next four years, Pangrekar expects that number to grow to 10-percent penetration, or 10 million broadband subscribers given an expected population of a hundred million.

“We don’t know yet for sure how this 10 million growth will be realized,” said Pangrekar, “when it comes to the split of wireline broadband and wireless broadband. We don’t differentiate. We as a company have both offerings.”

IN this next growth spurt of mobile communications in the country, Ericsson Philippines finds itself in an enviable position.

On the economic front, “We see the Philippines growing over the next three to five years at a very steady and healthy rate of 5-percent to 7-percent growth.” This could only translate to more mobile subscriptions, new telecom operators and expansion of telecommunications networks.

In addition, Pangrekar quoted a professor of the London School of Economics who studied the Philippine mobile market. This professor noted that the expansion of the telecommunications industry, as measured by mobile penetration, has a positive correlation to overall economic growth.

“For every 10-percent growth in penetration in the mobile area, [the professor found that] there is a 0.6-percent increase in the GDP [gross domestic product] directly correlated,” he said.

With the country’s economic numbers seen to grow at 5 percent to 7 percent in the next few years, the corresponding numbers for growth in the telecommunications sector could only go north.

In fact, Pangrekar sees the expansion of the market giving rise to more players.

“This market has a place for three operators,” he said. “You have the two established operators, [but] we definitely see a third operator making a space for itself. Which one that is, we leave it to the market to decide.”  

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Ericsson in Asia: Some recent announcements 

August 1, 2007: Ericsson announced that PT Indosat Tbk has awarded the company a contract extension to expand Indosat’s WCDMA/HSPA network coverage in greater Jakarta. Ericsson will be responsible for supplying core, radio access network and transmission equipment covering network design, deployment, integration, performance and improvement of the network. 

August 6, 2007: Ericsson was awarded an expansion contract by Malaysia’s PT Excelcomindo Pratama Tbk to expand its GSM/GPRS and WCDMA/HSPA networks in the country. Under a three-and-a-half-year frame agreement, Ericsson will supply both best-in-class 2G and 3G radio access network and Mini-Link transmission, as well as deployment of its Mobile Softswitch Solution. 

August 14, 2007: Ericsson and Pakistan’s Warid Telecommunications Ltd. announced a new three-year managed services agreement that will deepen the existing strategic partnership between the two companies, and marks Ericsson’s first multivendor deal in Pakistan. Under the agreement, Ericsson will provide a range of new services for Warid.

RP’s telecommunications industry ready for next growth spurt

RIDING the wave of growth can be an exhilarating thing, but the sober-faced Raj Pangrekar, president and country manager of Ericsson Philippines, is focused on what drives that growth.

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