THE battle came in early for Telstra Corp. Ltd., which bids to offer mobile-data services in the Philippines, as incumbent telecommunications providers in Manila seek to take hold of a precious asset that the Australian regional giant’s prospective partner currently owns.
The two lords of the telecommunications sector in the Philippines, industry observers said, are teaming up to thwart the potential foray of Telstra through a wireless joint venture with San Miguel Corp. (SMC).
To do this effectively, Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom Inc. are seeking the reallocation of the 700-megahertz (MHz) frequency band, an asset considered by the global telco industry as a “digital dividend” brought about by the shift of television technology from analog.
The war for the asset, according to International Data Corp. Asia-Pacific Telecommunications Group Senior Research Manager Alfie Amir, is nearing its boiling point, as such a frequency band has the potential to solve the Internet woes of the Philippines.
Precious band
“The 700 MHz is a precious band, not only in the Philippines, but also worldwide. There are two key advantages of the 700-MHz band. First, it is a lower band compared to the other current LTE [Long-Term Evolution] bands in the Philippines. Physically, lower-frequency bands have higher penetration range,” he said.
In other words, each cell tower using 700 MHz has wider coverage and can penetrate into buildings better than using higher-frequency bands. Hence, having LTE at 700-MHz band allows telcos to provide better coverage with little investment in infrastructure.
“Second is that having more frequency bands means a telco’s network is able to provide higher capacity or bandwidth. Imagine, like a road, the more lanes you have, the more cars can go through at the same time. The same concept applies for wireless technology: the more frequency bands, the more bandwidth they can transmit or receive,” Amir added.
Currently, SMC holds the right to operate the whole band: with Liberty Telecoms Holdings keeping 80 MHz; High Frequency Telecommunications with 10 MHz; and New Century Telecommunications 10 MHz.
The San Miguel Group also operates spectrums under the 800-MHz, 900-MHz and 1,800-MHz bands.
Slow Internet
This portfolio may be enough to provide better Internet services in the country.
Customers complain of slow Internet speeds in the Philippines. An Ookla study showed that the country has the second-slowest average download speed among 22 countries in Asia.
As of May, the country’s average download speed reached 3.64 Mbps, ranking 176th out of 202 nations around the world. It is eight times slower than the global average broadband download speed of 23.3 Mbps.
Cloud services provider Akamai Technologies also reported that, while the Philippines might have improved its connection by a percentage point, its overall ranking in Asia still remains at No. 13 out of 15, or the third-worst connection in the region.
According to the first-quarter report of Akamai, Filipinos enjoyed an average download speed of 2.8 Mbps during the period under review. Trailing behind are India and Indonesia, with 2.3-Mpbs and 2.2-Mbps average speed, respectively. Hence, the clamor for a new player that will break the duopoly that lords over the market with over 100 million subscribers.
Citing the potential improvement of their services, the two incumbent telcos recently sought the National Telecommunications Commission’s (NTC) power to reallocate the 700-MHz frequency band.
Ray C. Espinosa, who heads PLDT’s regulatory affairs and policies office, claimed that a reclamation of the frequency is necessary, as such an asset is currently being underutilized by its owner. A public auction, he said, should follow—such is the option for the government to take if it wants to further develop the digital economy in the country.
“We should have access to that very scarce resources to further improve our services. This spectrum should be made available to both incumbent and new entrants in the industry,” he said. “We can serve our customers better if we were given access to the 700-MHz frequency band.”
Globe General Counsel Froilan M. Castelo, meanwhile, said such a reallocation would also mean economic dividends to the country. He cited the recent forecast made by Groupe Speciale Mobile (GSMA) on the harmonization of the 700-MHz and 800-MHz bands that highlighted the possible spike in local output in the region if only the governments and their respective private sectors develop key policies in the utilization of assets.
“Estimates on the impact on the GDP across Asia Pacific of the 700-MHz band alone, as allocated to mobile, is a tenfold increase to $1 trillion by 2020,” he said.
Currently, the PLDT Group has the right to operate the 800-MHz, 900-MHz, 1800-MHz and 2,100-MHz bands. Globe, on the other hand, has rights to the 900-MHz, 1,800-MHz and 2,100-MHz bands.
Taking a hold of a portion of the bands would further improve the portfolio of the two companies.
Not asking for all, but for some
The two telcos are not asking the telco regulator to recall all of the 100 MHz of spectrum under the 700-MHz band. What the incumbents are asking is for the government to give them “a fair share” of the asset.
Likewise, there is no collusion between the current telco providers to thwart the entry of a third player, seen to be launched through Bell Telecommunications Philippines Corp.
“The fact of the matter, at least on the information available to us, is that the industry’s perception is that San Miguel only has the 700 MHz as the bandwidth for mobile business. They also have the 900 MHz, 1,800 MHz, 2,300 MHz and 2,600 MHz. In totality, including the 90 MHz on 700 MHz, they have 310 MHz. Smart has 290 MHz, Globe is much lower than us,” PLDT Chairman Manuel V. Pangilinan said. “They have a good spread of spectrum already.”
For her part, Globe Spokesman Yolanda C. Crisanto said her company will continue to urge the government for the reallocation of the spectrums, as this would help her company provide better Internet services to its subscribers.
“Our position is clear: We will continue to pursue the 700-MHz band, and we will continue to urge the government to harmonize the frequency,” she said.
Amir backed the two incumbents up, saying that reallocating the band will help improve the customer experience of all three companies.
“The government should only consider reassigning 700 MHz to Globe or PLDT if the existing LTE network is fully utilized, which will impact users’ experience, and the 700 MHz is not fully utilized by San Miguel. By providing Globe or PLDT additional frequency band at 700 MHz from San Miguel, PLDT and Globe will have higher bandwidth and, hence, improve overall users’ experience,” he said.
However, bidding out the 700 MHz to the public would be a lengthy process.
NTC Deputy Commissioner Edgardo V. Cabarios explained that before the regulator can reassign or recall a frequency, a case must first be filed before the commission.
“They should cite either non-use or nonpayment of spectrum fees. Then, of course, the case will go through the Court of Appeals, if a party wants to contest the decision of the regulator. It’s a long process,” he said.
SMC is expected to sign a deal with Telstra soon, as it debuts in Manila in 2016. It plans to invest roughly $1 billion in a wireless joint venture with the diversified conglomerate.
The Filipino diversified conglomerate is expected to hold 60 percent of the said company— requiring it to invest as much as $1.5 billion—while the remainder will be held by the Australian telecommunications giant.
Telstra is known to be one of the first few telcos in the world to have successfully capitalized on the 700-MHz band.
The Asia Pacific Telecommunity and the International Telecommunication Union (ITU) have recently launched harmonization initiatives for the repurposing of the 700-MHz radio frequency band from broadcast use to international mobile telecommunication use.
In the World Radiocommunication Conference held in Geneva last month, the ITU formally moved to allocate the 700-MHz band—specifically 694 MHz to 790 MHz—to the global mobile industry.
ITU officials specifically stated that this move was taken to help bridge the digital divide, pointing out that the long range of radio over the 700-MHz band will be especially beneficial for underserved, rural areas.
“It goes a long way in enabling bridging of the digital divide, while fully protecting the other services currently operated in the band,” ITU Secretary-General Houlin Zhao was quoted as saying.
For his part, ITU Radiocommunication Bureau Director François Rancy said: “The global harmonization of the 694-MHz to 790-MHz frequency band that has been decided by World Radiocommunication Conference paves the way for manufacturers and mobile operators to offer mobile broadband at an affordable price in currently underserved areas.”
GSMA Chief Regulatory Officer John Giusti said his group commends the vision shown by many countries seeking the flexibility to use the sub-700-MHz band for mobile broadband.
“Not only can legacy television services in the band be delivered far more efficiently using less spectrum, but the reality is that consumer habits are evolving as video content is increasingly accessed via mobile devices. Allowing both mobile and broadcasting in the band gives these governments the ability to respond to the changing needs of their citizens,” he said.
Studies showed that economic benefits from using the 700-MHz band for mobile broadband far exceed those from broadcasting. In a 2012 report, the Boston Consulting Group and the GSMA said that by 2020, the digital dividend for the Asia-Pacific region could be worth almost $1 trillion in additional GDP.
1 comment
and they just started scrambling for this?