Telecommunications in the Philippines


Telecommunications in the Philippines are well-developed due to the presence of modern infrastructure facilities. The industry was deregulated in 1995 when President Fidel Ramos signed Republic Act 7925. This law opened the sector to more private players and improved the provision of telecom services are better and fairer rates. The industry was deregulated in 1995, leading to the creation of many telecommunication service providers for mobile, fixed-line, Internet and other services.

History

Pre-reform

Colonial period

Two private companies offered telecom services namely Eastern Extension Australasia and China Telegraph Company which is a subsidiary of Britain's Cable and Wireless. The Spanish authorizes Eastern Extension to construct and operate the first submarine cable linking the Philippines and Hong Kong.
The Philippine Islands Telephone and Telegraph Company is American-owned which started operations in 1905 in Metro Manila. In 1928, merged with Cebu, Panay, and Negros Telephone and Telegraph companies to form the Philippine Long Distance Telephone Company. In 1932, the colonial Philippines congress granted PLDT a 50-year franchise to operate a national telephone system.
The establishment of the Public Service Commission to regulate the industry as well as other utilities, meanwhile the Bureau of Posts was created to operate telegraph services nationwide.

Post-independence, 1946–1969

Initially, PLDT was managed by Americans, including the American company General Telephone and Electric Corporation as a major stockholder. However in March 1967, GTE disposed of their 28% controlling interest in PLDT. Which is why in November 7, 1967, the Philippines Telecommunications Investment Corporation was registered to buy GTE's controlling interest. Ramon Cojuangco, who was part of one of the most influential clans in Philippine history, was a main incorporator. PTIC formally took control of PLDT on January 1, 1968. This led to the takeover of PLDT by the Filipinos, becoming a dominant player in telecommunications because of its authorization to operate a national network. Company officials however dispute that they were a monopoly because of the existence of a government telephone system, and over 60 provincial companies operating in the country. The Bureau of Telecommunications handled the government telephone system, which by 1975 had 34,643 operational telephone lines, or about 10.2% of the total telephone capacity of the country.
There were also four major companies with license for international data communication.
In 1976, the Philippine Association of Private Telephone Companies was organized to protect the interest of small telephone companies. By 1975, around 60 small telephone companies provided 11.7% of the total telephone capacity at the time. These small companies were dependent on PLDT to place inter-provincial and overseas calls, in which PLDT used this interconnection to their advantage.
PLDT could allow, slow down, or deny interconnection at will. Some companies which found it financially impossible to operate without interconnection sold their companies to PLDT. They also dictated the interconnection access rates, which meant that PLDT cornered most telecommunications revenues. Eventually, by 1991, PLDT had 94% of the total lines.

Martial law developments

Marcos' Presidential Decree 217 in 1973 mandated all PLDT subscribers to invest in PLDT to raise its equity and finance its expansion program. This law, known as the Subscribers Investment Plan required all PLDT subscribers to buy non-voting shares in the company. Mandatory investors held about 85% of the total company equity shares but had no actual power in controlling the company.
PLDT also had access to international loans from the World Bank. These loans assisted PLDT's dominance, and PLDT became the single largest private recipient of foreign loans to the Philippines.
In 1981, a National Telecommunications Development Plan was released. A section of the plan recommended the integration of all private telephone companies under one monopoly. Marcos issued a presidential directive to Retelco, PLDT's main competitor in Metro Manila, to merge with PLDT. The merger was met with objection by the owners of Retelco, but the merger was continued because Marcos threatened to withdraw the companies' franchises.

Developments under Aquino

The Aquino government's policy was two-pronged: it was to increase public spending in underserved or unserved municipalities, and allow entry of new players. In 1987, the DOTC adopted a series of policies aimed at rationalizing the development of the industry. This led to the reversal of Marcos' push towards the integration of the telecommunications system under a monopoly. It also affirmed that development of the national telcos needs an introduction of competition and regulated entry into the market. During the end of Cory’s therm however, telecommunications was poor but PLDT prevailed with their tactics in maintaining their monopoly.

Reform

Liberalization

Under the Ramos administration, a coalition named the Movement for Reliable and Efficient Phone System was formed with the goal of liberalizing the telecommunications industry. Until the mid-1990s, MORE Phones continued to pressure PLDT to be more transparent and accountable. Ricardo Manapat, who wrote about the illegitimate activities of the Marcoses and their cronies, wrote a follow-up report entitled "Wrong Number" the PLDT Telephone Monopoly." The report revealed PLDT's questionable management practices as well as how the Cojuangco family controlled the company, despite owning only 1.6% of the total stock.
As a countermeasure against PLDT's earlier attempts at refusing interconnection with its competitors, President Ramos signed an Executive Order 59 on 24 February 1993. EO 59 required interconnection among all authorized telecommunications companies, in order for subscribers on one operator to reach the subscribers of another. In the Senate, anti-monopoly bills were filed in the House of Representatives and it was reported that PLDT was the main target of these bills. The Congress had already approved nine telecom franchise, their applications pending at the NTC for provisional authority to operate international, cellular, or value-added services. This also led to the Congress controlling who could obtain a franchise. But PLDT would successfully block new entrants to the industry by filing various legal challenges.
In 1994, the NTC and several other industry players devised the Service Area Scheme This scheme was in response to imbalanced demand of telecom companies in urban areas over rural areas.The SAS attempted to allow companies to earn profits but also ensure that part of those profits would be channeled to serve less profitable areas. Companies were allocated both profitable and unprofitable areas to ensure operational viability and the provision of rural telephony.

New players

Globe Telecom
was a joint venture between Ayala Corporation and Singapore Telecommunications Limited. Globe was the first foreign company to be granted entry into the Philippine’s liberalized market. In 1994, Globe launched its digital cellular services, pioneering the use of Global System for Mobile Communications Technology. In fact, Globe popularized the short messaging service through adding it for free with their basic services.
When the 1997 financial crisis stuck, there were two consolidations that happened in the industry. In June 2001, the Globe-Islacom Merger was completed. This merger resulted to providing improved services and a wider coverage for the two companies subscribers.
Smart Communications
was the first company to enter the liberalised market. In September 1999, PLDT purchased Smart Communications absorbing it as a 100-percent owned subsidiary. Smart was financially supported by First Pacific. This partnership resulted to a rapid construction of Smart’s network and more importantly, the subsidization of handsets. Smart was also authorised to offer both international gateway and cellular telephone services. At the end of 2005, Smart became the largest cellular operator in the Philippines with over 15.4 million subscribers.

Facts and figures

Telephones

;Telephones – main lines in use:

Mobile

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Mobile prefixes used

Mobile Numbers are coded base on network providers ranging from 0800 to 0999, and international code for Philippines replace the zero to make an international call to the Philippines that would make it +63800 to +63999.

Mobile market

Considered as one of the most profitable industries, telecoms have emerged in the country due to it becoming a necessity and its product life cycle. The mobile market of the Philippines has been run by the duopoly of Smart together with Globe Telecom. The two companies have a very tight hold on the industry but they continue to fight for more subscribers and they are in a race to introduce new services. However, both still lost subscribers during 2017 as the market went through consolidation.
Although based in the Philippines, there is foreign ownership in PLDT and Globe —resulting a duopoly in the telecom industry. Anthony Salim is one of them, which is the biggest controlling stockholder of PLDT through Hong Kong based First Pacific Company Limited, which led him to establish and expand in the Philippines as a conglomerate.
It is expected that for the next five years to 2023, the growth of mobile subscribers will be low due to a highly mature and highly competitive market. There will be a movement from 4G to 5G services for faster browsing.
The mobile average revenue per user levels have been decreasing in the Philippines due to the visible competition in the mobile industry. In order to grab market share, aggressive price competition is done by these operators. There has been a drastic increase in mobile broadband penetration, as well as an increase of wireless broadband users over the past five years. It is predicted that over the next five years will have a strong growth. On the other hand, it could decline and slow down as the market matures. Currently, the Philippines is preparing from the move from 4G to 5G. A “5G technolab” is currently in the works in PLDT. Meanwhile, Globe Telecom announced its plans to release 5G within the middle of 2019.

SMS

services are very common in the Philippines, from news briefs to multimedia services. Cellular mobile services began in the country only in 1991. In May 2000, the number of cellular phone subscribers exceeded the number of fixed line subscribers. This is because of the spotty telephone service and high cost of fixed line subscriptions. It was also seen how SMS is affordable. This led to the Philippines has become the global capital of text messaging, which was a feature of the mobile phone that was ignored by other countries. Meanwhile in 2001, the popularity of the text messaging in the Philippines has created a subculture called Generation Txt, where teenagers and young mobile professionals have developed their own language in text.

Radio

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Radios

Television

Internet

List of Internet Service Providers (ISPs) in the Philippines (as of 2020, incomplete)

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Government laws affecting telecommunications

Importance of telecommunications to the Philippines

A lot of Filipinos work outside of their country and they keep contact with their families back home using calling cards to the Philippines because those are cheaper than direct calling. According to the TNS Digital Life Study of 2012, about 81% of urban Filipinos use the internet to keep in touch with their relatives abroad. 90% of overseas Filipino workers belong to social media networking sites such as Facebook wherein they. Some people use e-mail or instant messaging, but the preferred method is still the phone. The use of a mobile phone for offers the cheapest way overseas Filipino workers to send money or remittances to their families back in the Philippines.
Furthermore, in a study done in 2015 by the US-based Pew Research Center, 88% of Filipinos consider the internet good for education. The survey also notes that 76% of Filipinos see the internet as good for the maintenance of personal relationships. 73% believe that the internet is good for the economy, especially with the boom of online or electronic commerce.
Apart from that, telecommunications is used in the Philippine establishments. According to the 2015 Survey on Information and Communication Technology, 61.9% of establishments have Local Area Network. 13.7% of establishments utilize the internet for their business. This includes e-commerce. 17.6% of establishments conduct business transactions using the mobile phone.