In the first 9 months of 2013, the number of broadband subscribers in the Philippines increased by 6% to 5.5 million with the faster growth coming from fixed, especially from customers subscribing to DSL and entry-level fibre-based products. Despite this growth, only a quarter of the total households in the entire Philippine archipelago have access to broadband. Fixed broadband penetration rate is still very low at 7.1% while mobile broadband is higher at 18.2%. With this environment, the country trails behind some of its Southeast Asian neighbours, such as Malaysia, with fixed and mobile broadband market at almost 70% per household at end-2013 – but also Thailand and Vietnam, whose fixed broadband penetration broke through the 20% level already. It can be said that limited geographic availability and low competition are contributing to this low penetration rate. However, with no third competitor that is looming in the horizon, we expect that in the next three to five years, PLDT and Globe will continue to dominate the market, with no major investment undertakings to aggressively expand the DSL network, while there are some plans for mobile and fibre. Despite the given environment, there are some interesting growth areas for the future, in particular in the SMEs and SoHO segments as a result of the combined effect of multiple factors.
The BPO (Business Processes Outsourcing) industry continues to expand in the Philippines even into the other regions outside of Metro Manila with a concrete potential to create more jobs and increase the purchasing power of people in these areas. Additionally, the increase in entrepreneurial ventures in the major cities is contributing to create a growing number of small-to-medium enterprises, which need better and reliable broadband connections. In parallel, the number of SoHos or work-at-home professionals is also increasing thanks to a number of outsourced online activities (teaching English as a Second Language, writing/editing and different IT tasks accomplished remotely), which is slowly but steadily increasing the demand for high-tiered broadband services.
With these prospects, broadband operators in the Philippines will, eventually, have to engage in expanding and upgrading the networks in order to meet this growing demand, still dissatisfied by sporadic and generally unstable LTE coverage or high-tiered ADSL connection with still significant latency and jitter issues. As in many other markets, competition, unbundling and stringent regulation can concretely contribute to change such an environment very quickly.