Home Top News PHL fiber broadband adoption ‘extremely challenging’

PHL fiber broadband adoption ‘extremely challenging’

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By Luisa Maria Jacinta C. Jocson, Reporter

THE WIDER ADOPTION of fiber broadband in the Philippines remains “extremely challenging,” but that may soon improve if the government successfully implements a project to roll out fiber-optic infrastructure in last-mile areas, Fitch Solutions’ unit BMI said.

In a report, BMI said the Philippine Digital Infrastructure Project (PDIP), which was recently approved by the National Economic and Development Authority (NEDA) Board, will “catalyze further foreign investment in the Philippines’ wider information and communications technology (ICT) ecosystem.”

“Adoption of fiber broadband at the household level remains extremely challenging in the Philippines, and the PDIP may only provide marginal upsides to our outlook,” it said.

BMI forecasts expect over 1.83 million FTTx (Fiber to the x) subscriptions in 2033, for a penetration rate of 1.4 every 100 people. This is higher than its 2024 FTTx forecast of 1.58 million subscribers with a penetration rate of 1.3 per 100 people.

“We believe that obstacles to consistent and widespread fiber uptake remain the prices of packages in last-mile areas, particularly stemming from the elevated costs of rollout that are further increased by the Philippines’ archipelagic configuration,” it said.

BMI said its forecasts reflect a consistent uptake for fiber broadband among households in metro and suburban areas.

“Execution and project management will be key for the success of the PDIP to boost stronger fiber uptake among Philippine-based households. By extensively co-financing last-mile area rollout, wholesale network providers and internet service providers (ISPs) may be encouraged to further decrease prices on fiber bundles though at the expense of average revenue per user (ARPU) figures,” it said.

BMI said fiber broadband providers that also own the infrastructure are tweaking their strategies to boost uptake.

“Consumer interest in fiber is evident and grounded in sizable mobile data traffic increases,” it said.

For example, it cited Globe Telecom, Inc.’s mobile data traffic which grew to 1,600 exabytes (EB) in the fourth quarter of 2023 from 836 EB in the first quarter of 2021.

“That said, consumers have shown that they are not immediately able to (consistently) buy in long-term contracts with prices around P1,500 ($25.5).”

BMI noted that there have been efforts to introduce low-cost fiber offerings, such as from Globe, PLDT Inc., and Converge ICT Solutions, Inc.

“Renewed government efforts to fiberize the Philippines’ last-mile areas will be beneficial for the players with a large risk-seeking stance. Regardless, wider digital transformation ambitions and the attractiveness of the Philippines’ ICT market are set to benefit from a stronger nationwide backbone and last-mile network density.”

Meanwhile, National Campaigner of digital advocacy group Digital Pinoys Ronald B. Gustilo said that the PDIP will help hasten the government’s efforts to provide internet connection to disadvantaged areas.

“We are hoping that this will also pave the way for the decrease in internet rates and the improvement of the quality of connectivity services,” he said in a Viber message.

Sam Jacoba, founding president of the National Association of Data Protection Officers of the Philippines, said that upgrading the country’s digital infrastructure is the “foundation for the country to remain competitive in the global digital economy.”

“It is crucial that the investments will strategically target areas or segments in the country that will bolster digital economic activities, while bridging the digital divide,” he said in a Viber message.

Mr. Jacoba said there must also be a focus on digital skills training and enablement. Digital content creation initiatives should also be targeted to growth areas such as artificial intelligence, he said.

“Hopefully, the digital economic impact of this loan-funded project will eventually pay for itself through the new digital businesses that it will create,” he added.

Mr. Gustilo also called for the strict implementation of Executive Order No. 32, which streamlines the processes for the construction of telecommunications and internet infrastructure. This would cut red tape and ensure the delivery of internet services to geographically isolated and disadvantaged areas, he added.

The World Bank earlier reported that household penetration for fixed broadband in the Philippines stood at 33% in 2022.

The cost of fixed broadband was more than four times more expensive than Malaysia and Vietnam and more than double the Southeast Asian average, it added.

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