Mobile soars in the Philippines as fixed-line falters

Wednesday, 01 September 2010 14:31  |  James Barton

 A new report from Research and Markets details the growth and popularity of mobile services in the Philippines, examining why mobile has eclipsed fixed-line across the archipelago.

Despite considerable effort over the last decade or so, the government of the Philippines, working with the country's telecom operators, has not succeeded in its efforts to extend the basic fixed-line telephone network to reach the wider population. Fixed-line teledensity stands at less than 5%; only a little more than half of all Philippine towns and cities have a telephone service. A fixed-line teledensity of 12% by 2002 was the original target set for the government as part of its Service Area Scheme. The plan fell well short of target and since then fixed-line penetration has remained relatively static.

The country's mobile market has been a totally different story. No doubt contributing to the problems experienced in the fixed-line sector, the Philippines has witnessed a strong focus on and a rapid take-up of mobile services. Mobile penetration has grown quickly to reach the significant 80% milestone, 73 million subscribers by early 2009, up from just 6 million in 2000.

The continued growth has confounded the market; there have been times when the mobile sector in the Philippines looked to have reached a plateau, but then it found a new way to grow. Of particular note in this mobile market has been the remarkably high national usage of SMS. The country is ranked number one globally in SMS usage. The other chief characteristic is the high level of prepaid users (more than 95%). The mobile phone has certainly captured the imagination of the population; not surprisingly, mobiles have well and truly overwhelmed fixed-line services.

A large proportion of the recent growth in mobiles has also been coming from outside the main city of Manila, with the big operators, Globe and Smart, vigorously competing for lower income segments of the population by offering a range of cheap prepaid products. And whilst the big two operators battle it out, the third ranked operator, Digitel, has been quietly building up its own subscriber base and grabbing market share.

Further growth in the mobile market will depend on the pricing and marketing strategies of the operators, and, most importantly in the wake of the 2008 global downturn, the growth level in the Philippine economy. The view is that growth will ease over the next year or two. There is also a lot of interest in the take up rate for embryonic 3G services.

The country has been lagging badly in its roll-out of Internet and broadband services. The year 2006 saw what was looking like the start of a significant surge in broadband subscriber numbers. This continued through 2007/08 and was looking to maintain the momentum in 2009. Despite the fresh new round of growth, overall broadband penetration remains relatively low; there were only two broadband services for every 100 people in the country early in 2009.

The Philippine telecom and IT market continues to reflect considerable optimism despite the vicissitudes of the local market and the questions hanging over the global economy; significantly, the sector has been contributing more than 10% to the countrys GDP, having obviously been given a massive boost by the mobile segment over the last decade.

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