In November 2018, the Philippine government lead by President Duterte determined the prospective third major telecommunications provider, DITO Telecommunications, by granting a 25-year lease meant to compete with the existing duopoly of PLDT, Inc.–Smart Communications and Globe Telecom. Dito Telecommunications is a consortium led by businessman Dennis Uy, and China Telecommunications Corporation, a parent company of China Telecom. China Telecom is one of the largest players in the Chinese Telecommunications market a Fortune Global 500 company and the world’s largest broadband internet network with nearly a billion users. China Telecom will own 40% of Dito and will be providing most of the technology and expertise to make the network function properly.
Dito is expected to begin its commercial operations beginning in March 2021. This is to make sure that they comply with the government-approved number to cover 37% of the country's population, the third telco player said through a disclosure. Dito Telecom paid a 25.7-billion Peso performance bond to the Philippine government as it committed to provide internet service with a speed of 200 MBPS to a third of the population before the end of its first year of operation. By the end of its five-year commitment, Dito promised to cover 84% of the Philippines and offer a minimum average speed of at least 55 Mbps. Should Dito Telecom not reach this milestone the government will have the right to claim the bond and revoke the company’s license to operate.
Why has it taken so long for a third telco to enter the Philippine market?
“Aside from the billions of pesos poured in by the Telco’s for infrastructure, non-telco companies that were instrumental in putting up thousands of towers and thousands of kilometers of fiber optic cables in countries like Vietnam, Cambodia, Malaysia, and Thailand, encountered so much red tape that is drastically slowing them down here in the Philippines. The local governments of the Philippines view the telco industry as a source of revenue; therefore, there is an excess amount of paperwork needed to support the growth and modernization of the country’s current telecommunications system. It is not a lack of investment that is plaguing the Philippine Telco industry as there is a lot of private capital that is waiting to be deployed, but rather too much bureaucracy."
To speed up the installation of telecommunication infrastructure and catch up with our neighbors, the Philippine government simply needs to get rid of the red tape. This will cascade throughout the economy and provide jobs and new business models that will perk up our economy in this pandemic crisis. It will provide a badly needed service that will make the lives of our citizens more comfortable and progressive, that is, fast and low-cost connectivity to the internet in a new norm.
Smart Phones
“But when smartphones appeared in 2012, and internet content was replacing SMS as the killer application, these red tapes began to be felt when our mobile Telco’s started overhauling their networks to accommodate the 3G to 4G technology. More towers are needed to utilize these new technologies because internet content requires real-time connectivity like voice services."
Other countries using voice services since the roll-out 2G technology already had the necessary amount of cell towers. However, the Philippines was lacking for services that require broadband and real-time connectivity and never was able to catch up.
Conclusion
The goal of the current administration is to solve this problem by introducing a third Telco that could compete with the already established Globe and Smart duo. By increasing competition, the goal is to increase the number of cell towers and to allow the three telcos to gain market share by improving performance and bring more Filipinos online using data plans.
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