By Ashley Erika O. Jose, Reporter
PHILIPPINE telecommunications firms (telcos) are preparing for major shifts within the telco landscape, including margin pressure and evolving business strategies, because the Konektadong Pinoy Act reshapes competition, based on analysts.
“The entry of recent participants and a more intense competitive market dynamic could temper the margins and growth prospects of the present major players,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.
Nevertheless, he noted that incumbent operators retain benefits that would help cushion the impact of heightened competition.
“Industry leaders can leverage their position as incumbent operators to drive expansion and profitability, including brand equity, deep local market knowledge, and financial resources,” he said, adding that some players even have room to enhance operational efficiency.
The Konektadong Pinoy Act, also generally known as the Open Access in Data Transmission Act, lapsed into law on Aug. 24, while its implementing rules and regulations (IRR) were signed on Nov. 5. The law removed the requirement for a legislative franchise for data transmission players, easing market entry, and promoting infrastructure sharing.
John Paolo R. Rivera, a senior research fellow on the Philippine Institute for Development Studies, said the law is poised to significantly alter the competitive landscape.
“As a ‘gamechanger’ law, I expect it to spur fresh investment within the country’s digital and connectivity sector by removing the necessity for a legislative franchise and easing entry barriers for data-transmission players, thus opening the market to more competition,” he said.
He added that mandated infrastructure sharing could lower costs and encourage network expansion.
“By mandating infrastructure sharing and specializing in unserved and underserved areas, it reduces costs and encourages each domestic and foreign investors to expand broadband, fiber, and satellite networks,” he said.
Information and Communications Technology Secretary Henry Rhoel R. Aguda said several foreign players have already expressed interest in entering the Philippine market.
“Thus far, seven foreign data transmission industry participants have already signified their interests in entering the telecom industry,” Mr. Aguda said, noting that every is anticipated to take a position about $1.5 billion.
Under the IRR, data transmission industry participants (DTIPs) can be allowed to construct, install, establish, maintain, lease, or own networks and facilities and not using a legislative franchise, while also promoting asset sharing between incumbents and recent entrants.
The Department of Information and Communications Technology (DICT) will function the first policy and coordinating body for the law’s implementation, Mr. Aguda said, adding that the agency may even issue guidelines on cybersecurity standards aligned with each DTIP’s risk profile.
“The State shall promote data transmission infrastructure sharing and co-location to eliminate the uneconomic duplication of those facilities in the information transmission industry,” based on the IRR.
INCUMBENT CONCERNS
PLDT Inc. Chairman Manuel V. Pangilinan said the law’s implementing rules unfairly drawback existing operators.
“I believe [Konektadong Pinoy] has added to our concerns. Eventually, what does the bill and the IRR hope to perform?” he said.
He criticized provisions requiring incumbents to share infrastructure with recent entrants. “They’re going to use our infrastructure, and their claim is that the prevailing infrastructure is insufficient. Yet they will use inadequate infrastructure. How does that improve the service?” he said.
PLDT Chief Legal Counsel Joan de Venecia-Fabul said the corporate is studying its options. “We usually are not yet ready to say what legal remedies, but we’re actively studying all [options] because ultimately we would like to support the goal of the President, especially for greater connectivity,” she said.
Meanwhile, Converge Information and Communications Technology Solutions, Inc. views the law as a catalyst for expanding its wholesale business.
“The Konektadong Pinoy Law helps competition deepen, which opens opportunities for faster rollout to communities,” Converge Chief Executive Officer Dennis Anthony H. Uy said.
He said infrastructure sharing could reduce capital expenditures (capex) for brand spanking new operators while supporting Converge’s expansion.
“Infrastructure doesn’t come overnight, which is why we’re ready for Konektadong Pinoy’s infrastructure sharing provisions for each backbone and distribution networks,” Mr. Uy said.
“In other countries, infrastructure sharing has proven to be helpful since it reduces capex for brand spanking new operators. It’s a win-win situation for us, and we’re ready for Konektadong Pinoy implementation,” he added.
Globe Telecom, Inc. said it is continuous to innovate as competition intensifies.
“I believe the DNA of Globe is about innovation and innovation actually addresses the pain points of the purchasers,” Globe Chief Industrial Officer Darius R. Delgado said.
“Within the prepaid or fiber space, we might just proceed the formula that works. We are going to proceed developing things for them, then the demand will come,” he added.
DITO Telecommunity Corp. expressed support for the law’s objectives, particularly expanding access in far-flung areas.
“While you take a look at the noble objectives of the [Konektadong Pinoy], we’re fully supportive of that,” said DITO Telecommunity President and Chief Executive Officer Ernesto R. Alberto.
“Who doesn’t wish to democratize access to the web, broadband to a wider base?” he added.
DITO Chief Revenue Officer Adel A. Tamano said regulations should remain flexible for brand spanking new entrants.
“Recent players shouldn’t be subjected to the identical level of necessities currently imposed on incumbent operators,” he said.
REGULATORY AND MARKET IMPACT
For Samuel V. Jacoba, founding president of the National Association of Data Protection Officers of the Philippines, the IRR strikes a balance by imposing cybersecurity requirements.
“Inside two years from registration or authorization, DTIPs shall secure a cybersecurity certification or cybersecurity compliance from the DICT Cybersecurity Bureau,” the IRR said.
Mr. Jacoba said the timeline is cheap.
“Two years can be enough time for brand spanking new operators to determine baseline cybersecurity compliance anchored on global standards,” he said, adding that incumbents should already meet such requirements.
Digital Pinoys national campaigner Ronald B. Gustilo said the law could broaden the market base.
“When more Filipinos gain reliable access to the web, the demand for digital services, e-commerce, and financial technology naturally rises,” he said.
“This creates a multiplier effect across industries,” he added.
Mr. Aguda said the DICT expects web prices to say no and repair quality to enhance as competition increases.
“We do anticipate increased investment within the connectivity sector in consequence of the Konektadong Pinoy law. It provides predictability and policy direction — two major aspects that investors look into before committing capital,” he said.
The law offers tax incentives, including income tax holidays and value-added tax exemptions. Tower firms’ operating licenses have been prolonged to fifteen years from five years at no additional cost.
DICT, in partnership with the Australian government, has accomplished a real-time mapping of all fiber optic lines nationwide, which can guide efforts to expand connectivity to 100% of households.
Lower web prices and improved service quality are expected as recent players enter the market, especially in underserved and far-flung areas.
Despite being a national priority since 2022, the Philippines’ digital transformation has lagged because of weak broadband infrastructure and restrictive policies, based on a July World Bank report. Only 28% of households had fixed broadband access in 2023, while the country had greater than half of Southeast Asia’s unconnected mobile broadband users.