Interview: Gamaliel Asis Cordoba
How can quality of service and coverage by telecoms operators be ensured?
GAMALIEL ASIS CORDOBA: The Public Service Act from 1936 is an old law that inflicts minimal penalties for violations in quality service. To compensate, the National Telecommunications Commission (NTC) currently monitors telecoms monthly and publishes results in the media on a quarterly basis. Given that most telecoms are traded in the stock market, once investors see problems with the network or quality of service in the media, share prices drop. That is our strategy at present: transparency in the quality of service, such as the number of dropped calls, clarity of the voice and sound, and other indicators. Telecoms improve their services because of competition with each other, not because of penalties.
What are the challenges that new entrants into the telecoms sector face?
CORDOBA: A reason why it takes time for new providers to get a foothold in the domestic market is because existing users are reluctant to change their numbers, holding off switching to new providers even if they offer better quality. That is why the NTC is pushing for a number portability law in Congress, which would require the telecom companies to have a central clearing house for number portability, so people would not have to change their phone numbers.
Additionally, unlike other countries where the government puts up the network and the private sector leases it or uses it, in the Philippines the private sector makes all the investments. That creates a significant barrier to entry in a country where the geography is composed of so many islands. As a result, it is difficult for companies to invest in places that are not very profitable because they are difficult to access.
Finally, another significant challenge for new players is the interconnection cost for voice. Currently, interconnection cost is P4 ($0.10), whereas in most countries the cost is P1.5 ($0.04) or P2 ($0.05). We continue to work to push interconnection costs down.
Which technologies are prioritised to enhance the quality and reliability of network coverage?
CORDOBA: The NTC is neutral, enabling telecoms or investors to choose the technology they want so that they can study which is more efficient and best suited for them and their market. Philippine Long Distance Telephone Company, for example, is already connecting fibre-optic lines to homes for high-speed internet. The problem is that the price gravitates around P3000 ($72). What telecoms will do is to first invest in the market that can afford the new technology and after a while, once the equipment prices decline as the number of subscribers increases, they will move into new areas.
The decrease in price of smartphones, with the cheapest now around P2000 ($48), also helps consumers as they will now start transferring to the new technology and increase their connectivity. For instance, the latest entrant to the market, ABS-CBN, will act as a mobile virtual network operator offering both voice and text, with the advantage of not only using mobile for communication but for content. Given that more people are using smartphones, the average revenue per user is decreasing in voice and text services, leading telecoms to concentrate on broadband.
How can the NTC facilitate interconnection and enhance access to telecoms services?
CORDOBA: We reduced the interconnection cost for text from P0.35 ($0.01) to P0.15 ($0.003) to help lower-income citizens, who use text more than voice. We are also looking to do the same for voice because it is also a barrier to entry for new players and we want to make the industry more competitive.
The NTC is currently focused on developing internet connectivity programmes in local high schools and grade schools with the support of the private sector. The goal is to establish networks for students during school hours, while at night and on weekends students can use internet cafes. Despite NTC efforts, it is the private sector that is driving the push for connectivity.
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