Philippine authorities target increasing ICT speed, coverage and competitiveness


The Philippines’ ICT industry is embarking on an exciting period as a number of reforms and initiatives take effect and Congress debates legislation for further market liberalisation. Weak competition and the archipelago’s sprawling geography means there is indeed much room for improvement: the business community has long noted the failure of the ICT industry to keep pace with other countries in the region in terms of the scale and quality of its services. At the forefront of developments in the industry is the entrance of a third telecoms provider. While this is threatening the duopoly held by incumbents Globe Telecom and PLDT, it is expected to increase innovation, speed and coverage (see analysis). Telecoms infrastructure improvements, combined with a number of legal and regulatory changes designed to drive competition and improve the provision of ICT services, are also opening the door to lucrative opportunities for domestic and overseas players.

By the Numbers

The Department of Information and Communications Technology (DICT), which was formed in 2016 as a merger of five state departments, both directs and implements ICT policy. Under the remit of the DICT is the National Telecommunications Commission (NTC), which is tasked with carrying out sector regulation. The NTC enforces laws, allocates spectrum, and issues licences and permits.

According to the Philippine Statistics Authority (PSA), investment in the ICT sector rose by 12.7% in 2018 to P24bn ($446.4m), driven by a 39% expansion in IT services. Investments in other, smaller subsectors, such as information and communication, manufacturing and trade, collectively declined by 45% from P6.7bn ($124.6m) to P3.7bn ($68.8m). Investment from abroad accounted for 94% of IT services spending that year, bringing total foreign direct investment (FDI) in ICT to P22.6bn ($420.4m), up 28.4% on 2017. FDI is expected in other areas as well, such as internet businesses, which became eligible for 100% foreign ownership in October 2018 after President Rodrigo Duterte issued an executive order removing five activities from the list of areas limited or closed to foreign involvement.

Data from the International Telecommunication Union (ITU), a UN agency, shows mobile subscriptions in the Philippines peaking at 120.1m in 2016 before falling to 115.8m in 2017, while fixed-line phone subscriptions increased from a recent low of 3.1m in 2014 to 4.2m in 2017, the last year for which information is available. Mobile cellular penetration stood at 110.4% in 2017, compared to 4% for fixed-phone subscriptions. In 2019 internet users in the country rose by 13% to 76m, representing a penetration rate of 71%, according to the report “Digital 2019: the Philippines” by We Are Social and Hootsuite. Furthermore, despite challenges with service coverage and speed, the report states that Filipinos spend more time on the internet than any other nationality, at an average of 10 hours per day.

Pending Legislation

Foreign investors are closely watching a number of developments, including amendments to the Public Service Act, which seek to remove certain sectors from a list of public utilities where foreign ownership is limited to 40%. If passed the bill would open the door to an unprecedented level of foreign investment. As of August 2019 three of the four versions of the proposed amendments specified removing water, sewage, and the distribution and transmission of electricity from the list, while one version also included the removal of hydrocarbons, transport, broadcasting, telecoms, and electricity generation and supply.

Debate focuses on the national security implications of allowing foreign players to wholly own telecoms infrastructure, especially when it comes to providers from China. China’s growing influence in the region has concerned many economists and politicians, and the Philippines has had ongoing disputes with China over ownership of islands in the South China Sea. This backdrop casts doubt as to whether the legislation will become law in the summer of 2019. However, the success of candidates aligned with President Duterte in the May 2019 mid-term elections resulted in an Upper House that is supportive of his agenda to accelerate the process of reform and liberalisation.

According to Edgardo V Cabarios, deputy commissioner of the NTC, the constitutionality of the law may be challenged in the Supreme Court if the bill is passed. “Anybody can go to the Supreme Court and question the law’s constitutionality, so it may take quite some time before it can be considered final,” he told OBG. Cabarios said the same is true for another landmark piece of legislation for the ICT industry, the Open Access in Data Transmission Act, which is also pending Senate approval. The act aims to level the playing field for telecommunications and data services by opening the industry to foreign competition and promoting resource sharing. It would allow any entity to operate ICT networks without obtaining a franchise.

DICT Initiatives

Other notable legislation includes the ONE Philippines Act, which became law in February 2019. It is crafted to improve wireless communications nationwide, particularly in rural areas, and reduce the digital divide by having the DICT oversee the development of ICT centres in each of the Philippines’ 81 provinces. The legislation supports the Digital Transformation Strategy 2022, which aims to develop an effective e-government system that fosters citizen engagement. A key tenet of the strategy was the creation of the National Government Portal, a one-stop shop for online government services for consumers, businesses and other state departments that became available in June 2017. Moreover, construction work is under way on a national government data centre in Subic that will host data from regional and national agencies, while doubling as the touchpoint for regions that do not yet have their own data centre.

The DICT is also tasked with implementing the Free Wi-Fi Internet Access in Public Places project, under which the services of the winning telecoms providers are acquired for the installation of internet connectivity in over 18,000 public places across the country. However, Arlene A Romasanta, officer in charge/director of the Corporate Planning and Management Service at the DICT, told OBG that less than 3000 connection points had been brought on-line as of April 2019. Hurdles include the small footprint of telecoms providers in rural areas and difficulty obtaining the necessary permits. The process is further inhibited by limited manpower in the DICT’s eight regional offices. Achieving this and other policy goals will therefore require significant upskilling of the national ICT workforce, Romasanta said, adding that the department is working on a human resources development plan for its internal workforce as well as national training programmes, led by its national training centre in Valenzuela.

“To develop the local ICT industry, the priority is to invest in human capital. Human capital development should be promoted through educational programmes that provide specific training based on the requirements and needs of the industry,” she said.

Data Security

Security is another pillar of a healthy ICT environment. As such, the government has strengthened its cybersecurity awareness and defence, with the National Privacy Commission asking for assistance from white-hat, or benevolent, hackers to advise on securing state-sponsored projects.

Furthermore, the government is establishing a cybersecurity operations centre in Quezon City to help meet targets set by the $10m first phase of the DICT’s National Cybersecurity Plan 2022, which also mandates the creation of a National Computer Emergency Response Team. Meanwhile, phase two allocates $40m to increase the number of state agencies protected by the centre from 10 to 50. Secure data will assist with the rollout of new national ID cards under the Philippine ID System (PhilSys), which aims to bring onboard all 107.4m Filipinos by 2023. Led by the PSA, the project will undergo a proof of concept in 2019 in partnership with the Philippine Postal Corporation. This process will see 1m citizens register and receive the new ID card, before enrolling 25m people each year beginning in 2020. PhilSys aims to issue standardised ID cards that will make citizens’ interactions with government and the private sector easier; however, the scheme has attracted criticism from privacy campaigners still reeling from a 2016 cyberattack on the Commission on Elections that resulted in a massive data breach that affected 55m voters. In contrast, Simoun Ung, president and CEO of e-money firm OmniPay, believes the vulnerabilities lie elsewhere. “Based on the EU’s General Data Protection Regulation, the current data protection laws are fine – the problem lies in the lack of enforcement and prosecution,” he told OBG.

Broadband Plan

Perhaps the most important force underpinning the Philippines’ drive to become a digital nation is the DICT’s National Broadband Plan (NBP). According to the October 2018 report “From Analog to Digital: Philippine Policy and Emerging Internet Technologies” published by the Asia Foundation and the Better Broadband Alliance, fixed broadband services in the country remain expensive, costing 7.1% of GNI per capita per month. This figure is well in excess of the 5% affordability threshold recommended by the ITU.

The NBP was released in mid-2017 and its success hinges on a November 2017 deal with Facebook to construct and operate a submarine fibre-optic cable linking the US with Hong Kong via two landing stations on the east and west coasts of Luzon, known as the Luzon Bypass. This will feed into the Philippines’ existing fibre-optic infrastructure, facilitating a data transfer speed of 2 Tbps. In June 2018 the DICT signed a deal with the National Grid Corporation of the Philippines and the National Transmission Corporation for the government to use over 6000 km of their idle, or dark, fibre-optic cable. During the last two months of the year, the DICT was testing the backbone fibre-optic infrastructure in preparation for connection to the dark network during 2019. Furthermore, the DICT has allocated a 2019 budget of P2bn ($37.2m) for the NBP. The success of the NBP is essential to fulfilling government plans across a range of sectors, including health care. “We cannot deliver the telemedicine programmes we are working on with our clients because not all hospitals are connected or have digital records,” Maria Cristina Coronel, president of IT and business process outsourcing (BPO) firm Pointwest Technologies, told OBG.


Under a GSM cellular infrastructure, Globe Telecom and PLDT are the country’s two major mobile carriers, with the latter maintaining three brands: Smart Communications, Sun Cellular and Talk ‘N Text. The mobile experience is improving for Filipino consumers as the two incumbents up their game ahead of the entrance of a third provider (see analysis). According to the March 2019 “Philippines Mobile Network Experience” report by OpenSignal, users of both Globe and Smart can now find a 4G LTE connection more than 70% of the time, up from less than 55% in 2017. However, the Philippines still ranks low on many ICT measures. For example, the country recorded the poorest mobile video experience out of the 69 countries in OpenSignal’s September 2018 “State of Mobile Video” report.

While data on smartphone penetration varies, the “Digital 2019: the Philippines” report estimates that 65% of Filipino adults use such a device. Smartphone sales rose by 4% in 2018 due to aggressive marketing by Chinese brands such as Huawei, Xiaomi, Vivo and OPPO, which allowed them to capture 43% of the local market, according to Hong Kong-based Counterpoint Research. Samsung and local Cherry Mobile maintained their top spots with market share of 19% each.


The two incumbent mobile providers are ramping up infrastructure investment for 2019, even as earnings perform strongly. Globe’s net income rose by 22% in 2018 to P18.5bn ($344.1m) on the back of high demand for data services. Meanwhile, mobile service revenues rose by 9% to P106.9bn ($2bn), mobile data sales surged by 28% to P55.3bn ($1bn) and revenue from broadband reached P33.1bn ($615.7m), up 13%. At the end of 2018 Globe’s mobile subscriber base stood at 74.1m. In documents submitted to the Philippine Stock Exchange, Globe said it planned to spend P63bn ($1.2bn) on capital expenditures in 2019 to expand its data network, up from P43.3bn ($805.4m) in 2018.

PLDT, for its part, saw net income rise by 41% in 2018 to P19bn ($353.4m), with service revenues growing by 2% to P154.2bn ($2.9bn) out of its total revenue of P164.5bn ($3.1bn). In its 2018 annual report PLDT noted that its mobile subscriber base reached 60.5m, representing a market share of around 45%. This is down from 50% in 2016 as a result of aggressive price competition. PLDT stated that capital expenditure for 2019 would reach a historic high of P78.4bn ($1.4bn), up from around P58.5bn ($1.1bn) in 2018, as it rolls out infrastructure improvements aimed at helping it compete against the arrival of a third player.

According to OpenSignal, although both the Globe and Smart brands have improved their 4G availability considerably, PLDT’s Smart is the leader when it comes to the mobile video experience. Smart has a download speed of around 9 Mbps compared to Globe’s 5.5 Mbps.

5G & LTE Developments

The mobile broadband experience is set to improve in 2019 as Globe and PLDT continue carrying out network expansion and planned upgrades. In addition, Globe is on track to launch pilot 5G services backed by Chinese firm Huawei during the year, beginning with high-speed home internet.

In February 2019 Ernest Lawrence Cu, the CEO of Globe, sought to reassure the public over any potential security threats by partnering with the Chinese giant. “[Huawei] may provide the equipment, but we run the network. We know what passes over our network and what goes through it,” he told local media. “What we are seeing is that [Huawei’s] technology is more than a year ahead of its competitors.”

In 2018 Globe invested in 300 multiple-input/ multiple-output wireless sites using the 2600-MHz band. This complemented the almost 12,000 4G cell sites the company operated in September 2018 through the 700-MHz, 2600-MHz and other spectrum bands. Globe’s 4G LTE coverage stood at 90% of the country during the same month. PLDT, meanwhile, launched its first 700-Mbps 5G cell sites in Makati and Clark City in late 2018 with the help of Huawei and Sweden’s Ericsson. In February 2019 the firm announced that it was in talks with Ericsson, Nokia and ZTE over national roll-out plans. PLDT is more cautious about possible security threats, however, with Manuel V Pangilinan, the company’s chairman and CEO, requesting reassurance from Huawei over “heightened concern about security on the network and devices”. The carrier said it plans to launch 5G services in schools, technology parks and business centres in the second half of 2019.

PLDT’s 2018 capital expenditure was put towards erecting additional LTE and 3G base stations to provide high-speed mobile broadband to over 90% of the country. That year PLDT more than doubled its fibre and hybrid-fibre broadband capacity to over 2.25m ports, surpassing its goal of 2.2m ports.

Also in 2018, Converge ICT, led by Dennis Anthony H Uy, a local entrepreneur, signed deals worth $2bn to reach its goal of rolling out high-speed broadband nationwide over the next five years. The company is working with South Korea’s Korea Telecom, US-based Tyco Electronics Subsea Communications and domestic firm Fibernet Konstrukt to build the network. Core services are expected to be operational by 2021.

Infrastructure Needs

The Philippines, which had less than 20,000 cell towers in 2018 compared to 90,000 in Vietnam, suffers from the lowest cell tower coverage in Asia partly due to problems companies face in securing the large amount of permits necessary for their construction. The DICT said it is actively working to reduce red tape for common infrastructure in line with the government’s measures to ease doing business in the country. Through this, the DICT hopes to facilitate the installation of a further 50,000 towers.

In January 2019 the state-owned China Energy Engineering Corporation announced plans to invest $4.4bn to build all 50,000 cell towers across the Philippines and lease them to telecoms providers to improve their services. However, the DICT is looking to spread the wealth, having signed memorandums of understanding with four other tower providers by that month: local firm ISOC Infrastructures, Singapore’s iSON ECP Tower, Nigeria’s IHS Towers and Malaysia’s Edotco Group.


The need for more cell towers goes hand in hand with rising demand for ICT products and services as both government and industry pursue digital transformation. Telecoms providers are aiding this drive by investing in data centres, cybersecurity, cloud technology, internet-of-things applications and IT services. BMI Research forecast in early 2018 that the Philippines’ market for IT, hardware, software and services will rise from $4.8bn in 2018 to over $7bn by 2022, as the BPO industry, the financial services sector and the government upgrade their ICT capabilities.

Certain technologies are expected to be utilised on a larger scale as ICT services improve, including e-payment platforms. The central bank, Bangko Sentral ng Pilipinas (BSP), was also tweaking regulations in the first quarter of 2019 to make the launch of such services easier. “The legal framework that the BSP is creating for e-payment platforms is promising,” Albert Tinio, CEO of GXI-Mynt, a financial technology partnership between Globe and China’s Ant Financial, told OBG. “It is a custom regulation that aims to facilitate operations of these kinds of companies, and will help the Philippines achieve its goal of making 20% of transactions digital by 2020.”


The Philippine ICT industry is poised for robust growth as both the private sector and government pursue digital transformation. The entrance of a third telecoms player has already had an impact, and the country can expect more improvements to services as a result of the disruption. Legal reforms opening up the sector to foreign investment are also expected to boost growth in ICT and other industries dependent on such services. While state plans look to be on track, the DICT has been tasked with a long list of initiatives for a relatively new state body, thus setbacks may occur. In the midst of such ambitious plans, prioritising human resources training and educational programmes will be important to ensure the sustainability of the sector.


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The Report: Philippines 2019

ICT chapter from The Report: Philippines 2019

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