High costs could hamper Internet penetration despite fiber expansion in the Philippines

According to BMI Research, achieving the PDIP's goal of bridging the country's connectivity gap depends on lowering monthly subscription prices for broadband Internet services.

Gigi Onag, Senior Editor, APAC

July 9, 2024

2 Min Read
Philippine flag on computer keyboard key
(Source: Yann Song Tang/Alamy Stock Photo)

The Philippine government's fiber-optic expansion project won't connect more Filipinos unless prices for broadband Internet services become more affordable.

Local media reports last week cited an analysis by Fitch Group's BMI Research that said the recently approved $288-million Philippine Digital Infrastructure Project (PDIP) does not guarantee improved connectivity across the archipelago.

"Adoption of fiber broadband at the household level remains extremely challenging in the Philippines, and the PDIP may only provide marginal upsides to our outlook," BMI Research said in its report.

Funded by the World Bank, the PDIP aims to increase broadband connectivity nationwide, particularly in remote areas of the country. The project has five components: backbone network; middle-mile network; last-mile access network; network security; and project management support.

BMI Research estimates that the number of fiber connections in the Philippines will reach 1.58 million this year and will then increase to only 1.83 million by 2033. Most of this projected growth will come from metro and suburban deployments as PLDT, Globe Telecom and Converge ICT Solutions offer low-cost fiber packages.

High cost of broadband Internet

According to BMI Research, achieving the PDIP's goal of bridging the country's connectivity gap depends on lowering monthly subscription prices for broadband Internet services.

Related:Philippines approves $288M digital infrastructure project

BMI noted that with broadband prices averaging 1,500 Philippine pesos (US$25.61) per month, consumers are not readily and consistently able to commit to long-term contracts.

“We believe that obstacles to consistent and widespread fiber uptake remain the prices of packages in last-mile areas, particularly stemming from the elevated costs of rollout that are further increased by the Philippines' archipelagic configuration,” BMI Research said.

The analyst firm noted that execution and project management will be key to the PDIP's success in driving greater fiber penetration among Philippine households.

"By extensively co-financing last-mile area rollout, wholesale network providers and internet service providers (ISPs) may be encouraged to further decrease prices on fiber bundles though at the expense of average revenue per user (ARPU) figures,” it said.

Broadband Internet in the Philippines is more expensive than in its ASEAN neighbors, according to a World Bank research note earlier this year. The annual fixed broadband subscription costs 11% of per capita income, twice the ASEAN average, while mobile broadband costs 1.5 times the ASEAN average.

Related:World Bank calls on 'outlier' Philippines to reform broadband

The Philippines is one of the worst performers in the bank's global affordability index. It was the only ASEAN country not to improve over a four-year period, and of the 57 developing countries tracked, it ranked ahead of only Nicaragua, Venezuela, Haiti and Sudan.

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About the Author(s)

Gigi Onag

Senior Editor, APAC, Light Reading

Gigi Onag is Senior Editor, APAC, Light Reading. She has been a technology journalist for more than 15 years, covering various aspects of enterprise IT across Asia-Pacific.

She started with regional IT publications under CMP Asia (now Informa), including Asia Computer Weekly, Intelligent Enterprise Asia and Network Computing Asia and Teledotcom Asia. This was followed by stints with Computerworld Hong Kong and sister publications FutureIoT and FutureCIO. She had contributed articles to South China Morning Post, TechTarget and PC Market among others.

She interspersed her career as a technology editor with a brief sojourn into public relations before returning to journalism, joining the editorial team of Mix Magazine, a MICE publication and its sister publication Business Traveller Asia Pacific.

Gigi is based in Hong Kong and is keen to delve deeper into the region’s wide wild world of telecoms.

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