By Consuelo S. Perez

Two decades ago, Filipinos had to wait for years just to get a telephone installed in their homes. Such was the state of Philippine telecommunications then that a neighbouring tiger state’s leader—anxious to have the Philippines bask in the pouring investments on the Asian platform—encouraged the newly elected President Fidel V. Ramos to adopt a strongman approach, while a telecommunications monopolist sat on the audience’s front row.

Fortunately, over the past two decades, the confluence of rapid technological innovation, a bullish Asian economy, and pro-active reforms have enabled an “essentially moribund” telecommunications sector to surmount what used to be a “misguided” natural monopoly environment.

The positive and beneficial impact of liberal policy, especially pro-competitive reform, on the performance of telecommunications services can be gleaned from various econometric studies, such as Wallsten 1999, Fink et al 2001, and Estache 2006.

In Asian developing countries, private participation, competition, and effective (independent and pro-competitive) regulation have been associated with higher levels of mainline availability, service quality, and labor productivity, while mobile penetration is likewise positively affected by competition among digital service providers.

Indeed, new technologies, new applications, and significant policy reforms have been catalytic in gearing up the Philippine telecommunications sector towards a more competitive milieu with dramatic outcomes that contributed to buoying up growth in the economy and vastly improving consumer satisfaction and welfare. Liberalization and the dismantling of a monopoly expedited the development of telecommunications, now particularly in wireless telephony.

Source: International Telecommunication Website

The country has become globally renowned for SMS—short messaging system or texting—that allowed consumers to transcend the communication divide particularly in fixed line telephony.

Mobile phone density per 100 people has reached roughly 76% as of 2008 and wider geographical coverage of mobile telephony signal extends to 99% of the population. Significant improvements in telecommunications also paved the way for the expansion of ICT services, including business process outsourcing (BPO). With the advent of broadband services, expansion of the 3G and the NGN markets have become the next frontier.

Robust market competition has played the key role as the fundamental economic regulatory force that foster efficiency.
Hence, the challenge of regulation has always been to ensure competitive market outcomes while ensuring the protection of the consuming public and enhancing private investments in untapped service delivery areas with due consideration for the marginalized segments lacking in access.

While improving access through deregulation such as the Service Area Scheme (SAS) under Executive Order 109 is a creditable objective, oftentimes the results were mixed if not challenging.
The Service Area Scheme (SAS) was meant to address the shortage of telephone lines and made new entrants (cellular mobile telecommunications Services-CMTS and international gateway facilities-IGF operators) commit to install fixed-line telephony services in unserved and underserved areas as part of their service territories.
Undertaken during a year which was experiencing an intermittent glimmer of mobile services, the Service Area Scheme concluded with fifty-two percent (52%) of installed lines subscribed as of December 2005 and teledensity per 100 people remained stagnant at the 4% level in 2008.

Fixed Line Subscribers Migrate
The popularity of cellular mobile telecommunications Services (CMTS) and the attendant SMS in the vibrant 2nd Generation market seem to have been the decisive choice of consumers that bridged the digital divide, especially with the extensive reach of the mobile signal to almost the whole populace.

Surely, CMTS is the viable alternative close on the heels of the basic circuit-switched services used while implementing service areas, which technology appears to meet the challenge of universal access.
With a maturing Second Generation cellular mobile telecommunications Services market, universal access policy has started to evolve with the incorporation of targets on Internet and broadband services—the 3G market. On both counts, the estimated densities per 100 inhabitants as of 2007 were rather low at 6.03 and 0.56, respectively. With such densities, a massive room for growth in the next generation market can definitely be in the offing under a conducive environment and with apt policy moves.

A requisite for success though is for the country to learn its lessons in the development of the telecommunications sector and learn these well, especially in regard to transparency in the public sector, regulatory governance vis-a-vis the private sector, that competition matters, and the essence of the discipline of the market.

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