Broadband remains a luxury in emerging markets, says Ovum

Published : Monday, August 22, 2011 00:00
Written by : DARWIN G. AMOJELAR SENIOR REPORTER

MOBILE and fixed broadband service in Philippines remains a luxury for majority of Filipinos despite falling prices, according to Ovum.

In a study, the telecom analyst found that while prices in most markets fell from 2010, broadband still was beyond the reach of the vast majority of emerging market consumers.

Ovum studied broadband prices in 19 emerging markets, including the Philippines, to see what has changed from its last look in 2010.

“This lack of affordability is a major inhibitor to unlocking the growth potential in these markets,” Ovum said.

The study found that the Philippines and Malaysia had the lowest broadband tariffs, but affordability remains an issue for consumers.

Entry-level worldwide interoperability for microwave access services in the Philippines cost as much as $223 per year for wi-tribe.

Globe Telecom’s entry-level high speed packet access service was the most affordable in the Philippines, costing $1.28 per 100 megabytes.

Ovum said the broadband services using HSPA technology were the cheapest option for entry-level users, with an average global price of $223 per year.

While this was cheaper than entry-level broadband services based on digital subscriber line and WiMAX technologies, HSPA packages had a lower data allowance.

Overall, entry-level DSL packages offered the best value for emerging market consumers.

“Demand for broadband services in emerging markets continues to be stifled by high prices. In some countries, broadband pricing was double or triple the price of an equivalent service in a more developed market,” Richard Hurst, Ovum senior analyst said.

Hurst said lower gross domestic product per capita in most emerging markets meant that broadband was only available to the highest socioeconomic groups.

“While prices remain high, we expect them to fall slightly in the short-term. Network operators and service providers will reduce their prices and introduce packages to improve affordability and stimulate data usage so they can attract more subscribers and drive revenue growth,” Hurst said.

Telecommunication companies in the Philippines are shifting their focus to mobile and fixed line broadband services to squeeze more revenues from their subscribers amid a maturing market and cutthroat competition.

Gamaliel Cordoba, National Telecommunications Commission chief had said that broadband was the next growth area for the industry.

He projected that the number of broadband service subscribers will continue to register three-digit growth in the next two to three years.

Earlier, the NTC issued an order mandating telcos to dislose the minimum broadband speed as well as the service rates and reliability in their offers to consumers.

The order aims to improve the quality of the broadband services in the country.

At end-June, Globe’s broadband subscribers stood at 1.3 million, while Philippine Long Distance Telephone Company had 2.1 million.

Telco officials earlier said the growth of mobile broadband in the country will depend on the affordability of mobile phone handsets. Ovum projected that shipments of mobile broadband-enabled handsets will grow by a compound annual growth rate of 16.7 per cent from 2011 to 2016, to reach 372 million units in Asia Pacific.

“Increasing consumer appetite for smartphones is a major factor in driving the growth in the market for mobile broadband enabled handsets. However, smartphones are not the only story and there will still be growth in non-smart broadband phones, particularly in the emerging markets,” Adam Leach , Ovum principal analyst said.