Telcos’ next battlefield

Interconnection, bundled services and better technology may yet give telcos’ landline business a new lease in life. In fact it is the next battlefield.

There are at present only five million landline subscribers for the top three telcos. When compared to mobile users of 100 million, they are definitely swamped.

The telcos, however earn billions from this service. Philippine Long Distance Telephone Co. reported that it earned P45 billion in the first nine months of the year.

With households and offices still requiring landlines, telcos are on the right track bundling such services with internet connection (DSL or digital subscriber line) to make it more attractive.

While landline growth in Metro Manila has become saturated as almost all households now have landline and broadband connection, growth in the landline business would come from the provinces.

Technology is also a key driver in the landline business, as telecommunication firms migrate their from traditional landline services from legacy to the so-called next generation networks (NGN) for faster internet connection at home.

Legacy technology is the traditional way of carrying telecommunication services using copper wires. NGN’s fiber is more advanced which would allow PLDT to offer more services including higher carrying voice capacity and data traffic and faster internet connection at home .

A major problem in the industry is the mix of technologies used landlines. Smart CEO Napoleon Nazareno said the old legacy businesses continue to feel the drag of the declining domestic and international long distance segments, which still account for over P11 billion of its Fixed Line service revenues.

Philippine Long Distance Telephone Co. (PLDT), still the dominant landline carrier, will take advantage of the strength of Digital Telecommunications it recently absorbed on landline in areas where PLDT is weak such as Northern Luzon.

Ramon Isberto, head of PLDT-Smart public affairs, said local interconnection with Globe would increase the usage of landlines services and would further intensify competition on landline business.

Isberto, however, assured they will continue to offers affordable and better services.

PLDT rival Globe sees opportunity to grow its landline subscribers bundled with DSL in the provinces .

Interconnection with PLDT will even the level of playing field among players.

Without the interconnection, subscribers need to pay long distances charges when calling another landline network even if they are within the same area.

The benefit would cascade in terms of lower cost not only to household subscribers but also business firms and the business process outsourcing sector.

PLDT said once local interconnection with Globe Telecom is completed, they expect the traffic volume on landline to increase although they have no estimates yet.

Although the interconnection will level the playing field on both fixed line and DSL, PLDT claimed that the superior services offering and pricing will be the determining factor.

The National Telecommunications Commission ( NTC) is currently checking on the required interconnection between PLDT and Globe Telecom landlines. Local interconnection in three provinces — Pampanga, Bulacan and Zamboanga – have so far been completed.

Froilan Castelo, Globe head of legal, said on the telco side, as the price barrier is removed, this will increase subscription in the long run as it will entice subscribers to see the benefits of both landline and internet.

Globe expects to complete interconnection with PLDT as soon as possible, but there are certain areas where they need to interconnect: Bataan, Pangasinan, General Santos and Davao as migration of its subscribers to NGN line is still ongoing.

PLDT is targeting to connect 20,000 household to fiber by next year as part of irs P67.1 billion investment.

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