Achieving Universal Access
through Policy &
Regulatory Reforms:
The Philippine Case



Mary Grace P. Mirandilla
The Asia F...
Philippine Political Economy

                        Election Financing



          Domination by
                      ...
Reform in Telecommunications
                      Teledensity (per 100 persons)
                  1991                   ...
Possible Scenario

    Worst               2nd best                 1st best


                                           ...
How it happened
 Competition introduced (1993-2000)
 – Leadership and policy framework
 – Other private firms
 – Unmet con...
Universal Access
Service Area Scheme
• Deployed fixed lines in exchange for IGF and
  mobile licenses (300,000 and 400,000...
Universal Access
Municipal Telephone Project
• 2,879 “Telepono sa Barangay” (village phones) financed
  thru a US$177-mill...
Mobile: “Unintended” UA Program
Initially, cross-subsidy used to gain market share in
urban areas
Interconnection was crit...
UA in perspective
UA is being achieved through the
unleashing of competing private interests
 • 24/7 Unlimited SMS and Voi...
Results of Reforms

50                                                                        Unlimited
                  ...
The Next UA Frontier: Internet

 Internet access dependent on fixed line
 Déjà vu!
 – High cost of leased lines (ISPs)
 – ...
Moving Forward
 Learn from the mobile success story
 Market dynamics
 – Another elephant
 – Disruptive/affordable technolo...
Thank you

grace@asiafound.org
    +632 917 8167492
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Universal Acess Thru Policy Reform Ppt (Mirandilla, Dec 15 07)

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ICT development and growth in the Philippines, particularly the mobile phone sector, through policy reforms and innovative market approaches

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Universal Acess Thru Policy Reform Ppt (Mirandilla, Dec 15 07)

  1. 1. Achieving Universal Access through Policy & Regulatory Reforms: The Philippine Case Mary Grace P. Mirandilla The Asia Foundation - Philippines CPRsouth2, IIT Madras Chennai, India December 15-17, 2007
  2. 2. Philippine Political Economy Election Financing Domination by Economic Powers Oligarchic Elite Influence on Capture of Policy, Appointments Economic Rents Policy Distortions Weak Institutions So, is reform possible? YES!
  3. 3. Reform in Telecommunications Teledensity (per 100 persons) 1991 2006 Two principal and 3rd Fixed Single dominant private competitor player 772% Installed: 8.28 Installed: 0.95 Mobile High subscription rate Pre-paid and SMS Subscribed: 0.05 Subscribed: 49.29 91,178% Internet Negligible Subscribers: 2.3 Users: 9 How did reform happen despite the odds?
  4. 4. Possible Scenario Worst 2nd best 1st best Fully competitive Cost-based Monopoly pricing regime Low Cost High charges Efficient service Regulation because it can! needed Minimal
  5. 5. How it happened Competition introduced (1993-2000) – Leadership and policy framework – Other private firms – Unmet consumer and business demand Interconnection (2001-) – Two dominant players – Wide public awareness – Regulatory reform pursued – But, Presidential intervention needed
  6. 6. Universal Access Service Area Scheme • Deployed fixed lines in exchange for IGF and mobile licenses (300,000 and 400,000 local telephone lines, respectively) Results • Universal access limited success • Improved teledensity but not in non-viable areas • Cross-subsidy not used for UA
  7. 7. Universal Access Municipal Telephone Project • 2,879 “Telepono sa Barangay” (village phones) financed thru a US$177-million loan in 1989 Result • Supplier/donor-driven – technology now obsolete • Poorly maintained – 700 PCOs (1998) to 150 (2005) • Prone to corruption – no monitoring mechanism • Overstaffed - 5,000 employees 150 calling offices • For privatization since 1998 but no progress – mandated by law (Republic Act)
  8. 8. Mobile: “Unintended” UA Program Initially, cross-subsidy used to gain market share in urban areas Interconnection was critical! Innovative pricing increased teledensity! • Subsidizing handsets (from $1,500 in 1989 to less than $100 in 2006) • Mobile overtook fixed line in 2000 • Cell site roll-out, with almost 100% coverage • More than 40% penetration, saturation in urban areas Today, mobile is king! 68% telecoms revenue market share
  9. 9. UA in perspective UA is being achieved through the unleashing of competing private interests • 24/7 Unlimited SMS and Voice • “e-Load” • “Mobile wallet” Elephant vs Elephant – 1994 Globe (Ayalas) vs. Smart (PLDT) – 2003 Sun Cellular (Gokongwei) vs. dominants
  10. 10. Results of Reforms 50 Unlimited SM S war 45 Interco nnect A greement 40 35 Interco nnect R ules 30 Installed Fixed Line Teledensity P ublic T eleco ms P repaid M o bile Law Subscribed Fixed Line Teledensity 25 Subscribed Mobile Teledensity SM S 20 Universal A ccess P o licy 15 Interco nnectio n & C ro ss-Subsidies 10 5 0 1990 1991 1992 1993 1995 1996 1997 1998 1999 2000 2001 2002 2005 2006 2007
  11. 11. The Next UA Frontier: Internet Internet access dependent on fixed line Déjà vu! – High cost of leased lines (ISPs) – High cost for consumers – Concentrated in urban areas – Anti-competitive practices Dominant fixed line firm owns the leased lines and national internet café chain VoIP interconnection
  12. 12. Moving Forward Learn from the mobile success story Market dynamics – Another elephant – Disruptive/affordable technology e.g. WiMax? In our hands – Regulatory intervention – Government Telecenter Program – Shared Access Model
  13. 13. Thank you grace@asiafound.org +632 917 8167492

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