Nokia Siemens bullish on Philippines broadband

PHILIPPINES--Nokia Siemens Networks is optimistic about the Philippines' broadband services market.

Speaking at the company's first Philippine press conference since its merger between industry giants Nokia and Siemens, Joe Doering, Nokia Siemens Networks' chief for Asia South, said an in-house study showed that the country's broadband growth is driven mostly by the cellular base.

Doering said the study revealed a cellular subscriber base of 50 million, in a population of a little more than 90 million.

"While the fixed-line broadband base is still small, the potential of wireless broadband is huge, when we look at 53 million cellular phone subscribers that the country has," Doering said.

According to Nokia Siemens Networks, the country has 600,000 fixed broadband subscribers, while Internet user density is pegged at 10 percent of the population. The annual fixed broadband growth rate is also pegged at 10 percent.

Doering said that while the study did not predict a percentage for wireless broadband growth, its average growth forecast for 3G usage is 10 percent until 2009. This 10-percent growth is, he added, a conservative estimate because the 53 million cellular phone users present a potential market for wireless broadband.

"We predict wireless broadband to eventually surpass fixed broadband in this country," Doering said, adding that the fondness of Filipino consumers to buy phones with 3G features is a contributing factor.

According to Doering, the study also indicated that the Philippines' broadband base will reach 25 million in 2011, the bulk of which will be wireless connections.

The study also indicated a direct relationship between mobile and broadband penetration to a country's gross domestic product (GDP), the primary economic yardstick used globally.

The study said that for most developing countries, an increase of 10 percent in the mobile penetration rate almost always means an increase of 0.6 percent in the GDP.

When it comes to broadband penetration, the spike is even higher, as a 10-percent increase translates to a 1.25-percent GDP increase, Doering said.

However, industry players face challenges. Markus Lius, Nokia Siemens head of the business unit and marketing group in Asia-Pacific, said pricing remains an issue.

Lius said operators have yet to introduce a flat-fee pricing, or the more common bundled pricing that other global operators now implement, which makes wireless broadband in the Philippines more expensive compared to other Asian countries.

"But the country has no choice but to go wireless," he said, adding that it is almost impossible to fully install copper for fixed-line broadband in an archipelago such as the Philippines.

Joel D. Pinaroc is a freelance IT journalist based in the Philippines.