WiMax still too pricey for rural Philippines

Prices of WiMax customer premise equipment need to drop, before operators can justify going into the country's rural areas, according to Filipino operator.
Written by Victoria Ho, Contributor

The price of WiMax CPEs (customer premise equipment) must fall to a cost-effective level for operators before the masses in rural areas of the Philippines can access the wireless broadband standard.

According to Happy Communications' CTO Raul E. Ocampo Jr., the current price of CPEs still prohibits operators from recouping their investments because of the low ARPU (average revenue per user) from the country's consumer demographic.

The Filipino WiMax operator's current user base consists of enterprise customers, making monthly ARPU of US$800 to US$1,000. Ocampo estimated consumer monthly ARPU to be that of around US$25 to US$30.

"CPEs need to get cheaper than US$100 to hit the sweet spot. Then WiMax will be a sure success," said Ocampo.

Manufacturers also need to shrink the size of current CPE models so they are "not so bulky", he added.

Happy Communications intends to roll out a consumer service in the fourth quarter of this year, but Ocampo said it is "not in a hurry".

He explained that customers in the Philippines do not display much brand loyalty to operators, so winning customers over when entering the market later will not be as challenging, and will also give the operator time to build out its infrastructure.

Operators eyeing the rural opportunity
With just 1 percent of broadband penetration seen in rural areas in the Philippines, Ocampo said opportunity is very high for WiMax operators.

Currently, broadband service is limited just to "key urban areas", he said.

Ocampo expects rural broadband connectivity to bring opportunities in VoIP (voice over Internet protocol) usage, with many looking to make cheaper long distance calls to Filipinos stationed overseas. Distance learning is another aspect of interest.

Philippe Berard, director of business development at wi-tribe, too spoke on the opportunity in the Philippines for the operator.

Berard said the country's regulator had put in a "pro-competition, pro-transparency" licensing model, making it easier for an overseas operator like wi-tribe to come in.

Communicating online is also building momentum in the Philippines, and the device ecosystem is building up. More Filipinos are buying laptops, and the government has helped stimulate PC penetration through price subsidies, he added.

With these factors, Berard said Internet penetration is expected to hit 33 million--33 percent of the population--by 2013.

"There is a large pent-up demand for broadband [because] there is no DSL (digital subscriber line) network and the copper network is poor," he said.

Both Berard and Ocampo were speaking at WiMax Forum Congress Asia '08, held in Singapore.

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