VoIP connects—even for PLDT – News Analysis

VoIP connects—even for PLDT – News Analysis – Philippine Long Distance Telephone Co

Art Villasanta

They were almost everywhere: adverts goading Filipinos into calling overseas for “only” 40 cents a minute, that is. The catch, however, was in the fine print. It was $0.40 (P20.00) per minute and not 40 Philippine centavos ($0.008) per minute. This two-year-old promotional campaign by Philippine telcos, pushed hard by Philippine Long Distance Telephone Company (PLDT), vividly illustrates a major limitation in Philippine competitiveness: its pricey voice services.

PLDT, however, isn’t shouting the message as loudly as it did before. That’s partly because Philippines PCOs the de facto provision of voice over IP in provincial public calling offices and TeleCenters (some run by PLDT and mobile phone leader Smart Communications) at prices below $0.40 per minute has taken the bite out of the campaign.

Cheap voice services

The National Telecommunications Commission (NTC), the telecom regulator, has indirectly allowed Internet telephony in circular calling for the establishment of more PCOs and the provision of cheap voice services. Internet telephony consists of IP voice transmissions over the PSTN.

The circular prescribes rules and regulations for an entity other than public telecommunications entities that provide telephone services, other than switched telecommunications services, telecenter services, Internet services or any telecommunications services.

This new regulatory framework prescribes wholesale pricing principles so that carriers such as PLDT can provide transparent and reasonably priced telecommunications services that are economically feasible.

Bill Torres, past president of the Philippine Internet Service Organization (PISO), noted, “there is a window for non-telco enterprises [such as ISPs] that want to offer Internet telephony”.

Bell Telecommunications Philippines (BellTel), one of the younger telcos, bundles Internet telephony into its service package at a cost of $50.00 monthly.

Torres does not believe Internet telephony can be profitable as a stand-alone service, however. Profitability will demand that Internet telephony be packaged with other services.

“Alone, Internet telephony will not make money … because of its cheapness,” he noted.

PLDT is apparently making major moves towards introducing Internet telephony as one of its mainstream telecom services and has invested in frame relay infrastructure while pioneering new services that will lay the groundwork for its eventual shift from circuit-switched network to packet-switched networks, according to industry sources.

Martin Enrile, telecoms analyst of ATR Kim Eng Securities, however, believes that IP telephony is “a very clear threat to telcos”.

He feels that telcos will need to maximize their infrastructure investments, hence their rearguard resistance to VoIP.

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