Broadband to invest P117-M in LEC service

Premier broadband service provider Broadband Philippines is investing P117 million to construct and maintain a local exchange carrier (LEC) service or a landline telephone business using its authorized broadband network.

Since the company utilizes voice over the Internet technology, this means that a caller no longer has to pay for long distance or international calls, since voice traffic can be sent via the Internet to contact anyone anywhere in the world.

This developed after the National Telecommunications Commission (NTC) granted Broadband Philippines a provisional authority to construct, install, operate and maintain a LEC service using its authorized broadband network.

Under the license, the company will now be able to offer voice services to both residential and business users in selected cities and municipalities nationwide.

Since Broadband’s network is an Internet Protocol (IP) network, the company has chosen to implement voice over IP technology (VoIP), which according to company chairman and CEO Joey de Venecia III, is expected to provide substantial cost savings to corporations who rely on global markets.

Broadband’s LEC potential is estimated at about 30 percent of the potential market of Internet subscribers/computers in each targeted city or municipality in the Philippines. The total number of estimated users nationwide is about 230,000 over the next five years.

De Venecia said the company expects about 30,000 subscribers this year in Metro Manila and the Calabarzon area for this new service.

While other LECs like the Philippine Long Distance Telephone Co. (PLDT), Digital Telecommunications, Globe Telecom, among others, operate their landline telephone business using their traditional copper wires, De Venecia said these companies are burdened with the huge sunk costs associated with these investments.

"While they have spent huge amounts to roll-out their landline businesses, in our case, the investment is smaller because there is no incremental cost for us since it runs on our existing broadband network," he said.

Thus, these traditional telephone companies have been leveraging their existing copper wire networks to offer other value-added services like DSL (digital subscriber line). But De Venecia noted that the quality of DSL service is dependent on the quality of copper used.

With the introduction of VoIP, voice and data are carried on a single network. Companies will be able to utilize their available space or the bandwidth of their corporate networks, thus eliminating duplicated expenses of maintaining two networks for line rental, servicing, installation, and inconvenience.

Also with VoIP, companies can expect more efficient use of their telecommunications infrastructure in addition to the savings on long distance or international calls, as voice traffic can be sent via the Internet to contact anyone in the world.