Just recently, I asked my mom why she no longer uses her small basic Nokia phone to call or text me. She said that she forgets to charge it.
The real reason, though, is she now prefers to message me through Messenger or Viber chat apps using my late stepdad’s iPhone. After I tried to convince her for years, she finally stopped using her old phone and now calls and sends me messages, photos and emojis through these messaging apps.
She has also changed her internet service provider from a provincial cable TV service provider/ISP to PLDT for faster and more reliable internet connectivity, which she will need more once she gets used to connecting to and watching Netflix on her smart TV.
Gone are the days when texting was the killer app responsible for most of the revenues of telecommunications companies. The number of cable TV subscribers has also significantly gone down, with Sky Cable having a customer base of 300,000 as of the end of 2022, from a high of a million, as cable TV viewing has given way to over-the-top services provided by the likes of Netflix and Prime Video, to name a few. But, of course, you will need a good internet connection for uninterrupted viewing.
Data, whether from mobile or fixed broadband services, is now and continues to be king.
In 2023, major telco and digital services provider PLDT generated revenues of P210.9 billion, the bulk of which was accounted for by the data and broadband business.
Of PLDT’s mobile service revenues of around P94 billion, P75 billion came from mobile data services.
Meanwhile, Globe Telecom reported that its mobile business achieved record revenues of P112 billion in 2023, a five percent improvement over the previous year, on the back of data-centric value-for-money offers.
Globe president and CEO Ernest Cu said that the mobile business witnessed a robust nine percent increase in mobile data revenues of P90.9 billion, which more than compensated for declines observed in mobile voice and SMS-to-text messaging revenues. Mobile data traffic likewise soared to 5,960 petabytes by the end of 2023, a 28 percent rise from 2022. Globe said this surge in data consumption is primarily attributed to high-bandwidth online videos and social media content accessed through smartphones.
Mobile data average revenue per user also saw a 34 percent year-on-year growth, while mobile data average traffic per user increased by 35 percent to reach 14 gigabytes per month.
Mobile data now accounts for 81 percent of the company’s mobile revenues, up from 78 percent the previous year.
The company pointed out that the performance is a clear indication of the shifting consumer preference toward data-centric communication and entertainment.
Meanwhile, for the first half of 2024, Globe announced record mobile business revenues of P58.4 billion, up by seven percent year-on-year, driven by mobile data revenues of P48 billion, an increase of nine percent. Mobile data revenues now account for 82 percent of mobile revenues, as against 80 percent in the same period last year.
Company officials noted that the surge in mobile data revenues was largely attributed to the growing reliance of Filipinos on mobile apps for various online activities such as e-commerce, media streaming, social networking, among others.
During the January to June 2024 period, Globe’s mobile data traffic reached 3,256 petabytes compared to 2,814 petabytes last year.
Traditional mobile voice and SMS revenues dropped by two percent and six percent, respectively.
Globe’s home broadband data traffic experienced a downward trend, from 166 petabytes to 105 petabytes.
Meanwhile, for PLDT, the first half of the year saw an eight percent increase in mobile data revenues, which now account for 89 percent of total individual wireless revenues. Active data users stood at 40.5 million, with average data usage per subscriber at 11.6 GB compared to 10.5 GB in the same period last year. Mobile data traffic likewise increased by 11 percent to 2,641 petabytes.
Data and broadband, which grew by four percent to P80.5 billion, contributed 83 percent of consolidated service revenues.
How does the future look for the Philippine telecommunications market?
According to Mordor Intelligence, the Philippine telco market is estimated at $5.58 billion in 2024 and is expected to reach $6.55 billion by 2029, growing at a compounded annual growth rate of 3.28 percent.
Fixed broadband penetration, it said, is expected to grow over the next five years, driven by efforts from operators and the government to expand broadband coverage across the country.
The same report said that in the coming years, most investments in the telco sector will be focused on deploying fiber infrastructure in urban areas. It cited the case of PLDT, which has been accelerating a network modernization program that migrates from copper to fiber.
It noted that during and after the pandemic, most people preferred work-from-home mode, creating more demand for fixed broadband services, which can provide high-speed internet services.
Meanwhile, the report expects pay TV penetration in the country to decrease over the next five years due to subscription loss across cable and direct-to-home segments, owing to the growing popularity of OTT video services in the country.
It said that the local telco market is expected to grow significantly over the next five years with the rising adoption of OTT services, adding that OTT service providers will further create new growth opportunities for the telecom market.
The report explained that the adoption of video streaming platforms is boosted by increasing demand for both local and international shows and video content.
We haven’t seen the best for the telco industry yet though.
McKinsey & Co sees generative artificial intelligence (AI) technology offering the telco sector a real opportunity to reverse its stagnant fortunes. But seizing it, it said, would require embracing innovation and agility to an unprecedented degree.
Gen AI, it explained, represents the latest advance in AI, with the technology having the ability to analyze more and different types of data to create new content. It enables new levels of personalization, performance and customer engagement and, in the future, will even impact network operations, marketing and sales, IT and support functions and other areas of business.
McKinsey revealed in a report that most telco leaders they surveyed say they are developing gen AI solutions and leading telcos such as AT&T, SK Telecom and Vodafone have made early gen AI commitments and launched trials.
Some telcos around the world, it added, have started to experience significant double-digit percentage impacts from this technology, with one European telco increasing conversion rates for marketing campaigns by 40 percent while reducing costs by using gen AI to personalize content.
A Latin American telco increased call center agent productivity by 25 percent and improved the quality of its customer experience by enhancing agent skills and knowledge with gen AI-driven recommendations.
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