By Denise A. Valdez
LYSANDER R. BAGUE, a supervisor at a children’s hospital in Quezon City, has mastered the art of chatting using Facebook Messenger. He instantly reaches the people in his life by sending messages to friends and making audio and video calls to his family using the app, which is powered by his mobile data subscription.
“I barely do regular voice calls or send text messages because I can do everything on Facebook,” he said in an interview.
“Most of the time, Messenger is my source of communication.”
Over-the-top messaging services — platforms that require only an Internet connection for communication — have been praised for the convenience they bring to customers.
But Facebook’s Messenger, Apple’s FaceTime, Rakuten’s Viber and Tencent’s WeChat have led to steep revenue declines in the legacy services of telecommunication companies, forcing them to adapt and make even more revenue by upgrading infrastructure, trimming costs and selling profitable fixed and mobile broadband services.
Last year, PLDT, Inc.’s mobile revenue from short message service or SMS dropped by 50% to P13.1 billion, according to the company’s financial statement. Revenue from mobile voice also fell by nine percent to P28.05 billion.
Mobile text revenue at rival Globe Telecom, Inc. likewise fell by eight percent to P21.28 billion, while sales from mobile voice declined by 6% to P30.35 billion during the same period.
Now, the name of the game is mobile data, with both telephone companies experiencing healthy revenue growth from data services.
PLDT’s mobile data revenue jumped by 46% last year to P38.35 billion, tempering the drop in mobile voice and SMS sales.
For Globe, revenue from data services last year rose 28% to P55.3 billion, boosting consolidated mobile revenue to P106.93 billion, a 9% gain.
“People are shifting to data-based services, both for messaging as well as voice,” Globe Chief Revenue Officer Alberto M. de Larrazabal said in an interview.
“So the way to really look at it is one is rising, one is falling.”
The growth in data revenue from PLDT’s fixed and wireless business has “outpaced in excess of the decline” in legacy voice and SMS, PLDT Chairman, President and Chief Executive Officer Manuel V. Pangilinan said.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund unit MediaQuest Holdings, Inc. has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.
The growth in mobile data revenue is forcing both companies to innovate further and harness its potential.
PLDT is allotting a record capital spending of P78.4 billion this year, while Globe is investing P63 billion, both aiming to support their network expansions.
“It’s a very capex-intensive thing simply because the data growth is very significant,” Globe President and CEO Ernest L. Cu said at a recent forum.
“Globe today can almost sell every gigabyte that we can produce, given the demand for video and social media.”
PLDT is set to deploy its long-term evolution (LTE) network to more than 90% of the country by year-end, Mr. Pangilinan said.
“We should continue to improve our network, especially the coverage.”
The major telephone companies, however, have yet to maximize the potential of mobile data communications, according to Pierre Tito Galla, co-founder of internet advocacy group Democracy.Net.Ph.
“Despite the generally poor quality of service and relatively high cost of mobile data communications, subscribers are continuing to explore the various use cases that Internet access provides,” he said.
Mr. Galla also hinted at the possibility of “mobile data only” companies springing up, even if voice and SMS are unlikely to disappear completely. “Similar to AM radio, legacy mobile communications will continue to have their place in the bigger ecosystem,” he said.
SMS and voice mail remain relevant because everybody has them, and no proprietary service will ever match their universality.
Both PLDT and Globe have no plans of retiring legacy services soon.
“If you look at it, voice and SMS would have been assumed dead many years ago,” Globe Chief Finance Officer Rizza D. Maniego-Eala said.
“But the fact that it continues to generate a little bit contribution in revenue for us is a plus.”
There’s still a class of users that won’t give up calling, and Globe would like to keep tapping it, said Gil B. Genio, Globe’s chief technology and information officer.
“Voice interaction is a very human thing,” he said in an interview. “If you look at the retired people, they would rather talk.”