By Ashley Erika O. Jose, Reporter

PHILIPPINE telecommunications companies (telcos) are preparing for major shifts in the telco landscape, including margin pressure and evolving business strategies, as the Konektadong Pinoy Act reshapes competition, according to analysts.

“The entry of new participants and a more intense competitive market dynamic could temper the margins and growth prospects of the current major players,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

However, he noted that incumbent operators retain advantages that could help cushion the impact of heightened competition.

“Industry leaders can leverage their position as incumbent operators to drive expansion and profitability, including brand equity, deep local market knowledge, and financial resources,” he said, adding that some players also have room to improve operational efficiency.

The Konektadong Pinoy Act, also known as the Open Access in Data Transmission Act, lapsed into law on Aug. 24, while its implementing rules and regulations (IRR) were signed on Nov. 5. The law removed the requirement for a legislative franchise for data transmission players, easing market entry, and promoting infrastructure sharing.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said the law is poised to significantly alter the competitive landscape.

“As a ‘gamechanger’ law, I expect it to spur fresh investment in the country’s digital and connectivity sector by removing the need for a legislative franchise and easing entry barriers for data-transmission players, thus opening the market to more competition,” he said.

He added that mandated infrastructure sharing could lower costs and encourage network expansion.

“By mandating infrastructure sharing and focusing on unserved and underserved areas, it reduces costs and encourages both domestic and foreign investors to expand broadband, fiber, and satellite networks,” he said.

Information and Communications Technology Secretary Henry Rhoel R. Aguda said several foreign players have already expressed interest in entering the Philippine market.

“So far, seven foreign data transmission industry participants have already signified their interests in entering the telecom industry,” Mr. Aguda said, noting that each is expected to invest about $1.5 billion.

Under the IRR, data transmission industry participants (DTIPs) will be allowed to construct, install, establish, maintain, lease, or own networks and facilities without a legislative franchise, while also promoting asset sharing between incumbents and new entrants.

The Department of Information and Communications Technology (DICT) will serve as the primary policy and coordinating body for the law’s implementation, Mr. Aguda said, adding that the agency will also issue guidelines on cybersecurity standards aligned with each DTIP’s risk profile.

“The State shall promote data transmission infrastructure sharing and co-location to eliminate the uneconomic duplication of these facilities in the data transmission industry,” according to the IRR.

INCUMBENT CONCERNS
PLDT Inc. Chairman Manuel V. Pangilinan said the law’s implementing rules unfairly disadvantage existing operators.

“I think [Konektadong Pinoy] has added to our concerns. Eventually, what does the bill and the IRR hope to accomplish?” he said.

He criticized provisions requiring incumbents to share infrastructure with new entrants. “They are going to use our infrastructure, and their claim is that the existing infrastructure is inadequate. Yet they are going to use inadequate infrastructure. How does that improve the service?” he said.

PLDT Chief Legal Counsel Joan de Venecia-Fabul said the company is studying its options. “We are not yet in a position to say what legal remedies, but we are actively studying all [options] because ultimately we want to support the goal of the President, especially for greater connectivity,” she said.

Meanwhile, Converge Information and Communications Technology Solutions, Inc. views the law as a catalyst for expanding its wholesale business.

“The Konektadong Pinoy Law is helping competition deepen, which opens opportunities for faster rollout to communities,” Converge Chief Executive Officer Dennis Anthony H. Uy said.

He said infrastructure sharing could reduce capital expenditures (capex) for new operators while supporting Converge’s expansion.

“Infrastructure doesn’t come overnight, which is why we are ready for Konektadong Pinoy’s infrastructure sharing provisions for both backbone and distribution networks,” Mr. Uy said.

“In other countries, infrastructure sharing has proven to be beneficial because it reduces capex for new operators. It’s a win-win situation for us, and we are ready for Konektadong Pinoy implementation,” he added.

Globe Telecom, Inc. said it is continuing to innovate as competition intensifies.

“I think the DNA of Globe is about innovation and innovation actually addresses the pain points of the customers,” Globe Chief Commercial Officer Darius R. Delgado said.

“In the prepaid or fiber space, we would just continue the formula that works. We will continue developing things for them, then the demand will come,” he added.

DITO Telecommunity Corp. expressed support for the law’s objectives, particularly expanding access in far-flung areas.

“When you look at the noble objectives of the [Konektadong Pinoy], we are fully supportive of that,” said DITO Telecommunity President and Chief Executive Officer Ernesto R. Alberto.

“Who does not want to democratize access to the internet, broadband to a wider base?” he added.

DITO Chief Revenue Officer Adel A. Tamano said regulations should remain flexible for new entrants.

“New players should not be subjected to the same level of requirements currently imposed on incumbent operators,” he said.

REGULATORY AND MARKET IMPACT
For Samuel V. Jacoba, founding president of the National Association of Data Protection Officers of the Philippines, the IRR strikes a balance by imposing cybersecurity requirements.

“Within two years from registration or authorization, DTIPs shall secure a cybersecurity certification or cybersecurity compliance from the DICT Cybersecurity Bureau,” the IRR said.

Mr. Jacoba said the timeline is reasonable.

“Two years will be enough time for new operators to establish baseline cybersecurity compliance anchored on global standards,” he said, adding that incumbents should already meet such requirements.

Digital Pinoys national campaigner Ronald B. Gustilo said the law could broaden the market base.

“When more Filipinos gain reliable access to the internet, the demand for digital services, e-commerce, and financial technology naturally rises,” he said.

“This creates a multiplier effect across industries,” he added.

Mr. Aguda said the DICT expects internet prices to decline and service quality to improve as competition increases.

“We do anticipate increased investment in the connectivity sector as a result of the Konektadong Pinoy law. It provides predictability and policy direction — two major factors that investors look into before committing capital,” he said.

The law offers tax incentives, including income tax holidays and value-added tax exemptions. Tower companies’ operating licenses have been extended to 15 years from five years at no additional cost.

DICT, in partnership with the Australian government, has completed a real-time mapping of all fiber optic lines nationwide, which will guide efforts to expand connectivity to 100% of households.

Lower internet prices and improved service quality are expected as new players enter the market, especially in underserved and far-flung areas.

Despite being a national priority since 2022, the Philippines’ digital transformation has lagged due to weak broadband infrastructure and restrictive policies, according to a July World Bank report. Only 28% of households had fixed broadband access in 2023, while the country had more than half of Southeast Asia’s unconnected mobile broadband users.