Updated 08:38pm (Mla time) Nov 08, 2004
By Erwin Lemuel Oliva
INQ7.net

«IF IBM kept its mainframe business, it would be out of business now. If PLDT were to stay on its legacy business and continue offering voice as a primary service, I think we would be dead pretty soon.»

These were the words of Manuel Pangilinan, chairman of Philippine Long Distance Telephone Co., as the dominant telco tries to map out its strategy in an evolving telecommunications market.

Pangilinan was replying to a question on PLDT’s position regarding government plans to regulate voice over Internet Protocol (VoIP) services in the country.

The Philippine telecommunications industry is currently debating on government rules on whether to allow value-added service providers to enter the lucrative market for VoIP services in the Philippines.

Pangilinan stressed that government should give telephone companies time to manage the transition from its legacy business (voice-only) to more sophisticated Internet-based services, such as VoIP.

«We do have to change the
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legacy network of PLDT to IP-based and we’re in the process of doing that,» said Pangilinan.

«(But ) how can Internet service providers sell VoIP? They don’t have a (telephone) network so there should be some form of regulation,» the executive said.

He added: «VoIP is inevitable and we’re seeing it happen around the world. So we also have to change our business model for fixed-line.»

For the past months, the growth of PLDT’s fixed-line business remained flat due to lower demand for voice-only services. The fixed line business grew by only 1 percent to 35.3 billion pesos in the first nine months of 2004 versus the same period last year.

«In the next few years, we’re exploring ways to enhance DSL (digital subscriber line) to bring broadband into the market. Our legacy business will remain. But we will enhance our copper lines to DSL to address a broader base of the market,» said Napoleon Nazareno, president and chief executive officer PLDT and Smart.

Pangilinan added: «PLDT has to move to broadband that offers a richer menu of data and video applications. Our advantage right now is that we have the infrastructure. The transition from existing legacy networks to VoIP has got to be managed very well because telcos like PLDT have made significant investments in legacy systems.»

Meanwhile, an economist believes that PLDT and other telephone companies would likely get what they want, as regulators would rule in their favor.

In a paper titled «Regulation and the VoIP Challenge,» Johnson Chua, former economist of the University of Asia and the Pacific, stressed that the «outcome of the currently regulatory tussle over VoIP is likely to end with regulators citing the limits of the (Philippine) telecoms law and affirming the monopoly of telcos over the voice business.»

Telephone companies are now using existing laws to stop value-added service providers from encroaching into the «voice» business.

With the Internet becoming more pervasive and sophisticated, applications such as VoIP now allow smaller players like Internet service providers to offer voice without having to roll out expensive telephone networks.

Originally posted at 6:46 pm of Nov. 06, 2004