Fate of Philippines Wi-Fi still up in the air

Fate of Philippines Wi-Fi still up in the air

Local initiatives to develop services based on the wireless networking technology called wireless fidelity (Wi-Fi) have been relegated to the freezer. After a grand takeoff in June, Wi-Fi services came crashing down this month after government regulators shot it down.

The country’s two largest telecommunication companies arranged much-hyped launches for their respective Wi-Fi services last June. Both the Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom Inc. came out and announced plans to make Wi-Fi services widely accessible – built around a massive rollout of Wi-Fi hotspots in public places such as cafes, restaurants, malls, hotels, airport lobbies and other key locations nationwide.

Although Wi-Fi services have been around locally since last year, the real push for the local Wi-Fi market came only after PLDT bought into an independent Wi-Fi hotspot provider Airborne Access, shortly after which mobile phone giant Globe made public its decision to deploy its own Wi-Fi services. With the awesome financial clout of these two companies backing the technology, the market fully expected to soon be swept by a revolution in Wi-Fi services.

But the Wi-Fi party came to an abrupt halt less than a month after Globe and Airborne Access, PLDT’s Wi-Fi subsidiary, started to deploy Wi-Fi hotspots. The government regulator, National Telecommunications Commission (NTC), said the phone companies have not been authorized to offer Wi-Fi commercially. Both PLDT and Globe, it pointed out, were only given 30-day permits – both of which had actually already expired – to test their wireless equipment.

The NTC said the phone companies violated the 72-year-old Radio Frequency Control Law (Republic Act No. 3846) that mandated the registration of all wireless equipment using public frequencies. Under the law users of wireless devices – including Bluetooth devices on mobile phones and handheld devices – are also required to pay a registration fee which could go as high as 44,000 pesos (US$825). Another issue compounding the woes of the phone companies is the fact that Manila Electric Company (Meralco) has been given the exclusive right to use the 2.4 MHz frequency spectrum, the same frequency used by Wi-Fi equipment, in metro Manila and other parts of Luzon that fall within its franchise area.

In a presentation during a Telecom Industry Forum held at the Philippine Stock Exchange in late June, NTC Deputy Commissioner Jorge Sarmiento said PLDT and Globe’s Wi-Fi services were “illegal.”

“PLDT and Globe’s Wi-Fi services are actually banned,” Sarmiento told a room full of business leaders – including executives from the two carriers – stockbrokers and media people.

He added that the government was already in the process of formulating the guidelines that would govern wireless services and lift the suspension on the public’s use of the 2.4MHz frequency. A public hearing has been scheduled later this week to thresh out the issues.

The embarrassment of that experience, however, has been a major blow to the phone companies who have decided to put all their Wi-Fi activities on hold until after the NTC has announced the promised guidelines.

Sarmiento admitted that the government has been slow in reacting to advances in technology, resulting often in having outdated laws that prevent the commercial deployment of newer technologies like Wi-Fi and voice over Internet protocol (VoIP). The VoIP issue is even more complicated than the Wi-Fi problem because allowing VoIP services to be marketed locally would require certain amendments in the Philippine Constitution.

Wi-Fi was first introduced locally by PLDT last year through a wireless service called Blink. Airborne Access, an independent hotspot provider, followed soon after. Before the two companies merged in June, PLDT’s Blink deployed hotspots in Figaro coffee shops, while Airborne Access targeted the airport terminals and a couple of Seattle’s Best coffee outlets.

Following the merger, the surviving entity, Airborne Access, announced that it would deploy 60 new hotspots in 100 days, covering restaurants, school campuses and other public places. PLDT actually infused an initial 3.5 million pesos in cash and assets into Airborne Access to transform it into a 10-million-peso company.

Not wanting to be left behind, Globe announced its own Wi-Fi initiative a year after, deploying its first public wireless hotspot in Greenbelt 2, a high-traffic shopping and restaurant complex owned by its mother company Ayala Corporation. The phone company wanted to deploy an initial 36 hotspots, largely in malls and hotels in key cities nationwide. So far, the company has put up hotspots in Greenbelt 2, Rockwell Power Plant mall, LKG Tower, and RCBC Plaza, among others. Additional hotspot deployments are also planned in provincial cities like Olongapo, Tagaytay, Cebu and Davao.

Compared to other Asian countries, the Philippines trails far behind in Wi-Fi deployments. Next-door neighbour Singapore already has over 1,500 hotspots deployed, while Korea has over 1,000 hotspots with around 16,000 more being eyed by the end of the year. An alliance among carriers in the region plans to integrate over 8,600 hotspots in five countries under a single service.

Jay Fajardo, president of Airborne Access, said his company’s aggressive expansion plan hopes to take advantage of the popularity of Wi-Fi services worldwide. Local users, he said, are starting to use the service and the devices – laptops and Wi-Fi-enabled handheld computers – are also becoming more widely used.

Globe, on the other hand, is pursuing its own Wi-Fi strategy a bit more slowly. Jesus Romero, head of GlobeQUEST, Globe’s Internet and data arm, said the company is only aiming for a small number hotspots initially, primarily because it only wants to generate market awareness about the technology and the service.

“Our intention is to have at least some initial users who can gain experience using the service,” he said.

Both Airborne and Globe are hoping that the “build-it-and-they-will-come” strategy will work for Wi-Fi. Airborne plans to roll out as many hotspots as it can build to allow more people to gain access to the service and pay for it using prepaid cards.

Although Globe has the same objectives, it is following a slightly different go-to-market strategy. Although both companies are into building wireless hotspots, Globe shoulders almost all of the initial investments while Airborne offers a hotspot-in-a-box service that allows merchant establishments to buy their own wireless networks.

Globe takes care of the costs for all the equipment and the Internet access. Merchants only provide the space. The merchants can also sell prepaid cards and get a commission from card sales.

Romero said some merchants are satisfied just being a hotspot, convinced that this fact alone is already a value-added service to their customers and a high-tech come-on for new tech-savvy clients.

Airborne, meanwhile, offers a package of products that allows merchants to build and own their own hotspot. Airborne installs the wireless network while the merchants provide their own Internet access. The merchants can collect fees for the Wi-Fi service or sell Airborne prepaid cards as well.

Romero admitted that the business model for Wi-Fi service is still unproven. Both Globe and Airborne are hoping that the prepaid system, which has worked so well for the mobile phone market, will likewise prove to be a success for the wireless Internet service. But even while they are pushing the prepaid system, the two companies are also looking at alternative business models.

However, with the legal roadblock put up by the government, the firms have no choice but to put all their Wi-Fi plans on hold, and wait for the NTC’s public hearings and the resulting guidelines to be issued. Until all the legal issues are resolved, the fate of Wi-Fi in the country, true to the technology’s wireless nature, will remain hanging in the air.