This excitement over Telstra might end up as a huge disappointment

In the last several weeks, there has been a lot of noise and positive online sentiment with Telstra’s intention to enter the Philippine mobile internet market as challenger to the duopoly of Smart and Globe.

The plan to launch in the Philippines sometime in 2016 is not yet firm but talks with San Miguel Corporation as the local partner in the joint venture has been ongoing as early as August. However, top brass of Telstra has been quoted that the Australian giant is willing to shell out as much as $1 billion to represent its 40% investment in the joint venture (by law, foreign corporations are only allowed a maximum of 40% ownership in select industries such as telecoms).

Yugatech 728x90 Reno7 Series

The overflowing excitement and support for Telstra is expected as many internet subscribers in the Philippines are dissatisfied with the current level of service and support they are getting from existing providers.

However, very little detail is available as to how Telstra is going to penetrate and compete against the two dominant players. Our best guess is that their service will most likely be thru a wireless network using existing LTE technology. This is the fastest and more cost-effective way to roll-out a national broadband network in the country, considering the archipelagic nature of the Philippines.

We then also consider the track record of San Miguel which funded the establishment of Wi-Tribe back in 2007 in partnership with Q-Tel. That venture was did not quite pan out and they’ve been under rehabilitation for some time now.

Our hope is that Telstra’s venture with San Miguel Corporation will learn from the challenges of Wi-Tribe and the deficiencies of WiMax technology.

Do not expect this new ISP to offer wired broadband connection or fiber-to-the-home (FTTH) in the Philippines. The infrastructure and roll-out for that takes much longer and costlier. Do not expect gigabit-level speeds as well. Let us moderate our expectations.

Telstra or even San Miguel for that matter does not have a stand-alone infrastructure in the country. If they were quietly building one, we would have heard about it and it would have been started many years ago.

The San Miguel – Ooredoo joint venture on Liberty Telecoms will continue to operate Wi-Tribe after it exits rehabilitation. That could mean the home broadband services will continue to be offered via Wi-Tribe’s WiMax technology.

What Telstra brings to the table with the joint venture with San Miguel is the international gateway (submarine cables). One of which is the EAC-C2C (Pacnet, acquired by Telstra in April 2015) which lands in Cavite and Batangas, that goes all the way from Singapore up to Japan. It also co-owns APCN-2 with Singtel, Verizon, AT&T and many others which has a landing base in Batangas.

The fibre optic subsea cable network spans 36,800 km between Japan, South Korea, Hong Kong, Taiwan, the Philippines, Singapore and China. It has a design capacity of 17.92 Tbit/s to 30.72 Tbit/s to each of these landing countries. The EAC-C2C network lands at 18 cable landing stations across Asia.

That way Telstra/San Miguel will not have to buy or lease international bandwidth from PLDT.

What San Miguel is bringing to the table is its experience (with Wi-Tribe) and of course, the 60% equivalent investment of the joint venture.

The second challenge is to build the domestic network all the way from as far as Vigan down to Naga and then connect that Batangas landing base to Palawan, Panay, Negros and Cebu and still move further down in Cagayan de Oro to Davao and Zamboanga.

That’s a pretty long fiber network. One of the longest domestic network we know of was rolled out by PLDT is the DFON (PLDT Domestic Fiber Optic Network) which spans 11,100km from Batangas to Mindoro, then Roxas to Masbate and back to Legazpi. The other is from Negros to Cebu and Leyte then down to Butuan, Cagayan de Oro and Ozamis that goes back up to Dumaguete.

Our best bet is nomadic data services and fixed wireless connection just like SmartBro or PLDT Ultera. San Miguel already owns Bell Telecommunications which applied as a mobile network operator (MNO) for January 2016. It’s possible Telstra’s investment will be poured into BellTel.

Bandwidth for wireless connectivity is very limited so it is easily congested. It is also prone to more external factors or interferences. We’ve already experienced really fast LTE speeds up to 42Mbps during its first few months back then but those speeds are almost non-existent nowadays.

Perhaps, if Telstra and San Miguel put up better infrastructure and wider coverage at cheaper fees and much higher bandwidth allocations it will surely eat up a sizable share of the market right away.

Looking at Telstra’s mobile data plans in Australia, one can only hope that their $AUD25 (Php835) a month plan for 1GB or $AUD105 (Php3,500) for 15GB data allocation will not be replicated in the Philippines. Telstra would probably price it better than that to be competitive once they launch here.

Otherwise, all these positive sentiment will only be dampened by disappointment and frustration that many Filipino internet users have been experiencing for a long time.

There is huge expectations for a yet-to-be established carrier. It could all backfire once these alleged super fast, super cheap, un-capped and unlimited data services become available to consumers.

It’s unfair for Telstra to take on this big burden — something that they did not even promise in the first place. Otherwise, they will end up being labeled as another incompetent or greedy corporation.

In any case, we welcome competition. It is good for the market and good for consumers. We remain positive and hopeful that we will really get the service we deserve, whether it’s from existing local players or new ones.

The bottom line:

* The Telstra – San Miguel joint venture is still under negotiations so a 2016 launch is still unlikely.
* The partnership is more about San Miguel which will own 60% rather than Telstra that will only own 40%.
* The joint venture will mostly be mobile data services (LTE) and not ADSL, Fiber or even cable.
* The 4th mobile network operator (MNO) could be BellTel to compete with Smart, Globe and Sun Cellular.
* Any new competitor will likely bring prices down which is always good for customers

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Avatar for Abe Olandres

Abe is the founder and Editor-in-Chief of YugaTech with over 20 years of experience in the technology industry. He is one of the pioneers of blogging in the country and considered by many as the Father of Tech Blogging in the Philippines. He is also a technology consultant, a tech columnist with several national publications, resource speaker and mentor/advisor to several start-up companies.

73 Responses

  1. Avatar for Oniitan Oniitan says:

    These statements though..
    “Telstra or even San Miguel for that matter does not have a stand-alone infrastructure in the country. If they were quietly building one, we would have heard about it and it would have been started many years ago.”
    I’ve read a few articles saying that SMC has been putting up towers since last year (or was it 2014, can’t exactly remember).

    “Bandwidth for wireless connectivity is very limited so it is easily congested. It is also prone to more external factors or interferences.”
    And that’s why there’s the controversial ‘700mhz’ band because those problems can be overcome and it’s cheaper to deploy and has wider coverage.

    “It’s unfair for Telstra to take on this big burden — something that they did not even promise in the first place. Otherwise, they will end up being labeled as another incompetent or greedy corporation.”
    It’s not really a burden if the CEO already implied that the current service in the country is lousy by incumbent operators. They see an opportunity wherein given the right spectrum for LTE coverage (which SMC has) they’ll be able to provide better overall services. Though it would be quite stupid if they can’t get any upperhand with the current bandwidth allocations that both the ‘incumbent operators’ currently (and unsatisfactorily) offer.

    Well, this is a bit of a cliche question but how much did PLDT pay Yugatech/Writer for this article?








      MORNING ???



      1 + 1 LANG YAN

      DI BA???

      HALLER !!! …

  2. Avatar for jeff jeff says:

    nakita nyo na po ba eto? http://www.techronnati.com/forums/network-systems/ related yung sinasabi nila about telstra

  3. Avatar for Geo Geo says:

    Bottom line is… WALANG PERFECT NA ISP… May kanya kanyang problema.. May iba happy sa GLOBE, SMART, PLDT, SKY, BAYAN. Let them be. We are living in a democratic country, Walang dapat pag away awayan.. Kung san tayo masaya eh di doon tayo… Peace!

  4. Avatar for Arnel Pangy Dela Cruz Arnel Pangy Dela Cruz says:

    Andaming kunwari hindi excited sa comments pero deep inside, naiihi na sa kilig, para kung sakaling disappointing nga ang telstra, kunwari hindi sila umasa. Sino ba naman ang internet user na hindi aasang maganda sana ang telstra sa kabila ng mga pang gagago ng mga isp natin?

  5. Avatar for Lijah Magaspar Lijah Magaspar says:

    Baka maging Wi-Tribe lang yang TELSTRA nayan!!

  6. Avatar for Lijah Magaspar Lijah Magaspar says:

    Ipakita nyo muna ang hangarin nyo dito sa bansa TELSTRAA!! lageng nauuna ang salita!!

  7. Avatar for Maykee Cruz Maykee Cruz says:

    Watch nyo mga links kung ano talaga talaga ang TELSTRA nayan guyss! haha


  8. Avatar for Lijah Magaspar Lijah Magaspar says:

    Sure ba tayo na magiging maganda ang serbisyo ng telstra nayan!! baka puro salita lang

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