Why are there very few remaining ISPs in the Philippines?

One of the reasons why we experience a sorry state of internet in the Philippines is because of the lack of competition. The number of local players have been reduced to just 2 big parties, and a few smaller ones. Over a decade ago, when dial-up was still thriving, it was the major technology that enabled households to connect to the internet. There were hundreds of domestic internet service providers.

This was the question answered by Miguel Paraz in a thread on Quora:

When my partners and I started our ISP in 1995, the 64 Kbps leased line to the US was $10,000PHP 586,855INR 847,498EUR 9,523CNY 72,783/month! So given inflation, it would be much more now. So we had to squeeze in a lot of users into that line. A lot of the stuff I worked on was to maximize our company’s investment, like how to measure the Internet usage for dialups, and web proxy caching.

Why are there only 2-3 ISPs now – because they are the telcos. Who dominate by owning the infrastructure. Back then 20 years ago, the telcos did not know about the Internet so independent ISPs could buy leased lines to the US ISPs and then domestic leased lines and dialup lines for customers. Then it became a threat and they became serious. The telcos started to become further integrated into the telco infrastructure when DSL became the norm because an ordinary company could not operate DSL infrastructure. They also started buying larger international lines and selling IP transit to companies and other ISPs, with economies of scale that were unavailable to non-telco companies.

So the 2000s were the period of consolidation when the non-telco ISPs were being killed. This was also the time when internet data centers were starting to become a thing, but that didn’t really take off and now with IaaS is largely obsolete.

What struck us was that a dedicated line to the US was $10,000PHP 586,855INR 847,498EUR 9,523CNY 72,783 for a guaranteed 64Kbps. We guess that price has gone done in the last 20 years but once can only imagine how much a 1Gbps will cost per month these days.

In any case, it looks like any new player in the ISP business will require a lot of money in order to compete with the existing ones. Or else, they will have to ride on the backbone of PLDT or Globe.

You can read more about these below:

• Why internet in the Philippines is slow and expensive.
• Why do we pay more for slower internet?
• Why ISPs should state minimum speed for internet in their ads.