Abstract

In recent years, stiff price competition among service providers has helped increase mobile phone subscriptions in the Philippines, pushing penetration close to 80% for prepaid and 50% for postpaid. The market is starting to shows sign of saturation.

Philippine mobile communications market growth is mainly driven by prepaid subscriber services. By the end of the first quarter of 2006, prepaid subscribers accounted for 90% of all mobile subscribers. However, with subscriber penetration near saturation and with ARPU much higher for postpaid subscribers than for prepaid subscribers, mobile service providers have started focusing on the postpaid subscriber segment, offering a series of postpaid initiatives like monthly charge rate exemption and initiatives tailored for home and business users. Providers are also promoting unlimited calls on the same network, free text messages, and mobile phone discounts to shift the subscriber structure from postpaid to prepaid. In addition, as competition among service providers has moved from prepaid to postpaid initiatives, ARPU is likely to continue to plummet in the years ahead. Therefore, service providers including Smart and Globe in the Philippines began providing WCDMA business services in 2006, hoping to stimulate subscriber demand and guard against rapid drops in ARPU with the launch high broadband 3G services.

It is worth noting that text messages are a very popular form of value-added service in the Philippines. The huge popularity of text messaging in the Philippines is closely linked to service providers using a certain amount of free text messages as part of their promotions as well as providing unlimited service initiatives. As text messages are the most popular form of mobile value-added service apart from cell phone calls, service providers have come up with customized text message service applications to meet various needs. For example, the Philippines have integrated mobile remittance services into text messaging whereby text messages are sent to inform the remitee when they receive a payment.

Appendix

List of Companies