ISPs face uphill fight for survival
By Helen A. Jimenez, Senior Reporter
Business World Online, December 10, 2001
Ever since the Internet boom in the Philippines in the mid-nineties, Internet service providers (ISPs) in the country felt they had to play a tough game of survival.
Competing for a market with low telephone density and PC penetration was already a difficult challenge in itself. As value-added service (VAS) providers, ISPs also had to shoulder the high cost of bandwidth and telecommunication to be able to provide their subscribers fast and reliable Internet access.
The dot-com mania gave the struggling ISP industry only short-lived hope as most Internet start-ups went kaput even before they took off. Now, aside from the high cost of communication access, the ISPs are also faced with tough competition from telecommunications companies that are aggressively expanding their traditional voice communication services to venture into other data and Internet-related communication businesses.
According to data cited by the National Telecommunications Commission (NTC) at the International Telecommunications Union's (ITU) workshop on the Internet in Southeast Asia held in Bangkok, Thailand last November 21-23, there are 200 registered ISPs in the country this year that serve a total of 800,000 subscribers, or approximately 4 million users.
NTC also reported that there are about 3,000 Internet cafés in the country and that cost of Internet service ranges from a minimum of US$0.19 per hour and a maximum of US$1.73 per hour.
The commission noted Internet penetration in the country remains low as some 50% of the 1,500 municipalities in the country do not yet have Internet connectivity. Among the reasons it cited include the low PC penetration due to high cost of PCs, high cost of Internet access rates and the lack of telephones in many areas.
Some members of the Philippine Internet Service Organization (PISO), however, estimate that the surviving ISPs are now down to 60-70, maybe even 50. Some of the ISPs have ceased to operate, merged with other ISPs, or simply pursued another business.