The 2021 World Competitiveness Report by the Institute for Management Development (IMD) had some bad news for the Philippines, placing it 52nd out of 64 polled countries. This represented the steepest decline in Asia as well as a significant drop from the previous year when the county ranked a more encouraging but still somber 45th place.
A big reason for this lack of competitiveness was the country’s poor infrastructure, particularly when contrasted with those of its neighbors in Southeast Asia. This is especially clear when assessing the country’s information and communications technology (ICT) infrastructure, particularly in the number of telco towers.
With the recent massive public and private investments in digital infrastructure, Philippines was able to provide the basic connectivity required for economic resilience and business continuity during the COVID-19 pandemic. However the country still lags behind its neighbors in the ASEAN, having just 17,850 towers in 2020, each serving 4,090 users. In contrast, during the same period, Thailand had 52,483 towers and 991 users for each tower. Vietnam posted even more impressive numbers, with 90,000 towers and 756 users per tower.
Why Do We Need More Telco Towers?
The tower-to-user ratio is a rough metric for assessing the data handling capabilities of a geographic area. It is rather imprecise, as it does not account for the number of transmitters per tower nor the specific technology used by the transmitters. Overall, however, tower-to-user ratios can give a very good idea of just how much capacity an area has for serving data users.
Some capacity issues could be solved by increasing the number of transmitters and telco providers that could use each tower, through a common tower policy. Up until the Philippines’ common tower policy was rolled out in 2020, the few telco towers in the Philippines also had a low density of transmitters. This meant that even if users had coverage, they could quickly run into problems with network congestion.
However, even with a high density of transmitters, a low number of towers will always be problematic in terms of range and coverage. This is especially evident in the Philippine countryside, where many inhabited areas remain practically unconnected. There is also a practical limit to the amount of equipment that could be placed on each tower, which means having more towers available is usually preferable for increasing network capacity.
How Many Towers Are Needed?
In 2020, the Philippine Department of Information and Communications Technology (DICT) projected that the Philippines will need at least 50,000 towers to meet the country’s ICT needs. The Build, Better, More infrastructure initiative (formerly the Build, Build, Build! program) is currently committed to making this number of towers available to telcos, with a focus on adding more in the countryside.
Before the common tower policy was rolled out, the projected timeline for meeting this goal was around 10 years, starting from 2020. This was because only telcos were allowed to build towers, and many lacked the incentive to do so outside of areas with already high demand.
After the roll-out of the common tower policy, however, third-party tower providers were given the go-ahead to enter the market. As a result, the timeline to complete the 50,000 towers was greatly compressed to 3 to 5 years.
How Third-Party Providers Help Meet the Philippines’ Connectivity Goals
Empowered by the common tower policy, third-party tower providers can now build and operate towers for multiple telcos to rent. This has led to several private companies stepping in to build the digital infrastructure the Philippines needs to stay competitive.
Unity Digital Infrastructure, a joint venture between the Aboitiz InfraCapital (AIC) and Partners Group, is one prominent participant. Due to the company’s extensive presence in the Philippines, coupled with AIC’s and Partners Group’s market knowledge and expertise in the building all-kinds of high-quality infrastructure, it is likely to play a significant role in the Philippine national government’s initiatives to improve Filipinos’ access to reliable connectivity.
The 50,000 tower requirement for the nation is anticipated to be met far more quickly with the help of Unity and other common tower developers than by the telco providers themselves. To speed up construction and bring installation costs down, these providers can leverage their specialization in the development of these infrastructure assets.
Due to its value offering as a “one-stop” provider of tower services, Unity is anticipated to become a preferred choice for telecos. Additionally, the Philippines’ major telcos already have existing working relationships with Aboitiz InfraCapital, Unity’s main backer, through its small cell site assets, making it an established player in the Philippine telecommunications industry.
Common Towers Will Help Bridge the Digital Divide
As it stands, the Philippines is experiencing a serious digital divide. Internet use is dramatically uneven among different parts of the country, with 84% of the National Capital Region residents having access to the internet and only 47% of Mindanaoans and 62% of Visayans having the same privilege. The rest of Luzon outside the NCR does not fare much better, with usage at only 65%.
This is a direct consequence of previous tower policies that disincentivized the increase of tower coverage outside of already-developed areas. The gap between Filipinos with reliable internet access and those without has already widened gaps in information access and economic opportunity for rural and urban Filipinos, to the detriment of the entire country.
The Philippines has other problems that affect its competitiveness that have little to do with digital infrastructure. However, having secure and democratic internet access for all is likely to be foundational in solving the country’s other issues. And to achieve this goal, having enough towers to cover the country is probably a non-negotiable requirement.
