SCUTTLEBUTT

KPA will shake up industry

The Big 3 in the telco business, PLDT, Globe Telecom and DITO and broadband leader Converge, are expected to take a significant hit from liberalized Internet services through the proposed Konektadong Pinoy Act (KPA), and the bitter rivals are expected to band together to oppose the measure.

KPA aims to eliminate the requirement for a congressional franchise for internet service providers (ISPs), thereby facilitating the entry of new players.

The bill also seeks to remove the requirement for ISPs to build out a nationwide fiber/cable network but favors instead the use of satellite technology over traditional technology to reach remote areas.

If signed, the bill could further fuel selling on the two telco giants with DITO and Converge being less impacted.

The telecom industry is poised for significant change, as the market responds to the proposed bill, according to brokerage house AP Securities.

The market pundit advised waiting to see if the bill is passed or vetoed.

Satellite internet excels at providing connectivity to remote areas where traditional internet is unavailable.

Although the trade-off for adaptable connectivity is slower speeds and higher latencies, they are heavily affected by weather conditions.

There is no need to set up additional ground infrastructure, meaning there will be faster rollouts in rural areas, and it could rapidly increase the number of Filipinos connected to the internet.

Satellite service providers in the country are Kacific, Starlink and FiberSAT but the latter, owned by NOW, has its license-to-operate revoked last April 2025.

Given the limited competition, satellite internet services are currently much more expensive than traditional wire connections. The KPA lessening the regulatory hurdles would encourage foreign and local satellite firms to join the race and could (in theory) bring down satellite internet prices.

The Philippine Chamber of Telecommunications Operators (PCTO) noted passing the KPA would not guarantee that there would be lower prices for consumers. We believe this would benefit many but the potential erosion to the revenue base of the telcos due to increased competition could also stymie their ability and willingness to invest in improving networks.

In Australia, there are government programs that provide subsidies to rural users who subscribe to satellite internet.

Business-focused programs, such as the Regional Connectivity Program, utilize grants to fund the delivery of ‘place-based’ telecommunications infrastructure projects, aiming to enhance digital connectivity across regional, rural, and remote Australia.

There were also consumer-focused broadband incentive programs in the past which involved issuing time-bound subsidy vouchers worth $500-1,000 for farmers and remote users in rural areas to bridge the cost of installing broadband (including satellite).

The implementation of similar government programs in the Philippines would help guarantee lower costs for users and incentivize satellite connectivity. Additionally, this would not only entice new players but also encourage existing telcos to include satellite services in their existing portfolios.

Converge is the sole telecoms firm offering satellite-based services through its partnership with Starlink. The company entered into this partnership to expand its customer base and achieve its goal of targeting micro, small, and medium enterprises (MSMEs) in rural areas.

Just like the rest of its services, we believe the company would integrate other customizable enterprise connectivity solutions into its Starlink service, which could further grow its MSME segment.