Converge dives deep in ‘blue ocean’ of Philippine fiber broadband

By: Converge Admin | 01 Jul 2021

Converge, the only pure play fiber broadband service provider in the country today saw the pent-up demand for quality and affordable fixed broadband services in the country even before the pandemic.

Demand for fiber broadband became even more important when people were forced to stay at home following the movement restrictions amid the pandemic.  In fact, Converge said fast, reliable and affordable internet access became a lifeline for those working from home, having online classes, and even for entrepreneurs who had to pivot their businesses towards the new digital economy. Aside from this, Filipinos are avid social media users. The Philippines is said to have about 76.2 million social media network users that is seen to grow to 90 million by 2025.   Filipinos are said to spend an average of about 4 hours and 15 minutes each day on social media, significantly higher than the global average of 2 hours and 25 minutes. Converge, which is focused on fiber technology to provide world-class fixed broadband internet services, worked aggressively to meet customers’ demand for connectivity. The company saw its subscriber base nearly double during the pandemic to  almost 1.2 million at the end of March 2021 compared to the previous year’s level when the pandemic just started. To be able to service the surge in demand, Converge more than doubled the number of installation teams compared to before the ECQ lockdown, enabling the company to substantially reduce the backlog of installation by the last quarter of 2020.  “Customer satisfaction is at the heart of everything we do as an organization and we will make sure that they get the best possible experience, especially in this time of the pandemic,” said Converge CEO Dennis Anthony H. Uy.In December 2020, Converge installed 86% of new NCR subscribers within seven days and 64% within one day of application, respectively.  These augmentations, combined with improvements in the customer onboarding and installation process, allowed Converge to further increase rapid conversion from application to installation. Converge also significantly increased their customer support and enhanced their digital channels, to respond to customer queries, leading to reduced drop call rates for both our customer care and service desk teams. “Currently, we have almost tripled the number of our customer contact agents, bringing our answer call rate to 90%. We have scaled up our installation and repair teams. We are also investing heavily on the digital infrastructure to further improve the customer experience,” Uy reported.

“Go Deep” and “Go National” 

Converge’s mission since the beginning is to provide fiber-powered broadband connection to  unserved and underserved markets.

This means continuing to implement improvements on the customer service and support, while widening availability and accessibility of its products. Availability will be accomplished through network rollout – connecting Visayas and Mindanao to the Converge fiber backbone – while deepening the existing network in Luzon to more regions and provinces. Accessibility means making sure fiber broadband products remain within reach of Filipinos and the company offers value-for-money since it already provides 35 Mbps at an entry level price of P1,500.  The company is committed to be accessible and give the best value for customers. Under Converge’s twin strategy called “Go Deep” and “Go National,” the company continues to increase fiber broadband penetration in areas where it already has a presence. As part of the Go Deep strategy,for example, Converge continues to roll-out in more cities and municipalities in Luzon.

The company continues to add capacity because there are areas where Converge is sold out and some areas where service is not yet available thus providing room for growth.  Meanwhile, Converge’s “Go National” strategy refers to its expansion into Visayas and Mindanao.  The company recently connected both regions to its national fiber backbone and on June 7, 2021, officially launched services in the Visayas with the opening of a regional office and business center in Mandaue City in Cebu province.  Converge expects to roll-out our services in Mindanao within the second half of the year. On the international side of the network, Converge recently invested announced its plan to invest roughly $100 million to secure much needed capacity on the Bifrost Cable system, a transpacific cable being built to connect Singapore to the US. Part of the investment is developing a branch to spur off to the Philippines and a cable landing station in the southern region of the country.

Serving the Untapped Market

According to Converge, the Philippine fixed broadband market is a ‘blue ocean’ market with connectivity needs that are significantly underserved and underpenetrated compared to other regional markets.  Media Partners Asia reported that the Philippines ended 2020 with a fixed broadband penetration of almost 12% (compared to fixed broadband penetration of 9% in 2015), lower than most other ASEAN markets such as Vietnam (66%), Thailand (35%) and Malaysia (30%). As a broadband market, the Philippines is one of the most underdeveloped in Asia with the slowest average service speeds in the region.

This has been due to a number of factors that include: the country’s archipelagic topography, which makes inter-island connectivity difficult and costly; and the underinvestment in fixed broadband infrastructure by telecommunication operators whose primary focus has been and continues to be mobile and wireless, rather than fixed broadband. To address this, Converge is building a national backbone.  As of May, the submarine cables connecting Luzon to Mindanao have been finished and laid out. Converge reached the shores of Cebu in April and Cagayan de Oro in May.  “The fiber cables – the submarine and inland – had been interconnected. We are in the phase of lighting it up, which means putting up the equipment so by the end of this quarter, the backbone from Aparri to Davao will be live,” said Jesus “Boboy” Romero, Converge Chief Operations Officer.At the same time, Converge is continuing to roll out the last mile network.  Converge’s mission is to reach 55% of Philippine households with its network by 2025. As of March, the Company’s national household coverage is a little over 28% which means the company is on track to meet its targets.In the first week of June, Converge had a grand launch in Cebu for its services and will soon launch in other cities in Visayas and Mindanao in the second half.

Market disruptor 

Among the factors that hinder the connectivity is the country’s archipelagic topography, which makes inter-island connectivity difficult and costly. Another factor is the underinvestment in fixed broadband infrastructure by telecommunication operators whose primary focus has been and continues to be mobile and wireless, rather than fixed broadband. Thus, as the only pure fiber broadband internet provider in the market, Converge is introducing some disruption in the competition, and investing heavily in fiber broadband infrastructure to provide world-class quality connectivity to more Filipinos. The company, which debuted on the local bourse in 2020 –  with the biggest IPO at that time in the Philippine Stock Exchange – made its competitors in the fixed broadband market sit up and take notice.  Converge believes competition can bring about two clear benefits – it forces existing players to innovate, that is, to introduce something new that will give them an advantage over competitors while consumers are introduced to better technology or services.  The more choices a consumer has in a given product market, the more competitive the environment, and so market players are ‘forced’ to offer the best product at the optimal price.

Thus, Converge has introduced products to its subscribers such as the Time of Day FiberX Plan that allows our subscribers to choose day or night time when they can experience double the speeds of their base plans at just an additional P399 monthly fee.  With  high-speed broadband penetration in the Philippines  still low at 12%, Converge sees the fiber broadband market as still a ‘blue ocean’ market—and thus has a lot of room for growth and more than enough space for more players to compete.

Fiber for speed 

For Converge, the best gauge of the performance is achieving, if not exceeding, its own targets.  Converge boasts of having the newest and most modern fiber network compared to its competitors. The company is banking on fiber optic technology which remains far superior to any wireless technology when it comes to quality and speed of connectivity.  Fiber broadband is delivered straight to each home or customer via a dedicated fiber cable line compared to via mobile signal that comes from a cell tower that is shared by all users within the limited area reached by the radio waves from the cell tower and is susceptible to signal disruptions like walls and other structures.  Fiber optic technology can also realistically offer up to 100 Gbps connectivity compared to 5G technology that can only reach up to 20 Gbps download topspeed. The company decided to invest in fiber as there has been so much investment and competition in mobile technology for decades and apparent underinvestment in fixed broadband.  Latest data show each Filipino already has two SIM cards for wireless services. Meanwhile, high-speed broadband internet penetration in the country is only at 12% as of end-2020.  This means that only one household for every 100 families in the country has a high-speed internet connection, a sad plight as the internet is vital to empower  people in this digital age. Moreover, while the bandwidth demands of customers continue to grow exponentially, mobile network operators will need to continue upgrading their network to accommodate this demand.  Fiber, in terms of its technical specifications, can already accommodate the high bandwidth requirements that the current mobile networks cannot.5G may have the bandwidth capacity and the speed to accommodate that but right now, the market may not be ready. Device manufacturers and application developers are still preparing 5G-capable devices.

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TAGS: Converge, Dennis Anthony Uy, FiberX Plan, Media Partners Asia,

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