US aid agency backs fourth Philippines 5G network

US aid body USTDA is backing a fourth 5G network in the Philippines, opening up the newest front in the widening US-China tech contest. The assistance package, announced during Vice President Kamala Harris’ visit to Manila in November, was signed with Now Telecom last week.

The operator’s parent company, Now Corp, said in a filing that the aid would provide design and planning for the phased implementation of its 5G project, including pilots in Manila “to validate network performance, test 5G use cases, and provide data to inform larger scale deployment.” Importantly for a small and under-funded operator like Now, the aid also includes assessment of potential financing schemes including government grants, equity or debt financing and the level of interest of funding organizations.

The USTDA’s financial contribution is small – just US$1.5 million – with Nokia Bell Labs providing the technical expertise.

Now Telecom will be the fourth company to offer 5G services in the Philippines. (Source: Philipp Dimitri / Westend61 GmbH / Alamy Stock Photo)

Now Telecom will be the fourth company to offer 5G services in the Philippines.
(Source: Philipp Dimitri / Westend61 GmbH / Alamy Stock Photo)

The agency describes itself as specializing in connecting the US private sector with infrastructure projects in developing countries. In this case, it is clearly part of the US drive to counter Chinese investment in emerging economies and in particular the presence of Chinese telecom equipment. Using Washington’s favored turn of phrase, Now Telecom chairman and CEO Mel Velarde said the company’s goal was “to deliver a clean and secure 5G network.”

Tepid 5G take-up

But even so, this is a rather unusual project, with the Philippines already being served by three 5G networks.

At this stage the two big telcos, PLDT Smart and Globe Telecom, say 5G take-up is so tepid they don’t even bother reporting their subscriber numbers. Consumers are said to be deterred by the high handset prices.

US interest is likely sparked in part by the introduction of a new China-backed player, Dito Telecommunity, which is 40% invested by China Telecom and uses ZTE network equipment. Additionally, it may also be responding to concerns of new President Ferdinand Marcos Jr., who has repeatedly vowed to improve connectivity.

But here is the big question: is the US government genuinely committed to backing this 5G rollout and how will it fund it?

Now Telecom is privately held and doesn’t disclose its financial figures. It has 3.5GHz and 2.1GHz spectrum and recently acquired 26GHz frequencies after buying local media player Newsnet. Its parent Now Corp, a fixed wireless access provider, reported revenue of just 196.4 million Philippine pesos (US$3.6 million) and 70 employees in 2021.

No matter how well these trials go, Now’s 5G aspirations are a heavy lift.