The AI gap is narrowing — but for Philippine telcos, the real work begins

By Oon Tian Ng

For much of the past two and a half decades since the turn of the century, the Philippine telecommunications industry has measured progress in a familiar way: improved mobile coverage, increased data speed and more accessible fiber-optic internet. Competition revolved around signal strength, network size and eventually, how quickly broadband could be rolled out to new communities. These were visible, tangible markers of success and they mattered deeply to a country that has the highest consumption of social media in the world.

That era is now beginning to shift. The next phase of competition will not be defined by how large networks are but by how intelligent they become. Intelligence is moving into the network itself, into the devices people use every day and into the services and applications that run on top of connectivity. Artificial intelligence (AI) is no longer a distant concept — it is becoming a part of the core of telecommunications. This is a reality reflected in Deloitte’s Telecommunications, Media and Technology Predictions for 2026.

Deloitte’s headline for the year, “The AI gap narrows, but persists,” captures a tension many in the industry recognize. There is a broad agreement on the promise of AI yet there is also a growing realization that turning promise into practical, productive use is far more difficult than anticipated. From boardrooms to data centers and from corporate offices to remote cell sites, the same question is being asked: How do we move from experimenting with AI to embedding it meaningfully into the way we operate and serve customers?

This question matters because the primary responsibility of telecommunications providers has not changed. More than 120 million Filipinos depend on these networks to stay connected to each other and to the world. Any technological shift, including AI, must strengthen that responsibility, not distract from it. The impact of AI will be felt not only in systems and processes but also in the lives of subscribers and in the daily work of the engineers, technicians and partners who keep services running around the clock.

Looking back at Deloitte’s predictions for 2025 provides useful context. One of the most significant forecasts was the rapid growth of data centers and the resulting surge in power demand. That prediction proved accurate. Data center capacity in the Philippines has expanded sharply, with demand expected to rise dramatically over the next few years. This growth has stimulated investments in power generation, including renewable energy, and has driven strong activity among telco-linked data center operators.

Another accurate call was the spread of AI into consumer devices. Recent global technology exhibitions have shown that AI is no longer limited to phones and computers but is appearing in everyday household appliances as well.

Not all predictions materialized on the same timeline. The widespread adoption of AI in film production and major global consolidation among telecom operators have taken longer to unfold. Even so, the overall accuracy of the 2025 outlook lends credibility to the themes identified for 2026, particularly in the areas of AI, telecommunications economics and media.

One of the most important insights for the year ahead is that AI is not primarily an infrastructure problem. The industry already understands how to build networks, data centers and platforms at scale. Where telcos struggle is integration. The real challenge lies in governance, in cleaning and connecting data and in embedding AI into existing systems and processes in ways that improve outcomes without adding unnecessary complexity. These are not technology problems alone. They are organizational and cultural ones.

For Philippine telcos, these challenges are especially pronounced. Customer data is often scattered across multiple legacy systems. There is rarely a single, reliable view of the customer and many operational processes remain heavily manual and labor-intensive. Policies designed to manage risk in an earlier era can slow innovation today without delivering proportional benefits. These are structural issues built up over decades and they cannot be solved through isolated projects or quick fixes. Addressing them requires sustained commitment and coordination across the entire enterprise.

At the same time, AI is reinforcing the importance of telecommunications providers in the broader digital economy. Companies seeking to deploy AI at scale need connectivity, data centers, computing power and secure platforms. These are areas where telcos have long-standing strengths. As demand for AI infrastructure accelerates globally, competition for resources such as advanced chips, high-capacity networks, reliable data centers, power, cooling and international connectivity will intensify. Few industries are better positioned than telecommunications to play a central role in meeting this demand.

Economic realities, however, continue to shape the local market. Mobile prices in the Philippines are among the lowest in the region and average revenue per user remains constrained despite rising data consumption. For years, competition has pushed operators to offer more data for the same price. That approach is reaching its limits. Simply adding more gigabytes no longer delivers meaningful differentiation or value.

This is why Deloitte’s observation that “gifts beat gigabytes” is particularly relevant. The future of customer engagement lies in understanding subscribers more deeply and offering experiences that feel personal and thoughtful. Value will come from relevance, convenience, and connection rather than from sheer volume of data. This represents a significant shift in mindset for an industry long focused on scale.

Media consumption trends further reinforce this shift. Filipinos are among the most active mobile and social media users in Southeast Asia. Short-form video, much of it created by local talent, is driving data usage growth. Deloitte’s prediction that the global micro–series market will expand rapidly points to a significant opportunity for the Philippines, a country rich in storytelling talent and deeply connected to a global diaspora. Supporting this ecosystem will require collaboration among telcos, content creators, studios and agencies — particularly in areas such as distribution, analytics, payments and audience management.

Taken together, these trends point to an inflection point for the telecommunications industry. The coming year will test whether operators can move beyond infrastructure excellence to intelligence, integration and creativity. The gap in AI capability may be narrowing, but closing it will demand discipline, leadership and execution.

The broader question is not whether change is coming but whether the industry is prepared to meet it. Keeping the nation connected has always been the mission. Doing so better, more intelligently and more meaningfully is now the challenge. The year ahead offers an opportunity to turn ambition into action. It is an opportunity the telecommunications industry in the Philippines cannot afford to miss.

Oon Tian Ng is the director for Technology Advisory in Telco, Media and Technology Sector at Deloitte Philippines, a member firm of the Deloitte network.