The Court of Appeals has stopped the antitrust Philippine Competition Commission from investigating a telco deal that comes close to P70 billion. Thus, the coming months will be a challenge to PLDT Inc. and Globe Telecom to provide the best service to the consuming public so that they don’t provoke this public into continuing to yell “duopoly!”
The public outcry is backed by complaints of poor internet connections, slow speed, and expensive plans if one wanted faster internet. Studies comparing internet speeds (using 2014 data) showed that the Philippines had an average of 3.6 Mbps (megabits per second), or slower than other countries like Indonesia and Laos. The average for the Association of Southeast Asian Nations was 12.4 Mbps, with, predictably, Singapore having the fastest at an average 61 Mbps. Of course, PLDT and Globe offer faster internet speeds, but it will cost a consumer an arm and a leg.
The dominant players should now be held to their statements when they acquired the telco assets of San Miguel Corp. held through subsidiary Vega Telecom Inc. Their contention was that SMC had virtually all of the 700 Megahertz spectrum, which is coveted in the industry landscape because it has a wider penetration capability at a much lower cost. If they had these frequencies, they claimed, their internet service would be better and cheaper.
Now that the dominant players are in possession of the 700 MHz frequencies, they are in an excellent position to make good on their promise. It would be such a letdown to hear from them the usual excuse of permit problems—or the difficulty of obtaining the necessary permits from local government units to put up cell sites.
From the start, it was apparent that by PLDT and Globe’s reckoning, there was no room for competition. SMC had earlier announced that it would offer “cheaper and better” mobile internet service within 2016. That plan, however, faltered after negotiations with potential partner Telstra of Australia collapsed last March. This was blamed on the two dominant players, which threatened SMC with legal action. SMC president Ramon Ang was subsequently forced to negotiate with Globe and PLDT on the sale of the telco assets. How the deal worth P69.1 billion was negotiated in just about two months establishes a record.
Furthermore, the acquisition is a major development in a regulated industry that, in the first place, should have been scrutinized by the National Telecommunications Commission in terms of, for example and at the very least, its impact on consumers. Who will ensure that the dominant players will indeed improve their internet services after purchasing SMC’s telco assets? Who will see to it that they will price their services correctly and be fair to consumers? After all, SMC had said that the 700 Mhz bandwidth could substantially bring down the cost of and speed up internet service.
Globe and PLDT should now prove the antitrust body wrong in the latter’s claim that in the long term, consumers would likely face higher prices and reduced choices as the dominant players would have minimal incentives to pass on cost savings to consumers given the unlikelihood that they would be faced by strong competitive constraints.
The dominant players should prove the antitrust body wrong that their acquisition of SMC’s telco assets would eventually hurt consumers via higher prices in the latest industry battleground—the lucrative smartphone internet services—because the quality and quantity of limited and essential radio frequencies would be concentrated in their hands.
Or, better yet, the government must require from both PLDT and Globe a commitment to improve internet speed and lower the cost to consumers, with a set timetable as to when. That was in fact the promise of the scuttled third player. There is no reason the two dominant players cannot do the same now that they have the assets necessary to do it.