CUTTING down prices of telco services on the short term is only a palliative, and not a cure, to what experts see as a disease in the telecommunications sphere dominated by two giants, experts say.
What they deem as the ultimate solution is to open the market to new players to further drive competition, perceived as the key ingredient to improve and make the relatively dismal telco services in the country more affordable.
“The only way to lower prices and improve quality of Internet service sustainably is through real competition,” Mary Grace Mirandilla-Santos, an independent researcher on information and communications technology (ICT) and telecommunications policies, told the BusinessMirror.
Citing a report from the International Telecommunications Union, she said that, while the duopoly may result in more affordable telco services, a shift to a three-operator market can further drive prices down.
“President Duterte has a great opportunity to introduce reforms in the telecom sector, which has been controlled by the duopoly for five years,” Santos said. “And the dismal improvement in quality of Internet service and low value for money are proof that consumers’ interest has not been served optimally by just two major service providers.”
In fact, consumers experience poor service even in basic telecom services like voice, where dropped calls still happen a lot, she added.
“And with the shifting demand to Internet, it is high time to let real competition set the bar high again so that market players will keep striving to offer better and more affordable services,” she said.
President Duterte on Thursday threatened to open up the telco market to foreign players to force companies to step up their game, and promote inclusive growth. He also cited the multibillion-peso net income of PLDT Inc. and Globe Telecom Inc. as his basis for opening up the sector to other players.
Combined, the two companies netted P33.4 billion in profits during the first nine months of 2016.
Mr. Duterte noted that he will not open the market if telcos will “make their price dive down.”
Pierre Tito Galla, who founded consumer group Democracy.Net.PH, and Internet Society of the Philippines Chairman Winthrop Yu lauded the chief executive for standing up against the two telco titans, saying that they are hopeful that this statement will result in significant price cuts in telco services.
“We fully support the President’s plans to actively foster competition in order to truly improve Internet access and affordability for all Filipinos. The Philippines has been falling behind for over a decade, and it is time for clear, positive action that will enhance business competitiveness and support national development. We look forward to the President’s decisive moves to fast-track regulatory and legislative initiatives to foster competition,” Yu told the BusinessMirror.
He was referring to the Philippines’s almost consistent bottom-two ranking in Akamai Technologies’ State of the Internet Reports.
Filipinos, according to the report, endured an average broadband speed of 4.3 Mbps, which is a 24-percent improvement from 3.5 Mbps last quarter. When compared to the second quarter last year, the country’s average broadband speed improved by 37 percent.
The only country behind the Philippines is India, while South Korea continued to be the Asia-Pacific nation with the fastest broadband connection with 27 Mbps.
For wireless Internet, however, the Philippines ranked 6th in the second quarter report of the content delivery network player with an average speed of 8.5 Mbps for mobile, faring better than other developed economies such as Singapore and Hong Kong.
Galla noted that while his group is supportive of President Duterte’s call to lower the prices of telco services, his camp deems that opening up of the market to new players is a better option.
“Promos, promises and press releases are not improvements, and Filipinos are painfully aware of this. The President can fulfill his campaign promise of ending poor quality and expensive telecommunications service from the dominant duopoly,” he said.
Santos agreed, saying that the ultimate solution to the Philippines’s dismal ranking in Internet quality in the region is to heighten competition through a third player.
“Lowering prices does not equate to better service. It may even mean worse service. Lowering price is a populist move that does not effect real change. It’s a palliative, not a cure,” she said.
San Miguel Corp. was supposed to launch a third core player in the Philippines this year. The hype for its partnership with Telstra Corp. Ltd., however, was quickly extinguished when the PLDT and Globe co-acquired San Miguel’s telco assets to gain access to its spectrum holdings.
This effectively removed the prospect of another player and trimmed down the chance of a budding company to compete against the two existing vendors with the limited frequencies left with the National Telecommunications Commission.
This is not the first time President Duterte threatened to open up the market to new players. After winning the elections this year, he floated the idea of welcoming new entrants to the sector.
In his latest statement, Mr. Duterte said he is not waging war against the Ayala and Pangilinan groups, but merely wants Filipinos to enjoy quality telco services just like in other countries.
Responding to his statement, executives of the two players cited their multibillion-peso investments over the last few years as a testament to their vow of improving their services, while offering them at affordable prices.
“We welcome this development. Vibrant competition will be good for the industry and country. On our part, we are investing massively to build the fastest and most advanced data-centric fixed and mobile networks in the country to deliver progressively better and affordable services,” Ray C. Espinosa, who heads the regulatory affairs and policy office at PLDT, told the BusinessMirror.
Smart Communications Inc. Spokesman Ramon R. Isberto added that in terms of affordability, prices of telco services have been going down for the past five years.
For example, he said, the price of a megabyte of data way back in 2011 was at P1.20. Today, it only costs about 4 centavos.
“It’s being going down significantly in the last two years as a result of innovation and competition,” he said. “We are doing our share. We are investing.”
Globe Spokesperson Yolanda C. Crisanto echoed this, saying that there exists a “hyper-competitive activity” in the telco space.
“The way that we are operating in the market really shows that prices are down,” she told the BusinessMirror. “But insofar as the entry of another player is concerned — whether foreign or local — we have always said that we are not against it.”
27 comments
siguro panahon na para magpalit ng telco dito sa pilipinas! ang mamahal naman asi ang mga singil nila!
alisin na ang mga telco na matataas magsingil ngunit panget ang serbisyo!
mas maganda yan dahil may kakumpetensya na sila di na basata basta makakapagpataas ng presyo dahil babaan ng kalaban nila ang price
ibigay nalang sa iba! Tutal di naman maganda ang mga serbisyo ng mga telco ngayon na nagbibigay serbisyo sa ating bansa!
sus! mga kompanya na kinabibilangan nya ang ipapasok nya! wala kang mauuto dutiti!
walang kompanya na kinabibilangan si tatay digong!
itigil mo yan na mdaldal mong bibig!
patalsikin si digong
ikaw ang dapt patalsikin dito sa pilipinas!
kung wala naman kwenta ang sasabihin manahimik na lang.
kung meron ibang papasok tiyak na magkukumahog na ang mga dati nating provider
di natayo dapat mabahala dyan ang importante yung tinututukan ang bansa at inaasikaso sa pagunlad,.
wag tayong magalala dito sa mga pasya we are in good hands with our president,.
tma yan para naman mapalitan na ang ngayon na telco hindi nman maganda ang kanilang serbisyo eh
walang kwenta ang dutae na yan!
akala mo naman may kwenta ka sa mundong ito!
Opening telco market to foreign players is a good move but the government must act on a faster mode. Existing players might pre-empt the government good intention.
sna matuloy na yan para nman masubukan na rin
palitan na para mas maging maayos ang pilipinas
sangayon kami dya para nman mas mapapa dali ang communication sa hirap ng net sa kasalukuyan na telco ngayon
okie pa nman sila ahhh..
sa tingin ko hindi nman kaya kailangan na rin natin ang bagong telco saatin
patuloy lang tayo sa pag tiwala sa pamumuno ni digong sa ating bansa.
wag na kayong umasa sa dugong na baliw.
ikaw ang wag maniwala sa mga amo mong ABNOY.
kampante ako sa pamumuno ni tatay digong.
sorry for talking english..
i just want to tell how i despise the lousy service of SMART here..
and GLOBE is even worse;they even eat your load if you do a cross transfer
yes, even LTE: they are at least double the price like in Germany –
permanently Internet drops, no DNS, hours of clogged traffic like on Manila roads – saturday n sundays are UnBEARABLE
and all for a payload of cash
I hope Duterte gets them all when they lunch their shuba instead of delivering better service 🙁 🙁 :/