WHAT was billed as a landmark deal that would deliver much faster internet speeds to mobile phone users will actually strengthen the stranglehold of the country’s two giant carriers, making it highly unlikely that consumers will benefit from fast and affordable service.
Last month, the Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom agreed to divvy up the telecommunication assets of San Miguel Corp. for P70 billion.
The crown jewels of the purchase is the right to use the 700-megahertz spectrum, which San Miguel had planned to use in partnership with Telstra of Australia to compete against the duopoly. The spectrum is significant because the 700-megahertz band is best at penetrating buildings and traveling long distances.
But San Miguel’s $1 billion deal with Telstra fell through, helped along perhaps by heavy lobbying from both PLDT and Globe, which was pressuring the government to grant them a share of the spectrum, too—an outcome that would have cut the competitive advantage and profitability of San Miguel’s prospective joint venture. PLDT even threatened to go to court over the issue, adding an element of uncertainty to the viability of the new would-be competitor.
With Telstra out of the picture, PLDT and Globe are splitting San Miguel’s telecommunications assets 50-50.
The sale was a coup for both carriers, which have dominated the industry by buying out smaller competitors—with PLDT gobbling up Digitel, which operated Sun Cellular, and Globe buying out Bayantel.
Right after the deal was announced, PLDT shares jumped 9.1 percent, while Globe shares climbed 5.6 pecent—a clear sign from the market that they expected the two carriers to line their pockets with even heftier profits.
PLDT president and chief executive Manny Pangilinan said the purchase would enable them to provide “significantly improved internet and data services to the public… in the shortest possible time.”
He added that with access to the 700-megahertz band, he expected the company to improve its mobile broadband service in six months, with “affordable pricing.”
Globe president and chief executive Ernest Cu said his company’s goal was to provide customers with a better experience on its mobile data and home broadband service in three to four months.
He acknowledged that while PLDT and Globe cooperated in terms of “getting frequency freed up,” he said the public would see “intense competition shortly.”
But the experience of the last few years argues against this prediction because the two carriers have never really competed where it counts—in price.
Both companies, in fact, are using the same deceptive tactic of luring consumers with high connection speeds at what appears to be an attractive price, until they realize that all of these mobile internet plans come with a data cap, beyond which their customers must pay more.
I’ve written about this before (“Why data caps suck,” May 4, 2015), and the arguments I presented last year still hold water today—and the telcos are still peddling the same sneaky data capped plans.
With the faux competition between PLDT and Globe, is it any wonder that the cost of internet service here is among the highest in the world?
To add insult to injury, we are also close to bottom in terms of internet speed.
The fourth quarter 2015 report from Akamai, for instance, ranks us as the 14th among 15 Asian countries in terms of average connection speed, putting us behind Sri Lanka, Indonesia and Vietnam. Among 55 countries ranked worldwide, the Philippines was faster than only four countries—India, Bolivia, Paraguay and Valenzuela.
This is how the “intense competition” between PLDT and Globe has worked out for us so far, and there’s little indication that this will get any better by giving the two companies even more economic clout. Chin Wong
Column archives and blog at: http://www.chinwong.com
