• Conspiracies and wishes

    Ben D. Kritz

    Ben D. Kritz

    AS a rule, I do not pay much attention to “blind item” news, following the principle that the credibility of information correlates to the credibility of its source. Most stories that begin with “there is word going around that…” tend to be inaccurate at best, and too often malicious or self-serving.

    There are, however, rare exceptions that can point to larger issues. One such exception appeared this week, beginning with a conversation with a service contractor for one of the two local telecom giants.

    The technician was trying without much success to improve the pathetic speed and stability of my internet connection at home, a problem that he eventually traced to the three nearest transmission towers being tapped for a number of connections far beyond their capacity. During his ultimately futile visit he related an alarming story that suggested the sudden onset of severe connection problems for internet users all around the greater Manila area might not be coincidental.

    To be fair to him and the company he was representing, he was careful to qualify the story by saying he had no verifiable evidence for it apart from “talk among some of the technical people,” and the complaints from dozens of customers in areas where internet and cellular phone service has until lately been largely trouble-free, but it went something like this: Beginning about the last week of May, shortly after Globe and PLDT made the controversial P69.1-billion deal with San Miguel Corp. to buy out the latter’s unused telecommunications assets, the two telco giants began throttling their signal over wide areas, while greatly enhancing it in a few select areas, using some of the new broadcast frequencies they had just obtained from SMC.

    The reason for this, he said, was that the two companies were trying to encourage public support for the deal that, they feared, the government might not approve. The companies first subtly degraded the service for a large number of customers (turning off some towers for periods of time is one way the technician explained this might be done), and then use the new broadcast frequencies to enhance service in areas where the signal has been unreliable for a long time. In effect, the two telcos resorted to a form of extortion: If you want communications services to improve for everyone as it has for these few customers where we’ve already been able to apply these new resources, give us what we want by approving the deal with SMC.

    Contacted for comment, both companies of course vehemently denied that any such underhanded activity was taking place. PLDT, which as a company seems to follow the more churlish public communications orientation established by its leader, Manny V. Pangilinan, and had demanded that the “Government should leave the telcos alone” refused to “even dignify that [rumor]with a response,” Its counterpart Globe, on the other hand, stressed that it was doing its best to improve service despite the Philippine Competition Commission’s (PCC) unreasonable interference in demanding that it be allowed to review the deal with SMC.

    My own assessment of the accusation that the telcos are intentionally downgrading their service to hold the market hostage until it is ransomed off with approval of the deal which will cement their absolute control over the country’s telecommunications sector for at least the next decade or so is that it is entirely plausible. Plausibility, of course, is not evidence that it is actually happening, and so unless evidence is found we must presume that nothing so devious is being done.

    But it actually makes a certain kind of sense, from a rent-seeking point of view. Customers who encounter service problems have little recourse but to put themselves at the mercy of the very providers whose services are unsatisfactory; complaints to government regulators such as the National Telecommunications Commission move at a glacial pace if they are entertained at all. Thus Globe and PLDT have little to lose by providing bad service, even though in a normal world customers would be fleeing by the thousands for a better competitor.

    And anecdotal as it is, my own recent experience seems to jibe with the shocking tale of the visiting internet technician: Over the past three to four weeks, I have seen a noticeable degradation in the communications services I use (which include PLDT, Smart, Sun, and Globe) within a wide area stretching from my home in Cavite to the office in Manila, whether cellular phone service, broadband internet, WiFi, or mobile data. Again, this is in no way proof that Globe and PLDT are engaged in anything nefarious; on the other hand, it in no way provides any reassurance that they are not.

    All this adds an interesting wrinkle to one of the items on the wish list presented by President Rodrigo Duterte in his first state of the nation address on Monday, providing free WiFi service in public places such as parks and transit terminals. In order to do that, the government will need the cooperation of the telcos that are currently doing everything they can by fair means or foul to avoid being regulated or otherwise coming under official scrutiny. As a result, President Duterte may have just put himself in the quandary of either having to break a popular promise—he is by no means the first politician to score public adoration points with the “free WiFi” canard—or further compromise the government’s already feeble abilities to rein in the rapaciousness of the country’s big conglomerates.

    What would have been preferable, and I suspect potential investors and other important observers such as the major credit ratings agencies and multilateral lenders would agree, is if Duterte would spend much less time on populist, low value-added wishes like “free WiFi” (or for that matter, “free rice for the poor” and “open a complaint desk in Malacaang”) and more on actual structural reforms, such as strengthening key regulatory tools like the PCC. Although Duterte comes across as much more empathetic and ideas-oriented than the plastic simulacrum of a human he replaced, he has yet to take any real steps on a road that is fundamentally different than that the country has been on for the past couple of decades. Putting the obnoxious telecommunications duopoly firmly in its place once and for all would be a good way to demonstrate that instead of “change is coming,” it’s actually arrived.



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    1. Cake Monster on

      I suppose any dealing worth P69B will touch off any number of conspiracy theories. At least Mr. Kritz was quick to point out that all these rumors are just that.
      I have to wonder, though, what the point would be throttling the signal? If leverage against the PCC order is the object, couldn’t they just use those new frequencies to improve service across the board or at least where service had been poor in the past without the need to resort to ‘extortion’ by cutting off the flow elsewhere? They could just as easily say: See, service is getting better here and here. So let us finish the upgrades without interference and soon everybody will benefit. Or would the conspiracy theorists prefer that the frequencies be returned to SMC or NTC to wait half a lifetime for another competitor willing to face the regulatory strictures that make maintaining a telco so difficult? Telstra couldn’t.

    2. Amnata Pundit on

      So do you think its an ideological abomination to have the government enter the telco field as the third player?

    3. Happy Folger on

      If true, this is no surprise. Globe and PLDT have always abused their duopoly. These are companies that literally steal from their customers and have gotten away from it for year–who has not had pre-loaded credit disappear?
      Speeds have been kept artificially low for years–the same equipment, linked to the same undersea fiber optic trunks, give users in neighboring countries far greater speed at lower prices. And prices have been rising faster than speed or reliability.
      Either the regulatory bodies are deeply in their pocket or just incompetent. Possibly both.
      I fully agree that the regulatory structure needs to be changed. But also the culture needs to change–rules on paper mean little in country where the powerful enjoy almost complete immunity. That is the heart of the Philippines’ problems–infrastructure and otherwise.
      It remains to be seen if the new government will effectively handle these issues.
      I am not hopeful.