Duterte could break up the telecom monopoly

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RIGOBERTO D. TIGLAO

RIGOBERTO D. TIGLAO

The foreign and local oligarchs controlling the virtual telecom monopoly in the country — made up of Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom — probably would have sleepless nights after President Duterte warned them the other day that if they don’t improve their services, they’ll bring in competitors from China.

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If that happens, it will be devastating for PLDT (and its cell phone unit, Smart) and Globe. It would result in the end of its virtual monopoly, which would be a boon to cell phone and internet users, as well as for the economy in a country that remains the laggard in the region in terms of its telecom efficiency and infrastructure.

The world’s biggest telecom firm now, after overtaking the American Verizon last year, is China Mobile Ltd., while the tenth largest is China Telecom. These could undoubtedly bring a lot of resources into the Philippines to dismantle the local monopoly.

And it would be so easy for Duterte to get these companies into the country. Why?

Because both are state firms, their biggest stockholder being the government itself of the People’s Republic of China.

China would certainly jump on Duterte’s offer, in order to get closer to the country that has been antagonistic to it since it had been the US surrogate under past administrations, especially with regard to the South China dispute. Being state firms, the Chinese leadership would simply order either of the state firms to enter the country’s telecom industry one day, and the next day its executive and technicians will be here.

Not only that, it’s a fantastic business proposal for Chinese telecom firms: with our 100-million population, we’re a coveted market, being the 12th largest market for cellphones in the world.

And guess what are the large cellphone manufacturers in the world?

The Chinese firms, Huawei, ZTE, Oppo and Xiaomi, whose combined sales are more than all the revenues of Samsung, Apple and Nokia. The cellphones, and even smartphones of these companies, are now priced at a third or even a fourth of the cost of Samsung and Apple, which means, since the upper-class here is so small, these phones could overwhelm the Philippine market in a very short time. Already, industry sources say that Huawei, ZTE and Oppo’s cellphones — the cheapest now in the market —are accounting for 60 percent of new sales of cellphones in the Philippines.
telecom20161010With Duterte’s support, the entry of Chinese firms into the country won’t suffer the sorry fate of the attempt of the Australian firm Telstra and San Miguel to break PLDT and Globe’s duopoly. Telstra actually had already made substantial investment in Metro Manila for its entry, building cell sites which, when the company gave up in March, already covered 40 percent of the region. Telstra had also already employed 1,500 employees.

Worryingly “too cold”
Telstra, sources said, felt the government was worryingly “too cold” to its entry. Telstra was even told that the oligarchs owning PLDT and Globe Telecom were very close to then President Aquino, and so was his candidate for the presidency, Mar Roxas, who they were told would win the May elections because of its huge campaign finances and its control of government. Telstra allegedly was told that cases would be filed in court that could, at the very least, delay its entry for years. “What foreign company wouldn’t be scared with such threats, and a President supporting its rivals?,” a foreign consultant privy to Telstra’s attempt in entering the Philippines said.

Duterte’s unexpected rise to power has totally changed the game, especially as he has been at best apathetic, and at worst, antagonistic to the oligarchs. “I hate oligarchs,” he said in one of his speeches. Sources claimed that the telecom oligarchs’ attempts, through various third parties, to have an audience with Duterte have been rebuffed, in stark contrast to their first-name-basis relationship with Aquino.

The entry of a third telco in the country could take the form of China Mobile or China Telecom taking a 40 stake in the firm, in order to comply with the Constitutional limit on foreign investment in public utilities — despite PLDT and Globe Telecom’s violation of it. The government could take a 20-30 percent stake through equity by the Social Security System, the Government Service Insurance System, or by the Development Bank of the Philippines.

San Miguel, since it still owns the crucial, and valuable 700-megahertz spectrum, a frequency that would give a spectacular boost to the cellphone company that is authorized to use it, could be the biggest Filipino investor in the firm, taking up a 20 to 30 percent stake. That, however, depends on whether the May sale of its spectrum to PLDT and Globe is stopped by the Philippine Competition Commission (PCC), which appears likely to, so that Globe in panic filed a case against its intervention in the Court of Appeals.

The government’s entry into the telecom industry isn’t at all inappropriate, nor even unusual. Except for Thailand (because of Thaksin’s sale of the biggest telco to Singtel, which was one factor that led to the successful coup in 2006 that toppled him), all Asian nations’ telecom industries — from Japan to Vietnam — are dominated by state firms, with foreign firms allowed in the past decade to enter the industry but may take only small market shares. (Cf. Chapter 2 of my book “Colossal Deception: How Foreign Firms Control Our Telecom Sector”)*

But Duterte’s threat to get Chinese telcos to enter our telecom sector and give PLDT and Globe a run for their money isn’t the only worry for PLDT and Globe oligarchs. Duterte is the first President – ever since the two firms got to be controlled by foreigners – who is not their friend, who appears even to be antagonistic to them not just because they are among the oligarchs he says he hates, but that he is becoming mad at their poor service.

And Duterte has the legal, easy means for them to eat out of his hand. This is to order the Securities and Exchange Commission to simply implement the Supreme Court decision in 2011 and 2012 that would have ruled them as violating the 40 percent Constitutional limit on foreign equity in public utilities.

That on Wednesday.
 
The second slowest in Asia
Duterte certainly has a strong basis to claim that the PLDT-Globe duopoly has been providing lousy service, if we use as measures the country’s average internet speed and the percentage of users with internet speeds of above 4 Mbps.

We have the second lowest average internet speed in Asia-Pacific, according to the latest first-quarter 2016 report of the Massachusetts-based Akamai Technologies, a leader in the internet industry (see table). Our internet average speed is 3.5 Mbps., below the global average of 5 Mbps. That puts our global rank at 113 among 137 nations. A war-ravaged country like Vietnam and a poor country like Sri Lanka have faster internet speeds, at 5 and 5.4 Mbps, respectively

Indonesia, the country of Anthoni Salim, PLDT’s biggest controlling stockholder, has a faster speed of 4.5 Mbps. Singapore, the country of Singtel, Globe Telecom’s biggest stockholder, has a rocket speed — compared to ours, that is — 16.5 Mbps.

The picture is worse if we use the percentage of users having speeds of more than 4 Mbps: We’re on the bottom rung in Asia, with only 18 percent of users having that speed, way below the global average of 63 percent. I find it shocking that the comparable figure for Vietnam is 55 percent and for Sri Lanka, 71 percent. How could that happen?

What’s that again, Dr. Bernardo Villegas, and the neoliberals of the Foundation for Economic Freedom – that foreign investors ensure efficiency in an industry?

Or was it just a fluke that the biggest telco, PLDT, has been scrimping on its capital investment since it suffered a P5 billion loss in 2015 by investing in 2014 a whopping P20 billion in a 10 percent stake in internet site-maker Rocket Internet, which later tanked in the stock market with a huge drop in its share price.

tiglao.manilatimes@gmail.com

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54 Comments

  1. Carlos Dela Cruz on

    I think the two telcoms Globe and Smart welcome the competition. They prepared for Telstra’s entry investing in massive capex. But alas Telstra was all air or chickened out.

  2. More competitors means better service at a lower cost. In fact, our local telcos are open to more healthy competition. Pero sana wag naman galing sa China. Medyo nakakatakot, baka they will take advantage of our weak technology and compromise private information. Why should we trust a country that has malicious interest from the beginning di ba? Opt for a better telecoms company from other countries but China.

  3. May nabasa ako dati na open daw ang PLDT na magkaroon ng third player sa telecoms industry kaya lang hindi naman tumuloy si Telstra. Sayang, mas maganda siguro ngayon ang promos ng mga telecoms para sa ating mga subscribers. Siguro sa dami din ng red tape na dadaanan ni Telstra kaya sya nag-backout. Dapat gawing mas madali ang foreign investment ventures dito sa Pinas para mas maraming big players ang pumasok.

  4. If the telcos are having sleepless nights, it’s because they have to rush rolling out their newly-acquired 700 mhz frequency before government’s deadline for better internet runs out.
    Duterte doesn’t have to make threats to open the market to competition because the indiustry is already deregulated. But there are so many permits and so many excessive fees according to the Dept of Information and Communications Technology that not only is improvement slow, but competition is discouraged from the massive capex involved, as evidenced by SMC and Telstra being unable to participate despite having the rights to that all-important fequency. What I don’t understand is Mr. Tiglao is so quick to attack Salim but so inviting to China. Selective xenophobia?
    If we are to have better internet as ordered by Duterte then we need to get rid of roadblocks like the ones mentioned by DICT as well as the interference of the PCC. Then we can improve the foreign investment environment by easing ownership restrictions by amending the obsolete, xenophobic Constitution’s economic provisions.
    Enough of these hoary old abstractions like nationalism and isolationism. People want better internet and are getting tired of stuffy, turgid exposition that only the author obssesses about.

  5. Good article Mr Tigalo.

    PLDT seems more profit driven than providing a reliable service to its customers.

    Many time in a week there is a loss in the service including phone calls which customers pay a premium cost.

    It seems the maintenance people of PLDT just turn of the service or it breaks down quite regularly. For this

    customers pay a premium price for these breakdown and no reduction in the monthly bill for the inconvenience

    and non service.

    I am a PLDT customer in Mindanao and any issues one has to ring the call centre in Manila. This only applies if

    you have lost your internet. too bad if the phone line is down and your cell has no load.

    I am pleased President Duterte is looking into the communications in the Philippines.

    Looking forward to a more reliable internet.

    PLDT cant be a turkey and expect to fly with the eagles

    On a closing note I will commend PLDT on one service they provide. That’s the cashier when paying your bill.

    Its 50 times faster than PLDT DSL Broadband.

    billfaster

  6. SI Pangilinan ang dapat sisihin.Ang PLDT at Globe very
    poor ang internet at ang kawawa ang mahihirap load ng load sa halip na ibibili ng pagkain sa cell phone.Monopolized at fully control nila ang market . Sa U.S. and Canada due to open market very progressive at hindi corrupt ang gobyerno.

  7. Koko Celebredo on

    The President clearly just wants the best for the country. Previous presidents only wants the best cut they can get for themeselves from the investors.

  8. juan manuel jose on

    The possibility of a chinese firm entering our telecom industry is a double edged sword.

    On the good side, it can dismantle the pldt-globe duopoly and improve our sluggish internet speeds, which is a very good thing. However, the darker side of this is giving up our online privacy to the chinese.

    Intelligence gathering has come a long way from using actual spies to simply snatching precious metadata as it transits the internet. And he who controls the gateways has God-access.

    Bear in mind that facebook, google, and amazon are planning to ban chinese-made hardware on their data centers because of the fear that they might be bugged (the NSA did this with seagate, western digital, and toshiba).

    While the possibility of china entering our telecom market promises a much needed boost to our internet speeds, we must start thinking about what we are giving up.

  9. David Michael Meyer on

    Well about time someone did this –Once you see a monopoly get a strnaagehholdd of such services as water. electric ;; communication etc ..Then we see a decline in services, and a dictation of the Price ..
    I have seen it in my personal communication service ..Globule took- over from my provider Yu cant get customer care — just get put on endlessness hold….It should be renamed ..We don\’t care and it shows .comm …monopoly off such services is the dearth blow to customer care –it seems

    David M Meyer (Psych}

  10. Bobbi Tiglao Thank you at Bravo! Kelan kaya ala ng buffer ng buffer ang Blacklist? Sigi na Pres. Digong, go China!

  11. Reminder please, Secretary Salaman of Communication is a former Globe employee!!!!!!!!!!!!!!!

  12. mas gaganda at mapapabilis na nito ang transaction sa mga online store at mga opisina na gumagamit ng internet ayus! good job mr president.

  13. tama naman si president duterte kasalukuyang napaka bagal talaga ng internet natin dito sa pilipinas

  14. sawakas magandang tulong to sa trabaho or sa mga school na kailangan na kailangan ng internet na mabilis

  15. alfredo cumadcad on

    sana naman maayus na to heheh para naman mabilis na ang internet tyaka maganda ng ang pagcontact ko sa abroad :)

  16. dapat lang palakasin ang internet service dahil marami ring trabaho ang naaantala dahil dito,good job digong.

  17. Lamberto Pinaglabanan? on

    You rant against monopoly/duopoly yet you laud the hegemonic ambitions of China and the domination of its interest in the Philippine economy?

  18. mdaming gagawin na plano si digong sa pinas para umunlad ang ating bansa huwag tyo masyadong epal lets just wait!

  19. kailangan lang na maintain nila ang connections para hindi pumasok ang bagong companies, telco ay siguradong mas magaling sainyo kaya paki ayos na lang…

  20. lagi lamang tyo sumangayon sa nais ng ating leader para sa ikauunlad ng ating bansa hayaan nalang natin na mdama natin ang pagbabago

  21. dapat naman palitan sila kasi sino ba nman na mga subcriber nang bayad kung ang net connection is very poor

  22. kapag hindi naayos ang serbisyo nyo sigurado papayagan na digong pumasok ang bgong telco.

  23. kung lagi tyong taliwas sa mga nangyayari para sa sarili nating pagbabago sa tingin niyo ba bubuti ang buhay natin?lets just support him and trust him.

  24. additional telco is good but we need to give chance to the pldt and other internet companies to re gain thier service.

  25. ang kailangan lang nating gawin ay sumuporta sa nais ni Digong hindi natin kailangan na laging mangialm!

  26. Sna ayusin muna nang pldt. globe, smart ang kanilang serbisyo para hindi na tuluyang pumasok ang bagong telco na darating yon ang gustong sabihin ni digong..

  27. kung maayos din ang bagong telco na darating kesa sa existing na Globe at Smart Pldt at hindi gaano kamahal bkit natin subukan.

  28. gagawin lahat ni tatay Digong para sa pilipinas para umunlad ang pinas at macontrol ang mga gastusin dito sa bansa.

  29. I care on the internet speeds rather than monopolies. However, if the breakup of monopolies will increase the internet speed then so be it.

  30. After the breakdown of that monopoly(better still;during)..straight onto the Electricity monopoly!!

  31. Duterte is acting like a middleman or ahente of China than the President of the Philippines. Puro China China na lang. Gusto pa isacrifice and Filipino companies for China.

    • O di cge wag na papasukin ang iba.

      Pagtiyagaan mo na yung mabagal na internet at mahal na data schemes ng mga telco ngayon. rich ka naman yata eh.

  32. Cynicbuthopeful on

    That PLDT is a major partner of Microsoft, there is an added monetary incentive for PLDT to nudge its subscribers to get a more expensive plan that incrementally is a bit “faster” to appease the anxiety of its subscribers from downloading the relatively massive file size of the weekly updates Microsoft releases every Tuesday (Wednesday here). Consuelo de bobo, my Globe does a less irritating job in performing this task.

    Yes. It is high time to let China wallop the duopoly that we Filipinos have been contending with for so long. Parang utang na loob pa na may Internet tayo. Que se joda if the U.S. government went all out to derail the admittedly kickback-laden NBN-ZTE project to provide the backbone for our government’s IT infrastructure. Just ensure that this time around – wala ng for the boys.

    Let NSA work for its budget. Allowing their dummy to directly engage in this project so it can have easier access to our country’s database, means they even get to earn from snooping at us.

    Going back to the issue of Globe-PLDT duopoly. Unlike the problem of Metro Manila’s horrendous daily crawling traffic, adding more bandwidth does not face the problem of “lack of roads.” All it takes is a moral choice for these two to convince its top honchos that taking a cut from their stupendously fat paycheck so their companies can provide more bandwidth is an appreciated service to the people. Kung may moral bearing nga sila na ganito.

  33. This is not just a problem of control. Pointing your finger at foreign controlling interests is only part of the story.

    It is a as much a problem of sound management at the executive level. The incompetence of the people at both companies (with Globe being the worst) is absolutely staggering. How can they be competitive with such a deficient manpower?

    Now Mr. Tiglao, maybe you can explain to me how a Chinese company would significantly enhance the performance of the Filipino network when the numbers in the table you have included in your article show that China is just marginally better than the Philippines. It seems to me that a partnership with a company from South Korea, Hong Kong, Japan or Singapore would be a much smarter choice.

    But most probably this has nothing to do with technical prowess or objective qualifications, but much more with the brand new political winds blowing through the country. I hope that you will enjoy it.

    • RIGOBERTO D. TIGLAO on

      china’s beating us is a feat in itself since itas 1.3 billion subscribers omares to our 100 million. China has still vast countrysides basically untouched by modern facilties where 5 Philippines would fit. india with 1 billion obviously can do that.. you miss the point entirely though. the pint is that the monopoly must be broken by a 3rd player backed by govt which shoukd have stakes in it and in the board so practices pldt and globe did, which was to declare huge dividends every year (which were brought out of the philippines) -are blocked

  34. I have a contract with Globe Internet until 2017 of November, I plan to retain it as long as I can. This article is good for the many Pilipinos who cannot afford my kind of Globe Post Paid Plan, like my brother and mother. It really would be nice to know that there will be more Telco to go to for Internet Subscription suited for my family needs and budget.

    I just would request that they can be of good quality| just like my SG Globe.

    • Pierre, it is not all bad as what you read. Globe is the best this time.. It is the best service that is the problem. Cell phone companies and Internet providers are the culprits. A message to Maany Pangilinan and Salim. “. GO TO HELL “

  35. All monopoly is bad for any country primarily because it takes away the right of choice and fair competition. Like the oil cartel that starved the whole world by decreasing the supply of oil thereby increasing the fuel prices. Look at Meralco, MWSS, PLDT . These are monopolies that struggled all Pilipinos via high prices. It is my opinion that all public utilities must be owned and operated by our government. It is just a choice of good management which we lack.

  36. Jiovanni jalolino on

    Spot on Tiglao! Make more articles like these, we need to disseminate more information to our Filipino people. Let’s not waste another 6 years of stunted internet growth. Let foreign telcos enter the country.

    • I agree.
      “It’s about time”.
      There must be no condition, just remove the monopoly to improve the service(s) for the filipino people.

  37. It is about time. Pangolin an Salim group must have a competition. Next is the Meralco group, our nation has the highest electricity rate in Asia. Go for it Duterte.

  38. Its time to dismantle these monopolies, and help increase the middle class – the way eliminate inequity, and remove this oligarch control of our politics. Open up the market to competition. Let the Chinese, Australians, and others in – not only the yellow oligarch controlling our economy.

  39. might as well, your restricting millions of people of communication and information, just for these two companies to duopolize? let me know the positive impact these two companies plan to achieve in the years they have been allowed to monopalize. and if there only job was to give good service and affordable communications, have they failed or satisfied the needs of the country???

  40. good job Digong go for it. kick these greedy oligarchs and companies exploiting the people and bleeding the country. I cant wait for this to happen. actually they also should be investigated for wrong doings in the past and be given hefty fines. their time has finally come and answer to the people power and pay back the loses and thru their gains.