• Healthy competition benefits consumers

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    IT is common knowledge that competitive markets benefit consumers because the competition to attract customers creates economic efficiency, innovation and better quality products at lower prices. When that happens, consumers—and the economy—win.

    Recently, competition has again become a buzzword due to accusations of anti-competitive behavior by major telco players against each other.

    Here’s a brief backgrounder: In 2003, Bayan Telecommunications Inc. (Bayantel)’s foreign creditors filed a petition for corporate rehabilitation with the Pasig City Regional Trial Court (RTC) Branch 158 after the Lopez-owned telco defaulted on interest payments on its debts.

    Ten years later, Globe Telecoms Inc. (Globe) acquired 96.5% of Bayantel’s total debt amounting to some US$423.3 million, thus making the Ayala-led telco the biggest creditor of Bayantel.

    However, since Bayantel still could not generate enough revenue to pay Globe and other creditors, Globe and the Lopez Group submitted a plan to the Pasig RTC to restructure Bayantel’s debt by converting 69 percent of the debt into Bayantel shares in a so-called “debt-to-equity swap.” The swap would pare down Bayantel’s debt to just US$131.3 million while giving Globe a 56.6 percent ownership stake in Bayantel.

    The Pasig RTC approved the amendment of Bayantel’s debt restructuring plan and the implementation of a new master restructuring agreement (MRA) last September 2013. A month later, Globe and Bayantel went to the National Telecommunications Commission (NTC) to seek a similar approval for the same rehabilitation plan.

    But before the NTC could commence the hearings on the rehabilitation plan, the Court of Appeals granted the motion of the Philippine Long Distance Telephone Co. (PLDT) for the issuance of a temporary restraining order (TRO) to stop the NTC from acting on the Globe-Bayantel deal.

    According to PLDT, Bayantel never used the mobile frequencies assigned to it for the past 14 years. PLDT says that the assigned frequencies were given to Bayantel conditioned upon the rollout of a mobile service and since Bayantel never rolled out such mobile service, the frequencies of the Lopez-owned telco should be returned to the government.

    But why did it take PLDT 14 years to question Bayantel’s non-use of its frequencies? Why only now when Bayantel is about to be taken over by Globe? Would PLDT even be complaining if it was them and not their competitor Globe which bought out Bayantel?

    PLDT also argues that if Globe were allowed to use the frequency allocation of Bayantel, it would have a total of 50 Mhz in the Long Term Evolution (4G) or WiMax frequencies while PLDT (through Smart and Digitel-Sun) would only have 35 MHz.

    PLDT claims it is grossly unfair and anti-competitive for Globe to have access to 42 percent more 4G frequencies than PLDT when it has twice the number of subscribers of Globe.

    That argument is quite flawed because it assumes that Globe’s customer base will no longer increase (which PLDT obviously wants to happen).

    From our perspective, letting Globe maximize the use Bayantel’s frequencies will enable the Ayala-led telco to increase its market share and give PLDT a run for its money—and in turn, foster healthy competition that will ultimately benefit consumers.

    Deceptive Air Asia promo
    Talking about competition, it appears the “war” to attract airline customers has spawned some dubious sales promos among certain airline companies.

    One of our readers, whom we will call “Jane,” complained about the recently concluded 7-day promo by Air Asia Zest airline for its P0.01 (1 centavo) seat sale for all its domestic and international destinations.

    According to Jane, Air Asia was offering 3 million all-in promo seats to various domestic and international destinations such as Langkawi, Yogyakarta, Krabi, Siem Reap, Da Nang, etc.

    Enticed by Air Asia’s promo, Jane tried to book a round trip flight from Manila to Siem Reap, Cambodia. She was easily able to get a flight from Manila to Siem Reap for P2,261 instead of the usual P14,908. But her excitement quickly turned to disappointment because all the return flights from Siem Reap to Manila for the entire travel period from June 10, 2015 up to December 31, 2015 were unavailable or sold out.

    That was, of course, a bit impossible because that meant tourists from Cambodia were flying in to Manila in droves. When Jane tried to look for alternative flight schedules on Air Asia’s website, she said she was redirected to the online booking webpage for regular fares.

    Jane’s experience is not unique. We’ve received complaints from other readers about misleading airfare promos that deliberately conceal extra costs like fuel surcharges, airport taxes, etc., which when added almost amounts to the price of a regular ticket.

    While the Department of Trade and Industry (DTI) has rules for TV and print ad promos, it seems there are no rules for promos via the Internet. Trade Secretary Greg Domingo should also keep a tight watch over Internet promos and penalize companies guilty of deceptive marketing practices in cyberspace.

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    1 Comment

    1. Thank you, Atty. Duklay for exposing this anti-people development in our telco industry. Why indeed does the Department of Trade and Industry (DTI) have rules for TV and print ad promos but none for telco promos via the Internet. Trade Secretary Greg Domingo perhaps does not keep a tight watch over Internet promos and refuses to penalize companies guilty of deceptive marketing practices in cyberspace.because of a million reasons that Business Magician MV Pangilinan can explain.