THE entry of a new player in the country’s currently duopolistic telecom industry will benefit consumers because it will pull down broadband and mobile data prices, National Telecommunications Commission (NTC) regulatory affairs head Edgardo Cabarios said.
“More competition is beneficial to the consumers, as an economic theory. It will improve quality (of internet) and reduce prices,” Cabarios said in a chance interview at the NTC office in Quezon City last Thursday.
The country’s telecom industry currently only has two major players, the Manuel Pangilinan-led Philippine Long Distance Telephone Co. (PLDT) and the Ayala-led Globe Telecom (Globe).
Cabarios said the addition of a new player in the industry would definitely induce competition, therefore pulling costs down.
“We only have two telcos. The third player will change this setup. When it comes, maybe promos will further improve,” Cabarios said.
Reports have been circulating that San Miguel Corp. (SMC), which holds a 700 megahertz frequency in the radio spectrum in the Philippines, is looking to partner with Australian telecommunications giant Telstra Corp. Ltd.
Both companies, however, have said that negotiations are still ongoing. PLDT and Globe, meanwhile, have said that they would be ready for increased competition. Industry analysts, meanwhile, said the new telco would not immediately see gains given regulatory considerations.
Cabarios pointed out that despite the arrival of a new telco player which is expected to change the climate of competition in the industry, the government still has to invest in telecommunications infrastructure.
“If your investments are purely private, the cost is high, as they will need returns. If government invests, it’s an economic return that we are waiting for,” he said.
Cabarios said that the government will still play an important role in leveling the prices of broadband internet and mobile data.
“If we leave it purely to the private sector, prices will come down because of competition, but not to a level the same as Singapore because they have subsidy. So government should, in the same way, intervene so that prices can go down,” he said.
Cabarios explained that along with any new entry prices tend to go down, but there is the question of sustainability of those affordable prices.
“Prices will go down, the same way when Digitel entered. The question there is sustainability. With Telstra, a regional global player, it will not back down. It’s not just a price war, it will be quality war. But if not a price war, then it will be quality,” Cabarios said.