Telstra, yet another lesson in Philippine business



That anybody would have seriously believed that Telstra, the Australian wireless communications group would actually have succeeded in its planned joint venture with San Miguel, to introduce high quality broadband and presumably other wireless related service into the Philippines, just goes to show how unaware the average Joe may be about the way things work around here.

Such an initiative, to introduce high quality services into a big and eager, or even desperate market is a direct attempt to strike at the very vitals of the oligarchic control of the Philippines. PLDT with Smart (claimed Indonesian backing) and Globe with Singapore Telecomm backing would never have allowed a new entrant to share their private money machines. Apparently, according to one recent article; “stores that rely on the foot traffic and income generated by selling Globe and PLDT SIM cards would be banned if they dared to stock San Miguel’s telco products, cell tower sites and backhaul would be locked up for use, preventing any sharing of resources—district governments lobbied against letting the new players in,” and court battles would rage all over the place.

In addition to the street warfare in the quotes above there would be and probably has been intense political lobbying which given that national elections are coming up and the way things work around here, would be a more than usually powerful tactic.

Contrary to certain recent quotes, the Philippines is not open for business, at least not to any foreign business that would threaten the local vested interests, unless of course those same vested interests thought that they could use and control some foreign involvement that would provide them with either money or technology. The Constitutional 60/40 provisions and the good old Omnibus Investment Code ensure that control will be with the Filipino partners.

There are at the very least three things glaringly wrong here; that a national public utility is in the hands and under the control of greedy private interests, that any ability to regulate in the interests of consumers is nullified by the political power of the vested interests in a society where money is seen as the answer to everything, and thirdly that foreign competition in the market at least in accordance with the law is so draconically restricted. It is quite clear that the Philippines at its current stage of development is not ready for the wholesale privatization which has been for years now obsessively pursued—with much encouragement I have to add from the multilateral organizations who never rest in trying to turn underdeveloped economies into ”free markets.” Privatisation doesn’t even work to the real benefit of the customer in the advanced economies, so how can it be expected to work in a captive market like the Philippines.

The quality of the internet service is appalling and does not improve for the general public despite all the noise made about the availability of exceptionally fast broadband speeds. It is not possible to keep a mobile phone number and transfer from one carrier to another, but then in the Philippines telecoms duopoly that may not seem like a really big deal. And as for “customer service,” despite the polite and meaningless words scripted for the customer service representatives, they are totally powerless to answer even simple questions if they are not on their scripted list of very basic Q&A’s. As for their credit control it runs ahead of the speed of the accounts department—the credit control people will advise that you pay the bill 5-10 days before the due date in order to avoid being unceremoniously disconnected!

Of course the quality of service is something that has been written about so many times, it really is a shambles. What we see in the Telstra case is just how vigorously and effectively these vested interests can fight in order to continue with their totally unacceptable service quality and cost in order to protect their own greedy needs.

Government is clearly powerless to effectively regulate, so how about considering a bit of re-nationalistion in the interest of the people that the government is supposed to be protecting? But I somehow doubt that any political group no matter how powerful would ever dare to do that! Too many favours owed and too many convoluted relationships.

Mike can be contacted at


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