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Monopolies in PH economy are passé

It is inexplicable how some individuals are still insisting on a monopoly to dominate certain sectors of the economy. The Philippines had a bad experience in this kind of market situation before. 

The government controlled power generation during the 80’s and 90’s until it had to get out of the business when it could no longer prevent outages. PLDT for a long time was the sole provider of bad telephone services until the government liberalized the telecommunications industry to make it more efficient and give customers a choice.

The Metropolitan Waterworks and Sewerage System controlled the distribution of water in Metro Manila and nearby provinces, but the agency, too, had to it give up when it could no longer supply water efficiently due to lack of capital. 

As a result, two private water companies now own two separate concessions that took over water distribution in the capital region. Manila Water Co. Inc. and Maynilad Water Services Inc. are now spending billions of pesos to reduce water leakages, increase the supply and improve the sewerage system.

Encouraging monopolies did not work in the Philippines. They ultimately ended up in the government providing subsidies and emptying the national budget. They also deprived customers and users of efficient services and the right to choose their preferred products and services.

Plans, meanwhile, are afoot to improve further the telecom services in the Philippines through the construction of more common towers. The Philippines has lagged behind its Asian neighbors in providing reliable and fast telecom services and the best way to address the problem is to build thousands of towers.

But Presidential Adviser on Economic Affairs and Information and Communications Technology Ramon Jacinto appears to have his own idea in the construction of the common towers. If he will have his way, Jacinto wants to accredit just two independent cell tower companies for the entire country. Mr. Jacinto might as well concede that monopoly, which the government has shunned, is not yet passé.

Telecom stakeholders, both in the government and the private sector, have already rejected the idea of accrediting just two independent cell tower companies in several public hearings. Department of Information and Communications Technology Acting Secretary Eliseo Rio in fact confirmed in a Senate hearing that the DICT would not pursue Jacinto’s proposed policy.

Senators Grace Poe and Francis Escudero both criticized Jacinto’s proposal, which is seen to create a duopoly in the sector instead of opening up the market.

“I don’t think that is good policy,” said Escudero, adding Jacinto’s plan was not in the best interests of the telecoms industry.  “That is not opening it up, that will make it even more of an oligopoly or monopoly.  I don’t even understand why DICT or NTC is considering it.”

Rio also confirmed that incoming DICT chief Senator Gregorio Honasan was in favor of more than two players building common telecommunications infrastructure in the country to avoid legal issues. Honasan believes this is in the best interests of the industry and the country.

Opening up the construction of common cellular towers to everybody is promoting fair competition. Limiting the number to just two will result in inefficiency and is prone to corruption.

What was originally meant to benefit the general public may end up favoring only a select few after all. 

Advocacy group Better Broadband Alliance lead convenor  Grace Mirandilla-Santos earlier questioned Jacinto on the rationale for limiting the participating tower companies.  

“The tower companies are finding it viable to have more, why are they limiting it to two?” Mirandilla-Santos asked, and sought the legal basis for inviting just two independent tower companies.

Many in the industry raised concern that the proposal could turn into a money-making scheme for some businessmen.  

A more open accreditation process ensures a more level playing field and market competition, says one stakeholder, but limiting the process to only two companies breeds favoritism and corruption.

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Topics: PLDT , Economy , Grace Mirandilla-Santos , Gregorio Honasan , Grace Poe , Francis Escudero , Eliseo Rio , Ramon Jacinto
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