THE tag line under the banner announcing the forum said it all.
““69 Billion Pesos, 100 Million Subscribers, 700 Megahertz, 2 Dominant Telcos, 1 Crappy Internet”
That seemed to me a perfect way to summarize what is at stake with the P69 billion buyout by PLDT and Globe of San Miguel Corp.’s telecommunication assets.
The buyout, now the subject of a court case in which the two giant telecommunications companies are seeking to stop the Philippine Competition Commission (PCC) from doing its job, was the focus of a forum ]organized last week by the Foundation for Media Alternatives (FMA) and the Philippine chapter of Internet Society (ISOC PH).
Setting the tone for the forum hosted by the Ateneo School of Government, Dean Ron Mendoza described the buyout as an important test case on the policy of competition, as set out in the Philippine Competition Act of 2015.
In case you were too busy chasing Pokemon on your mobile phone to notice, here is the story so far.
Toward the end of May, the Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom announced that they would buy the telecommunication assets of San Miguel Corp. for P70 billion.
The crown jewels of the purchase is the right to use the 700-megahertz spectrum, which San Miguel had planned to use in partnership with Telstra of Australia to compete against the duopoly. The spectrum is significant because the 700-megahertz band is best at penetrating buildings and traveling long distances.
But San Miguel’s $1 billion deal with Telstra fell through, helped no doubt by heavy lobbying from both PLDT and Globe, which was pressuring the government to grant them a share of the spectrum, too—an outcome that would have cut the competitive advantage and profitability of San Miguel’s prospective joint venture. PLDT even threatened to go to court over the issue, adding an element of uncertainty to the viability of the new would-be competitor.
When Telstra backed out, PLDT and Globe agreed to split San Miguel’s telecommunications assets 50-50.
The sale was a coup for both carriers, which have dominated the industry by buying out smaller competitors—with PLDT gobbling up Digitel, which operated Sun Cellular, and Globe buying out Bayantel.
To nobody’s surprise, the National Telecommunications Commission (NTC), which has always taken the side of the telcos over consumers, approved the buyout on the condition that PLDT and Globe would “increase capacity, i.e., broadband and internet access speed within one year”–without specifying what this actually meant.
When the newly formed Philippine Competition Commission (PCC) announced it would investigate the buyout because of anti-trust concerns, Globe and PLDT went to court separately to stop it, arguing that the commission’s own transitory rules allowed them to go ahead with the deal.
When the Court of Appeals 6th Division threw out Globe’s request to stop the PCC from reviewing the deal, the telco sought to consolidate its petition with that of PLDT, which is still pending with the Appeals Court’s 12th Division.
On July 28, the 6th Division approved the consolidation of the Globe and PLDT cases, over the objections of the PCC, which saw the move as a form of forum shopping.
Examining the economic implications of the deal during last week’s forum, Adora Navarro, senior research fellow at the Philippine Institute for Development Studies (PIDS) said allowing the deal to push through would make it highly unlikely that a third player would be able to enter the market to challenge the duopoly of PLDT and Globe.
This is unfortunate, because as Navarro noted, markets with three dominant players such as those in Malaysia and Thailand are more competitive than duopolies, which are prone to price collusion.
At the same forum, Greg Tangonan, a computer and communications engineering professor at the Ateneo de Manila University, said that from a technical perspective, allowing PLDT and Globe to buy up the right to use the 700MHz band would deprive consumers of more innovative applications such as interactive TV. He, too, said the entry of a third carrier would be better because the two dominant telcos have no incentive to innovate.
Commenting on the poor quality of services provided by PLDT and Globe, Tangonan said part of the problem was the “gutless NTC.”
“They’ve been throttling back on their services to keep us on SMS and voice and we don’t complain because we don’t have the NTC on our side,” he said.
While Tangonan held out hope that the NTC under the newly formed Department of Information and Communications Technology (DICT) would do better, that prospect looks unlikely at best, since the department is headed by none other than the former chief legal counsel of Globe.
The best hope, for now, then, is that the PCC be allowed to do its job.
As Winthrop Yu, chairman of ISOC PH, noted, it is clearly the mandate of the commission to ensure that consumers are not on the losing end of any business transaction, especially those that directly affect their daily lives. This mission, it seems clear to me, ought to trump any legal parsing of the transitory rules that PLDT and Globe are using to ram the deal down our throats. Chin Wong
Column archives and blog at: http://www.chinwong.com