PCC scrutinizes Globe, PLDT deal

People complaining of the inefficient and costly internet connection and bad mobile service in the country had looked forward to a third player that would put the omnipresent telecommunication companies Globe and PLDT on their toes.

But it didn’t happen.

In 2015, San Miguel Corporation (SMC) attempted to partner with Australian firm Telstra to provide an alternative to the two internet service providers (ISPs). The proposed partnership did not push through. SMC’s prized assets are being acquired by Globe and PLDT, of which Smart is a subsidiary, in a P69.1 billion deal that would perpetuate the duopoly in the telecom industry.

But the newly established Philippine Competition Commission (PCC) rejected the mega deal submitted by Globe and PLDT on May 30 for being “deficient and defective in form and substance and required additional information.”

The PCC is mandated by Republic Act 10667, or the Philippine Competition Act, to “review, prohibit mergers and acquisitions that will substantially prevent, restrict, or lessen competition in the relevant market.” Globe and PLDT issued separate letters to defend their compliance practices but later submitted new material to the competition authority.

In a statement, PCC said it has taken a “keen interest” in the deal because the public’s demand for cheaper and faster internet “could be stymied by a lack of competition in the sector.” The two companies attempted to block the regulatory body’s review by filing a temporary restraining order at the Court of Appeals, which the court denied.

Globe Telecom, Inc. was registered in the Securities and Exchange Commission in 1935. It claims to provide mobile and broadband services to 55 million people. The owners of Globe include foreign company Singapore Telecom (SingTel) and Ayala Corporation, with Jaime Zobel de Ayala as the company’s chairman.

Smart, meanwhile, is wholly owned by Manuel V. Pangilinan’s Philippine Long Distance Telecommunication (PLDT) Company. It claims more than 68.9 million cellular and broadband subscribers. In his book Colossal Deception, How Foreigners Control our Telecom Sector, journalist Rigoberto D. Tiglao said the biggest controlling stockholder in PLDT is actually  Indonesian mogul Anthoni Salim through his HongKong-based company First Pacific, where MVP sits as managing director and chief executive officer.

National Telecommunications Commission's Plans

National Telecommunications Commission Deputy Commissioner Edgardo Cabarios said a third player would have a hard time entering the market since 70 percent of the internet market is concentrated in key areas in the Philippines, namely Metro Manila, Subic, Clark and Calabarzon (Cavite, Laguna, Rizal and Quezon).

“PLDT (and) Globe … have the same cost but they are fighting for a little market there so your cost is twice and yet the market is the same,” Cabarios said. He said the government should help lower the prices by creating demand, and this is done by providing free Wi-Fi in some areas as well as direct demand subsidies. A project of the Department of Information and Communications Technology (DICT), the free wifi initiative aims to provide 256 kbps to public spaces such as parks, plazas, public schools, libraries and government hospitals, among others.

However, according to him, the government does not plan to set up an alternative internet infrastructure. The problem would be that "if you are to compete with these two you have to think twice" whether you get enough traffic to generate sufficient profit. The entry barrier to the ISP market seem even too high for the government. The NTC's comment: "when you enter the telecoms you’re investing billions of Dollars. So how can you recover?"

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