A NEW core player in the hotly contested, duopolistic telecommunications market in the Philippines will prove to be a challenge to the incumbent carriers, forcing them to step up their game and provide better and more affordable services.
This early, just as the buzz on the possible entry of Telstra Corp. Ltd.—Australia’s largest telecom player—becomes louder, Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom Inc. indicated that they are ready to compete against another mobile-services provider.
Manuel V. Pangilinan, the chairman of the dominant telco in the country, said his group is anticipating the entry of another market player, as San Miguel Corp. confirmed that it is negotiating with Telstra for the possibility of introducing another core market player.
“We just have to deal with it when they come. It’s anticipated that San Miguel will do it whether with Telstra or another partner,” he said in an interview late Tuesday.
Globe President Ernest L. Cu, on the other hand, was more confident that it can continue to aggressively compete with another player, especially after proving that it can lead the local market.
“Globe has been successful in its transformation initiatives over the last five years, which resulted in consistent market-share gains and strong business performance,” he said in an e-mail on Wednesday.
Whether or not Telstra will prove to be a challenge for the largest telco player in the Philippines, Pangilinan said it will depend on how San Miguel will position itself in the market.
“It depends on how they behave to get market share,” the businessman said. “Telstra is the leading telecommunications provider in Australia.”
Cu, meanwhile, said his company will be more than ready to take on the challenge, as it has already prepared its network and infrastructure.
“While the entry of another competitor into the mature Philippine telco market is something we are closely looking at, Globe has had a long history of fighting a larger, well-resourced incumbent. We were a challenger brand for quite some time and now we have emerged a leader,” he said.
Globe outperformed PLDT during the first half of the year, as PLDT posted a 5-percent drop in its net income, while Globe saw its bottom line surging by 27 percent on the back of record-breaking revenues from data and broadband.
Pangilinan noted that his camp may not necessarily review its business strategy. The company, however, will base its future plans on developments in the market.
Telstra and San Miguel in late August announced that they are currently negotiating for the possible joint venture to introduce a new player in the Philippine telecommunications market. Industry observers predict that the Australian company will bring into Manila its Internet expertise through its 4G technologies.
Boon and bane
Experts said the entry of a new core player will prove to be both a boon and a bane to the market as a whole.
International Data Corp. (IDC) Philippines analyst Alon Anthony D. Rejano said a new telecommunications provider will be advantageous to consumers, as it will result in a more competitive market.
“The market will be more competitive. For the consumers, it will be an advantage, because it will give them more options and will lower the price,” he explained.
Both National Telecommunications Commission (NTC) Director Edgardo V. Cabarios and Democracy.PH Founder Pierre Tito Galla echoed Rejano’s observation, saying that it will help improve the market condition in the Philippines.
“There is still room for a third network player. Right now, we only have two core networks. True competition in the core network market is slightly minimal. If you want a free competition in the marketplace, a third core network player is welcome,” Cabarios said in an interview.
He also admitted the need of the government for assistance in developing the telecommunications market.
“We need investments in infrastructure because we are one of the countries in the region with the slowest Internet speeds. We need help from the private sector,” Cabarios explained.
According to studies conducted by Ookla, an Internet metrics provider, the Philippines has the second-slowest average download speed among 22 countries in Asia.
As of May, the country’s average download speed reached 3.64 Mbps, ranking 176th out of 202 nations around the world. It is eight times slower than the global average broadband download speed of 23.3 Mbps.
In a separate report, cloud services provider Akamai Technologies said that, while the Philippines might have improved its connection by a percentage point, its overall ranking in Asia still remains at number 13 out of 15, or the third-worst connection in the region.
Filipinos, according to the first-quarter report of Akamai, enjoyed an average download speed of 2.8 Mbps during the period under review. Trailing behind are India and Indonesia with 2.3 Mpbs and 2.2 Mbps average speed, respectively.
ICT market
Galla added that Telstra’s entry will help develop the information communications technology (ICT) market in the Philippines.
“A new player in the ICT space will lead to more competition that we hope will result in better services, more reasonable costs and greater penetration and access,” he said. “We also hope that this heralds the possibility of faster, more reliable and cheaper Internet and network services to the public.” However, this would prove to be a threat to the incumbent vendors.
“If Telstra will bring in connectivity from Australia, there will be lower traffic in our local network. This is a threat to the vendors,” Rejano added.
Telstra recently acquired undersea-cable company Pacnet Ltd., the operator of a 28,000-mile submarine network in the Asia-Pacific region.
“Knowing Telstra, the largest telco in Australia, and with the capabilities provided by the incumbents, the largest factor that will determine the consumer’s choice is the pricing. So, aside from just providing connectivity, Telstra should also provide content. The battle cry for consumers today is entertainment and connectivity,” Rejano explained.
Mobile services providers Smart, Sun and Globe have taken their battle for market supremacy in the digital space, with all of them entering into different partnerships with multinational companies for content.
well sa pagdating sa cost. mahal talaga! minsan issue pa ung hidden charges! let's see kapag dito sa pinas ang ipprovide nila. hopefully same performance and sa cost mas mababa sana. sana lang talaga.
