PLDT-Digitel deal: What’s in it for consumers?By Tonyo Cruz Mar 29, 2011 2:42PM UTC
Business leader Manuel V. Pangilinan, chair of Philipine Long Distance Telephone (PLDT) did not mince words on what’s at stake in PLDT’s P74.1 bn (US$1.7 bn) investment in Digital Telecommunications Philippines (Digitel), which both companies announced today.
“For PLDT, this transaction fortifies its position as the leading telecommunications company in the Philippines,” said Pangilinan.
By the time the deal is approved by regulators and completed by both parties, PLDT would emerge as the undisputed leader of the telecommunications sector, with control of 2G and 3G licenses and frequency allocations of Piltel, Smart, Cure and Digitel.
PLDT original wireless company was Piltel and this was followed by acquisitions of Smart, Cure (now known as Red Mobile) and now Digitel.
Digitel owns the upstart Sun Cellular brand and service which introduced “unlimited” or “bucket pricing” of its calls and text service. The company also plays a leading role in the massive rollout of mobile broadband services via Sun Broadband.
Pangilinan says the deal with Digitel is good for PLDT, but would it be good for consumers?
That is what the National Telecommunications Commission and other government corporate regulators should find out before they approve the transaction between PLDT and JG Summit, which owns Digitel.
Digitel’s Sun Cellular is credited for introducing drastic changes in the telecommunications sector. Both PLDT unit Smart and rival Globe first laughed at and later sued Sun Cellular over its “unlimited” or “bucket pricing” schemes. They contended that Sun Cellular was engaging in predatory pricing — but the huge, sophisticated Philippine telecommunications market disagreed.
Years later, Smart and Globe would introduce their own versions of “unlimited” or “bucket pricing” as Sun Cellular continued to gain headway in subscriber uptake.
Many consider Sun Cellular not as their main phone line, but their principal choice for a second line. A number of small and medium-scale enterprises also switched to Sun Cellular due to its price proposition.
Late last year, Sun Cellular claimed that it has surpassed Globe in number of postpaid mobile subscriptions.
PLDT would commit a terrible mistake if it changes Sun Cellular’s branding and pricing scheme. At stake here is 14 million Sun Cellular subscribers and close to half-a-billion pesos in net income both of which Digitel attained using its successful formula.
All telcos, including PLDT and Digitel, have legislative franchises and regulatory permits. And it goes without saying that consumers ought to have a role in the efforts to seek regulatory approval of their agreement.
The NTC, which raffles off 3G licenses, should study the impact of having most 3G licenses controlled by one company, and how consumer welfare figures in the bargain. Yes, nothing stops Pangilinan and PLDT from buying out other telcos but this is no ordinary business. Lest we forget, telecommunications is a public utility imbued with a public trust and uses publicly-owned airwaves and frequencies.
It is also obvious that PLDT’s purchase of Digitel cut down out choices for mobile carriers down to just two: The PLDT empire comprising Smart, Talk N’ Text (Piltel), Red Mobile (Cure) and now Digitel (Sun Cellular) on one hand, and the distant second place, Globe Telecom and TM (formerly Islacom).
Is this good for the cause of #betterinternet in the Philippines? We do not know. We have to wait and see, and press the NTC to do its work as the industry regulator.
Pangilinan should understand that the least the public expects is for PLDT and Digitel, moving forward, to push the telcos self-imposed limits on internet and mobile phone services, whether in pricing, speed and quality of service. He could boast about the fortified big-ness of PLDT, but if it does not improve service in a big way, it would be wasting its investment and disappoint Filipinos further. It is an open secret that the Philippines, which PLDT dominates, has the slowest internet speeds in this part of the world.
The NTC, PLDT and Digitel should explain to and show the public that the deal is good for people of the Republic of the Philippines, and not just for those who today exchanged a total equity of P74.1-billion. There should be clear safeguards against backward steps to the sad reality we faced 20 years ago when PLDT was the industry monopoly.