SAN FRANCISCO – My children who work in Silicon Valley love to mock the quality of our internet service every time they visit. I don’t blame them. I am now experiencing what they are used to – world class broadband service in my son’s home in the East Bay.
Hopefully, I no longer have to be embarrassed soon about our internet service the way I am embarrassed by NAIA each time I bring home a relative or a friend. The latest news I got from home is about how the Duterte administration is determined to introduce a third telco player by the end of the first quarter next year.
Malacañang promised to release approval of the new telco’s permits to operate within seven days of filing. President Duterte also warned the courts not to entertain suits that will delay the project. It was also announced by the Palace that China has assigned China Telecom to be this third player.
I have always praised quick action from government, but I am sure three months is too little time to get all the details for a major investment organized, much less approved by regulators. Unless China Telecom had been studying our market for sometime and knows how to fast track getting their boots on the ground, the Palace announcements are for dramatic effect to show the President’s determination to strike hard on the telco duopoly.
The Palace spokesman talked about the third player getting into the broadband business. I assume this is mobile because this is the only way by which technology can be used to immediately compete with our duopoly. The duopoly has spent many years setting up infrastructure for their operations and they still don’t have enough to calm consumer discontent on the services they provide.
Setting up a telco to compete effectively against Smart-PLDT and Globe is normally a time consuming process. But no doubt, Malacañang will be able to cut red tape typical in the approval process.
Indeed, San Miguel, a major telco tried for many years to become this third player, but gave up. SMC bought small telcos to hasten the process, but in the end decided to throw in the towel.
I recently asked Ramon Ang why he gave up just when he was almost ready to launch. He said it was too time consuming, taking almost half his time, but it did not seem as profitable as the other companies under the SMC umbrella.
Mr. Ang was also concerned he may just end up with law suits filed by the duopoly to delay him. This was also why Telstra, San Miguel’s potential partner, backed out.
By selling to the duopoly when he did, Mr. Ang more than recovered investments already made and freed up capital he needed to support growth prospects in the other businesses.
For sure the duopoly will not go quietly into the night and let a third player intrude in their market. This is probably why Globe CEO Ernest Cu spoke out strongly to dispute the DICT estimate of how much existing capacity it has. DICT earlier said the duopoly has about two Tbps installed international connectivity capacity which the government intends to more than match within two years.
Turns out, DICT grossly underestimated what the duopoly has.
According to Mr. Cu, Globe alone has more than 16 Tbps which is sufficient to service the bandwidth demand of the country and satisfy the market’s hunger for faster internet service.”
Mr. Cu said Globe has only lit up 3 Tbps of its capacity. The rest of Globe’s capacity remains unused because, he said, of insufficient last mile infrastructure. He blamed government red tape in processing permit applications to build more cell site towers for the last mile problem.
For his part, Manny Pangilinan said PLDT would unleash a huge capex program, north of P50 billion to meet the challenge of the third player.
The instinct of China Telecom’s head that investing here is a bad idea will be reinforced by these recent statements from Globe and PLDT. China Telecom will likely get a bloody nose as the incumbents defend their turf.
But if Bejing has ordered China Telecom to operate here, they will come. They will most likely be subsidized by the Chinese government anyway. China most likely sees the investment as a political favor being given to their newly found friend, President Duterte.
For us consumers, all we are looking for is faster internet at reasonable cost. If the threat of China Telecom coming in as the third player will make the duopoly fight for their market, that’s good for us.
From the looks of it, the duopoly seems energized already, ready for a big fight. If they want to, they can deliver the fast internet tomorrow or even today. After all, they were able to boost the quality of their broadband service in the areas where the APEC and ASEAN conferences were held. And as Mr. Cu boasted, they have so much spare capacity installed.
In the meantime, President Duterte should create a task force from DILG and Malacañang to help Globe and Smart-PLDT get their construction permits for cell site towers approved within seven days by all LGUs and national government agencies. We have to deprive the telcos the ability to use that old excuse for poor service.
Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco