Is world class now unaffordable?

One of the first things I do when I travel abroad is to reorient my mindset from pesos to dollars. This is a necessary survival mode. I have to constantly tell myself that I’m not home and multiplying everything by 50 is simply useless and guaranteed to drive me nuts.

It could also make me very hungry. Even a simple breakfast of ham and eggs from a no frills diner becomes expensive in peso terms. Multiplying prices by 50 makes you feel good only in the outlet stores on the long dusty road to Las Vegas. And that’s because they are practically giving away stock overruns to reduce their inventory carrying cost.

For everything else, including a tablet of Aspirin, you are better off buying in Manila. For the stuff you want that you can't buy in Manila, then you don’t have a choice but to pay top dollar, that’s peso times 50. You might be able to get discounts for being a senior citizen if you are old enough and have the proper card. But you can’t show your passport and ask for a third world discount.

These thoughts came to mind last week as I listened to officers of the local cable television association recite a litany of woes that have besieged the industry. Elpidio Paras and J. Manual Dabao, chairman and president of the Philippine Cable Television Association (PCTA) run provincial operations and they are feeling more than a pinch from the peso’s devaluation.

Unlike other utilities, they pointed out that cable television cannot charge a foreign exchange adjustment. Their rates are largely determined by market forces – competition and consumers ability to pay. Cable television is also not a necessity, making it easy for subscribers to cut their subscription in the lean months and re-subscribe when extra money is available.

Their problem, Paras and Dabao said, is that their costs are largely dollar based. They pay program suppliers in dollars and they buy their equipment and supplies from foreign manufacturers who quote in dollars. Program costs alone have more than doubled for many PCTA members in peso terms. Gone are the days when they can just pick up signals from the great big sky out there. They must be paid for in dollars.

Paras and Dabao complain that cable operators now seem to be in business solely to pay the bills of program suppliers. The line-up of major operators entail the cost of about $10 per subscriber a month which translates to about P516 in last week’s exchange rate. How many cable operators are able to charge their subscribers that much? And what about other costs? No wonder even the largest cable operators are in the red.

I wondered aloud if it was possible for the PCTA to ask HBO, CNN, Star TV, ESPN, etc. to quote in pesos so that they are not subject to the sudden ups and downs of the currency market. And further, is it possible to ask these First World suppliers to come up with market-based rates, a third world rate that is affordable to Filipino cable subscribers. Couldn’t they make money on US, Japan and European sales and treat the third world as gravy?

I guess I am dreaming. They have this take it or leave it attitude. Unfortunately, third world cable television subscribers may have to learn to leave it as the economic crisis deepens. I am all for intellectual property protection but they have to be reasonable too and understand this matter called affordability.

It is sad that we can’t afford world class anymore. Cable television has so revolutionized this archipelago of 7,000 islands by exposing our people even in the most remote areas to world developments. It is this exposure that also serves as an impetus to local television practitioners to improve their standards. Western governments should perhaps consider subsidizing this export product, if they are unable to get their private program producers to consider a third world rate.

In the meantime, many family entrepreneurial ventures in cable television hang in the balance. If even the big guys are in trouble, you can just imagine the state of the mom and pop operations. It is a pity if we are to be thrown off the world information superhighway, of which cable television is a part, only because we can no longer afford world class.

Consumer debt

There really is no such thing as a free lunch. Remember how the American consumer kept the American economy from falling into recession before Sept. 11 by maxing out their credit cards? Well, all that free spending has given rise to another problem: credit card delinquencies has hit a 29-year high just before the Sept. 11 tragedies.

Economists now worry that more debt and fewer paychecks due to job retrenchment spell trouble. The combination makes consumers retrench. And a decline in consumer spending would make the recession deeper. Consumer spending in the United States makes up two-thirds of the economy.

Before the drastic job cuts, American consumers didn’t think twice about borrowing and spending freely. Now, they know they have to start being sensible about their personal finances. That means, they must reduce their debt, which can be a very, very hard thing on the economy.

The Los Angeles Times reports "credit card balances aren’t the only problem. Late payments for cars and other debt also are rising. Earlier this year, household debt service–interest and principal payments as a share of Americans’ take-home pay–was near the all-time peak reached in 1986." It is the lower income groups that are really feeling the pinch and they have little cushion to protect them.

The chief economist for the American Bankers Association summed up the problem: "It certainly can prolong a recession. You need consumers to spend to drive the economy, to create jobs. So by not spending it actually makes the situation worse overall."

Looks like the American economy is going down with a bad case of flu. We, who are dependent on them, should prepare to come down with a serious case of pneumonia. Unless they come up with a brilliant recovery plan that exploits our domestic (read: countryside) economy, I don’t want to hear another propaganda line about our economy recovering next year. Raising false hopes is just simply cruel.

Bush war

I doubt if President Bush really said this quote as claimed by Dr. Ernie E. It makes so much sense, something I haven’t heard from that direction in the post Sept. 11 hysteria. Here it is anyway.

"The last thing that I want to do is to launch a 10-million dollar missile at a 10-dollar tent and hit a camel in the ass."

(Boo Chanco’s e-mail address is [email protected])