Sun Cellular, the impossible ‘predator’
March 14, 2005 | 12:00am
It was only during the presidency of then President Fidel V. Ramos that the difficult strides toward demonopolization were strictly undertaken. At that time, PLDT, the supremely dominant player, accounted for virtually 93 percent of the telephone network of the country.
Behind the effort was the fundamental objective to generate competition in the telecommunications industry so that service would improve, rates would be more affordable to a greater number of people, the new technologies come in as soon as possible, and our universal access ratio improve from a horrible "less than one line per 100 inhabitants."
The public interest and public good were the only considerations. Cellular telephony or what is technically called Cellular Mobile Telephone Service (CMTS) had as yet not come in.
There was no Globe, no Smart, no Sun Cellular. All of us were stuck with our PLDT landlines, the service of which was dismal. And in the countryside, in the rural areas, were the local operators (many of them were called "Mom and Pop" ventures) valiantly providing telephone service which was a touch-and-go situation. The subscribers were indeed held captive by a dominant monopolistic carrier called PLDT.
That there was pressure brought to bear on us is true, to the extent that from some "dirty tricks" department somewhere, a white paper had been circulated to media, on my supposedly colorful private life, a situation a widow like myself could crave for.
But we plugged on, struggled fiercely, and the rewards came a couple of years later.
The Philippines, in fact, was one of the firsts to undertake and tackle the demonopolization process in the global telecommunity. As the other countries commenced to do their own processes, we were invited to speak at quite a number of conferences and seminars in Geneva, in Honolulu, in Canada, etc. on the Philippine demonopolization effort. Consultations with us were sought.
Most studies reveal three distinct steps for demonopolization: a) corporatization b) privatization c) demonopolization. Not really a tall order for the Philippine venue because the first two steps we did not have to undertake. Philippine telecommunications operations have always been in private hands. For as far back as I can remember, PLDT has been around mostly in the urban, urbanizing and profitable areas. Extensive rural areas were left unserved. There were quite a number of countries where the telecom monopoly was the government, so that a simultaneous necessity as they undertook the three necessary steps, was the creation of a regulatory body for telecommunications. The Philippines, of course, has always had a regulatory body with a succession of different names as it plugged through the years, but graduated into the name provided by a reorganization dictum of the executive, the National Telecommunications Commission (NTC) which it is today.
The success of the demonopolization and liberalization efforts we undertook more than a decade ago speaks for itself. The competitive environment has benefited the public interest, no one can deny. It is an environment that is far from perfect, we are all aware, but technological civilization finally hit our country and the competitive environment should be protected by the relevant agencies in charge.
That Philippine texting has become a phenomenon by itself is an excellent offshoot. That the telecommunications business is a sector where big money can be made, no one can deny. According to the Securities and Exchange Commission’s latest listing of the top 5,000 companies as far as net income is concerned, Smart Communications Inc. occupies the No. 1 slot with P16.122 billion, PLDT follows with P11.18 billion, and Globe Telecommunications Inc. occupies the fourth slot with P10.31 billion. Data shows that the top 10 most profitable firms include three from the telecommunications sector.
Related to telecom are the electronic manufacturers like Texas Instruments Philippines with sales of P132.4 billion and Toshiba Information Equipment Philippines Inc. with P129.1 billion. It has indeed become an extremely profitable revenue-generating sector. The demonopolization and liberalization effort has created an environment where big money is to be made. The dynamism of technology is so real and must not be stifled or impeded by too much regulation.
The fact that there are two dominant CMTS players, PLDT/Smart/Piltel on one side and Globe/Innove on the other, is good for the subscribing public. Their rates and service have to remain steadily attractive in order to keep their customers. But the fact that two players now account for virtually 95 percent of the CMTS market should not discourage any brave carrier, like Sun Cellular, in a free enterprise system, to compete fair and square. There should be no predators attacking their prey.
And this is where the story of Philippine demonopolization and liberalization has brought us – to a situation where in effect two beneficiaries of Philippine demonopolization, Globe and Smart, two giant CMTS players have become the aristocracy in the cellular market. And as Sun Cellular who hardly accounts for five percent of it, introduces its seductive "24/7" Call and Text Unlimited service (24/7 CTU), the joint CMTS aristocracy of Globe and Smart charges the new CMTS player with "predatory pricing". Sun Cellular’s scheme had been approved by the NTC, and has been enthusiastically received by the public, that’s why.
This is precisely the essence of competition. The benefits the competitive environment brings to the public are so clear in this particular case. It is as pure a competitive device as any. And the subscribing public are the beneficiaries. This is competition in pure play. And the new upstart cellular player cannot be the predator, or the monster, or the giant. You’ve got to be big, big, big! As giant players, instead of shouting "predatory pricing", why not devise your own gimmicks?
I do remember that in December 2004, after Sun Cellular introduced its 24/7 CTU, Innove, the fixed-line subsidiary of Globe, launched its "One Country-One Rate toll-free program (1C1R) in areas where Innove operates – parts of Metro Manila, parts of Mindanao, Southern Tagalog and the whole of Visayas. In January 2005, PAPTELCO (Philippine Association of Private Telephone Companies) filed a complaint against Innove with the NTC, on the basis that Innove’s 1C1R scheme would have a great adverse impact on their economic viability and ability to compete.
Just this January, the NTC came out with a memorandum stopping Globe’s Innove from offering its 1C1R service and asking it to explain why it launched said program without obtaining prior approval of the NTC. After a hearing before the NTC, the latter approved, on a promotional basis, Innove’s 1C1R program and directed the parties to submit their position papers on the matter.
In the ensuing discussions with the NTC thereafter, Innove through its counsel who also represents Innove’s parent company Globe, in a seemingly Machiavellian manner, agreed to stop their 1C1R program if the NTC also ordered Sun Cellular to desist from offering further schemes such as 24/7 CTU, because such service constitutes, (and here is where that ugly word comes in) predatory pricing. NTC therefore required the other telephone companies including Sun Cellular to comment on the Globe/Innove positions.
Why go against competition which is at its best right now? These beneficial schemes are good for every Filipino subscriber especially the students and young professionals who are so aware and count every peso they spend. Public interest and the public good are on the side of Sun Cellular, the impossible predator.
(To be continued)
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