There are currently two major telcos in the Philippines right now. In the previous reports that we’ve shared, it’s obvious that quite a number of subscribers aren’t totally satisfied with the service that they’re getting. In this article we list down a few points why we think there is a need for a third telco player in the Philippines.
Let’s first take a trip down memory lane. There used to be three major telecom players (PLDT/Smart, Globe, and Digital/Sun Cellular) between 2003 to 2011 and we saw how fierce the competition was.
In 2011, PLDT bought majority stake of Digitel (Php74.1USD 1INR 107EUR 1CNY 9 billion for 51.55% shares) which operates Sun Cellular, nullifying a very aggressive 3-player telco competition. Many opposed this move, including us (Merging Smart & Sun not good for consumers?), but the NTC approved the sale.
PLDT’s revenues were shrinking the previous year due to the fierce competition.
By buying into Sun Cellular, the company hoped to consolidate and strengthen its position as the majority telecom provider in the country. So now, we’re back to just two players.
We looked back to those years where 3 independent telcos made more sense for the subscribers and listed down these points:
An additional telco means more choices for consumers.
This is as simple as it sounds. If there are more than two options to choose from, consumers would not give in or be forced to be under a telco that doesn’t specifically cater to their needs/wants. This is what we’ve also talked about in our previous article, “Why do Filipinos pay more for slow Internet?” where we came to a conclusion that we pay for expensive Internet because we simply have no other choice.
The current duopoly is weak due to potential standoff.
Since there are just two telco players right now, there tends to be a waiting game between them. It’s like one is just waiting for the other on its next step, with both readying to react to whoever makes the first move.
Another reason is since two players are only involved, it’s easier for both to predict what the other company will do next. Put a third contender into the mix and it would be harder for them to prepare for the competitor’s next agenda.
Copy-each-other formula.
When Globe announced its Free Facebook campaign, a first in the world, Smart also announced its free Internet for its subscribers.
This kind of formula eliminates the room for thinking outside the box. Having a third independent player will most likely disrupt this current model and will encourage the three of them to introduce more fresh offerings for the Filipinos in the attempt to have an edge over the other two contenders.
There is very little incentive to disrupt current line of services and pricing.
Since they just copy each other, whatever they do just tend to cancel each other out. This results to them not going past the norm or disrupting the status quo since some of their efforts don’t bear much fruit.
As an example, there was a SIM-swap campaign that was launched a few years back where Globe offered to swap people’s Smart SIM for a Globe SIM plus an additional load credits. This resulted to gazillions of subscribers swapping to Globe and at first was good news for the company.
However, Smart countered it later on with their own swap campaign which successfully brought back their subscribers — this resulted to both telcos just ending up with almost the same number of subs they started with and even lost the free load credits for each SIM swapped.
Basically, they both just spent money to be somehow back in square one.
The dynamics of the competition will be different if it’s a three-way battle.
With just two players, it’s automatically a seesaw setup wherein when an individual dislikes one service he would automatically give his loyalty to the only remaining player. But with three companies vying for the subscriber’s loyalty, an individual still has two options when he decides that he no longer wants to receive the service of one company. This will result to the telcos stepping up their game in hopes to still be chosen over the last option when the original choice no longer works for the subscriber.
For example, if you find the service of Telco A to be unreliable you’ll still have Telco B and Telco C to choose from. Because of this, Telco B would want to be chosen rather than Telco C so Telco B would still have that drive to make their offers more attractive for everyone. In our current setup, Telco B automatically wins when Telco A fails — this wouldn’t be the case when Telco C is around and is also ready to accommodate potential subscribers.
As we’ve pointed out, bringing in an additional player in the telco business not only gives us more choices but it could also change the slow, unsatisfying service that both networks are currently serving us. We’ve just reported that Philippines is STILL at 2.5Mbps of average Internet speed as of Q4 2014– with the rates that we’re paying for there’s certainly a big room for improvement, don’t you agree?
Abe Olandres contributed to this article.
YugaTech.com is the largest and longest-running technology site in the Philippines. Originally established in October 2002, the site was transformed into a full-fledged technology platform in 2005.
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Ex-Alodian Knight says:
That would be nice if Verizon or even Olleh were to open business here. We could finally use all that bloatware from the Sky Vega phones. properly.
rigor says:
wait for SMC
Digest says:
Its all great thinking about it. Question is, are they willing to go aboard here in the Philippines?
Anonymous says:
It’s obvious why we need a third player, but was disappointed that article sounds like it was written for a HS reflection paper (sorry). Need more data and analysis, comparison of other countries that have a similar market as the Philippines, and how having a 3rd player works for the benefit of the that country.
Easy 2say E says:
Where’s Easy E the expert here? He can give good solution to this problem, lol!
Tama ka Ex-Alodian Knight. Oo na dapat may competitors itong Smart at Globe na Verizon, T-Mobile at Vodafone at tingnan natin kung hindi mga yan papanic. Kaya lang ang NTC din ang panalo jan kasi tatapalan din ng dalawang heganteng network ng salapi. Talo parin mga consumers at magwi-wish upon the falling stars nalang tayo sa imposibleng mangyari.
james says:
Agree with #1, disagree with the rest. The other points you’ve mentioned assumes the 3rd telco would play it differently compared to Globe and Smart. The 3rd telco could just as easily provide the same level of products and services and not be any better than the rest.
Summer says:
What a ridiculous idea considering that PLDT will always buy the weakest to dominate this market. Or we could hope for two telcos to implement unlimited txt (1k threshold per day), unlimited call on off-peak hours in fix rate, say P500 a month.
cj says:
either way, consumers doesn’t have much of a choice just like having an LTE device and plan but look at the speed kbps? these two telcos will always brag and brad and brag about their service… having a third party won’t be necessary only if they are not wallet-killers.
Easy E says:
i-extend pa natin ng konti ang history.
It started when PLDT monopolizes the telecoms industry, then came EO109 and RA7925 (by pres Ramos) that seeks to break the monopoly to enhance the telecoms service. In 1989 Piltel and Extelcom was granted franchise for Cellular Mobile Telecomms service. In 1993, Islacom, Smart and Globe was given franchise to operate CMTS. Islacom was the first to provide GSM service and 3months after, Globe. The rest were still Analog. Then smart decided to “gold” (gsm). Then Digitel (Sun) was granted franchise to operate cmts in 2000.
Extelcom was owned by the Lopezes (Bayan), Piltel was bought by PLDT, Islacom bought by the Ayalas (Globe). That is why there was just three: Globe, Smart and Sun. Dugtong nyo nalang ang kwento sa taas.
So bakit ba sila nawawala sa serbisyo o binibili ng mas malaki? LUGI.
Bakit binibili ng malalaking companies ang malilit na palugi? Dahil sa FREQUENCIES na pagMamay-ari nila. Hindi na makakapag extend ng service ang malalaking telco kapag wala nang makuhang frequencies.
So bakit walang nangangahas na magtayo ng 3rd carrier? Una, kailangan ng malaking pera, pangalawa, wala nang Frequencies. Most are franchised by Smart, then by Globe, and few ones are still owned by Bayan, and of course other small players like Liberty.
Yes we need a third service provider pero mahirap at malamang malugi sila.
Pasensya sa mahabang post.
ice says:
Agree with #1, disagree with the rest. The other points you’ve mentioned assumes the 3rd telco would play it differently compared to Globe and Smart. The 3rd telco could just as easily provide the same level of products and services and not be any better than the rest. <— hinde mo ata alam na before SUN cellular cellphone bills average around 800 PHP – for 60 mins of calls 200 SMS… and there was SUN 250 PHP for CALL and Text Unlimited Bulok nga ang service sa simula look at it now… Now Suncellular DATA from 999 unlimited to 999 3GB…
dzandueta says:
Anyway, there’s always room for a third player or even more, limitations notwithstanding. Question is who’s willing to take a risk.
andre says:
I was really surprised when NTC allowed PLDT to buy Sun. That was a weird move. Oh well, telcos are more fun in the Philippines! :P
A third telco can really help. I remember years ago in SG, the third telco (M1) dared to provide 12 GB of cellular data monthly for postpaid subscribers, at a time when the other telcos (Singtel and StarHub) provided only 500 MB or 1 GB for the cheapest plan. That was when they first offered the iPhone 3G (after a 6-month monopoly by Singtel)…of course, the other telcos soon followed with 12 GB as well, or they’ll lose customers.
Then again, three telcos is not a guarantee of fierce competition. They can still act like cartels. The three telcos above almost simultaneously reduced the previous 12 GB monthly data to just 2 GB, offering the excuse of introducing 4G/LTE service.
criz says:
Dati sa SUN cell Internet was way better and traffic was lesser before pldt/Smart bought SUN. Justifyable yung sinasabi nila na consistent, fast and reliable. Ganun kse sa negosyo ng mga buwaya, if you can’t beat them, buy them.
Jun says:
How i wish another Competitor would consider Philippines as their consumer baka harangin lang yan ng NTC kasi malaki na kita nila sa Globe at Smart palabas lang nila yang iimbedtigahan kuno ang telcos ngaun as of now nagtitiis pa din ako sa kakarampot na speed ng net ko pero willingly paying my bills.
archie says:
Mahirap mangyari na may third player telco. Dahil wala ng pork barrel, karamihan ng mga politicians ay nagmadaling mag invest sa either smart, globe, pldt o meralco. Ang NTC ay napakacorrupt na agency. Naalala nyo yung Islacom? Di ba binili ng globe yun? Di kinaya ng islacom ang sobrang taas ng ntc fees pero sinet up lang sila para mabili ng globe. Isang pang factor ay ang mga telco lobbyist na laging may special gift sa mga taga NTC. Wala tayong magagawa kundi mainggit sa Romania at Hongkong na may average 52mbps connection.
NotASheep says:
you know what we need? Google fiber, there. the PERMANENT solution. kill both teleco’s with 1 GIGABIT PER SECOND for 25$ + 300$ installment which is WORTH it.
wtf says:
Who’s willing to invest in the Philippine telecom area? Given the existing duopoly, this would be hard and inter-network connection can be a bitch…remember what happen to sun cellular when they became successful – globe and smart started to become less cooperative.
NTC should first provide guidelines to encourage competition in the telecom area. In particular, allow new players to use existing and current cellular towers of smart and globe to initially set up their system – WITHIN A REASONABLE RATE. Provide incentives to new players in form of tax breaks to compensate the cost of new network systems. Also, bring back adoption of areas with low cellular user population. For the nth time, PLEASE LOWER CALL AND TEXT RATES FOR EVERYONE. Provide incentives and disincentives for slow internet access. Encourage coopetition rather than pure competition. Stop that stupid free WIFi nationwide service – sayang lang ang pera. Sa States, Republic wireless uses WiFi first and cellular towers for other areas. Bakit hindi ito ang gamitin? just asking.
SunCell Subscriber says:
The current duopoly is weak due to potential standoff.
– I do not agree. I think both Globe and Smart actually are becoming fierce in terms of offering new services. Sometimes even being the first to offer such in Asia.
You know what the problem is? Right now, the market is looking for a telco that could provide a reliable service. Do you think a third player – the one that will become the newbie among all telcos – would be able to provide this? Maybe, until 10 years time. Even SMC is finding it hard to penetrate the business because it’s really hard to set-up a new telco.
A better commission that will strictly regulate, enforce and penalize telcos is what we need to put the pressure on PLDT and Globe to provide better service. As of now, NTC does not have the balls to do this. That’s where the problem lies.
ATT_VERIZON says:
One word…
CORRUPTION!
momoja magic says:
how about eastern telecoms? http://www.easterncommunications.com.ph
Peejay says:
We need an Anti-Trust law.
Jayson Moy says:
San Miguel Telecom:
http://www.technomanila.com/2014/05/new-mobile-phone-company-spotted-in.html?m=1
duh says:
we only need google fiber para maayos yung telco natin.
Juan says:
Grabe talaga mga telecos sa Pinas. Mahal na and pangit pa ang service, dito sa US$24 lang ang bill ko every month with unlimited minutes,text and 10gb of data may free iphone 6 plus pa.
Rockafella says:
Well played guys :) all of you are certified all-knowing a-holes.
tobimagwire says:
former next mobile has planned to deploy cellular sites in Metro manila over the next two years
targeting low-end users with an offer of unlimited text messages and voice calls
check it out here –> http://wwww.now-corp.com or here https://www.telegeography.com/products/commsupdate/articles/2014/06/10/now-telecom-plans-usd28-million-metro-manila-rollout/
hope, they do it fast considering that they partnered with huawei
ewanlangha says:
who among you guys, the thinkers here, those who know bout cellular blah blah stuff..
can put a simple analogy to this frequency thingy..
is it like the radio stations?
that when all the numbers in the FM band gets used, you can no longer add?
or is it like the jeepney/bus routes?
that when the route gets the number of franchise it will no longer issue additionals?
help us understand this in simple terms
Thank you
realtalk says:
oi mga conyo.. pang english english pa kayo..
lalo na yang mga mga ofw na sabi nila “dito sa amin sa us/sg/hk/uae/europe, ganto lang binabayran”, wala kayong alam, tahimik nlng. wag nyo nlng compare kc 3rd world country lang ang pilipinas. at inter island pa. mahirap or malaki ang investment sa telco. imagine minimum 3000 ang cellsite sa pilipas at 7digits binabayaran nila sa ntc for the freq per cellsite, wala pa jan ang other operation expenses. bakit mo naman iimprove ang network mo kung kakarampot lang naman ang binabayad ng mga ubscriber mo compared sa ginagastos mo para sa equipment. sa ibang bansa, subsidize ang mga telco, partly owned by goverment kaya mura sa subsriber. sa pinas, wholly mother of god, i mean private lahat yan.
And isa pa, tumaas or lumalaki na ang demand sa data dahil sa lumalaki din ang mga data sa dinadownload sa mga webpages na binabrowse nyo. ex. facebook, with 300 kbps max, mabilis na yan para magload ng page. e ngaun kahit consistent na 1mb ung conection mo, it will still take 20 secs to load.
solution, pay more, subscribe for more static/corp account na mas stable at dedicatd bw for you. iwasan ang torrent.
matchbox says:
before we can think of it i know there’s someone out there na nagpplano mag tayo ng new telco i hope soon
romy57 says:
These two giant telecommunications companies are holding the Filipino consumers by the neck and the Government through the National Telecommunications Commission should do something about it. There are three solutions to this problem: 1) Upgrade their Servers up to 25 percent above and over their existing capacity to cater to future increase in load, and/or 2) Invite additional investor players, local and foreign, in the field. Make the field climate conducive to investor by offering the best business incentives like lesser restrictions, tax cuts, and subsidies 3) Let Government order or legislate, whichever is applicable, regulations and/laws which maximizes benefits of consumers using their products!
v says:
Remember wi tribe? Poor service and they introduced capping into the philippines
they are welcome to try but they wont prosper unless they offer a superior product
drew says:
Dati masaya na ako sa unli na service kahit kbps lng yung reading atleast unli kesa naman sa may cap. Ok lng sana na may cap bsta consistent yung speed na pinangako nila. Pero kng gagayahin dn ng third player to wla rn kwenta.
Jon says:
They should approved 2 new player in the cellular bandwagon it is better that way since cellsites and frequency can be shared to all network like Globe, smart, 3rd cell network, 4th cell network thats four way competition to who’s the best of the four cellular networks so subscribers will benefit from it…