Is there a favored player?
(The Philippine Star) - October 19, 2016 - 12:00am

“A bird in the hand is worth two in the bush.” defines this expression as follows: it is better to have an advantage or opportunity that is certain than having one that is worth more but is not so certain. A bird in the hand is yours, and it’s not going anywhere unless you let it go. But if you leave it and go for two in the bush, there is no guarantee you’ll catch them, you might end up with nothing in the end. In essence, don’t be greedy and stick with what good things you already have, instead of going after something you’ll probably never get.

Is this the position that the Philippine Competition Commission (PCC) wants to get itself into: go for two in the bush when there is already a bird in the hand?

There is talk that the PCC wants to have the telco acquisition deal between San Miguel Corporation (SMC) on one hand and PLDT/Smart Communications and Globe Telecom on the other set aside because the commission is reserving a slot in the Philippine telecom market for a favored player.

Does this player have billion of pesos to spend for telco infrastructure?

The P70-billion deal involved the acquisition by PLDT/Smart and Globe of SMC’s telco company and assets, including valuable radio frequencies in the prized 700 Mhz spectrum that is considered the most valuable frequency range for 4G/LTE due to its ability to provide better wireless internet connectivity. The real value of the 700 MHz band according to experts is its longer range and better indoor penetration.

There is also coffeeshop talk that government is now considering building its own national broadband network (NBN), a plan that requires a whopping P200 billion and three years to set up. While the amount is paltry compared to the almost P1 trillion Thailand and Indonesia are both spending to provide better internet service and the $24 billion South Korea is investing for its public internet backbone, the sad fact remains that we do not have the funds for that.

Even Information and Communications Technology Secretary Rudy Salalima, who had raised the NBN option, said this could prove to be a money-draining venture for our government because players in the telecoms sector need constant spending to remain competitive, given the technology they use often gets outdated in just a matter of months.

So why look consider all these expensive options that have no assurance of coming to fruition when we already have PLDT/Smart and Globe all set to improve our mobile Internet experience.

But then, there is the PCC that continues to insist the deal is subject to its review when the commission’s own rules have said that the acquisition is already deemed approved. Even the National Telecommunications Commission (NTC), the government agency that is in a better position to say whether or not the deal will be good for the public, has given Smart and Globe as early as May this year the go-signal to co-use certain radio frequencies in the 700 Mhz spectrum previously owned by SMC through Vega Telecom.

The PCC insists that the deal is anti-competition, on the belief that SMC could have become a strong third player in the local telco market that could break the duopoly enjoyed by Smart and Globe.

But then, what is wrong with two players, when even one player or a monopoly is not prohibited by no less than our Constitution. And no less than international credit ratings agency Fitch Ratings has taken note of the stiff competition in the market between Globe and PLDT, which, it said, could intensify in the coming years.

So why does the PCC want to break up an imagined duopoly in the telecoms sector and open up the market for the entry of a favored third player, and in the process disregarding the pressing needs of over 100 million existing subscribers of PLDT/Smart and Globe for improved and more advanced mobile services?

If the government would be this third player, then the PCC should start realizing that we do not have P200 billion to build a national broadband network, an amount that would eat up six percent of the proposed P3.3 trillion national budget for next year, an amount that could be better spent on infrastructure, education and health care.

The PCC is obviously disregarding President Duterte’s call for telecom providers to improve their services, an issue he had raised even before he took over the presidency. In fact, just a week ago, Duterte reiterated this call and warned Globe and PLDT that he would open the telecoms sector to Chinese competitors if they fail to shape up. But how could PLDT/Smart and Globe do so, given the PCC’s obstructionist ways?

The PCC is now the single biggest stumbling block to President Duterte’s goal of providing affordable, fast and reliable internet service to Filipinos, which he had pledged to them during the presidential campaign.

The Court of Appeals just last August stopped the PCC from reviewing the P70-billion deal when it issued a writ of preliminary injunction.

But the PCC seems hell bent on its bid to stop the deal, and nobody seems to understand where this is coming from.

Would the PCC rather that the 700 Mhz spectrum remain with SMC and continue to be idle when we already have a bird in the hand – PLDT/Smart and Globe already being reminded by the NTC about the requirement in their co-use agreement – that they should be able to show improvement in service within one year. But how could they start using the frequencies if the PCC continues to oppose the deal?

Time is running out.

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