Only thing worse than a monopoly . . .

Posted on September 1, 2015  /  0 Comments

When the paper by Shazna Zuhyle and Grace Mirandilla was presented at CPRsouth 10 in Taipei a few days back the discussant, Reg Coutts from Australia, asked why the paper supported action by the regulatory agency as a remedy for the manifest problems of quality in the Philippines market. My answer, on behalf of Shazna and Grace, was that regulatory action was an interim solution until the international backhaul problems were resolved. It was incomplete. I am happy that Grace has filled he gap in my answer. Another underlying problem was the duopoly in the access market.

Competition can do much to revive a stagnant telecom industry where PLDT and Globe, the two big telcos controlling the fixed line, mobile phone and broadband markets, no longer have the incentive to outdo each other or improve customer service.

Telstra’s capital and technology coupled with SMC’s telecom assets and local business knowhow would be a force to contend with. While Telstra and SMC are still in the initial stages of negotiation, already Globe has expressed its readiness to take on another competitor, saying that it has had “a long history of fighting a larger, well-resourced incumbent.”

With the entry of a third telco, expect to see an honest-to-goodness rivalry among service providers, unlike the follow-the-leader type of competition that one often sees in a duopoly. And effective competition can only reap benefits for the consumers.

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