Speaking before members of the Philippine Economic Society (PES), PLDT chairman Manuel Pangilinan said: "The lack of a national program to build broadband networks means that even for the few blessed with these devices, connections can sometimes be disappointing."
"The fixed line business looks and remains a dumbbell: with PLDT on the one end with a majority of the market, and on the other, the service area providers and Paptelco in the minority," said Pangilinan.
He noted that while the cellular industry is now a vibrant sector, only two players have emerged strong.
"In an economy where the market is small in terms of purchasing power, and where resources are extremely scarce, perhaps we should revisit our competition environment by asking this question: how far should we permit completely free market forces, and free competition, in our businesses?"
He said a strategic competition policy for the Philippines may be revisited.
"Instead of free and open competition, an enlightened competition policy may be more appropriate for franchised industries where market size is dependent on mass market spending, where capital requirements are large, extensive and sustaining, and where there isn’t space for too many players if you want them to be profitable."
Given the choice, Pangilinan said he would rather eschew the elegance of a free market policy a policy of the western world dating back to the 80’s, a policy we tend to adopt wholesale and without much thought because they come from the first world.
"I’d rather see a robust and profitable competition policy that enables the participants in an industry to serve as both an engine of economic growth, and a provider of affordable telephony services to the vast majority of Filipinos, particularly those who are financially challenged. Because they are profitable."
He cited the case of Malaysia for its policy of granting just three 3G cellular licenses.
Hongkong at one time had only three cellular providers and all of them were profitable.
When the Hong Kong government further deregulated by granting three more licenses in 1997, the industry’s fortunes reversed with six players.
Now, the industry is consolidating and the participants are down to four.
"We’re seeing this consolidating trend beginning to happen in the United States and elsewhere. While there may be merit for the Darwinian principle, can we afford with our meager resources to go through this wasteful cycle of deregulation followed by consolidation?"
"Thus, how many cellular companies can there be for these to be viable? Cable TV companies in a given locality? Direct Broadcast TV Satellite operators? Free-to-Air Television stations?"
Despite the political turmoil, Pangilinan believes that today’s economy is actually quite different if not actually better than what it was, one or even two decades ago.
"And this, in the face of severe fiscal measures, political tempest, and external shocks generated by rising oil prices and interest rates."
Pangilinan noted that a gradual but significant transformation of the economy has occurred quite unnoticed thanks to the accrual of incremental reforms instituted by past and present administrations.
"At the time they were being crafted and implemented, these reforms were highly contentious, tentative, and probably thought imperfect even by their sponsors," Pangilinan added.
