Poor telco service gets Duterte’s attention

Change is coming for the telecommunications sector, which could witness a state-led shakeup unseen in almost two decades, under the incoming administration of presumptive President-elect Rodrigo Duterte.

Industry observers weighed Duterte’s challenge to the telecommunications duopoly of Philippine Long Distance Telephone Co. and Globe Telecom to address “slow and expensive” Internet services in the country or face a regime that would ease the entry of large foreign players, who remain capped by a 40-percent ownership limit.

The statements made by Duterte, whose term begins in July this year, was the strongest coming from an elected President regarding this sector since the time of President Estrada in the late 1990s, when he ordered both PLDT and Globe to settle interconnection issues over text messaging.

Text messaging was the hot service then and it has since given way to the digital age where smartphones are driving an explosion in demand for Internet services, instant messaging and social media.

“It’s refreshing and something that we need. In the past two administrations, we did not see much movement in the telecommunications sector,” independent researcher Mary Grace Mirandilla Santos, whose work is closely followed in the industry, said in an interview Tuesday. “It’s very telling of what the telcos can expect of the incoming President. But I hope it’s also backed up by strong policy reform.”

Those reforms were included in a February 2016 policy brief she authored and presented to the Joint Foreign Chambers of the Philippines. It included moves to lower entry barriers, adopt open access, update decades-old regulations, promote infrastructure sharing and implement the necessary spectrum management.

“If you look at what [Duterte] is saying about the dominant telcos, possibly of reform in ICT, we should see changes in the telecom landscape that will bring us finally into the 21st century,” Winthrop Yu, chair of the Internet Society-Philippines Chapter, said in an interview Tuesday.

Taken with this week’s signing by President Aquino of a law that would establish a Department of Information and Communications Technology, Yu said steps were being taken to improve digital services in the Philippines. Priorities in this sector would depend on who Duterte would choose to head the DICT, he added.

“The way to address slow and expensive Internet is to do both regulatory and competitive solutions,” Yu said.

Even before the May 9 polls, Duterte was perceived to be the most capable in terms of starting reforms in the telecommunications sector, at least according to the Fitch Group’s BMI Research. “Entrenched barriers to entry through regulatory ambiguity and the duopolistic market structure will continue to pose significant hurdles to foreign investment. Duterte would be more likely to address these problems owing to his hard line against corruption,” BMI research said in a report last month.

A new player would arrive this year via a high-speed mobile Internet service to be launched by conglomerate San Miguel Corp. Ang said Tuesday that talks were still ongoing with a yet-to-be-disclosed foreign partner, but he said the intention was still to launch the service within 2016.