Globe scores duopoly critics

By: Miguel R. Camus - 8 years ago

Globe Telecom fired back at its critics Wednesday, saying a new challenger was not the solution to better services and that San Miguel Corp.— the last company that attempted to break into the sector—would have had difficulty succeeding because of its “barely adequate” infrastructure.

Globe’s strongly-worded statement was a departure from earlier releases, which mainly focused on the telco’s network expansion plans or calls for government to cut bureaucratic red tape.

The criticism now of SMC’s telco ambitions comes as Globe and PLDT are locked in a legal dispute with the Philippine Competition Commission, which wants to review the duopoly’s P70-billion joint buyout of SMC’s telecommunications unit last May 30.

The statement was quoting Globe CEO Ernest Cu, who was addressing a recent forum in Davao. Cu said they were ready to compete with new players, but barriers to entry were not the PLDT-Globe incumbents but massive investments and the stiff local government unit permitting process, which delays the rollout of crucial cell sites.

Cu added that a new player should invest in “incremental” infrastructure, and not rely on sharing assets that PLDT and Globe had already built.

Referring to SMC, Cu said the conglomerate was threatening to challenge PLDT and Globe, but after they acquired the company’s telco unit last May, it was found to have just 230 cell sites.

“That is after two years of trying to build a network. You’ve heard about them trying to build their network but in reality, you go there, there’s nothing in there,” Cu said in the statement.

Cu added that SMC’s cell sites had to be “dismantled” since the buyout because these were overlapping with PLDT and Globe’s network.

“There is no incremental value because the sites they built on already have existing telco sites,” Cu said.

SMC President Ramon S. Ang did not immediately respond to a request for comment. A PLDT official also did not immediately respond.

Ang said earlier they planned to launch a “better and cheaper” mobile internet service within this year. The initial plan would cover Metro Manila and nearby provinces.

Ang said they required less cell sites because of SMC’s radio frequencies, including those in the 700 megahertz band, which could efficiently cover wide distances and penetrate buildings. Prospects for SMC’s entry weakened after talks with possible partner Telstra Corp. of Australia collapsed last March. Ang said sale negotiations with PLDT and Globe started shortly after that.

Cu said in a mature telecommunications market like the Philippines, “late entrants end up being bought by one of the other players.”

He said government should instead make it easier for telco companies to build more infrastructure to adjust to growing demand, now centered on internet services.

To deploy network infrastructure, it takes 25 permits and about eight months to complete the approval process of one cell site, he said.

“The Philippines continues to lag behind in terms of cell site density that will improve mobile internet experience in the country. In addition, the roll out of fiber optic cables as last mile solution to bring broadband services to homes is likewise challenged due to right of way issues,” Globe said in its statement. JE