FULL TEXT: Interview with Globe President and CEO, Ernest Cu

It’s not often that one gets to sit down with the CEO of a large company and get his opinions on current issues. Last Friday INQUIRER.net had the opportunity to have a chat with Globe President and CEO, Ernest Cu for a session of INQUIRER Conversations.

During the 45-minute-long interview, Ernest Cu talked with Editor-in-Chief John Nery about the status of the local telco industry, the challenges that they face, and the company’s plans for the future.

Below is the full transcript of the interview:

John Nery, INQUIRER.net editor in chief: Good afternoon and welcome to our INQUIRER Conversations with Globe President and CEO, Ernest Cu. My name is John Nery, I’m editor in chief at INQUIRER.net and it is my happy task to serve as conversation partner. Ernest, thank you for taking time and welcome!

Ernest Cu, Globe President and CEO: Great John. Its a great opportunity to do an interview live in whatever Facebook, or INQUIRER.net streaming. I don’t think I’ve done many TV  interviews but it’s one of those unique ones that we’re doing in a new mode of broadcasting if you would.

John Nery: That’s right and thanks for the prompt. We are live on Facebook. We are also carried on other Inquirer social platforms. We are on Twitter, on Kakao, on LINE, on Firechat, as well as on Viber. We are also being covered by reporters from the Philippine Daily Inquirer and INQUIRER.net. Once again we are Live on Facebook through the INQUIRER.net Facebook account.

The format is straightforward. For the next 50 minutes or so, I will ask questions and we will have answers from you and maybe in the last few minutes, we’d like to ask you for some parting words. I have a lot of questions actually.

Ernest Cu: Sure! Fire away.

John Nery: I’d like to start with where we are. So we are in the Globe HQ. It’s October, the year’s almost up but 2016 has been a year of milestones for the telecoms industry. How has it been like for Globe in 2016?

Ernest Cu: Well, 2016, I think, started out like most other years. We had a very good growth in terms of revenue vis-à-vis the previous years. We continue to gain market share, leading to our now being named as a the number one mobile brand in the country and that’s by revenue market share. Things are going the way we planned in terms of migrating users to use more data. As you know the user habit has been shifting over the last few years and I think it’s reaching this inflection point.

In 2016 we crossed the border of 50-percent penetration of the smartphone and when that happens movement away from traditional voice and SMS or legacy voice and SMS will simply accelerate. People will be using VOIP type of communication or messaging platforms like the ones you mentioned—the Vibers, the WhatsApps, the Telegrams, the Line, and the WeChats of the world. And our job is to really fortify revenues by having people consume  more data as we shift the revenue base from voice and SMS into data.

The year took a very interesting turn sometime in May when we initiated the acquisition of the stranded telecom called the Vega Telecom owned by San Miguel—as you know their partner backed out. The assets were left stranded. Most important among the asset base was the spectrum that they held in various frequencies.

They held assets in the 700MHz, 1800MHz, 2600MHz, and those are what you would say prime real estate from which to broadcast the LTE spectrum which is going to be the main 4G equal for data transport in this country for mobile.

We figured it’s best to do the transaction, do it jointly with competition because we really felt it was important that this country  benefit from the use of that spectrum. That spectrum has been stranded and unused for such a long time—warehoused as a matter of fact without being deployed, and in a country where spectrum is at a premium given the fact that we have so little cell sites relative to others in the region. We felt that it was actually criminal to keep that spectrum kind of unutilized.

So we embarked on that deposition, it was not actually planned well in advance, it just so happened there was an opportunity to actually acquire, and we did it and our hope is that, as we use that spectrum, the public continues to see an uptake in speed on mobile internet here in the Philippines.

The other milestone you would say for us at Globe is that Globe has always been a mobile-focused company. “Mobile first” because that was where the demand was, that was where it was easiest to roll out. In 2010, you remember, we announced a general change-out of the whole mobile network. and from that time on until 2016 all that we’ve been working on is mobile.

But in 2016 we announced a strategy to actually go into the home. With our success in mobile, owing to the mobile digital consumer, now we felt that this should extend to the home. Filipinos have been clamoring for higher speeds and we have not really invested much in the fixed line infrastructure in this country. You would recall that this country came from a very low fixed-line concentration or fixed-line base.

I remember growing up in the ’80s when a phone line took four or five years. It’s an heirloom piece you actually bequeath to your heirs.

Mobile changed that in terms of voice communication, but we do believe that because of changing habits of people, fixed line, fiber, that sort of infrastructure will now be needed to deliver what the public really desires.

The main use case for high-speed internet is video in the home, so Globe announced an endeavor to cover about 2million homes with at least 10mbps and above by the year 2020. We embarked on a massive billion-dollar endeavor to roll out fiber to modify and even improve the existing copper infrastructure. So that’s what we’ve been focusing on in 2016 so far.

John Nery:  Is there something or anything else to look forward to in the last three months of the year?

Ernest Cu: Globe has endeavored to become relevant to the Filipino digital consumer. We continue to sign interesting partnerships. I think we’ve got a bevy of the best of the world if you would. From sports, family entertainment, Hollywood-type and so on. Expect a few more announcements from us hopefully by the end of the year.

John Nery: A lot of people depend on their phones. It helps define the quality of life, you might say. Which explains why many people are frustrated by slow internet speeds. Why is it slow? What is the situation?

Ernest Cu: I think to cover or answer that question, you need to frame the answer in two parts: mobile and fixed.

Unfortunately some mix the two up so people don’t understand where the slowness is coming from.

I do think that if you look at the mobile infrastructure of this country, yes, we still need to reach some areas with LTE but in the areas we have LTE, and our endeavor is to cover as much as of the Philippines as possible, the speeds are decent.

I think the last report, if I’m not mistaken, we’re averaging 7-8mbps already on LTE. That’s average, that’s not bad. And in areas where we have free reign to roll out fiber, to roll out sites, whether it’s macro sites, which is the big behemoths of a cell site, to the small cells, or atom cells as we like to call it, that we scatter all over the place like here in BGC. Here if we roll out the 700, 1800, 2600 on LTE, you will get speeds up to 80-200 mbps. We actually, in a recent event of Globe, showcased some speed test that we did in three various locations and even simultaneously at times. And we showed speeds in excess of 60, 80, and 100 and it was a great experience but, that requires actually deploying the right type of equipment and being allowed to do it.

So I think mobile we’re right in there, in terms of relative comparison to countries with similar GDPs—I say Indonesia, we’re above India. We’re not too far from the Malaysia.

Where we really have an issue is the fixed-line internet infrastructure of this country. That’s why the averages come down. The majority of the fixed-line subscribers in the home have access to 1-2 mbps plans. These are the legacy of DSL plans of the past. Like I said, I think both telcos have only recently started to invest in fiber and VDSL, the high-speed copper network in this country. Again the focus has been all on mobile. And now the challenge is to roll so we can reach as many homes as possible. This will require once again much difficult right of way and permits, and so on that we have to obtain. And that can sometimes slow down.

So when you combine the two, in summary, I’d say mobile we’re fine. There are still places to reach of course, congestion issues to address. The new spectrum will help. Globe, and I’m sure the competition is also doing the same, we’re rolling out cell sites as soon as we can. We’re hoping to do 1,000 cell sites per year in the next three years. If we get there, that should continue to alleviate some of the congestion and improve the speeds.

Fixed line is a little bit more slow-going. As you know it’s a construction project. And construction projects get delayed a lot of times because of unforeseen circumstances. But we’re very determined to make it happen because it’s what the country needs and it’s what the  Filipino people want in terms of wanting to consume data at home—music, gaming and social media.

John Nery: Does the government have a role in fixing the fixed-line problem?

Ernest Cu: I think they have a very significant role because they can truly influence what the different local governments have. We’ve been hearing things like emergency powers to be able to roll out, exempt the telcos from getting too many permits. I believe they’ve successfully done this before in some PPPs [public-private partnerships] where they streamlined the process of getting permits. But not everything is successful because we also know about some expressways like the one in NAIA that’s been delayed simply because of right of way.

So I think if the government is determined to do this we’re willing to cooperate with them to be able to expedite permits to make sure the bills happen. That’s the first part.

The second part is an advocacy personally of mine to work with government to treat telco infrastructure very much similar to roads. One can even argue that at times the flow of information is more important than the flow of goods because it changes people’s lives when they can access this treasure trove of information called the internet, when they can communicate on the internet freely with their relatives. This is becoming the sole mode of communication and information attainment.

Personally what I’d like to see that government do is help the telcos build fiber or build fiber in places or routes where, it’s called a missionary route in my term. It does not make business sense for us to do so. What I mean is that it’s probably far from the nearest node or the main islands. It’s got a very low pool of customers that we’re trying to serve but still important to the citizens of the Philippines.

One example that always comes to mind is the ARMM region, Basilan and Sulu. For instance I remember the governor and vice-governor of Sulu came and asked if we can help them provide high-speed internet in their island. Their public wants it. They think they can have improvement in people’s lives if they have it. And that they can actually create peace. We know that it’s a troubled area, unstable area. If people’s eyes are opened up to the world, I think that they feel like it (the local unrest) can improve.

But the dilemma is, that island is 120 kilometers by sea, away from the main island. That requires building a submarine cable probably for a populace that will maybe spend maybe 20-30 pesos a month in terms of mobile internet. And you still have to create a 120-km submarine cable from the tip of the island to the main city. And you have to create another terrestrial fiber route into the main city. It doesn’t make (business) sense for us to pursue.

John Nery: So the advocacy is for the government to…

Ernest Cu: Government I think can build, just like they do roads. When they build it they can rent it to the telcos. Because for us to have a return, we would have to make the money back within five to eight years, at most 10 years, but sometimes a business case like this will not carry everything. But for government there’s a lot more justification, such as what else can you throw into the business case. There’s progress, peace, education, people’s well-being, all that cannot be factored into an economic term. We are a business, after all as telcos, but government is government. So that’s the advocacy, that’s one example. That’s the submarine example.

Another example that comes to mind all the time because it’s a request by a very very good friend, Senator Angara—his family is very prominent in the Aurora region—he asked if we (Globe) could help him bring internet and high-grade facilities to Aurora. But the problem was that the province was separated from the main area of Manila by the Sierra Madre mountains. That means we have to traverse it with construction of fiber underground or above. And it’s a very expensive proposition as well and it won’t make it.

So that’s the terrestrial and submarine example.

But if government builds that, I’m sure things will change for that particular region.

John Nery: If I can go back to the signal/speed thing, the weak signal. I remember you said something about the topography or the place where you live or work actually influences the way you receive the signal.

Ernest Cu: In terms of construction we’re in a dynamic state here in BGC. A building comes up almost every six months or a year. And every time a building goes up, those signals get a bit screwed up. Let’s say if there’s a cell site in a straight line within this particular window, the signal’s probably coming from that. Building goes up there and you can forget it. So we have to reconfigure the whole thing once again. We have to re-optimize the whole thing once again. That involves finding an alternative cell site to put a new facility and then re-optimizing the whole area.

So people will wonder, “Why did my signal get weaker?” It’s because a new building is up and it probably covers one of the sectors that’s been serving some users.

John Nery: So how do you respond to that? Do you put up another Atom site?

Ernest Cu: It’s increasingly difficult, John. If you look at this place, there’s no place to actually to put a cell site here, right? If you think about it the buildings are too high, and they’re glass. So we can’t really put an antenna on the side, the building owners would not allow us to do that. Instead we employ technologies call “small cells.” “Atom cells,” or self-contained cell sites, that are about this big (gestures to shape around 2 feet in height) that we put on lamp posts that are strung together with ethernet or fiber and have their own power. Its a cell site by itself but you have to put many of them.

We’ve deployed that here if you look at the high street area of BGC you’ll see a lot of Globe small cells or atom cells as we call it, in that area. That’s why there’s continuous coverage, there’s high capacity all throughout and generally good LTE experience.

John Nery: You mentioned a plan to construct 1,000 cell sites every year for the next 3 years. Was that there before or after you acquired the San Miguel assets?

Ernest Cu: It’s always been there, whether we get there or not is another question. Like for many years running it’s always been an endeavor to do the 1,000 per year but we only get between 450 and 500. That’s why if you look at the Philippines, we have 15,000-16,000 cell sites between the two telcos. And a city like Tokyo will have 22,000 in itself. So there’s not enough sites. China, this massive country has 1.2 million cell sites because they can pretty much build cell sites at will. To add to that in the Philippines there’s no sharing of sites. So if you look at the 16,000 we have much of that is duplicate. It’s not incremental to each other because of the facilities.

That’s probably where we are lacking. The new spectrum without a doubt gives us relief because we can move capacity into the existing sites. But I think in some point in time we’re going to max it out again and hit the physical limit with what we can do with those sites. If you look at the Globe cell sites, they’re loaded up with antennas—we average 12, and probably even more now that we’re adding the 700(MHz). Because every kind of spectrum, every frequency requires its own antenna. You need one for 900(MHz), you need the one for 700(MHz), you have a 2100(MHz), you have a 2600(MHz), that’s a lot to put in one tower!. The 700(MHz) antenna will be as long as this couch and there’s three of them so it’s a real issue. And we recognize that and we want to build so we’ve been lobbying and working with various groups whether in gov’t, whether it’s with groups of LGUs to say, “Hey, let’s facilitate.” We all want this for the public good, right?

John Nery: I wanted to ask you about the LGUs as a matter of fact. You mentioned the Sulu governor, Senator Angara from Aurora. In what role do local governments play in fixing the fixed-line (problem)?

Ernest Cu: They present one of the most difficult hurdles for us because of the number of permits that are required to build one site.

John Nery: Per LGU?

Ernest Cu: Yes. We average 25 per cell site, both national and local permits. The NTC, you know, Department of Health, DENR, all that. They’re pretty standard, there’s not an issue with getting those. But the LGUs vary in their implementation and what they would like to happen. Some are very strict. They require multiple permits of “esoteric kinds.” Some will require huge payments. Some interpret the law as per antenna or some per site, per tower, it’s a mixed bag. If you can standardize that, it would help. There’s one LGU, I was told in a particular city here in the Metro, we have 173 pending applications for 173 cell sites. It’s a major city and it’s stuck in various forms.

It’s a challenge and I think they could help out the country if they view building out this infrastructure as a major priority.  Because it’s been proven, right? that as we gain (faster) internet speeds, as we get internet penetration, it does help the GDP of this country.

John Nery: I wonder why they don’t see that if the focus is on the esoteric kinds of requirements…

Ernest Cu: Well, it’s the usual issue. Who does it really benefit, the individual or the country. Sometimes the benefit to the individual comes first, so it doesn’t quite flow through to the overall national objective.

John Nery: So these stranded assets in San Miguel that was supposed to be used in partnership with an Australian (firm), Telstra. Can I ask you why you think that didn’t pan out?

Ernest Cu: Let’s emphasize the “what I think.” I’ve long held the view that new entrants into mature telco markets really stand a low chance of success because it is very difficult to get people to switch, especially when you are coming in with a sub-par network.

Now I’ll caveat that by saying there is a venture in India called Reliance Jio that went in a different way. This is owned by Mukesh Ambani, he’s the richest man in India. He invested, I believe, in excess of 20 billion US dollars over a five-year period to build a network that he just launched about two or three weeks ago. And that means he built out the whole network, tested it, did not have revenues until today for five and a half years. And I think 16,000 people or some ridiculous number. So unless someone wants to do something (like) that… that’s the only project in the world I’ve seen. The late entrant to mature market space, or population, or guys have tried it, the whole picture isn’t very rosy. They normally get to low to mid single digit market share, eventually fold and get sold. It’s very difficult to penetrate. And so probably my own feel is that the partner probably saw that and how difficult it was. And second, of course, to create a, what I said as a competitive network, you got to build. And you know just  being open until it’s done, until the transaction’s done. We saw about 250 working cell sites when we went into the company—250 were ready to go and this is after a  year and a half, two years of actually trying to build out a network. How do you compete with 250 sites?

If you look at all that, coupled with…I know this partner also had internal issues in their home market—issues with their network, issues with people, issues with market share. They probably decided it wasn’t for them to come in and compete in here in this particular market.

John Nery: One implication, does that mean there is in fact no space for a third player in the Philippines?

Ernest Cu: I wouldn’t say no space, but I say it’s a very difficult space to get into. I wouldn’t want to say never is never. I guess the question becomes, “Is there a need for a third player?” Telcos are spending a lot of money into their networks. If you’re looking for a third player to prod us to spend, there’s no need to do that.

John Nery: What if you were to consider the government as the third player, I mean they helped build the infrastructure.

Ernest Cu: I wouldn’t want to speak ill of government, but telco is very involved operation, very, you would say, sensitive to how assets are maintained and optimized. I don’t think our government in the past has shown a very good track record of building something and maintaining it, that’s the usual problem. Because this thing requires constant tweaking almost nightly, daily. So from that point of view, I think that’s quite difficult.

But again I go back to the issue why is a third player needed. Is that the panacea or the solution to this whole thing when you are seeing telcos like us at least for us? We are spending about 30 percent of our revenue back into the capex base. That’s a lot.  Out of a 120 billion projected revenue, that’s 36 billion that we’re going to pump back into the infrastructure, and probably more this year because of the 700(MHz frequency) we were granted rights to use.

The other thing is competition. I think someone would be hard pressed to prove that  there is no competition between the PLDT group and the Globe group. I think if you see the way pricing has gone down in this market. 700MB of data for three days along with unlimited texting to all networks from Globe for 50 pesos. I think the only country that beats us in price is India. but in India you would get a very inferior data experience.

So I think that price (data) has gone down. In January of this year, at 50 pesos you would only get 350MB. Today it’s close to a Gig with free Facebook, too. So the prices are coming down and there’s definitely competition.

John Nery: Is that a long-term trend or is that a temporary one?

Ernest Cu: I think it’s a long-term trend because from what I’ve been seeing with my eight years in Globe, we’ve been seeing general price reductions across the board because of the intense competition, because there’s been quite a movement by us and our group here to continually gain market share and fortify position in the market, and that, of course, creates competition from the other side.

John Nery: We’ve spent the last 15 minutes talking about the challenges the telco industry faces. One more question about the challenge, you referred to this. This was the second development in 2016: The acquisition of the stranded assets has led to the new Philippine Competition Commission objective. Can you give us an idea of where you stand on this.

Ernest Cu: I’ll thread carefully given the lawsuit, but anyway our position is very clear that the transaction was or should be deemed approved given the rules in existence at the time during the transaction. Just my opinion is that, the essence of a competition commission should be to ensure that competition does exist in the marketplace. As a I told you earlier i’t be hard-pressed to prove that it isn’t, given the pricing pressures, given the seeming price war that has erupted on data and the competitive positions that the two players have put themselves in. And by the way there has not been resistance from us to say “Yes, watch the industry from a competitive point of view.” Because it is their job. At times, of course, it will help us as well, because, you know, to ensure that there are no anti-competitive practices being employed by both sides. We like playing on a level playing field and play fair and if they can help assure that, then more power to them.

John Nery: The third development that you spoke of, moving from mobile to the home. Actually it reminds me that I think you’re also moving from a telco company to something else. Maybe we can talk about this in the next several minutes. What is happening to Globe?

Ernest Cu: Well, Globe has been undergoing multiple transformations of its persona. When I came to the company, I think you could characterize the persona at the time, it was the persona of a utility. Utilities will simply serve up public services, right? At the time it was telephony, SMS and so on in a semi-competitive environment. Actually it’s less competitive than today. And because there was a certain consumer clamor for better service, people are moving around and switching vendors, switching partners, and we were losing market share.

So we decided to focus ourselves, in around 2009 timeframe, to become a consumer company—one that is truly focused on what the consumer needs and wants. Creating product that put the customers first, meaning, products they want. Simple business principle. If you sell products they want they may actually buy it. So we proceed to actually change the product focus to create, our first salvo was in the post-paid area. We created a customizable pack. I myself was dissatisfied with the separate plans we had which are quite rigid. Why am I telling you to buy 100 voice minutes when you don’t even use voice and just use SMS and data, and so on and so forth. Allow the people to mix and match, you would say, according to their lifestyle. With a certain limit, of course, because the systems cannot do infinite combinations. And at the same time allow you to change and select the handset you want. In those days we had plans that only could be bought with one handset. Only for 90 days and then you exchange again. It made no sense to me. So if you were a low-service consumer you could not buy the iPhone, for instance. It doesn’t make sense and you wanted to pay cash for it so we created that.

And then we created a much-improved environment to sell it in, which is our gen-2 store—one that’s focused on service, one that’s focused on selling, not just accepting bill payments. One that’s very consumer-like. And I think we changed the game a little bit because from that point on we started to gain significant amounts of market share. And to date, from the consumer service point of view, now that the people have the smartphones in their hands that we introduced to them in this gen-2 store format, we’re evolving into a lifestyle purveyor, as we call it. Because people have the handset. The people are increasing to…

John Nery: I need to wrap my head around that. From a telco to a lifestyle company…

Ernest Cu: We think that the people in the Philippines are moving towards a digital lifestyle. Consumption in a digital manner, of content. Content is music, video, gaming, information, commerce on the phone. And commerce is shopping, banking, movie reservations or whatever you call it, and so on—social media, communication on their phone. So their whole lives are on their phone. And so we want to be a part of that. We want to play in every single bit of that ecosystem, not just simply supplying them the data that goes through it. So we figured, while it’s still nascent in form, let’s shape the Filipino digital lifestyle and look at the pockets of need to make them fulfill this lifestyle need that they want. If you look at the youth in this country, they’re very much focused on their tablets and their phones. As a matter of fact, they ignore the TV. So we are trying to feed them content that is relevant to them. Because, look, I don’t know about in your house but in my household, nobody watches the cable TV. That’s why we don’t have cable TV anymore. And because people don’t want to watch TV when they’re told or scheduled. You watch according to your time.

John Nery: No more appointment TV

Ernest Cu: No more appointment TV. It’s prime time anytime. So the content should be whatever I want to watch, whatever I feel like watching right now. And so we are trying to help the public fulfill that. That is what it’s headed to, habit-wise, so we try to supply all that. So we look at pockets in the market that’s missing. So there was no good music service, we brought in Spotify two and a half or three years ago. Now it’s de facto the standard music service in the Philippines. It’s a side benefit. We have actually succeeded in stopping piracy of music. Because now people can have access to music either free or 129 pesos on demand with your own playlist, downloads, take it offline, and so on. Fantastic results! We think we can do the same with video.

John Nery: So recently you have launched Globe Studios.

Ernest Cu: Yeah, well, that’s a second part to our strategy. Because we first started with what’s available out in the market right, we brought in HOOQ, we brought in Netflix as our two major partners for video. Then we brought Disney and Cartoon Network. We brought NBA for sports. Then we look at what’s still missing. We think local content is not enough. It’s produced sparingly. There’s very few movie production houses in the Philippines left. If you look at and count the number of films and TV series being produced, it’s concentrated to the free-to-air channels. So we decided let’s experiment. Maybe we can stimulate the production of local content once again. That’s why we put up Globe Studios. And we can feed the Netflix of the world with content so that it becomes more relevant to the Filipino over time. We are in the throes of producing our first full-length movie. And…

John Nery: Do you have a role in it?

Ernest Cu: No no no… (chuckles) Acting is not one of my… (stronger suits) And the other is, I think a 9-episode series that we’ll be releasing with HOOQ as a partner. Hopefully you’ve seen Netflix originals that are made for the Philippines, HOOQ originals made in the Philippines with Globe playing a hand in it.

John Nery: That would mean spending a considerable amount of money. You’re investing in these creative productions, right?

Ernest Cu: Right. Well, yeah, it could be hit or miss, that’s why we take in partners.

John Nery: Even for someone who’s interested in the content that you’re putting together, may I ask, are you taking money away from the money that you’re supposed to invest in additional infrastructure and so on?

Ernest Cu: How does it play out? Not really because when we do that, when we create content that’s relevant to people they want to consume, it drives the demand  for mobile data, or high-speed broadband at home. Right? And that’s the objective. Because for us I don’t think we’ll ever be able to make and recoup our investments on the telco side with movie investments. I don’t think we’re that good as movie producers yet. We’re not Disney. We have a partner with Disney that makes so much money from original content.

So we do all this to try and help the Filipino move along, and at the end they’ll buy our basic service, our core services.

John Nery: I actually have more questions, three pages worth of questions but we’re down to our last 10 minutes. I just like for you to say hi to our viewers on Facebook in Abu Dhabi; Doha, Qatar; South Korea; and from the Republic of Las Vegas.

Ernest Cu: Hello everybody, I hope we are able to give you a glimpse or an idea of what’s going on in the Philippine telco world. Lots of things going on, it’s exciting obviously! Challenging at the same time, and I just hope you just bear with us; we’re continuing to build. We will improve the situation and I think people are really seeing improvement happen in the market.

John Nery: Ernest, you’re about to mark eight years as CEO, what more do you have to do? What are you looking forward to doing? But before you answer, we want to know your media consumption habits. Do you watch Netflix at all?

Ernest Cu: Actually, in terms of media consumption, of course my music service is Spotify. It’s everywhere for me, whether in the airplane, offline mode, the cars, when I’m riding in the car and these days you know it could be a few hours, Spotify is my go-to. I stream music. And on video, actually up until about three years ago I stopped watching TV. Because I could not, never follow a TV series or catch a movie in the beginning. Nowadays I think its ludicrous to believe that I would have to go home at 9 o’clock every Thursday to follow, say, Game of Thrones.

John Nery: That would be Mondays at 9.

Ernest Cu: It was on Mondays? See, I told you. And then on the 11th episode I missed it because I had something to do or travel abroad. That destroys the whole thing. The spoilers come out on social media. So I did not watch until I discovered that there were streaming services out there. And Netflix was the first one I discovered. And to be honest, at that time I was using VPNs in the States also. But lo and behold because of that, I was able to again watch TV and content or video on my terms. When I had a spare hour I would do one episode. If I had spare two hours I would do two. I have to admit, when I was sick once I binge-watched the whole season. I don’t know what it was at the time, I think it was Fargo or something like that. But anyway it was something that I said, hey this is neat. You can bring viewership back for people like us.

John Nery: So that’s your experience. You said that you wanted to change the whole home entertainment experience.

Ernest Cu: In order to deliver that experience, because millenials have bypassed TV altogether, I think you’re going to have to have high-speed (internet) in the home. I think you cannot stream Netflix HD at 1mbps. You require at least 10(mbps). And if you have multiple people using and streaming, you’re going to require much more than 10. In my home we have 100(mbps) and there’s about 3 people at any one point in time because the viewing habits are different. One guy is watching big screen using a box, a streaming box like an Apple TV, one would be watching on the tablet, and one would be watching on a laptop, or doing a game. It’s really how my household works.

So I want to be able to give people the speed they need at home to fulfill these particular emerging habits. Without high-speed it wouldn’t work. That’s the kind of endeavor, that’s what keeps me interested in the game. I think the mobile piece is very well in progress. The team has taken it on. The builds are continuing. They know what to do. But we’re still shaping how we go to market on the high-speed broadband for home.

John Nery: We’re down to our last five minutes. What do you think 2017 will bring?

Ernest Cu: 2017 I think will present quite a bit of challenges to Globe as we have to juggle—number one is our CapEx budget because there’s so much to build. We have to maximize and use the spectrum that we were allowed to use by the NTC, the 700 and 2600 (MHz). We have to build fiber all across the nation, fiber all across the cities. You got to build content. We have to educate the public into how to use it. We got to build new stores and create new services, even start-up new businesses, as well. We have a Fintech business, advertising business, and we have a clothing business now. So all of that I think we have to fund. The actual prioritization and juggling of where to put the money, where to put the funding, I think, is going to be the biggest challenge for us. It’s actually going on now already as we go into the end of the year. We’re at budgeting season at the moment.

John Nery: Maybe last question, then, I’ll ask you for your parting words. Free Wi-Fi in MRT stations and so on. Are you working with the government?

Ernest Cu: Yes, we worked with the MRT management, who by the way is fantastic in working with because we got this done so quickly. To put in high-quality Wi-Fi, our product’s called GoWiFi where every node is at least one gigabit to provide a really good WiFi experience for the public. We provide 30 minutes free per day. Because we think a free service will not sustain itself obviously. Someone has to pay for it in the end.

John Nery: Sometimes that’s all our consumer needs, right? Just need to send an email while waiting for the train.

Ernest Cu: Right. I hope that waits are less than 30 minutes. But eventually we’ll put Wi-Fi across the train tracks as well. So yeah, Wi-Fi in the airports as well, we’re in there. And some government offices, we’re talking like Makati City Hall. We’ve been asked by the mayor over there to scope a project out and put it for her constituencies. Coming into all of the Alpha Marts or Family Marts with the same product. It’s actually like building a third network for Globe. Third being we have the fixed-line network, we have the mobile wireless network, and then the Wi-Fi network. Because there’s simply not enough locations and spectrum to actually satisfy the demand for Wi-Fi, so Wi-Fi is a big part of our strategy.

John Nery: Unfortunately that’s all the time we have. Can I have you some parting words.

Ernest Cu: Well, I would say now you could see a lot of improvement. I think with the acquisition of the San Miguel spectrum, the Philippines I think ranked 6th, if I’m not mistaken, in Asia in terms of mobile internet speed and moving fast because remember we’re still in the beginnings of our roll-out. We hope to have a thousand, I think 500 sites beginning, at the end of this year and close to a thousand next year in the 700(MHz) spectrum which will make LTE ubiquitous. Like I said, I think I want the public to see and experience more speeds coming from both telcos, not just from us, because we’re both building in competition. From Globe you can see a lot more lifestyle-type products coming on stream. One of them will be our iconic store in BGC. It’s a massive investment for us relative to a normal store. It’s a 5-million-dollar store we’re investing in, which includes a live entertainment venue, supplied by Globe Live and the biometric payment division of Globe, and probably the most beautiful telco store in the world. So I invite the public to come and see that, which should be open sometime in November—fully opened. We’ll be making announcements and I hope to see all of you guys there.

John Nery: All right, that’s something to look forward to. Thank you. I’m afraid we’ve run out of time. This has been our INQUIRER Conversation with Globe President and CEO, Ernest Cu. This is John Nery, thank you and good afternoon.

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