Analysis: Did Smart's free Internet backfire and serve to focus on PHL connectivity problems?

Smart Communications Inc., a unit of Philippine Long Distance Telephone Co. – the largest telco in terms of subscriber base and market capitalization – made a splash that made social media abuzz before and after announcing last Friday free Internet to all prepaid mobile subscribers primarily to stimulate  a wider adoption of online access among consumers.

 

It would have been the biggest deal for the telco, with no less than PLDT chairman Manuel V. Pangilinan going out of his way to personally tell the world about its latest promo. 

 

However, following the free Internet offer, the market reacted.

 

Shares of PLDT fell P108.00 or 3.38 percent to P3,090.00 on Monday from 3,198.00 Friday on the Philippine Stock Exchange. Freya Natividad, analyst at Papa Securities Corp., told GMA News Online that investors were mainly concerned how the free Internet access would impact on company earnings.

 

More than 481,900 shares were traded valued at P1.498B or 9.5 percent of the total market transaction.

PLDT has a market capitalization of  P690,946,368,450 at the close of trading Monday.

 

State of PHL Internet

 

On the other hand, concerns were also raised over the poor state of the Internet in the Philippines, the slowest in the Southeast Asia.

 

For Sun postpaid subscriber George Uy Buenavista, a marketing assistant in the banking industry, the free Internet access sparked fears of further diminishing the speed of connectivity in the Philippines. 

 

"As a Sun postpaid subscriber, I worry on how will they be able to accommodate that kind of promo without sacrificing the data quality of their postpaid subscribers?" he said.

 

"Madami siguro ang gagamit... baka din 'di kayanin ng system nila," he added.

 

The bone of contention the 30-Megabyte data cap per day for Smart, Talk N' Text and Sun Cellular subscribers.

 

PLDT executive Charles Lim emphasized that subscribers will encounter a pay wall or "safe zone" after using up 30-MB limit, then they will be given an option to continue the experience by buying any of Smart's load options.

 

Also, the offer does not allow video downloads, as well as messaging other users of, say, Viber or Skype, and definitely no "peer-to-peer sharing like BitTorrent." Beyond such restrictions, subscribers will have to pay regular charges for data usage.

  

The 30MB limit is the estimated average data needed by typical mobile internet users per day, and should be "more than enough" for an average subscriber, according to Smart.

'Free limited Internet'

Technology blog Yugatech said postpaid users will be on the losing end in the already congested mobile Internet connection as only prepaid subscribers stand to benefit from Smart's free Internet promo. 

This data cap defeats the idea of the promo being "free," said Timothy James Dimacali, GMA News Online Sci-Tech editor.

 

"Basically, Smart's offer is not free since it essentially has a data cap. But Internet should be more accessible," he added.

 

Tonyo Cruz, co-founder of consumer advocacy TXTPower, said this is simply a marketing promo of Smart. 

 

"Kapag sinabing free Internet, lahat ng services dapat ma-access. Ang binigay ng Smart, specific sites lang ang pwede," Cruz noted.

 

"May kailangang ipaliwanag ng malinaw ang PLDT group sa offer nila. It should be called, free limited Internet," Cruz added.

 

The competition

 

Faced with what seemed like a daunting marketing strategy, the competition, Globe Telecom Inc., brought back its free unlimited Facebook to both prepaid and postpaid subscribers starting this week. 

 

Still, Globe subscriber Kean Torres says she wants the same treatment from the Ayala-led telco and is all but contemplating on buying a Smart prepaid SIM card.

 

"As a globe prepaid subscriber, we want to have free mobile Internet access, too, just to be fair," she said. In fact, I want to have a Smart prepaid SIM... I am not shifting, but for an additional SIM," Torres noted.
 

Such a reaction from a Globe subscriber, shows that the ploy has its own merits in the sense that it serves to lure non-Smart consumers into the promo, said Mary Grace Mirandilla-Santos, an independent telecom/ information and communications technology (ICT) policy researcher.

 

"It will help telcos to entice hundreds, thousand more new subscribers," she said.

What's the point?

 

For Julian Isleta, a resolution specialist in the BPO industry, who owns both Sun and Globe prepaid SIM cards, there is no point in shifting permanently to any network right now.

 

"Susubukan ko lang siya pero 'di pa ngayon, kasi kung may limit parang Globe lang din... Ano point ng paglipat," he said.

 

The so-called free Internet access or the free Facebook are just cover ups that hides the real issue of the state of Philippine Internet, said Cruz of TXTPower.

 

"Lahat tayo subscribers, consumers. Alam natin ang problema. Tinatakpan lang nila ang problema. Walang solution na ino-offer na immediate or long-term sa Philippine Internet," he said.

 

Independent analyst Mirandilla-Santos noted this is not the kind of competition the public needs to see.

 

"I want to see them competing over the better quality and cost of internet in the Philippines," she said. – VS, GMA News