The Philippine government is at this point the only “realistic” third player that can bear the financial cost of competing in the telecommunications industry, a recent study showed.
Citing a study by University of the Philippine Professor Emeritus Epictetus Patalinghug, Globe Telecom Inc. on Monday said the government is the most viable third player that can compete with the two major players, Globe and PLDT Inc.
“The present two-player structure is characterized as fiercely competitive. However, the market realities of capital intensity, sunk costs and economies of network size prevent a realistic entry of a private third player. Only a publicly-owned third player that builds a ‘last mile’ network that is financially not viable for private operators to build, can complement the coverage gap in the present network,” Globe said, quoting from the study.
In the study, “Assessment of the Structure, Conduct, and Performance of the Philippine Telecommunications Industry,” Patalinghug, and co-authors Wilfred Manuela Jr. and Regina Manzano-Lizares noted only the government can shoulder the burdens competing with existing telcos.
“The only realistic third player is the government, because it has the capacity to pour investments in ‘last mile’ and high-cost areas to build a ‘last mile’ network that complements existing networks,” the study said.
Last week, the Department of Information and Communications Technology (DICT) emphasized the pressing need for a third telecommunications service provider in the country to improve the service, pricing and coverage as soon as possible.
Australia's Telstra Corp. Ltd. negotiated a joint venture deal with San Miguel Corp. in 2015. But the negotiations were scrapped after both companies failed to agree on an equity structure for the joint venture.
ICT Secretary Rodolfo Salalima said the country is open to having more industry players.
"If any local franchisee wants to be the third or fourth operator of consequence in this country, bring in a foreign partner with the legal, technical and financial credibility and capacity to mount a credible and effective competition against the existing telcos," he said. — Jon Viktor Cabuenas/VDS, GMA News