First a disclaimer. I am a loyal subscriber of PLDT, Smart Gold and Smartbro. For some reason, I have stuck to their services despite my constant irritation at the dropped calls, choppy reception, and ultra slow broadband service that they provide me.
But this is not about that. This is about the recent move of Philippine Long Distance Telephone Co. to buy and control Digital Telecommunications Phils., Inc., giving the former Marcos-era monopoly ownership and control over 71% of the telecommunications market.
At present, PLDT is the biggest and most powerful telecommunications company in the country. Its owners also own and control Meralco, Maynilad, Channel 5, the North Luzon Expressway, a chain of high-end hospitals, and several ICT firms, among others. PLDT owns Smart Communications, Red Mobile, Piltel Talk ‘n Text, among others.
Digitel Telecommunications Phils. Inc., on the other hand, owns Digitel Mobile Phils, Inc. which operates Sun Cellular, the country’s third largest mobile communications service provider.
Under this deal, nothing will stop PLDT from limiting, discontinuing or even disrupting Sun Cellular’s unlimited text and call plans. And with Sun out of the way, nothing will stop PLDT-owned Smart Communications from conniving with Globe Telecom in raising rates and making even more profits the way they always wanted it to be. There will be nothing to stop PLDT from using its enormous market power to strangle the competition or bend them to its will.
The thrust of government policy since the early 1990s has been to break up PLDT’s monopoly, develop genuine competition and broaden the market. This deal is a reversal of that policy of de-monopolization enshrined in the Constitution. It is a threat to our consumers and our people.
The PLDT-Digitel merger violates the franchises given by Congress to Digitel Telecommunications Phils. Inc. and Digitel Mobile Phils, Inc. – franchises that were precisely granted to prevent the emergence of monopolies.
Under Sec. 15 of Digitel’s franchise, (RA 7678) which was granted in 1994, it says Digitel “…shall not lease, transfer, grant the usufruct of, sell nor assign this franchise or the rights and privileges acquired thereunder to any person, firm, company, corporation or other commercial or legal entity, nor merge with any other corporation or entity without the prior approval of the Congress of the Philippines. Neither shall the controlling interest of the grantee be transferred, whether as a whole or in parts and whether simultaneously or contemporaneously, to any such person, firm, company, corporation or entity without the prior approval of the Congress of the Philippines.”
Essentially the same provision can be found under Sec. 16 of the franchise granted by Congress in 2002 to Digitel Mobile Philippines, Inc. (RA 9180).
Prior congressional approval is required because a franchise is a mere privilege granted by Congress. Thus Congress has the duty to ensure that public interest is adequately protected by (1) ensuring that the sale is legal and aboveboard; (2) that the franchise does not fall in the hands of fly-by-night operators; and (3) that the sale or transfer does not create the very monster that we want slain – a monopoly with overwhelming market power. This is why at anytime, Congress may revoke the franchise.
Proponents of the deal say congressional approval is not required, citing the principle of “equality of treatment” since other franchise holders, particularly RC Yulo in 1997 and RCPI and Sear Telecommunications in 1998, were allowed to enter into such deals without prior congressional approval.
However, Digitel Mobile’s franchise was granted in 2002, or four years after RC Yulo, RCPI and Sear. If it was really Congress’ intention to waive prior congressional approval, why was it still explicitly required in Digitel’s franchise? Furthermore, in other franchises, prior congressional approval is waived only if the surviving entity is the franchise holder, which is not the case in the PLDT-Digitel deal.
In fact, prior congressional approval is explicitly contained in the franchise not only of Digitel Mobile but of all the big players – Digitel Telecommunications, PLDT, Smart Communications, Bayantel and Globe. The reason is obvious – there is a substantial distinction between small firms like RC Yulo, RCPI and Sear and the big boys like PLDT, Digitel, Globe and Bayantel. It is the wisdom of Congress that when you eat small fry, you don’t need prior approval. But when you eat the big fish, you need prior approval.
I don’t think the framers of RA 7925 or other franchises that waived congressional approval ever imagined a situation where PLDT or any entity would once again control 71% of the market. I don’t think they contemplated allowing, without their consent, a deal that would reverse the policy of de-monopolization in the telecommunications industry. This is why congressional approval is explicitly required in the franchises of the big players. This is our only safeguard against the re-emergence of a monopoly in the industry.#
*This article came out in my ‘Man in the Mirror’ column in the July 11 issue of Good Morning Philippines newspaper.