Telconopoly

introducing the concept of access charges

There are three major cellphone networks in the country: Smart, which has the highest market share, Globe which comes a near second, and finally, Sun, an innovative fledgling that, once upon a time, shook the industry when it introduced the concept of unlimited calls and text. Alas, the numbers will show that Sun still has a long way to go in terms of competing with the big boys. The reason is simple. We have a telecom cartel: a duopoly that will exist in perpetuity unless the law is brought in to level the playing field.

The issue of improving competition in the telecom industry revolves around “access charges” - a relatively unknown concept that has surprising implications. Now defining it with technical and academic accuracy would be tedious, if not, boring. So let me frame my understanding of the phrase in this light: when a Globe subscriber calls a Smart subscriber, Globe, in order to access Smart’s network, pays a fee of P4.00/min. This is the access charge, the interconnection fee, the bane of competition in the Philippine’s mobile industry today. Note that when a Globe subscriber calls a fellow Globe subscriber, this rate is reduced. To zero.

The Philippines, despite its reputation as the cellphone capital of the world, has the misfortune of having the highest interconnection fees, and thus the most expensive voice calls, in all of Asia. The rate is fixed by contract... Globe and Smart’s contract, that is. Sun, commanding a much smaller share of the market, has no choice but to bow its head and pay tribute to access the wide network controlled by its two-faced overlord. My guess is that if these “access charges” are reduced, Sun would be able to charge less for its services and gain a bigger share of the consumer pie. More telecoms would probably want to set up shop since they’d now be able to tap into existing networks without spending an arm and a leg. And the consumers themselves? Ecstatic at such enormous savings? They’d probably elect the NTC commissioner (who actually gets the job done) to the Senate.

The question therefore is, can these rates be reduced by our existing regulatory framework? The answer is yes. Will it? Now there’s the pickle.