Telcos at War and Our Future?

I guess this particular story begins when the two telcos held similar events one in Boracay and one at Heritage Hotel. Smart had launched or gave a glimpse of LTE technology in the beaches of Boracay. Meanwhile, Globe called a press conference announcing it was the first company to offer 4G. Although in both events the LTE and Globe’s 4G were limited to within a specific area of land they were in. At that time and now, I believed that it was not really the race on who was the first to adopt 4G, but who would complete the 4G network nationwide that would be the winner in this war.

Years passed and …

A few days ago Smart launched its LTE services. Initially with its dongle to be followed by pocket-wifi offering LTE and the possibility of seeing LTE capable devices within the year. A few days before Globe announced the launching of its LTE service via mobile and tablets. Globe also announced that the Central Business District of Makati would be the first to get LTE to be followed by an expansion in other areas of Metro Manila, Cebu and Davao. It is said that Globe targets to complete around 4000 4G base stations. On the other hand during the LTE launch of Smart it was mentioned that Smart has the service activated in roughly the different cities within the Philippines and will expand accordingly. At present Smart had around 14,000 LTE ready base stations and had conducted more than half a year beta testing the LTE technology around Metro Manila, Cebu and other places,
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It has been an interesting journey so far in more ways than one. During that time the rivalry between the Telcos could be observed in its press launches; social media endeavors; advertisements: adherents, surrogates and even agents on-line. But who is actually winning between the two? Are we as consumers going to benefit from all of these?

But first let us look at how the telcos are faring during this time.

THE FINANCIAL HEALTH OF THE TELCOS

While this is happening the telecommunication industry on the whole has continued to drop, based on second quarters result. Possibly because of modernization efforts; competition amongst themselves; and competition from the Internet, via applications like Facebook, Twitter and Skype.

Philippine Long Distance Telephone Co (PLDT) reported an 8 % decrease in net income, still a whopping P 19.5 Billion. While its main competition Globe suffered a 10 % drop at P5 Billion for a six month period, still the proverbial drop in the bucket. Here is the article regarding the performance of the PH Telecom Industry at PLDT, Globe Telecom post lower Q2 profits from the Philippine Daily Inquirer.

Surely, the modernization effort has been one of the factors that has led to a drop in earnings – by a few billions. Although such investments seem more practical in the future. Since the consumers are shifting in terms of technology used in communication and despite existing competitors in the digital world, the digital world is the future income stream of telcos. And it is important to note that among the telcos SMART and PLDT so far has the most resources to fund and win this winner.

CAMPAIGNS, PROMOTIONS, WHINING AND DEALING WITH PERCEPTIONS

Meanwhile, as the competition of both Telcos in the arena of public opinion remains colorful – with Shakespearean overtones leaning towards the rivalry between the Capulets and the Montagues – it seems that one side has decided to cry foul.

Just recently columnist Cito Beltran mentioned, Telecoms War, that Globe CEO Ernest Cu complained of media bashing and negative PR campaign against Globe and not concentrating on the advantages that an upgraded network would bring to consumers. A surprising complaint given the vitriol launched in the passing years.

Or has some of the recent vitriol touched a raw nerve – for example commentary published last April by Atty Toto Dulay at Manila Times, mentioned the lack of interest in Globe’s retail bonds earmarked and wagon-circled for its modernization program. (See Globe Telecom’s over-hyped project.)

Perhaps has the advertisements about dropped calls have started to sting?

It is all part of the game the two Telcos play. Perhaps instead of whining and orchestrating or astro-turfing social media campaigns and public relations initiatives to combat these perceptions. Globe would be better off completing what it has said it would complete, a true 4G network and improving its services.

WHERE DOES THIS ALL LEAD?

If you compare both companies. Smart and its brothers and sister has the advantage of resources. It can and has funded its modernization program more easily than Globe. Globe might have the advantage in terms of postpaid subscribers but the combined subscriptions of Its rival Smart, Sun Cellular, PLDT and others is a serious threat not to be taken lightly. Smart and company has more LTE base stations and it is still growing. Frankly, at this point it would seem Smart is ahead. And the complaints against Globe service is taking its toll more than the complaints against Smart, at any rate it seems- based on the reaction of Globr. So unless something dratic happens it would seem Smart will be winning this War of the Telcos or at least be on top.

However, despite the outcome will we see the benefit of fast mobile Internet?

Yes, but maybe not in a way we imagine or expect.

4G via LTE is coming. The benefits will be felt depending upon the size of one’s wallet: The growth will be limited by price rather than technology. The Philippines is still a price sensitive market. Initial adaptors will be: (i) those with surplus money to spare; (ii) those who would consider it a business investment. These would be rich folks and employees of businesses enabling and empowering them. Initially, it would be offered to big corporations and then to small to medium-scale business.

The P3500 plan, Smart, would eventually go down as the years pass as the service upgrades and the formerly premium services be replaced with more powerful bundled service. Who knows LTE might be available eventually for pre-paid.

The telcos have no choice in the end their dwindling income stream would have to be replaced with new ones. In a sense it is mutually beneficial, as long as consumers are vigilant.

LTE would be used for downloading and communication but in time because of its inherent speed we might or might not see it being used for financial transactions; security applications; education; public health ; and even disaster management. At any rate it would seem that we would be able to use LTE directly or indirectly. Unfortunately, such is the nature of economic defined digital divide. Then something new comes along and we start all over again.

Menwhile LTE for some sooner and for some later.

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