Promoting Competition in the Telecommunications Industry
Johannes R. Bernabe
Commissioner
Philippine Competition Commission
The PCC is an independent quasi-­judicial agency with the mandate of promoting competition
Why is ensuring Competition in the telecommunication industry important?
• Protection of consumer welfare
• Expansion of the Philippine economy
• Overall economic competitiveness
ASEAN in Numbers
Country
PHI
VIET
INDO
MALAY
THAI
SING
International Connectivity
Excellent
Somewhat Weak
Weak
Excellent
Average
Excellent
Domestic
Connectivity
Rel. Strong
Limited
Adequate
Adequate
Rel. Strong
Very Strong
Telecom Infrastructure
Growing
Growing
Rel. Strong
Average
Very strong
No. of Operators
Speed
Competition in Telecom Market
Limited
2
3
4
4
3
3
4.2
6.3
6.4
7.5
11.7
18.2
Less Competitive
Less Competitive
Competitive
Reasonably Competitive
Reasonably Competitive
Reasonably Competitive
Source: United Nations Economic and Social Commission for Asia and the Pacific 2013 (no. of operators updated), Akamai 2016 PCC powers under RA 10667 as both regulator and policymaker
POWERS
EXAMPLES Merger & Acquisition Reviews
Review of the Acquisitions of Telecommunications Assets
Anti-­Competitive Agreements
Price-­fixing
Abuse of Dominant Position
Barriers to entry
Telecommunications Sector: Opportunities for Competition
• Connections, bottlenecks, and contestability
Competition Issues Arising from Inherent Characteristics of the Telecommunications Industry
Characteristics
Pro-­Competition Solutions
Vertical integration and bottleneck facilities
• Strengthen interconnection regime
• Introduce essential facilities doctrine
• Consider structural or functional separation (wholesale vs. retail)
Network effects
• Strengthen interconnection regime
Scarcity of resources
• Introduce market-­based approaches to allocating scarce resources such as frequencies
• Improve coordination for rights of way
Competition Issues Arising from Inherent Characteristics of the Telecommunications Industry
Characteristics
Pro-­Competition Solutions
High switching costs
• Mandate number portability
• Discourage customer lock-­in
Weak buyer power
• Increase information available to customers in wholesale markets
• Monitor quality of services and publish indicators on a regular basis
Economies of scale
• Implement competitively neutral universal service scheme
PCC Recommendations for an Effective National Broadband Plan
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Revisit the option of unbundling the telecommunications sector
Impose significant market power obligations
Prioritize the creation of an effective interconnection regime
Improve management of scarce resources
Rationalize and combine efforts to meet universal service objectives
Competition Policy Framework
PILLAR I
PILLAR II
PILLAR III
Introduce Pro-­Competition Policies and Regulations to Address Structural Constraints to Competition
Remove Government Regulations that Create Barriers to Competition
Effectively Enforce Competition Law
• PCC
• NTC
• DICT (e.g. NBP)
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PCC
NTC
DICT
LGUs
Congress
• PCC