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Thursday, April 25, 2019

Villanueva: Monopoly power & John Padilla

LAST Sunday night, my internet connection at home just went dead at around midnight. I immediately reported this problem to PLDT by sending a direct message (DM) to their customer care’s Twitter account. The time stamp was 12:32 a.m. I tweeted several times to get their attention, but they only replied to the DM after 13 hours at 1:37 p.m. I also called their customer service hotline 171 several times. And finally, our internet was restored after 84 hours or three days and 12 hours since it went dead.

There was a meme shared to me in social networking sites defacing Maslow’s hierarchy of needs theory, where Wi-Fi was scribbled below the lowest need which is physiological needs. It is funny but really, internet connection has become an essential need, especially during these times where families are separated by time zones and businesses are globalized, and it is only through the internet that families can communicate with each other, and globalized businesses to operate efficiently and effectively.

The question that is bugging me is that why and how are the actions or reactions of this very big, blue-chip company with an abundant volume of resources that they can utilize, take soooooooo looooooong?

The customer care reacts, replies and tweets for updates especially for repairs with a couple of hours, if not days, delay. For example, they tweeted me for update at 4 p.m. about the ongoing repair works but my connection was restored 3 hours earlier.

As I monitor Twitter for their replies and updates, I also read complaints from other subscribers regarding this issue. They really do reply after sometime. That is why, one can read the frustration, anger and disappointment of subscribers on PLDT.

Another complaint that is recurring among subscribers whether from their tweets or from my ordinary conversations with other subscribers is when they disconnect internet service after only one day non-payment of the bill, and upon payment, subscribers are advised that the service will be restored after 24 hours. How can that be? If bill was paid right away, then service should be restored right away, too, shouldn’t it? That’s another one day that the subscriber will not be able to use the service, but will be billed anyway.

How can they do this? BECAUSE THEY CAN!

Having a very dominant position in the telecommunications industry, PLDT and Smart Communications, they can practically dictate how the telecoms market would behave. Globe Telecoms is the other major player in the industry, but the former takes the larger share in the market. Although, with the similarities of their “plans” like 1999, 999, 1499, etc., it is possible that they are colluding, whether formally or tacitly, to set the market prices higher, practically creating a cartel or a collusive duopoly (a market structure where the industry is dominated and shared by only two firms).

However, if we consider Globe to be a minor “major player” then Smart-PLDT dominates the market. Its market dominance may be classified as a monopoly, a market structure where there is only one firm dominating the market. There are many barriers to entry into this industry mainly because it is highly capital-intensive. A firm needs to have a high capital to enter this market in order to compete with the existing. The monopolistic firm has the power to dictate the price of the goods or services they are selling.

And I think this is what’s happening right now with our telecoms industry, the major players can afford these glitches, they can ignore messages of subscribers, they can take time to repair because there are no other providers aside from the existing. In other words, WE HAVE NO CHOICE. We have to live with the fact that we are paying the highest charges for the slowest internet in Asia according to a news report I read one time.

President Duterte has announced several times that a third entry will be entering the market, but until now, this third party is yet to enter the Philippine Telecoms market. Telstra from Australia was reported to enter the Philippine market two years ago, but did not push through with the plans, leaving the market dominated by Smart-PLDT still.

I stumbled across the Philippine Competition Act of 2015 (RA 10667) which created the Philippine Competition Commission. This law and commission assure that there should be fair competition in the market of goods and services, basically what is called as an ANTI-TRUST LAW. I wonder what the commission’s stand on this issue.

The chairman is an economist, Arsenio Balisacan who was the former NEDA chief if I am not mistaken. One of the basic theories in Economics is the Theory of the Firm, which explains the different market structure. A student majoring in economics can easily identify a monopoly (or a duopoly) by how the firms behave in the market. I wonder what Mr. Balisacan sees in this situation.

So, who is John Padilla?

I use the name, John Padilla as a hypothetical codename for a representative/employee/agent of a business firms who follows religiously his work time schedule. So, even though a big problem of a firm affecting 65 customers is not yet resolved, he had to stop working because his work is only up to 4pm, and the possibility of working beyond the time is very low.

He is a symbol of an employee without concern for their customers (even if it is the customers who pay for the services that are provided by the firm which pays his salary or wage) and is only concerned of his own welfare. He is one person who cannot put himself in the shoes of another. He may be skillful that’s why the firm relies on his service, but probably has a very low IQ because he cannot think beyond what he can do. He is a typical employee who has no dedication to his job, cannot identify with the mission and vision of the company, and has very low job satisfaction.

These John Padilla’s of business firms are cancers of the business firms. They would eventually be one of the sources of problems or complaints of customers that could lead to the fall of the reputation of the business firm, entailing losses for the firm, and eventually folding of the business. Knowing the effects of cancer, and for it not to spread to other organs, something has to be done. I need not mention it.

*****

P.S. Names, characters and situations mentioned in this edition of this column are just hypothetical. Any similarities with a real person, character or situation are only coincidental.
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