And the Telecom War is on...

[mazdamazda]

from the Phil Star:

NTC asked to stop Sun Cellular’s new ‘24/7’ promo
By Rainier Allan Ronda
The Philippine Star 02/07/2005

Top telecommunications firms Globe Telecom and Smart Communications filed separate petitions before the National Telecommunications Commission (NTC) urging a stop to Sun Cellular’s "24/7" unlimited call and text service.

Through their respective subsidiaries — Innove for Globe and Piltel for Smart — the two cellular phone companies charged that Sun was practicing "predatory" or cut-throat competition pricing in offering its 24/7 service.

The complainants wanted the NTC to set all call rates at P5.50 per minute and bar Sun Cellular for charging much lower rates.

The 24/7 service of Sun Cellular offers unlimited calls and texting among Sun-to-Sun subscribers per month for an additional P250 for pre-paid and post-paid subscribers.

The service allows subscribers unlimited local Sun-to-Sun calls and texts. Post-paid plan holders can subscribe to the service by paying a minimum fee of P250 every month on top of their current plans while pre-paid subscribers can load P100 valid for 10 days and load option of P250 valid for 30 days.

The service, originally offered as a promotional campaign by Sun, was made permanent following its success in luring thousands of new customers. The promo has been popular among college students and low-income consumers.

The success of 24/7 service drove the company’s subscriber base to 1.1 million as of end-December last year.

In its complaint, Globe’s Innove claimed Sun had employed "predatory pricing" in its promotional gimmick, branding it as "an anti-competitive measure employed by a dominant company to get/protect market share from new or existing competitors."

For its part, Smart’s Piltel said that its rehabilitation program was compromised by Sun’s 24/7 service due to the "unwarranted action of Digitel in importing rates arbitrarily."

Digitel’s 24/7 plan, according to Piltel, was destroying the "fundamental or basic market pricing considerations when it has priced its service at a level where no new market entrants in the cellular market can still compete, and that any losses Digitel may incur at the moment may be recovered later on when it has severely weakened its competitors and successfully driven them out of the market."

Piltel claimed Sun’s pricing scheme threatens its viability in the already crowded cellular market.

"Digitel charges Piltel a wholesale rate of P4.50 per minute access charge to its network, while its own subscribers have an unlimited retail access to its own network at P250 a month, or P100 every 10 days," Piltel said.

"Piltel by itself is charging its subscribers an average retail P5.50 per minute and has not embarked on an atrocious wholesale pricing scheme," the firm added.

Sun Cellular is the trade name of Digitel Mobile Philippines Inc., a unit of listed Digital Telecommunications Phils. Inc., owned by tycoon John Gokongwei.

The firm managed to eat up a portion of cellular phone users nationwide through its aggressive marketing.

Analysts noted the net additions of both cellular phone companies suffered due to marketing efforts of Sun Cellular which attracted a substantial number of new users due to its unlimited call and short messaging services for additional fees on top of a subscriber’s prepaid load or postpaid plan.

Smart and Globe are the two dominant cellular firms with more than 95 percent of the market.

Compared to these two giants, Sun Cellular is a very small competitor with less than five percent of the market, Digitel officials said.

[mazdamazda]

from ABS-CBN

PILTEL asks NTC to prohibit Sun’s unlimited calls plan

By LENIE LECTURA
TODAY Reporter

Pilipino Telephone Corp. (PILTEL) has asked the National Telecommunications Commission (NTC) to disallow Gokongwei’s mobile-phone brand Sun Cellular from offering unlimited call and text services, saying the pricing scheme threatens its viability in the already crowded cellular market, it was learned Thursday.

PILTEL, a unit of Philippine Long Distance Telephone Co. (PLDT), said if Digitel is to continue offering 24/7 Call and Text Unlimited service to its subscribers, other mobile-phone firms will loose market share. This practice will therefore lead to the survival of only one player and, thus, a monopoly.

“The current pricing scheme of Digitel affects PILTEL and seriously threatens the viability and rehabilitation of PILTEL. The company’s rehabilitation is now under grave threat and peril due to the unwarranted action of Digitel in imposing rates arbitrarily and without passing through the time-honored process in this Commission,” said PILTEL in its 12-page complaint.

The 24/7 Call and Text Unlimited is a service that allows subscribers unlimited local Sun-to-Sun calls and texts.

Postpaid plan holders can subscribe to the service and pay only P250 every month on top of their current plans.

For prepaid subscribers, 24/7 Call and Text Unlimited can be loaded via call cards available in P100 and P250 denominations.

The success of Digitel’s 24/7 service drove the company’s subscriber base to 1.1 million as of end-December last year.

The rates, PILTEL said, are priced below the marginal and variable cost of production of its airtime access charge.

“Digitel charges PILTEL a wholesale rate of P4.50 per minute access charge to its network, while its own subscribers have an unlimited retail access to its own network at P250 a month, or P100 every 10 days. PILTEL by itself is charging its subscribers an average retail P5.50 per minute and has not embarked on an atrocious wholesale pricing scheme,” said PILTEL.

PILTEL said Digitel’s 24/7 Plan constitutes predatory pricing as this will force carriers to drastically lower their airtime rates in a bid to catch up with competition but result in the decrease in the quality of service.

Predatory pricing is an anti-competitive measure employed by a dominant company to get or protect market share from new and existing competitors. It involves temporary pricing a product low enough to end a competitive threat.

“Digitel’s 24/7 Plan has started to destroy the fundamental or basic market pricing considerations when it has priced its service at a level where no new market entrants in the cellular market can still compete and that any losses Digitel may incur at the moment may be recovered later on when it has severely weakened its competitors and successfully driven them off the market,” said PILTEL.

Digitel, for its part, said it is not engaged in predatory pricing. “Sun Cellular cannot be considered as engaging in predatory pricing since it is not a dominant player in the cellular industry.

Smart and Globe are the two dominant cellular firms with more than 95 percent of the market. Compared to these two giants, Sun Celular is a very small competitor with less then five percent of the market today,” said Digitel senior vice president William Pamintuan.

PILTEL urged the NTC issue a cease and desist order to Digitel’s 24/7 Plan and to revert to the rates allowed by the commission in 2002.

Digitel, PILTEL added, should also be penalized for violation of due process for unilaterally revising its charging scheme without the approval of the NTC.

[the_wildthing]

I may be oversimplifying the problem here so feel free to comment against it...

Bakit ba ang mga Pinoy laging gustong pino-protektahan ng batas ang sariling negosyo? Di ba free trade nga? As long as it's not against the law, you can innovate, offer better products and services, and so can the competition? Pano na kung walang competition? Pano mag-iimprove ang services at products? Gusto ba nila parang mga cartel style? Hindi ba dapat shape up or ship out?

Sa bagay, local producers were complaining about low cost products from China. So anong magagawa kung mas mura talaga? Shouldn't we be producing stuff that we can produce better and cheaper instead, or stuff that only we can do best?

[cyberdoc95]

What these two companies are doing simply show how GREEDY they are! 5% or less lang ang subscribers ng SUN Cellular, pinapatulan pa nila?? GREED..GREED...GREED!!! Kung kaya ng Sun Cellular to operate on that rate, why can't SMART and GLOBE do it as well?? The people's response to SUN's Offer is simply a signal that people still want a cheaper alternative than what SMART and GLOBE are currently offering.

May nagawa ba ang MOBILINE COMPANY(does this still exist?) na pinatay ng GSM companies who offered cheaper alternative to CDMA services? At least ngayon, they met a competitor of their own kind on a common ground.

[gretzy]

i cannot agree more with you sirs!

sun is just telling us that smart and globe are charging us sooo much for their services. If sun can operate properly with their current rates, it means that smart and globe's income percentage is sky high. They are earning too muchsince there are no other strong competitors.

Now, if sun can just improve their services, Globe and Smart will both go down the drain.

[A121]

parang destiny cable at skycable..

[kinyo]

fortunately, the NTC don't seem inclined to entertain the complaints of the two greedy giant brats ... NTC kinda said "24/7 is for the public's benefit"

but judging the way govt runs its business, i won't be surprised if NTC reverses itself ... for all we know, 24/7 might indeed be an unfair practice (although it does benefit the public) and NTC is simply waiting for the right money, este, moment.

[empy]

competition = good for the consumer

that said, if your company has some kind of competitive advantage, whether it be regulatory or otherwise, wouldn't you fight to protect it? i think that's all globe and smart are doing.

sun isn't doing anything wrong imo. this free cell-to-cell call/text has existed for some time now in other markets.

[dieselNUBI]

Diba may unlimited texts din ang GLOBE nung bago pa sila. I think it was 4 years ago. Ginawa nila un to attract clients from SMART(analog pa non).

[odell]

ganyan talaga ang buhay.. panapanahon.. ok na ako sa sun.. feeling ko lalaki pa ang market kung maayus nila un service nila

[Rediesel]

swapang lang talaga Globe at Smart, gusto nila monopoly. Sana sa oil industry maging ganito din, hindi parang magkakakuchaba pa sila.

[phat_tricks]

Ayaw talaga palugi ng Smart and Globe! Masyado silang ganid sa pera. Dapat iniisip din nila yung mga consumers nila dahil sila ang bumubuhay sa kanila

[empy]

ganyan talaga ang capitalism. swapangan. if you owned shares in those companies you'd want them to be a monopoly too. we can't blame the big telecoms for fighting to protect their advantage, even though they will probably lose the battle.

[Walter]

It is the duty of the government to regulate the prices of some industries so as to allow fair competition and protect the consumers. Take for example the airline industry, if an airline company will price their tickets lower than the industry standard, it may affect their service and maintenance of their aircrafts hence endagering the lives of their passengers.

But with regards to the telecommunications industry, don't think lives are endangered if SUN cannot maintain their system properly, at the worst it would only cause inconvenience to their subscribers. The big companies are just whining, they are most likely affected by SUN's 24/7.

[IceColdBeer]

Monopoly, cartel, gahaman, you name it!!!
Dito sa HK, 298 hkd plan ko = 3100 mins free to other network and 1700 mins free to the same network.

[gretzy]

Let's tell them to shift to sun.heheheh

I cant wait to see globe and smart lowering their current rates.;)

[BlueBimmer]

greedy bastards! buti nalang bumaba na bill ko sa globe, less money for the bastards!

[chieffy]

time to boycott the others?

[BlueBimmer]

wag muna, lag kc txt n sun minsan, sira negosyo hehehe

[the_wildthing]

Basta dapat ang pino-protektahan ng batas consumer, not always big business...