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World's text messaging capital revolts vs. telecom monopolies

BY ANTHONY IAN CRUZ, TXTPower

A spectre is haunting the world's text messaging capital. It is the spectre of monopolies.

Already up in arms over lousy services, cellphone owners launched a revolt dubbed TXTPower after cellphone companies Globe and Smart bared plans to cut down free text allocations for all their subscribers. The announcement was done in a way that betrayed collusion between the two and their smaller subsidiaries Islacom and Piltel.

Starting with five players, the cellphone market is now dominated by Globe and Smart which operate GSM networks, a powerful digital service for voice calls and data services like text messaging. The two other firms were buried by stiff competition with competitive pricing (Islacom) and superior technology (vis-à-vis the analog system of Extelcom and Piltel). Today, Islacom is part of Globe while Piltel has started abandoning analog by leasing facilities of its new parent company (Smart) and marketing its Talk N Text GSM service.

Right now, Globe and Smart are the only choices left for consumers. In the experience of many subscribers, they give the same services at almost the same cost and consumers get the same lousy services too.

Not only did Globe and Smart bare plans one after the other to cut down text messaging by two-thirds, they changed their minds after widespread public uproar also in the same manner. It was done in an audacious way too. They did it at the start of a House hearing on the issue, with congressmen and consumer groups like TXTPower in attendance.

Indeed, we have a cartel or a monopoly of two firms dominating the cellphone market and this gives the most painful headache for consumers and make us prone to corporate abuse.

One of these abuses is the planned cut on free text allocations.

Free text

Free text is not really free. Had it been true, we would not have to buy a callcard costing P300 (for Smart and Talk N Text) or keep a balance P50 (for Globe) in order to get free text. The truth is, free text is bundled with these cards and with subscription plans.

In this sense, we fully agree with Rep. Augusto Syjuco in calling the free text cuts hidden price increases by Globe and Smart. If the reduction of free text allocations pushes through, it would cost subscribers more to send the same number of messages as they do now and the value of the card falls considerably to the clear detriment of consumers.

Apart from being a hidden price increase, subscribers, the consumers’ group Philippine League for Democratic Telecommunications Inc. and TXTPower have every reason to complain since majority of the current subscribers were enticed by Smart and Globe into the cellphone market using free text ("forever" according to Smart). Now, after managing to enlist millions of subscribers, the two firms are cutting down free text.

Looking over the financial statements of Globe and Smart as posted in their websites, texting has become a huge success, providing at least P2.7 billion in revenue or about 80 percent of total revenue from wireless services of just one provider. With the planned cuts, this figure will grow since subscribers will shell out more money for the usual number of messages they send out.

What especially miffed TXTPower convenors were the implied threats of price increases if the text cutbacks do not push through. We viewed it as blackmail, plain and simple and anti-consumer. If these cutbacks could be called the “least painful way” at raising revenue, that would only be true for the owners of Globe and Smart who show no compunction about network expansion at the expense of their customers.

For the record

For the record, Smart and Globe officials are always tongue-tied when asked about the rationale for the text cuts. One of them will claim huge losses which nobody would bother to believe since the telecommunications industry has been spared by the economic crisis. Proof of this are the huge net incomes or profits garnered by Globe and Smart.

A lawyer of Piltel even tried to use earlier losses (the biggest in the entire history of Philippine commerce) in justifying the free text cuts. True, Piltel incurred losses but it was entirely due to an utterly wrong choice of digital technology (CDMA, not GSM) which did not catch fire in the country. Incompetent company managers should not pass on to consumers the heavy price of their incompetence.

How about network expansion? Isn't it for subscribers’ interest that Globe and Smart expand their networks and enlarge their capacity to take calls and process data services like text messages? We agree, but that should be the domain of the company owners and investors. In fact, Smart and Globe signed up fresh loans from various sources, one of them amounting to $324 million, assuring their expansion efforts of the needed funding.

Congressmen raised eyebrows when Smart and Globe officials said this and implied that opposition to the text cuts would impair efforts to deliver telecom services in the rural areas. They have a right to be mad since these companies applied for franchises or permits to operate cellphone networks. In exchange for the franchises, companies were mandated to roll-out around 300,000 landlines in service areas across the country. This is entirely their responsibility.

As for the number of subscribers, figures are growing at a dizzying speed. In the case of Smart, subscribers more than doubled in the period June 2000 to June 2001. It was about the same for Globe, albeit at a slower rate. Smart forecasts its subscribers to reach 10 million next year. The steep increase in subscriber base could only result in growing revenues for the two firms.

Even traditional economists who usually side with big businesses like Smart and Globe are also averse to the free text cuts. They said that these firms have full confidence in their high-technology networks because they won’t go obsolete and need only upgrades. This technology, they said, will continue to reap them huge revenues and profits in the long-term, especially as the Information and Communications Technology (ICT) industry gears for an even more powerful 3G (Third Generation) technology that would allow high-speed data transmission like websurfing over the cellphones.

Given these, it seems Globe and Smart are simply gearing for more short-term profits that could come from texters everywhere. We have every reason to rise up and protect ourselves from abuse.

Text and GSM

In our talks with ICT experts, we found out that text messaging is actually integral to the GSM network. Providing text needs no extra equipment, just like other services like call barring and call forwarding. High technology makes this possible.

The experts also said that text messaging did not interest Globe when it first introduced GSM in the country. Proof of this was the initial offering of free text messaging to its subscribers and later unlimited texting for a small monthly fee. Charging P1 for each text came in only after texting caught the fancy of many subscribers (read: profits).

For its part, it was purely a business decision for Smart to introduce a P1 charge per each text message when the company started offering GSM in the market. According to Smart official Mon Isberto, they had to choose between providing it for free or charging customers.

In fact, Isberto admits that they need equipment not to provide text messaging but to only enhance message delivery throughout the network.

Here, we need to stress the point that the P1 price for each text in excess of the free text allocations were arbitrarily set by either company. First, they chose to sell the service and they chose that price for no apparent economic reason at all except to charge consumers for a highly-lucrative service.

Soon, we will come out with a study on text and its real price value, if any. What is clear is that text messaging cannot cost much to Globe and Smart since the service is built-in in the GSM network that they both use.

Prospects for TXTPower

Formally launched on Aug. 27, TXTPower began with only ten convenors and now includes hundreds of others who emailed their signatures to be affixed to a Texters’ Declaration. It is now widely circulated through email and punctured what is otherwise a “free” market of ideas dominated by big industry players who allocate huge funds for marketing campaigns in print and broadcast media.

Convenors of the group come from various fields. They are: triathlete Sandra Araullo, college professors Tonchi Tinio and Roland Tolentino, environmentalist Trixie Concepcion, radio broadcaster Ruth Cervantes, student leader Raymond Palatino, campus journalist Rey Asis, netactivist Gerry Kaimo (also an officer of PLDTI), visual artist Emil Mercado, journalist Ederic Eder and myself, an activist writer.

There are three demands in the Texters’ Declaration. These are: 1) that Globe and Smart stop their plan to cut free text; 2) that the NTC immediately resolve festering consumer complaints about lousy services and abuses of the two firms and other telecom carriers; and 3) that the government review its telecommunications policy especially deregulation. TXTPower says that deregulation has been made a license to form monopolies and cartel and to force on the consumers patently one-sided terms, high prices and lousy services.

Right after the launch, TXTPower drew considerable public support since it was the first group that stood up for the interests of texters and cellphone users. And it was widespread too. Groups like the National Food Authority Employees Association, four journalists’ organizations in Mindanao, the College Editors Guild of the Philippines, the National Union of Students of the Philippines and Bagong Alyansang Makabayan endorsed the Sept. 1 boycott. Even DOTC Secretary was quoted in radio interview that he backs the protest action.

After Sept. 1 and the issuance of the TRO against Smart and Globe, texters face considerable legal and propaganda efforts from the companies who employ topnotch lawyers and a whole cabal of spin doctors. Indeed, the TRO is only a temporary victory and texters must prepare for more action ahead.

The whole controversy highlighted the need for a texters’ organization, a matter which we might help solve by recruiting more members, holding forums or eye balls (EB’s), establishing chapters and incorporating TXTPower.

We are now in the stage of gathering more relevant information, consulting with ICT experts and consumer advocates and during media interviews where we face Globe and Smart officials exchange some ideas with them and send them a message:

Monopolies should watch out. Its about time for TXTPower and consumer rights in the world’s text messaging capital. Bulatlat.com

An activist writer, Cruz is the current spokesperson of TXTPower. The group’s email is: txtpower@hotmail.com

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