ECON 12

Microeconomic Theory and Practice

REFLECTION PAPER #2
Describing the local telecommunication industry as being in a
poor and floundering state is even an understatement for most
people. Our country has this ignominious reputation as having
one of the worst internet services. Adding insult to injury is the fact
that we are among the leading countries when it comes to the
cost of internet service.
According to an industry report by ASEAN DNA, with its snailpaced 3.6 Mbps, the country lags all ASEAN countries when it
comes to internet speed. The average internet speed in the entire
ASEAN region is at 12.4 Mbps.
According to industry estimates, local telco service providers
charge $57 per month, which is way above the current rates
charged by their counterpart service providers in the US.
Philippine Long Distance Telephone Co. (PLDT) - SMART and
Globe Telecom insist that they are operating under a regime
defined and dictated by prevailing market forces. Other
stakeholders also have their own 2-cent worth of insights and
views of why our local telco industry is at what seems to be a
moribund state.
Using our learnings of industry organizations and how firms
behave and make decisions in different types of markets, discuss
and share your views why the local telecommunication industry is
in such a poor and underperforming state.
Additionally, discuss as well, if there are any, the measures and/or
interventions that the government must take to get our local telco
industry back on track and be at par with their counterpart service
providers in the other countries in the ASEAN region.

Suggested Readings:
1. The PH Telco Cartel: Telstras Story from Conception to
Miscarriage
http://www.thinkingpinoy.net/2016/06/san-miguel-globesmart-700-mhz-band-part-2.html
2. We Need a Third Philippine Telco
http://www.utterlyrandomtechie.com/3rd-philippine-telco/
3. How the Philippines Got Asias Worst Internet Service
http://www.forbes.com/sites/ralphjennings/2016/02/23/meetasias-internet-laggard-the-philippines/#6a213c59717a
NOTE:
The readings are mainly intended for your reference and source
of information for our Reflection Paper. You MUST NOT COPY or
LIFT SENTENCES directly from these articles. Plagiarism is a
form of ACADEMIC DISHONESTY and the school has zerotolerance for such offense.

ECON 12 Microeconomic Theory and Practice

Second Semester AY 2016 2017
NAME: NARON, Be-Ann Charlotte B.
BLOCK 22
REFLECTION PAPER #2

I dont know much about our local telecommunication industry so I did some readings
about this issue. And based from what I have read, there are many reasons why we have so
slow internet connections. And yes, it is so embarrassing because we are one of the leading
country when it comes to cost of internet services but look at the results, unsatisfying isnt?
We cannot deny the fact that our country is still developing unlike others. So, our
technologies are not so that advance and besides are main focus is about agriculture for we are
an agriculture country. But still, the importance of technology advancement cannot be ignored
for this will be a great help for our countrys overall economic status.
When we talk about internet access, many would say that only those rich can afford it
because of its cost. So people specially students who cant pay for it are having a hard time on
their studies and such.
But the main question is that, why do we have slow internet services though we spent so
much for it? First is that our country has scattered islands. So the producers are having a hard
time putting up cell sites all over the country. And because of that the expenses are high and it
is so time consuming.
Another reason is that we lack government support. Were seeing some progress
regarding this issue but for most consumers, that progress is very slow especially when
compared to our neighboring countries. If they just provide some budget and they focus on this
issue too then the probability of improving the internet services would increase.
Another reason is that the competition is low. And we know that sometimes competition
can improve an industry. In our case, Philippine Long Distance Telecom (PLDT) Smart
Communications and Globe Telecoms were the two biggest competing telecommunication
company here in our country. We can say that they are duopoly, meaning because they are the
biggest and dominant, they have gained such market power.
In our side, as consumers, we have no choice if we are not satisfied with the services
they give knowing that they are the only companies that can provide this kind of industry. So
even if our internet connection is so slow, we have no choice but to wait. Even if the qualities of
this service are low, still weve got no choice but to endure.
And because the competition is low, the remaining companies are not alarmed. Because
they know that the consumers have no choice but to accept their services. So that, the
improvement of their services is still slow.
To solve this problem, some says that we need a third party telco. But as for now, I can
say that the government has the greatest help for this. That if they continue to support this
immediately, and I believe that it will improve, maybe not that much but still, an improvement is
still and improvement and what matters the most is the will try.