Friday, August 28, 2015

Philippines is Exception to the Rule that Duopoly Markets are Not Competitive

There is an exception to every rule, including the “rule” that telecom duopolies stifle robust competition. Some would point to cable TV companies and telcos in the U.S. market, but a better case is the Philippine telecommunications market, where just two providers compete aggressively.

The telecom industry in the Philippines is a duopoly, with PLDT and Globe Telecom being the two dominant players in the mobile market.

Local media company ABS-CBN Corp. is trying to become the third player in the country's mobile  industry, operating using wholesale facilities supplied by Globe.

In addition, Philippine-based conglomerate San Miguel Corp. has also expressed interest in entering the telecom market, and is in talks with Telstra in that regard.

PLDT is the market leader with a dominant market share in all segments (mobile, fixed line, and broadband), having 60 percent to 70 percent market share in all these segments.

Analysts at Standard & Poors consider the Philippines telecom market moderately to highly competitive.

The market is price sensitive, and subject to periodic bouts of intense price competition, typically features of competitive markets.

The new contestants face high hurdles. The maturing cellular market in the Philippines features penetration of 113 percent.

Smartphone penetration will reach about 35 percent by the end of 2015.


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