THE government should prohibit telecommunications companies or telcos from offering mobile phones and other gadgets that are “locked” to their networks. This not only favors consumers, but also compels telcos to improve the quality of their services despite the lack of competitive pressures in a duopolistic market.
Regulation seems headed toward that direction but has not gone far enough yet. In 2019, the National Telecommunications Commission (NTC) issued guidelines for unlocking mobile phones sold by local telcos. That circular followed a memorandum order from the Department of Information and Communications Technology a year earlier. The title of that order is “Mandatory Unlocking of Mobile Phones and Devices After Lock-in Period and Compliance with Terms and Conditions Contained in Subscription Agreements.” After the NTC circular, the public expected that unlocking devices bought as promotional offerings by telcos should become hassle-free.
In fact, the circular mandates telcos to respond within two days to customer requests to unlock their cellphones. But unlocking phones remains cumbersome with one telco even requiring a visit to its nearest service center. That particular requirement should be revisited now that the pandemic has popularized digital and contactless transactions.
In fact, such outdated and needless procedures would matter less if authorities had prohibited telcos from locking devices in the first place.
Such a ban is not new. Beginning this month, the United Kingdom was to prohibit mobile network operators there from selling devices locked to their services. Canada and Singapore already have similar bans, and similar restrictions are now being deliberated in the United States.
In a November 2020 article in the American magazine Wired, Kyle Wiens, chief executive officer of a right-to-repair advocacy group, said, “I can’t think of anything more customer-hostile than locking a phone to a particular carrier.” He explained, “It would be like having cars that only work on certain toll roads. No one would put up with that, and we shouldn’t put up with locked phones.” Wiens could not have said it better.
Championing consumers
We recognize that the locked devices are promos offered by telcos to prospective customers or to existing clients whose contracts are up for renewal. The cost of the device is bundled with the monthly subscription charges. And based on its circular, the NTC seems to consider those gadgets as the telcos’ property until the total contract price has been paid by their clients.
We disagree with that view given that telcos require full payment when customers prematurely cancel their subscription contract. In order words, customers are required to pay the balance, plus charges, for terminating their subscriptions anyway. As such, customers should be able to do whatever they wish with the device that came with their phone plan; even giving it away. They will pay for it regardless.
By removing the switching costs, the pressure will be on the telcos to continue delighting their customers who remain loyal to their network. Even when the third telco player eventually starts operating, consumers in the Philippines will still have few alternatives.
The financial burden on telcos seems justifiable, mainly consisting of additional expenses for improving the quality of their services. Besides, they can afford it. PLDT, along with its subsidiaries, is the 17th largest conglomerate in the country, according to the latest issue of The Manila Times 500, a ranking of the country’s top corporations. Its competitor, Globe Telecom and its subsidiaries, is not far behind at Top 20.
Both rake in billions in annual income with most Filipinos relying on mobile phones and on other gadgets to a lesser extent to connect online. For Filipinos, cellphones are essential for personal and even commercial purposes.
Granted, it would be better to have competition encouraging market players to improve the quality of their goods and services. But as mentioned earlier, the duopoly will improve only slightly to a three- player oligopoly.
The domestic telco market is far from ideal. And rules are skewed in favor of billionaires and their giant corporations perhaps because of regulatory capture.
Given this scenario, government regulators, along with policymakers, should step forward as the champions of consumers.
