Utilities

Manolo Quezon quoted me yet again in his blog regarding the Meralco-GSIS brouhaha. click here

If you notice, our phone and water bills aren't going the same way as Meralco's. They stayed largely the same. Here are the possible reasons:

• The Foreign Currency Adjustment: water and phone utilities can adjust rates based on wildly fluctuating exchange rates. The peso has strengthened considerably, which means dollar-denominated debts can be serviced adequately and additional benefits are supposed to trickle down to consumers. In other words, despite soaring gas prices, the strong currency mitigates the negative impact somewhat;
• In the case of the telecomms sector, competition is in full force. That is, the Service Area Scheme has long been abandoned, and phone companies can put up lines as long as there is demand. As it is, there is an excess landline capacity in the country, given that the preferred mode of telecomms service nowadays is wireless.
  
• In other words, landline service is no longer the bread-and-butter of phone companies. In fact, Smart is now bigger than its parent company, PLDT, and that data services (i.e., texting) accounts for roughly 60% of the PLDT Group's total revenues. PLDT is in fact bundling landline with broadband internet service, just to fill in the idle capacity. Same with Globe. And so, increasing landline rates may only jeopardize these companies' broadband efforts. It seems even to me, that given the cost structure, landline services are being subsidized by cellular phone services. And the biggest source of growth after data services is broadband. Contribution from long distance calls remains significant, but it is not the same as before;
• Curiously, the water utilities show mixed results: the East Zone managed by the Ayalas seem to be better managed than the West Zone, which is being run by...the Lopezes! It has something to do with the management, isn't it? With the exception of ABS-CBN, all other Lopez entities are highly-leveraged behemoths.