Telecommunications in the Philippines are well-developed due to the presence of modern infrastructure facilities. The industry was deregulated in 1995 when President Fidel V. Ramos signed Republic Act No. 7925 (The Public Telecommunications Policy Act of the Philippines). This law opened the sector to more private players and improved the provision of telecom services are better and fairer rates, leading to the creation of many telecommunication service providers for mobile, fixed-line, Internet and other services.
History
Pre-reform
Colonial period Two private companies offered telecom services namely Eastern Extension Australasia and China Telegraph Company which is a subsidiary of Britain's Cable and Wireless. The Spanish authorizes Eastern Extension to construct and operate the first submarine cable linking the Philippines and Hong Kong. A telephone network was established in Iloilo City in 1894. Jose de Olagier y Feliu requested permission from the Spanish officials in the Philippines in 1892 to operate a telephone network covering the Spanish cities of Iloilo, Jaro, and the town of Molo. Permission was granted for a 10-kilometer (6.2 mi) radius telephone network with bidding for the public works done in Madrid and Manila. By May 1894, all necessary posts and ridges were installed. The telephone network in Iloilo City was operational by June 1, 1894. The Philippine Islands Telephone and Telegraph Company is American-owned which started operations in 1905 in the present-day Metro Manila. In 1928, merged with Cebu, Panay, and Negros Telephone and Telegraph companies to form the Philippine Long Distance Telephone Company (PLDT). In 1932, the colonial Philippine congress granted PLDT a 50-year franchise to operate a national telephone system. The establishment of the Public Service Commission to regulate the industry as well as other utilities, meanwhile the Bureau of Posts was created to operate telegraph services nationwide.
Post-independence, 1946–1969 Initially, PLDT was managed by Americans, including the American company General Telephone and Electric Corporation (GTE) as a major stockholder. However in March 1967, perhaps in anticipation of the end of "parity rights" by 1974, GTE announced their intent to dispose of their 28% controlling interest in PLDT. On November 7, 1967, the Philippines Telecommunications Investment Corporation (PTIC) was registered to buy GTE's controlling interest. Ramon Cojuangco, who was part of one of the most influential clans in Philippine history, was a main incorporator. PTIC formally took control of PLDT on January 1, 1968. This led to the takeover of PLDT by the Filipinos, becoming a dominant player in telecommunications because of its authorization to operate a national network. Company officials however dispute that they were a monopoly because of the existence of a government telephone system (Republic Telephone Corporation or simply ReTelCo), and over 60 provincial companies operating in the country. The Bureau of Telecommunications (BuTel) handled the government telephone system, which by 1975 had 34,643 operational telephone lines, or about 10.2% of the total telephone capacity of the country. There were also four major companies with license for international data communication:
Eastern Extension, a franchise was transferred to the Eastern Telecommunication Philippine Incorporated (ETPI) in 1974. Eventually, they restructured its ownership, with 60% now owned by Filipino businessmen. Globe Mackay Cable and Radio Corporation (GMCR) was established in 1928. It is now majority-owned by the Zóbel de Ayala family, which is one of the oldest and most established elite families in the country, as a joint venture with SingTel. Capitol Wireless Inc (Capwire), established in 1962, which is owned by the Santiago family which is also the group which owned Retelco, then-second largest telephone company. Philippine Global Communications (Philcom) was established in 1977. During the term of Ferdinand Marcos, he gave Philcom exclusive rights to handle calls to Japan, Australia, Korea, Guam, and Thailand.
Paptelco vs. PLDT In 1976, the Philippine Association of Private Telephone Companies was organized to protect the interest of small telephone companies. By 1975, around 60 small telephone companies provided 11.7% of the total telephone capacity at the time. These small companies were dependent on PLDT to place inter-provincial and overseas calls, in which PLDT used this interconnection to their advantage. PLDT could allow, slow down, or deny interconnection at will. Some companies which found it financially impossible to operate without interconnection sold their companies to PLDT. They also dictated the interconnection access rates, which meant that PLDT cornered most telecommunications revenues. Eventually, by 1991, PLDT had 94% of the total lines.
Martial law developments Ferdinand Marcos's Presidential Decree No. 217 in 1973 mandated all PLDT subscribers to invest in PLDT to raise its equity and finance its expansion program. This law, known as the Subscribers Investment Plan (SIP) required all PLDT subscribers to buy non-voting shares in the company. Mandatory investors held about 85% of the total company equity shares but had no actual power in controlling the company. PLDT also had access to international loans from the World Bank. These loans assisted PLDT's dominance, and PLDT became the single largest private recipient of foreign loans to the Philippines. In 1981, a National Telecommunications Development Plan was released. A section of the plan recommended the integration of all private telephone companies under one monopoly. Marcos issued a presidential directive to Retelco, PLDT's main competitor in Metro Manila, to merge with PLDT. The merger was met with objection by the owners of Retelco, but the merger was continued because Marcos threatened to withdraw the companies' franchises.
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