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MVP: Telcos will be obsolete; social media is the future

MANILA, Philippines - Shareholders of the largest telecommunications company in the Philippines, Philippine Long Distance Telephone Co (PLDT), might have been surprised by what their chairman Manuel V. Pangilinan told them in their annual meeting on June 14. 

"The fact is," he said, "telcos… will become obsolete." 

The savvy businessman, who oversees other major assets such as roads, hospitals, power and water distribution, said PLDT's goal doesn't end in keeping leadership in the industry, something it sealed when it acquired rival Digital Telecommunications Philippines Inc (Digitel). PLDT has to evolve, he said.

"PLDT has a choice of staying as a utility, as a delivery system, as an infrastructure system… but simply being that, like a Meralco… That's an option for us. The future of that is uncertain," he said.   

"We have to be something more than that. The next frontier lies in the media space," he added.

Pangilinan envisions his various companies supplying the power people consume to charge their phones, the network they use to access the internet and even the news that they pull up on their devices. He doesn't think PLDT is going anywhere, he thinks it's going everywhere.

He admits to not knowing how a company with wieldy wires and big microwave towers would fit with "creative" companies that supply content but he sees convergence as inevitable. 

"Social media will eventually merge with us and us with them," he said.  

Pangilinan told the shareholders: "[We must] move firmly into the social media, social networking and internet space before they move into ours and eat our lunch." 

Where GMA-7 fits

After he sounded the death toll for the future of traditional telecommunications, Pangilinan told reporters how the second biggest television network in the country, GMA Network Inc, which operates GMA-7, fits into these future plans

The answer is content. Pangilinan doesn't just want to connect Filipinos but supply the content they're sharing. 

"You need to understand why a telco needs to move into the media space [as] broadly defined. [It's] not to adjust traditional media, television, radio, print, but also social media--Google, Facebook, Twitter, Youtube. These two spaces are converging." 

He explained he sees these companies as competition. "It is possible that the Googles of the world--I'm not saying it's Google--the social networks could get into the telco space… for them to offer and deliver their own services." 

If PLDT's acquisition of Digitel teaches us anything about the company's chair, it is that he knows how to eliminate a rival and make his company stronger at the same time.

Digitel, a distant third industry player, came up with the strategy of offering low-cost unlimited plans, biting into the leading telcos' profits by forcing them to meet their prices with similar cheap and unlimited offers. The problem was solved when PLDT brought Digitel into its fold. 

As a pure utility company, "we're seeing how [PLDT's] margins are getting depressed by staying purely as a distribution company… Our shareholders don't like to see that."

Pangilinan seems to believe PLDT could have a greater grasp on the new media space by controlling more content, which GMA-7 could help supply. GMA-7 rivals TV5, the television company his group currently controls, but he explained that the two would be united under PLDT-led MediaQuest Holdings Inc. 

GMA-7 could also benefit by harnessing PLDT's massive communications infrastructure. The largest television network in the country, ABS-CBN, is already investing aggressively in broadband, while rival GMA-7 has no cable or broadband assets. 

Envisioning the partnership from PLDT's side, Pangilinan said, "Telcos have user-generated content but they also need the content of others. Your television content is not user-generated, somebody else produces content, your tele-drama, your news, even your radio commentaries." 

"We need to move into that space so that there is eventually some form of a combination between telco as a utility and social media as providing the sort of content that a telco needs to deliver," he said.

"It's beginning. PLDT has changed and we'll (continue to) change. The whole industry will change," said Pangilinan. - Rappler.com