Doing It Hard

Rene Mallari

PLASTIC PLOY Joel Disini was once so strapped for cash that he resorted to taking out seven credit cards to finance his new startup.

A Philippine Internet pioneer takes the long road to success.

In 1989, with no money, just computer skills and a lot of determination, engineering graduate and former software developer Joel Disini embarked on the greatest adventure of his life. He became one of the Philippines' Internet pioneers, launching EMC (originally called The E-Mail Company), which offers online services.

Disini's business idea came by accident. He was looking for a way to save on long-distance calls. "I had a partner in the US and there was a tremendous need for me to save on long-distance phone calls. We had been communicating by exchanging messages through a modem. Then I stumbled on the Internet and later on realised its business potential." At that time, he was so cash-strapped that he resorted to credit-card financing. Disini, now in his late thirties, applied for seven different credit cards, flew to the US, and was granted cash advances totalling US$14,000. "In those days, there was this loophole. You could get credit cards without the banks doing any cross-checking to see if you have any other cards."

He took the risk of paying at least 18% interest on each card, a charge much higher than the rate banks offer to borrowers. Fortunately, the Philippine peso was relatively stable vis--vis the US dollar, making repayment less difficult, and in three years, he was debt-free.

That's not to say those first few years were struggle-free. His venture of providing online content - Internet chat, discussion groups and file downloading - was slow to take off. "In those days, the main problem was no one understood what the Internet was," he says.

Disini had to figure out ways to keep his business afloat. Sales were low, while his credit-card payments were high. So he sold computers and callback devices and offered software consultancy and computer programming. "It was hard to build a solid business foundation when you include these kinds of activities. They were not part of my overall plan. But it was necessary," he says. His belief that the local online market would soon blossom made him cling to his then lukewarm business. It was not until 1995 that his ISP business finally picked up. EMC went on to become a full-fledged Internet service provider (ISP). As money started to come in, he managed to hire more people and today has 35 on staff compared with three 11 years ago.

At the same time, more and more players were entering the ISP business. Today there are over 150 ISP companies in the Philippines, and experts consider the market over-crowded given that there are fewer than 1 million Internet users in the country. They say an industry shakeout is possible in the near term. A few small ISPs have already folded, a tell-tale sign of worse things in the offing. Edgardo Cabarios, former director at the National Telecommunications Commission, says that with these kinds of market forces at play, it is a natural course for smaller operators to affiliate with bigger ones. "The market dictates that if you have fewer subscribers, you have to ally or merge with other operators."

Disini offered his ISP services at a much lower rate than his competitors to attract more clients. "We can connect an entire company through one phone line for as low as 2,500 pesos (US$60). Other ISPs will try to sell you a very expensive router and charge you 50,000 pesos every month."

Low cost, but functional and reliable - that's how he describes EMC's services. Product innovation has been his priority. For instance, EMC subscribers are offered free web space, paperless faxing without going to another software application, customised domain names, newsgroups, and more content (EMC has various feeds from UPI, AP, Reuters). "If an ISP is small, service should be its difference. If clients don't like the service, then they'll probably go to a bigger service provider."

The Asian financial crisis turned out to be a blessing for EMC, according to Disini. Three years ago, most local ISPs were hard hit by the peso's plunge as dollar-based costs had spiralled. "We didn't spend too much on hardware and equipment. We didn't have any loans. Others were affected and they either had to raise their prices or lower their service quality. On our part, we didn't." Disini, however, refused to discuss EMC's finances.

Now in his late 30s, he admits that competition in the ISP sector is getting stiffer. While his company has yet to talk with other companies about a tie-up, he doesn't rule out a merger in the future.