The Philippine Competition Commission (PCC) said the government should ease regulatory restrictions that foster monopolies in the water distribution sector, a move aimed at empowering consumers to choose their own water service providers (WSPs).

In a recent market study, the PCC noted that while water distribution is traditionally a natural monopoly, where high infrastructure costs make it most efficient for a single provider to serve a specific area, opportunities for competition still exist.

“On the issue of consumer choice, as the industry is typically a natural monopoly, it is understood that consumer choice may be limited,” the study read.

However, some geographic areas feature multiple WSPs, largely due to supply gaps or infrastructure limitations, which inherently offers consumers more options.

Despite this, the PCC study found that competition at the household level is heavily constrained by the pre-construction decisions of real estate developers and homebuilders.

While the existing regulatory framework does not legally bind households to a single utility, these early development choices effectively lock residents into a specific WSP.

At the broader district level, the PCC said consumers generally have little to no influence over who supplies their water. At this scale, market entry is predetermined through legislative mandates or competitive selection processes, such as public bidding for concessionaires.

Even in rare situations where consumers technically have a choice between multiple WSPs, the study found that switching providers is often impractical due to high friction costs.

“These costs, both monetary and non-monetary, include logistical barriers, such as the need to modify existing infrastructure, and contractual restrictions imposed by developers and residential managers,” the PCC said.

To foster a more competitive market, the PCC recommended banning or restricting exclusivity arrangements between developers and WSPs, thereby granting consumers the right to switch providers based on their needs.

Additionally, the commission is pushing for a centralized online platform to give consumers transparent data on different WSPs, including service quality ratings, pricing, and user reviews.

Through these reforms, the PCC believes the water distribution market can become more competitive and consumer-friendly, ultimately driving up service quality.

“Where alternative options can practically exist, consumer choice must not be artificially or inadvertently suppressed,” the commission stated.