Proposed ICT convergence law faces problems

President Arroyo’s directive for Congress to come up with an information and communications technology convergence law, although ideal, may not be feasible at this time.

Common regulations for the Internet, broadcasting, telecommunications and cable may not be possible due to differences over the extent of foreign ownership in each sub-sector, industry officials said.

The President issued her call for the legislature to come up with a convergence law in her recent State of the Nation Address, where she also urged the creation of a Department of Communication and Information Technology.

Almost all of the country’s telecommunications companies are moving toward convergence, which basically means that voice, data and cable are now being transmitted through a common medium.

Television can now be used not only for cable but also for the Internet. Voice over the Internet is also one form of convergence where the computer, which used to carry only data, can now be used to transmit voice.

"In the near future, we might just be using one medium – probably the television – for voice, data and cable," said National Telecommunications Commission (NTC) chief Eliseo Rio.

Constitutional limitations

But due to constitutional limitations and the absence of a convergence law, mega franchises cannot just be granted to entities to engage in telecommunications, cable, broadcast and the Internet.

Article 16, Section 11 of the 1987 Constitution provides that the ownership and management of mass media shall be limited to citizens of the Philippines, or to corporations, cooperatives or associations, wholly owned or managed by Filipinos.

This particular provision of the Constitution thus prohibits foreign ownership in broadcast companies, as well as in cable firms. Cable, under Philippine laws, is part of broadcast.

On the other hand, Article 12, Section 11 provides that no franchise, certificate or any other form of authorization for the operation of a public utility shall be granted, except to citizens of the Philippines or to corporations or associations organized under Philippine laws, at least 60 percent of whose capital is owned by such citizens. All executive and managing officers of such corporation or associations must also be Philippine citizens.

"The Constitution, in particular the provision on 100-percent Filipino ownership of mass media, should first be amended before convergence can take place. But this may be difficult, especially since Congress will have to focus its attention on just one bill. And it has other more important things to take care of," said Froilan Castelo, vice president for corporate and regulatory affairs of Globe Telecom.

Any amendment to or revision of the Constitution may be proposed by Congress upon a vote of three-fourths of all its members, or a constitutional convention.

Amendments may also be directly proposed by the people through an initiative upon a petition of at least 12 percent of the total number of registered voters, of which every legislative district must be represented by at least three percent of its registered voters.

Congress may, by a vote of two-thirds of all its members, call a constitutional convention, or by a majority vote of all its members, submit to the electorate the question of calling for such a convention.

Castelo said there is also the danger that some politicians may use this opportunity to propose other amendments to the Constitution, such as the junked proposal to extend the term of the presidency.

Initial talks

Nevertheless, some legislators are already planning to submit a proposed convergence bill and are already in initial talks with the NTC. Among them are former NTC commissioner Joseph Santiago and former deputy commissioner Aurelio Umali.

But Rio said he will ask each sector to come up with specific proposals for the proposed convergence bill. "The more we are now seeing convergence happening, the more we should fast-track this law," he said.

As planned, the creation of a single regulatory body for telecommunications and information technology as well as the establishment of unified regulations for the two sectors may be lumped into one proposal.

The absence of a convergence law and the presence of certain constitutional prohibitions are some of the reasons why telecommunications giant Philippine Long Distance Telephone Co. (PLDT) could not directly buy into broadcasting company GMA Networks Inc.

PLDT, partly foreign-owned, had to use its wholly owned subsidiary Mediaquest to purchase the country’s second biggest broadcast company.

Mediaquest, together with another PLDT subsidiary ePLDT, has just concluded the due diligence on GMA Networks and is now preparing the definitive purchase agreement.

"Also, PLDT cannot proceed with its plan to go interactive once it completes the purchase since it will have to use its facilities," an industry source said.

Globe senior vice president Rodolfo Salalima, president of the Philippine Electronics and Telecommunications Foundation, noted that the Philippines is probably the only country that cannot proceed with convergence due to constitutional limitations on foreign ownership.

India, for instance, expects to pass by next year its communications convergence law which could lead to a dramatic overhaul of the way the Internet, broadcasting and telecommunications industries are regulated.

India’s Group of Ministers on Convergence proposed the creation of a Communications Commission that would function as an all-powerful regulator for the three marketplaces under a common law, repealing all previous acts governing these sectors.

The goal is to have one body that handles all convergence issues and which has a better understanding of how one area of technology can impact on another.

If passed into law, the convergence bill would repeal India’s Telegraph Act, Wireless Telegraphy Act, Cable Television Networks (Regulation) Act and Telecom Regulatory Authority of India Act.