Digitel seeks to extend provincial authority

Gokongwei-owned Digital Telecommunications (Digitel) has asked the National Telecommunications Commission to extend the life of its provisional authority to engage in the cellular mobile telephone service (CMTS) business after its license expired last month.

While a PA is supposed to be a continuing authority which means that even if it has already expired, a company can still continue operating, creditors and business partners require a public telecommunications entity (PTE) to show a valid PA before they continue to do business with the PTE.

Digitel was granted a license to offer CMTS in Aug. 7, 2000, but the start of commercial operations of its mobile telephone business has been delayed from an earlier target of second quarter of 2002 to the end of the year due to several reasons.

With is foray into the CMTS business, Digitel becomes the fifth telecommunications company to engage in this highly competitive field of GSM mobile telephony currently dominated by Ayala-owned Globe Telecom, Smart Communications, Isla Communications (Islacom), and Pilipino Telephone Inc. (Piltel) all of which have concentrated on the GSM digital technology which allows text messaging.

Extelcom is still offering the analog technology but has revealed plans of going into digital soon. On the one hand, Lopez-owned Bayan Telecommunications (Bayantel) now has a valid license to engage in the CMTS business after the Supreme Court ruled in its favor on the validity of its PA, but the company has yet to come up with a definite plan on the matter, given its current financial difficulties.

In its motion for extension of its PA, Digitel officials said that they took some time before they could decide which supplier to award the equipment supply contract to. "The suppliers engaged in a price war, and we wanted to make sure that we got the best package. Finally, we decided on Alcatel," they said.

Digitel is spending around $200 million for the initial requirements of the mobile telephony project. The company was supposed to undertake a bond float to raise the amount but had to shelve the plan due to uncertainties in the financial and economic climate following the Sept. 11 terrorist attacks on the US.

It was learned, however, that the company was able to secure a commercial loan from a French bank that is more than enough to cover the initial funding requirement.

In an interview, Digitel regulatory affairs manager Ricardo Dira said that their original PA had a life of 18 months ending Feb. 7, 2002. And as per NTC rules, the company had to start commercial operations of the project within the life of the PA.

But since it would take at least eight to 10 months from the time its PA expired before it can start its mobile telephony operations, Digitel decided to seek an extension of the life of its PA.

Under the recently revised rules of the NTC, new PAs or extended licenses now have a term of four years. Telecommunications companies have complained that 18 months is too short, considering the length of time government deliberates on the application.

Dira said that Digitel has already installed 100 cellsites mostly in Luzon, out of a target of 700 nationwide before the start of commercial operations.

He also revealed that the main switching center has already been put up in Libis, Quezon City.

Digitel initially plans to install a CMTS capacity that will be able to accommodate 500,000 subscribers. Of this number, around 300,000 will be accommodated during the first year of operations and will be a combination of prepaid and postpaid subscribers.

Officials earlier said they believe that the CMTS business is far from being saturated and that there is money to be made by concentrating on niche markets.

One plan of the company is to bundle the CMTS offering with its existing landline business which means that current Digitel landline subscribers will be able to avail themselves of the cellular service at more affordable prices. The same will be true for new Digitel fixed time subscribers.