Government agrees to piggyback on NGCP line for broadband plan

MANILA, Philippines — The National Grid Corp. of the Philippines (NGCP) has mutually agreed with the Department of Information and Communications Technology (DICT) to move forward on the use of available fiber optic capacity in the government’s National Broadband Program (NBP).

In a statement, the grid operator said DICT OIC Undersecretary Eliseo Rio recently met with NGCP president and CEO Henry Sy, Jr. and expressed the agency’s commitment to partner with NGCP on the use of transmission facilities as backbone for the NBP for the duration of its concession agreement.

“The core of the matter is who owns the dark fiber of NGCP/TransCo. When it is turned over to TransCo, whatever agreement was done with NGCP may be modified, changed, or reviewed by TransCo,” Rio said.

DICT’s commitment follows NGCP’s earlier pronouncement that it is willing to enter into a bilateral agreement with the government for the lease of its available fiber optic capacity for use of third parties at no cost.

“NGCP will enter into the agreement up to the life of its concession, which is until 2034, provided that in the event that the concession is extended, the bilateral agreement will also be extended,” it said.

Republic Act (RA) 9511 grants NGCP a franchise to operate the country’s transmission network across the three main islands and allows it to to engage in any related business which maximizes the utilization of its assets such as, but not limited to, telecommunications system.

Through the 25-year concession agreement, NGCP operates about 5,000 to 10,000 fiber optic cables of existing fiber optic facilities that run from Luzon to Mindanao for internal communication purposes.

Earlier, the grid operator maintained that it can legally enter into a bilateral agreement with government without TransCo, but said that it would not object to any agreement between DICT and the National Transmission Corp. (TransCo).

“NGCP will not object to any separate agreement DICT signs with TransCo for so long as the exclusive rights of the company, in relation to transmission and related businesses, for the entire duration of its concession are upheld,” it said.

The tiff between NGCP and Transco on the use of the fiber optic is a legal issue, which should be addressed by legal entities, Energy Secretary Alfonso Cusi said.

“On the basis of the documents I have seen and read, TransCo is the owner of the facilities. They privatized it and NGCP is the awardee as the operator, but owner is still TransCo,” he said.

TransCo has said it should be part of the agreement with DICT on the use of the transmission grid’s fiber optic network being the agency of government protecting the assets.

The transmission grid’s existing fiber optic cable network enables real-time communication between transmission facilities, and with generators and distribution utilities (DUs).

The fiber optic capacity to be leased out by the company uses transmission facilities and allows government or third parties to “piggy-back” on the transmission communication backbone.

NGCP said it is not interested in entering the telecommunications business and its main focus is on the operation of the transmission facilities.

“The lease of available fiber optic capacity is specifically allowed under our concession as a ‘related business to maximize the utilization of its assets.’  Such lease agreement is contemplated by our concession and franchise and is not considered our primary mandate,” it assured.

Even if the government uses the fiber optic network, there is still available capacity for use of another private telco player, NGCP said.

“Should the government use only a portion of the fiber optic capacity available for use of third parties, NGCP may also enter into other bilateral contracts with interested telecommunication companies based on the contract with government, for the use of the remaining capacity. Under the EPIRA, 50 percent of the net income from these bilateral contracts will be used to reduce transmission rates. But priority use remains with NGCP’s internal communications purposes and the government’s NBP,” it said.