HCLoS method overwhelming choice in selection of 3rd telco

MANILA, Philippines — The method using the highest committed level of service formula for selecting the third telco player won by an overwhelming margin over the scheme which proposes to use auction among potential bidders during a consultation conducted by the Department of Information and Communications Technology (DICT) yesterday.

The outcome further strengthened DICT’s position in pushing for the highest committed level of service (HCLoS) method as the best way in choosing the third telco player that will break the existing duopoly in the industry.

Among the 15 franchise holders and potential investors which were asked to submit their vote during the consultation, DICT Secretary Eliseo Rio said 75 percent expressed preference for the HCLoS selection, while only 16.67 percent chose the highest bidder or by auction method.

“The 15 telcos are the franchise owners who could be the Filipino partners of the foreign firms. Right now we have about five foreign (companies) interested so they can choose among the 15,” Rio said.

Results of the general public voting, meanwhile, showed 96 percent chose HCLos, while the remaining four percent prefer the auction method.

Under the HCLoS method, selection of the third telco player will be based on the committed level of service, particularly on the population coverage, broadband speed, and investment within five years.

The participant with the highest CLoS will be the new major telco player based on the criteria on the terms of reference.

Meanwhile, for the highest bidder or by auction method, the floor price as well as minimum obligation on the level of service will be set by the government. The participant with the highest bid price will be the new major telco player based on the criteria on the terms of reference.

For the auction method, National Telecommunications Commission (NTC) commissioner Gamaliel Cordoba said the minimum bid price under the draft rules has been significantly slashed to P6.28 billion from the previously reported P36.58 billion.

The DICT, as well as some stakeholders, are opposed to the Department of Finance-backed auctioning of frequencies, as this will entail the new player to put up a huge amount to qualify for the bidding process.

“Who will be interested to go in and compete with the two giants when they have to pay something that has nothing to do with their rollout of their infrastructure, that has nothing to do in improving their communications services?” Rio said.

Rio said the outcome of the stakeholder consultation is an indication of what the potential participants prefer.

 “After this, we are going to collate the results, come up with a report which I can present to the oversight committee that this is the result of our market study,” he said.

“The legal process will require NTC to publish the final version and then this will be subjected to another public hearing. It will again improve the terms of reference until it becomes final. Once the public hearing is completed then we can have it effective, then that will start the bidding process,” he said.

Rio said if everything goes well without any further delays, Filipinos can expect to have their much-awaited third player awarded by September or early October this year.