FEF: Exclude telcos as public utilities

MANILA, Philippines — The Foundation for Economic Freedom (FEF) is supporting the exclusion of telcos from what are considered public utilities under the proposed amendments to the Public Service Act (PSA) as part of efforts to encourage greater competition in the sector.

In a statement, FEF president Calixto Chikiamco said the group supports the proposed reform to exclude the telecommunications sector from the definition of a public utility since it is not a natural monopoly.

“There are currently three telco companies that are profitably operating in the same area here in the Philippines, Globe (Telecom Inc.), Smart (Communications Inc.), and DITO (Telecommunity Corp.) This goes to show that several telecoms firms can operate in the same area without leading to higher costs and economic inefficiency,” Chikiamco said.

The statement comes amid the push for the telecommunications sector to continue to be considered a public utility as the Senate deliberates on amendments to the PSA.

Senate Minority Leader Franklin Drilon has said only natural monopolies should be considered public utilities based on the proposed definition of public utilities in the bill.

The proposed amendments to the PSA seeks to limit the definition of public utilities to distribution and transmission of electricity, water and sewerage.

Under the Constitution, public utilities should be 60 percent Filipino-owned.

When approved, the proposed amendments to the PSA would allow greater foreign investment in the telecommunications and transportation sectors.

While the three telcos currently provide services in the country, FEF said there is a digital divide with data from the National Economic and Development Authority showing 64 percent of barangays in the Philippines do not have telecommunication power, 88 percent are without free WiFi zones, and 70 percent have yet to be deployed with fiber optic cables.

The PSA is seen as a solution to address the digital divide as it is expected to encourage foreign investments in the telco sector.

If telcos are considered a public utility and subject to the 40 percent foreign ownership restriction, Chikiamco said competition would be limited, noting it is a capital-intensive industry but very few Filipinos have capital for majority control.

“This effectively bars new entrants and competition which will lower prices, improve services and new technology,” he said.

The PSA is among the bills that have been certified as urgent by President Duterte.

During his final State of the Nation Address last Monday, he renewed the call to Congress to approve the PSA.