Means to an end

The Philippine Competition Commission (PCC) wants amendments incorporated in the draft Terms of Reference on the New Major Player (NMP) in the public telecommunication market. This is in stark contrast to the position taken by the National Telecommunications Commission (NTC).  Both are agencies of government that seem to be working at cross-purposes in the performance of their respective mandates, principally to protect the public and the State in general.

As in the failed deal between San Miguel Corporation (SMC) and Australia-based Telstra, the PCC and NTC are again at loggerheads in the formulation of the rules and regulations on the selection of an NMP.

PCC wants a prohibition on mergers, combination or becoming a related party with a dominant telecommunication or telco firm. Further, voluntary return of frequencies should the NMP become a related party with a dominant telco; monitoring and performance evaluation through information sharing; and, claw back of spectrum in case of non-use and exemption from PCC review if competition issues are addressed.

Earlier, the PCC took the buyout battle with the duopoly to the Supreme Court (SC) so that it can review the transaction between SMC; the Philippine Long Distance Telephone (PLDT)-Smart Telecom; and the Globe Telecom.

For PCC the most important aspect of said transaction was the co-use agreement between the duopoly with respect to 700 megahertz (MHz). 

It was the NTC that approved the co-use agreement between PLDT’s Smart and Globe in total disregard of the competition law or Republic Act (RA) No. 10667 and its implementing rules and regulations.  It was also the NTC that compromised the roll out on 3G frequency cases which remains pending before the SC and covers 2.5 gigahertz (GHz) frequency band.

Interested bidders have also raised issues such as there is no distinction between different types of coverage. Wireless mobile and wired broadband are treated the same. The minimum nationwide coverage is even in violation of NTC’s regulation of at least 80% nationwide coverage, among others.

In the draft terms of reference (TOR), there is no mention of the SC cases involving the 700 MHz and the 2.5 GHz band.  These cases need to be settled in order for government to determine what they are actually offering to the NMP.

Last week, Department of Information and Communications Technology (DICT) Secretary Eliseo Rio announced in a press conference that a total of six local firms and seven foreign companies are keen on bidding for the spot to become the country’s next major telco player.

According to the DICT chief, the local firms include PT&T, NOW Corp., Converge ICT, Transpacific Broadband Group, EasyCall, and Tier One.

On the other hand, Rio disclosed among the foreign companies is a US telco which could be the American telco giant AT&T. The following foreign telcos—which would serve as partners to a local franchise holder—that expressed interest are, namely: China Telecom, Korea Telecommunications and LG Uplus from Korea, Telenor of Norway, Vietnam Telecom, and one still unnamed Japanese firm.

While the DICT has been busy facilitating the entry of a third telco, Sen. Sonny Angara last Friday called Rio’s attention over the agency’s failure to implement up to now the free internet connectivity for state universities and colleges (SUCs) despite the P280 million provided for them under this year’s budget approved by the 17th Congress.

From the DICT report submitted to Angara, only two of the 112 SUCs have been provided with free internet connectivity as of July this year under the public wi-fi project of the government.

The DICT chief remains keen though to award the third telco player by December, or even earlier.

Rio frowned upon renewed appeals for extension made by some other interested bidders.

As far as Rio is concerned, the DICT will adopt the suggestions made recently by the PCC which include the automatic return of unused frequency, mandatory return of spectrum in the event the firm becomes a related party to a dominant player, and information sharing on reportorial requirements.

Under its current timeline, the submission of position papers for the TOR from stakeholders will be welcomed in the next 10 days. After which the DICT has seven days to finalize the TOR and then publish the final memorandum circular. The circular will then be effective 15 days after its publication. Bid documents will be available by Sept. 26, with the bidding process expected to last for one to two months.

This is in line with the marching orders of President Rodrigo Duterte for a new telco player to compete with incumbent industry giants PLDT and Globe and to provide more options and better service to consumers amid public complaints on slow internet services. In April, the President formed an oversight committee that would facilitate the entry of a new player. The committee is composed of different agencies which included the DICT and the Department of Finance.

As part of the legal process in coming up with a new major player, the DICT conducted last week a public hearing on the proposed memorandum circular for the rules and regulations on the third telco player selection.

During his guesting at my Kapihan sa Manila Bay last Aug. 15, Finance Secretary Carlos Dominguez underscored the need for the government to develop stronger regulations on the country’s telco industry while still looking for a new major player. Dominguez bewailed the regulation on the local telco industry “is not up to par”—something that led to the growing public outcry on slow internet service, among other complaints.

“The question is not the third telco. The question is, when are we going to improve? Third telco is one way of improving it. The other way is to have a better regulatory environment and I think that is the priority rather than a third telco,” Dominguez pointed out.

If indeed having a third telco player is just a “means to an end” as Dominguez puts it, then, let’s have this means to that desired end at the soonest possible time.