Towers

On Nov. 7, the DICT will designate a third telecommunications (telco) player. This is much anticipated. A third player, according to prophets of our information and communications policy, will break the “duopoly” and bring our wireless services to par.

The exponential growth of demand for wireless transmission does produce an ample domestic market for more players in the industry. A third player theoretically creates more competition. In turn, this will force more innovation in a sector that should be thriving on that.

The entry of a third telco will, again in theory, result in improved services and greater customer satisfaction. Or it may not.

The two existing telcos are racing to bring 5G services to the market – partly to be a step ahead of the prospective third player. Depending on who is anointed the third player, the new entrant might find the market saturated.

Recall that San Miguel, the country’s largest conglomerate, attempted to barge into the telecoms market as the third player. In the end, it gave up on that effort. The investment required was too large and the risks too high. This is, after all, an industry where technology moves at a searing speed and equipment could become obsolete even before they are deployed.

Too, the industry is such that the major players need not hold on to all segments of their operations. Parts of the business could be outsourced or simply spun off for improved efficiency. The existing telcos might, in the near future, be better off dissembling rather than consolidating.

At any rate, in order to ease the entry of new players, the Department of Information and Communications Technology (DICT) mandated a “common tower” policy. What this means, basically, is that a separate company could come in and provide the communications tower needs of the telcos. Instead of duplicating investments in tower building, the telcos could share the facilities of a tower service provider.

That policy seems completely intuitive.

By sharing towers, much like power companies share a common transmission grid, investment outlays will be lowered. The service could be delivered at a lower cost to consumers.

In the telecommunications sector, the guiding principle is open access. Any start-up, if it proves more efficient, is free to enter the fray and grab a piece of the action. Because of rapid technological change, the competition is necessarily ruthless.

Open access serves us best. The consumer ultimately benefits if anyone who delivers volumes of data faster and cheaper is welcome to compete.

Strangely, however, someone in the telecommunications policy circuit, thinks it is a good idea to limit tower service providers to one or, at most, two players. That seems to run against the grain of open access.

We need about 50,000 towers to effectively cover the archipelago. One or two tower service providers cannot possibly deliver the infrastructure we need urgently. Anyone who can build a tower, including the telcos if it makes business sense for them to do so, should be allowed to come into the game.

There is no logic to limiting the number of tower service providers. If we are trying to break up the “duopoly” among the telcos, why are we trying to build a duopoly in tower service provision?

There is a bill in the Senate proposing an Open Access in Data Transmission Act. This aims to foster competition by opening up the various segments of the telecommunications market to new players by removing regulatory barriers and creating an open and level playing field. The “two tower company” policy maintained by the DICT will run against the grain of this proposed law.

Restricting tower service provision to only two designated players is arbitrary, illogical and counterproductive. Telecommunications is dynamic, rapidly changing and disruptive. It is better to allow market forces freest play.

Unimpeded

President Rodrigo Duterte issued a directive to all concerned agencies to allow the “unimpeded” importation of rice. The directive precipitated a debate on what the directive actually means. This only illustrates how confused and chaotic our rice policy has been.

For years, we maintained the “minimum access volume” (MAV) agreed upon with the World Trade Organization. This means we guaranteed international rice traders a minimum amount of rice imported into our market without tariffs. Beyond that, by definition, rice importation will be subject to tariffs.

Our Congress, however, never legislated a tariff on rice imports. This is most likely due to a fear of backlash from our rice farmers. To this day, a “tariffication” bill is still under legislative consideration.

The NFA, meanwhile, seems to have along the way interpreted “minimum access volume” as “maximum access.” This gave the agency tremendous powers in issuing importation permits to favored cronies. In practice, because of our chronic rice shortages, we imported larger volumes of rice that the MAV prescribes – although all within the framework of the NFA’s monopoly over rice importation.

Since there was no clear policy on tariff levels imposed on imported rice, private sector traders could not participate in rice importation. In practice, the NFA shut out even large conglomerates like San Miguel (who could have accessed rice supplies in bulk and at lower costs) from the business of procuring rice. Anyone who brought in rice without that precious importation permit issued by the NFA was defined as engaged in smuggling.

The “unimpeded” rice importation directed by President Duterte, by Rep. Joey Salceda’s calculation, could lop off a full percentage point from the current inflation rate.