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Will the third telco save PH Internet?

In October 2016, I asked in my blog: Does the Philippines need a third telco? My answer was “a resounding yes.”

So, you could imagine how delighted I was that the Department of ICT, under the leadership of Acting Sec. Eliseo Rio, Jr., immediately acted on President Duterte’s marching orders to bring in a third challenger to the telecommunications market.

The much-celebrated selection process for the Philippines’ third telco was finally carried out—and successfully I would add.

Everything was consultative and transparent from the start. The draft terms of reference and selection criteria were subject to stakeholder consultation and a call for comments was launched. An information campaign (pre-bid conference) was conducted. Third-party observers were invited to witness the actual submission and opening of the bid documents, which was also livestreamed on Facebook and covered by the media.

In the end, it can be said that the process was pioneering and worth copying in other industries. However, the controversies and legal issues that followed after the NTC declared the Mindanao Islamic Telephone Company (Mislatel) consortium—made up of Udenna Corp., Chelsea Logistics Holdings Corp., and China Telecommunications Corp.—as the provisional third telco is another story.

Citizens and legislators alike expressed fear that China, through government-owned China Telecom, would pose a threat to national security given the economic giant’s existing row with the Philippines over disputed territories in the West Philippine Sea. Philippine President Duterte is known for shifting foreign policy and making a pivot to China, adding to speculations that the third telco selection has been rigged to favor Dennis Uy, a known friend of the President, and China Telecom.

The two other losing bidders, Sear Telecom and PT&T, filed cases against the NTC and Mislatel.

These post-selection challenges, however, are not new to the Philippine telecoms sector. In fact, this is the rule rather than the exception.

And if we are to keep our eyes on the prize, Mislatel’s promised services, contained in its bid—a minimum average of 27 Mbps on its first year of operation and coverage that will match Globe and Smart’s on the third year. These promises are backed by a performance security of 24 billion pesos ($450 million). Since Mislatel has the financial backing of a telco giant, the promise of better services and the threat of competition should be enough to keep the incumbent telcos from falling into complacency and the consumers hoping.

In my 2016 blog, I also did say that: “The country needs a third, even fourth or fifth telco. It needs the presence of challengers that will put the dominant telcos on their toes again, much the same way that the new players did to PLDT over two decades ago when the telecommunications market was finally opened up to competition.”

Looking back, I meant to say third, fourth, or fifth “service provider.” Because in the digital era, broadband services are not and should not be limited to just the big telcos. How do we get more broadband players to invest in the country? How do we help new service providers, and the innovative technologies and business models that they have to offer, enter and compete in the Philippine market? I will discuss these questions and potential answers in part 2.