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The selection process for the market's third operator was a spectacle to behold
(First part of a series)
Christine, a call center agent, just finished her night shift. It’s 2pm and she can’t wait to get home to sleep. Christine tries to open the ride-sharing app on her phone, but she couldn’t enter her pick-up location. Her 3G data was wonky so she decides to walk around the block to find a good cell signal. After 10 minutes, Christine finally manages to book a ride. The app said the driver was 5 minutes away, but the car was nowhere to be found 15 minutes later. Christine sends a text to the driver to ask if he was near, but she didn’t get a reply.
She then decides to call the driver. The first call gets dropped. The second one goes through, but the reception is choppy. Christine tries a third time but, to her surprise, gets a notification that her credit had ran out. She had just topped up yesterday and barely used her phone that day. Luckily, there’s a convenience store nearby. Christine buys credit. She is finally able to call. The driver asks for direction because his Waze app isn’t working due to his poor pocket Wi-Fi signal. Christine’s ride finally arrives. A couple of blocks later, the driver’s phone beeps. “Manong, malapit na po kayo?” It’s Christine’s text from 10 minutes ago.
Every day, millions of Filipinos experience poor cell signal, dropped calls, delayed SMS, disappearing credit, and slow internet service. Not that these problems are new, but in this age of data and IoT, the need for better telecoms services is all the more urgent.
There is a renewed call for better telecoms service not only among consumers, but from the government itself. President Duterte, who anchored his campaign on introducing change, had promised to open up the telecoms market to foreign competition if PLDT and Globe don’t shape up.
Current laws, however, allows for only 40% foreign ownership in telecommunications. Just the same, the President in November last year offered China “the privilege of becoming the country’s third telco”.
When Duterte’s newly appointed spokesperson, Harry Roque, was interviewed over the phone, he complained that he had to go out of his house, clad in his bathrobe, just to get a good signal.
Shortly before Christmas, Malacañang announced the President’s marching orders to the Department of Information and Communications Technology (DICT) and the National Telecommunications Commission (NTC) the ensure that a third telco would be “up and about” by March 2018. All applications and licenses are also to be approved within 7 days upon complete submission of requirements. The President is that serious, Roque said. And, obviously, he’s that impatient.
In the Philippines, the president is not only a powerful political figure, but a very powerful chief executive. They can set the policy direction and issue direct orders to executive agencies, including the DICT and NTC. In the 1990s, liberalization in the telecommunications sector was jumpstarted by two executive orders issued by President Fidel Ramos. One mandated interconnection among local telcos and lowering telephone subscription rates for consumers, and the other required the improvement of landline services.
However, allowing a new player to enter and operate in the telecoms market is not up to the President alone.
The NTC was—and still is—instrumental in instituting reforms to introduce competition in the telecommunications sector.
In 1989, the NTC awarded a license that allowed the entry of a second international gateway facility (IGF) operator, which essentially broke the monopoly of PLDT.
The telecoms regulator can also issue regulation to ensure a level-playing field.
In 2000, the NTC granted a permit to a third mobile service operator, Digitel. Sun Cellular, launched in 2003, successfully lured millions of subscribers from PLDT and Globe. It was bought by PLDT in 2011.
In 2008, NTC issued a memorandum circular mandating the interconnection of backhaul networks to all cable landing stations, subject to negotiation and approval by the NTC. The regulator believed that “opening the backhaul network service to other suppliers will bring prices to market level to the benefit of the consumers.”
The creation of DICT is crucial in setting the policy direction of telecoms and ICT in the country. While some would argue that it’s an added layer of bureaucracy, the DICT also added a layer of checks and balances in policy and regulation.