The perfect telco

14 Jun 2018

Part 3 in a series (Part 1, Part 2)

It’s been five months since the Department of Information and Communications Technology (DICT) issued the policy guidelines for the entry of a new major player (NMP) in the telecommunications industry, and four months since the National Telecommunications Commission issued the draft memorandum circular on the rules and regulations on the NMP selection process. And yet, a third telco has yet to be named.

What has happened since January when the president announced that he wanted a third telco “up and about” by early 2018?

In February, president Duterte initially rejected DICT’s request to extend the deadline in selecting the third telco. Presidential spokesperson Harry Roque said Duterte was “particularly displeased” that in order to have a third telco, the government would need to find frequencies to be allotted to the new player.

Literally a day after this announcement, PLDT’s MVP was reported that have agreed to return the 10MHz of the 2100-MHz spectrum assigned to CURE, which PLDT bought in 2008, “at absolutely no cost”.

The second draft of the TOR was supposed to be issued in mid-March to be subject to a series of public hearings. March came and went but no TOR was issued. Word was that some parties did not agree with the terms for the selection process.

In a sudden twist, the Palace announced that it was no longer setting a deadline on the entry of a third telco.

In April, the president signed Administrative Order 11 creating an oversight committee to oversee the entry of the new telecom player. This committee is composed of DICT as chair, the Department of Finance (DOF) as vice-chair, and has representatives from the Offices of the Executive Secretary and the National Security Adviser.

Why an oversight committee was necessary is not very clear, policy-wise. As the A.O. itself also provides, existing laws mandate the NTC, through Republic Act (R.A.) 7925 or the Public Telecommunications Policy Act, to award spectrum licenses and necessary permits for a telco. In 2016, by virtue of R.A 10844, the NTC became an attached agency to DICT, which is mandated to provide the policy framework and guidelines, and to develop and promote the national ICT agenda.

The oversight committee “shall assist the NTC in the formulation of the terms of reference for the selection and assignment of radio frequencies,” something that the implementing rules and regulations of R.A. 7925 already provides in the form of the Radio Frequency Consultative Committee (RFCC). If the president were to follow the original set-up of the RFCC, the committee should be represented by the government, telco industry associations, and consumer/user groups.

In April, the DICT tried to continue the momentum by issuing DICT’s Memorandum Order No. 002, which provided that the potential NMP must have paid-in capital of at least 10 billion pesos (almost $190 million) to prove financial capability.

Apart from holding a congressional franchise—a requirement unique to Philippine telcos in the Asia Pacific—the third telco candidate must have experience in the delivery of telecoms services for the last five years, have the highest committed investment (HCI) and highest committed level of service (HCLOS) for the next five years, and must have no outstanding liabilities with the NTC, a prerequisite that invited controversy.

ICT advocates thought that the recent guidelines by the DICT was already enough for the NTC to revise the TOR before the President’s next state of the nation address (SONA). The right prerequisites were there – the committed level of service (coverage, quality, etc.) backed by the committed amount of investment.

However, by end of April, it was clear that the selection process would be delayed yet again. DICT’s Acting Secretary Eliseo Rio, Jr., oversight committee chair, announced that the bidders would instead be identified during the SONA.

In early June, DOF Secretary Carlos Dominguez III, vice-chair, expressed his dissatisfaction over the proposed selection process and criteria, saying that they are “weak” and that the “scoring should not be based on ‘commitments’.”

So here we are now. The Filipino people are waiting. All they see are posturing and projections from willing candidates. All they hear are press statements on delays and future plans. This has gone way beyond the President’s original deadline. And this is just the terms of reference, not even the actual selection of the third telco!

All these precautions and discussions are necessary. But, meanwhile, the two dominant telcos that the new players are supposed to compete with continue to solidifying their place in the market. They continue to get more subscribers, rollout more infra, and grow their market share. If the government wants to usher in the third telco, it has to do so immediately. After all the debates, we all need to ask ourselves: Is the perfect getting in the way of the good?

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