What's the frequency, Rody?

27 Mar 2018

(Second part of a series)

The telecom sector was abuzz the past few months over the selection of a third telco. The President’s order was clear: a third player should be up and running by March to compete with the duopoly. But where’s the third telco now?

In all fairness to the DICT and NTC, they got to work right away.

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A series of stakeholders’ consultations were held in January and February. A Facebook account on the “New Major Telco Player” was opened. But long before this, DICT officer-in-charge Eliseo Rio, Jr. had already started the conversation and threw out ideas on social media. Netizens and ICT stakeholders appreciate the retired general’s openness and willingness to engage the public. Comments started pouring in.

There were hitches along the way but were easily resolved, thanks in part to the resolve of Rio and in part to the President’s temper.

One major issue is the mobile spectrum to be awarded to the new player.

The DICT and NTC identified the frequencies to be made available for the third telco. The list included 10MHz of the 2100-MHz band held by Smart subsidiary CURE, which, as a precondition to PLDT’s buyout of Digitel in 2011, was ordered to be returned to government and was planned to be auctioned off.

As early as 2013, NTC Commissioner Gamaliel Cordoba lamented that the determination of the cost recovery amount (CRA) for the frequencies was the only thing delaying the auction. Back then, the PLDT Group wanted to recover 2.215 billion pesos ($42.4 million) from the sale of the CURE frequency .

But spectrum is not a privately-owned asset that one can sell or guarantee recovery of investment from. It is national patrimony, and the State simply grants the right to use spectrum to authorized entities. The State also has the power to recall and reassign spectrum for national interest.

The President, of course, knows this and rejected the proposal to “pay for the frequencies that [the government] gave out for free.” (In the Philippines, there is no one-time upfront fee for spectrum. Instead, an annual spectrum user fee is collected from holders).

Without mincing words, Duterte ordered the telcos to give back the spectrum and issued a somewhat vague but stern warning that the telcos would receive some slapping if they didn’t.

Rio then announced that, after talking to MVP (Manny V. Pangilinan), PLDT will now be returning the frequencies “at no absolutely cost”.

As early as January, the DICT had already issued the policy guidelines for the entry of a new major player, followed by a draft memorandum circular by NTC on the rules and regulations on the selection process of a new major player in the telecoms market in February.

According to the rules, the selection will entail participants “bidding” for the license to operate as the country’s third telco. This license comes with a menu of spectrum identified for the third telco, including chunks of 3G, LTE, and fixed wireless broadband spectrum bands—more than enough to compete, if the new player puts up enough towers.

However, many things remain unclear.

Will the whole menu of spectrum be awarded to the new player? But since this is scarce resources, it might be prudent for the government to ask how and why the new telco could and would possibly use all this spectrum, and in the amount available, all at once.

Will the license be a provisional authority for a whole gamut of telecom services or will the new player apply for specific services? The usual process is that a telco applies for specific services which will determine the spectrum it needs to use.

Will the awarding of spectrum be for nationwide use or for regional basis? This is a good opportunity for the NTC to consider regional assignments and shared spectrum use, especially in areas the big telcos won’t cover anytime soon.

And these issues are on spectrum alone. The selection criteria is an entirely different matter.

Last week, the Palace announced that it was no longer setting a deadline on the entry of a third telco.

This can be a good or a bad thing. The government can now work quietly on the rules, away from the pressure and distractions of a hyped-up selection process. Or the process could start to lose steam and the third-telco option will be placed in the back burner.

Now can we focus on the National Broadband Plan?

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