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PRRD Year 2: The push for a 3rd telco player

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The Department of Information and Communications Technology (DICT) is committed to ensure the entry of a new player that will be able to offer telecommunications services to the public in competition with the existing duopoly in the industry.

This developed as the department has implemented various policies seeking affordable and faster Internet services to the public.

The DICT has crafted its draft guidelines, which will award a new telco based on its financial and technical capability to deliver high-quality communication services to the country.

The highest committed level of service (HCLoS) mode will award a bidder through corresponding points based on network coverage, broadband speeds, and annual capital and operating expenditures over a five-year commitment period.

“The third telco will come in a playing field where it has to compete with Globe and Smart. Globe and Smart (have) all the subscribers already kapag pasok nitong third telco (once the third telco comes in), it has to attract the subscribers of Globe and Smart. Of course, Globe and Smart will also put up their own marketing strategies and they have to retain subscribers. Ito ang magiging fight ng third telco (This is the fight where the third telco will be coming into),” DICT Acting Secretary Eliseo Rio Jr. said in an earlier interview.

Telco industry stakeholders have expressed preference for this mode of selection over the mode of auctioning the frequency spectrums to bidders for the new major telco player, which is backed by the Department of Finance (DOF) in a public consultation conducted by the DICT this month.

The DOF said holding an auction that has a floor price of PHP6 billion would help raise funds for the government.

The DICT has opposed this, as it will force a new player to put up a huge amount to qualify for the bidding process, which is not related to setting up telecommunication facilities and improving services.

“By proposing an auction for the new player to recover what is due the Filipino people from failures of past administrations is not only illogical but really unfair. The government can still run after the beneficiary of the sale of frequencies if proper taxes were not paid, and it is not the task of DICT to get it from a new player whom we are trying so hard to attract to give better and less expensive ICT services,” Rio said.

An oversight panel has approved the guidelines using the HCLoS mode last Friday. The department is now in the process of finalizing the terms of reference as it seeks to address various issues, particularly the 3G frequencies of Bayantel, which is currently pending in the Supreme Court.

These frequencies will be awarded to the new telco player once resolved.

“If by end of July, we can have the Bayantel resolved, then we can have a published draft memorandum circular by the first week of August and that will be the start,” Rio said during a press briefing on the same day.

Furthermore, the DICT is hoping to complete the review of spectrum user fees of telcos by August. The secretary has earlier said that higher fees should be imposed against telcos that are not efficiently using the frequency spectrums awarded to them.

The department hopes to select the new telco player by December and start its operations next year. It projects that this firm would be able to become established and deliver telecommunication services by 2020.

“By 2020 we will have the third telco, the national broadband network, and the Facebook link and Bypass. That year we will all feel better telecommunication services,” Rio said.

Under Administrative Order No. 11, President Rodrigo Duterte has created an oversight committee to assist the National Telecommunications Commission (NTC) in the formulation of the guidelines for the selection and assignment of radio frequencies for the entry of new telco player.

The committee is composed of the DICT, NTC, DOF, Office of the Executive Secretary, and the National Security Adviser.

Lowering interconnection rates

The DICT has ordered the NTC to craft policies that would result in the reduction of interconnection rates for both short messaging services (SMS) and voice calls of telcos through its Department Order No. 002-2018.

The NTC released an order last Thursday, wherein telcos will be charging PHP0.50 per minute from PHP2.50 per minute for voice calls while text messaging will be at PHP0.05 per text message from PHP0.15.

Mobile subscribers are expected to experience lower charges on voice calls and text messages by August.

The department has said that mobile voice and SMS rates in the Philippines are among the highest in Asia. It added that affordable interconnection rates will encourage the entry of new competitors in the telco industry.

Common tower policy

Earlier this month, the DICT has released its guidelines on the common tower policy, which may be leased to existing and new telco players to build their communication facilities.

The department hopes to accredit up to two independent tower companies by the first quarter of next year, followed by a six-month building period.

The Philippines has one of the lowest tower densities in the world with less than 20,000 towers serving 100 million people. Approximately 50,000 more towers should be built to serve the current voice and data traffic.

The lack of cell towers has been identified as one of the barriers that result in the slow and costly internet services currently being experienced in the country.

Fiber network deals

The DICT has signed an agreement with the National Grid Corp. of the Philippines (NGCP) and the National Transmission Corp. for the use of its dark fiber or spare optical fiber for the implementation of the National Broadband Network.

The total length of the dark fiber network that will be used by the DICT is 6,154 km., spanning Luzon to Mindanao, which would enable the department to deliver Internet services to remote areas that are not easily accessed by existing telco companies.

This will also serve as a backbone to the Luzon Bypass Infrastructure, which will provide a bypass route for international submarine cable systems from the Luzon Strait, which is prone to multiple simultaneous submarine cable breaks.

A submarine cable system that will land on the cable stations and provide direct connections from Luzon to internet hubs in the United States and Asia will be constructed and operated.

Facebook, which will use the broadband infrastructure, will provide frequency spectrums equivalent to at least 2 million megabytes per second (Mbps), expanding the capacity available for the government’s information and communications technology (ICT) projects, such as the National Broadband Plan, National Government Portal, and the Free Public WiFi program.

Telco giants

Major telco firms PLDT Inc. and Globe Telecom have welcomed the entry of a new player in the industry and vow to further improve their services to subscribers.

Last March, PLDT has divested 10 megahertz (MHz) of 3G frequencies that was previously assigned to Connectivity Unlimited Resource Enterprises, Inc. (CURE) at no cost to the government in compliance with the directive of the NTC.

“The new assignee of the affected frequency shall have no obligation to reimburse the PLDT Group for any of the said costs,” PLDT Chairman and CEO Manuel V. Pangilinan said in a statement.

Its wireless subsidiary, Smart Communications, is set to roll out its 5G technology by 2020 as it has established a facility for its research and development.

PLDT has allocated PHP58 billion as capital expenditures (capex) for this year, which will be used for the rollout of its fixed and mobile networks.

For its part, Globe said the entry of a new player will help create a healthy competitive environment that will benefit consumers.

“As repeatedly stated before, Globe is not opposed to the entry of a third player, or for that matter, as many players that the market can accommodate. Globe has always geared itself for growth and competition,” according to Froilan Castelo, Globe General Counsel and Senior Vice President.

“Competition has the potential of opening up new sources of revenue streams for telecommunications players while benefiting consumers with more innovative products and services at competitive rates,” he added.

Globe has recently announced that it is eyeing to launch 5G technology by the second quarter of 2019 to deliver its Globe At Home broadband product line.

The telco has allocated USD850 million as capex for 2018, which will be used to expand its data network amid the rising demand for mobile data services and online streaming content. (Source: PNA)

 

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