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Can Gov’t Take Frequencies From Globe and PLDT to Give These to the 3rd Telco Player?

Policy makers admit available spectrum is not enough to make new entrant competitive
By Elyssa Christine Lopez |

 

 

 

Hopes for the entry of a new telecommunications player to compete with the duopoly of PLDT Inc. and Globe Telecom surged after President Rodrigo Duterte instructed regulators late last month to ensure that “the third telco player should be up and about by the first quarter of 2018.”

 

Many Filipinos are pinning their expectations for an improvement in telecommunications service on the entry of a third player. Internet in the Philippines has consistently been ranked as one of the slowest yet most expensive in the world. In the latest State of the Internet report by cloud service provider Akamai Intelligent Platform, the country’s connection speed was found to be the slowest in all of Asia Pacific at 5.5 Mbps during the first quarter of 2017.

 

But as the deadline nears, and the expected third telco player has yet to appear and formally start the process of applying for licenses, government officials have begun voicing concerns that perhaps the competitive odds seem stacked against the new entrant.

 

A member of the Philippine Competition Commission (PCC) said the limited telecommunication frequencies outside the control of PLDT and Globe may not be enough for a potential third player to compete against the two industry giants, according to ABS-CBN News Channel (ANC) in a report on January 18.

 

“(The frequencies are) sufficient for purposes of starting the provision of telco services,” said PCC member Johannes Bernabe in a clip of the interview aired by ANC.  “Whether or not it will allow you to expand and grow to pose a competitive constraint to PLDT and Globe, that’s another question. They [the third player] may require more frequencies to be surrendered by PLDT and Globe.”

 

The commission previously said that only about 12.8 percent of the country’s total spectrum may be available for use by the third telecommunications player as the rest is held by PLDT, Globe and other smaller telecommunications companies, according to a BusinessWorld report.

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Under current regulations, the government has limited options to reassign frequencies held by operating telecommunications companies. It can only compel companies to give up frequencies that have remained unutilized for the longest time.

 

In 2017, the Department of Information and Communications Technology (DICT) released a list of unused frequencies and warned its owners that these properties may be recalled by the government.

 

According to the National Telecommunications Commission (NTC), the unused frequencies are held by Sears Telecoms (410 MHz); Teodoro N. Romasanta, Inc. and Twilight (700 MHz); RBC, Cagayan Economic Zone Authority, Uniden Philippines, Inc., Liberty Broadcasting Network, Inc. (LBNI), Worldwide Comms., Inc., (800 MHz) and Bayantel (2500 MHz).

 

Easy Call Communications Philippines, Inc.; AZ Comm; Multimedia Telephony, Inc., Broadband Everywhere Corp.; and Radio Marine Network, Inc. (3400 MHz); and TN Rosanna and the Metropolitan Manila Development Authority (MMDA) (10 Gigahertz) also own unused frequencies, according to NTC data.

 

The PCC itself tried to block PLDT and Globe’s acquisition of San Miguel Corp’s telecommunications assets, including companies that hold the coveted 700mHZ spectrum, said to be essential for 4G wireless data service, while it reviewed the competitive implications of the deal signed in 2015. However, the Court of Appeals has issued an injunction preventing it from reviewing the acquisition while it hears the case brought by the two telcos questioning the PCC’s jurisdiction.

 

Other government officials admit that the President or Congress may need to come up with new regulations or laws to empower regulators to redistribute telecom frequencies.

 

“Give the government some time to have a more equitable frequency distribution policies or laws and that will take two to three years,” said Eliseo Rio, secretary of the DICT, according to the ANC report.

 

Bernabe added that the government would have to study how much frequencies should a potential third telco player really own to properly compete in the local industry. “We’re not only talking about internet, we’re talking about SMS, voice telephony and what frequencies are available in each of those bandwidths,” he said.

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Elyssa Christine Lopez is a staff writer for Entrepreneur PH. Follow her on Twitter @elyssalopz

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