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Will Moves to Lift Foreign Restrictions Add to Delays in the Selection of 3rd Telco Player?

The DICT is eyeing end-August but also wants to liberalize telecoms to attract more foreign contenders
By Elyssa Christine Lopez |

 

 

Already running late—well past President Rodrigo Duterte’s initial March deadline—the selection of a third telco player is now being pushed back to end-August or early September, according to the latest timetable of the Department of Information and Communications Technology (DICT).

 

Nonetheless, the agency is promising that the terms of reference (TOR) as well as the selection and bidding process for the frequencies to be used by the new telecommunications player will likely be completed before Duterte delivers his third State of the Nation Address on July 23.

 

“The bidding documents can be perfected by the second week of July, then we’ll give the proponents two months to fill them up. Therefore by the end of August we will award them [the new telecommunications player],” said DICT Officer in Charge Eliseo Rio in a televised interview on ABS-CBN News Channel on May 2.

 

This is the third time the government pushed back its deadline.

 

In several interviews earlier, Rio said the DICT aims to finish the TOR by the end of April and will name the new telecommunications player before Duterte delivers the SONA. This came after the government missed the first deadline set by President Rodrigo Duterte, who wanted to have a new telco player by the first quarter of 2018.

 

The Duterte administration is keen to attract a third telco player to compete against the duopoly of Globe Telecom and PLDT Inc. It is hoping greater competition would lead to improvements in telecommunications services, particularly in boosting internet speeds and reducing costs.

 

But the government’s efforts to liberalize the telecommunications industry and lift foreign ownership restrictions—aimed at attracting more foreign telecoms groups to bid to become the third telco player—could also potentially delay the process. 

 

Currently, foreign investors are not allowed to own more than 40 percent of a company engaged in telecommunications operations. Under the Philippine constitution, the operation of a public utility is restricted to companies that are 60 percent Filipino-owned. Public utilities include telecommunications, electricity distribution and transmission, water distribution and transportation among others.

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“Some infrastructure has to be in place and increasing the foreign ownership are vital factors [for other foreign players] in having enough interest to really compete against Smart and Globe,” Rio said. “If they amend that law so telecommunication can be de-categorized as public service [instead of public utility] that would more or less open the doors for bigger foreign ownership.”

 

Senate Bill 1754, one of the proposed laws that seek to amend the Public Service Act, aims to remove telecommunications among the industries considered as public utilities. If passed into law, foreign companies can own more than 40 percent of companies engaged in the telecommunications sector without the need for amending the constitution.

 

Eliseo admitted that the oversight committee in charge of selecting the third telco player may have to wait for Congress to pass the law liberalizing the telecoms sector to attract more foreign groups. While they are not necessarily keen on full ownership, he said that foreign telecom groups want greater controlling rights.

 

“The objective here is not just [have] a telco who can come in but really compete with Globe and Smart,” he said. “That means that they [the new player] have to have technical and financial clout that could make them competitors.”

 

While the DICT has not officially named the companies that have been eyeing to become the country’s new telco player, several firms have been brought up in news reports. These include NOW Corp., Philippine Telegraph and Telephone Co. (PT&T), Converge ICT Solutions Inc., EasyCall Communications Philippines Inc. (ECP) and Transpacific Broadband Group International Inc. (TBGI). 

 

 

Related story: Who are the PH Companies Eyeing to Launch the Country’s Third Telco Player? 

 

 

Rio also said the third telecommunications player has the advantage to be the first to introduce 5G or fifth generation mobile network in the country, a technology that may be locally available in three years. According to a report by the Korea Times, 5G’s data speed can reach up to 20 gigabytes per second (Gbps).

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“It would be reasonable to think that 5G will be available in a commercial basis three years from now in the Philippines. The third telco player that we are trying to come up here, we are giving them the first shot on 5G,” he said.  

 

 

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

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