EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session
10:24 am
SENATE
. BlLtsVdJlNDBX
S. No. 2131
Introduced by Senator Grace Poe
AN ACT
PROMOTING THE GROWTH AND DEVELOPMENT OF WIRED INFORMATION 
AND COMMUNICATIONS TECHNOLOGY (ICT) INFRASTRUCTURE IN RURAL 
AREAS, AND FOR OTHER PURPOSES
EXPLANATORY NOTE
Relative to their counterpart in urban areas, people residing in rural 
communities have long been at a disadvantage in terms of accessibility and 
connectivity to public services. The advent of technological advances even widened 
this gap between rural and urban areas as most of these advances are concentrated 
on the latter.
According to Measuring Digital Development: Facts and figures 2020, a report 
launched by the International Telecommunication Union (ITU) last November, 
worrying gaps in connectivity and Internet access persists in rural areas all over the 
world - 72% of households in urban areas have access to the Internet while only 38% 
of households have Internet access in rural areas.1
These gaps, according to the same report, are even more pronounced in least 
developed countries where 17% of the rural population live in areas with no mobile 
coverage at all and 19% is served by only a 2G network.2
In the Philippines, 84.3% of the households do not have access to the Internet. 
Consistent with the trend in global data, incidence of household with Internet in the 
country is highest in the National Capital Region (NCR) at 32.3% and lowest in rural 
areas like Region V at 5.7% and the Bangsamoro Autonomous Region in Muslim 
Mindanao (BARMM) at 5.1%.3
1 2020 November 30. Household Internet access in urban areas twice as high as in rural areas. Retrieved from 
https://www.itu.int/en/mediacentre/Pages/pr27-2020-facts-figures-urban-areas-higher-intemet-access-than-njral.aspx
2 Ibid.
3 2020 June 26. National Information and Communications Technology Household Survey (NICTHS). Retrieved from 
https://dict.gov.ph/ictstatistics/nicths2019/


The implications of this digital gap are far-reaching. Previous studies show that 
access to the Internet not only strengthens social ties and increases access to 
information; it is also directly correlated to better economic outcomes as it opens 
communities to additional employment opportunities and livelihood activities.4
The importance of having access to the Internet was even magnified when 
people were forced to stay at home, but expected to go on with work and school 
responsibilities, during the imposition of varying levels of community quarantine due 
to the COVID-19 pandemic.
The pandemic also served as a painful reminder of how far behind rural areas 
in the country are in terms of access to Internet and other information and 
communications technology (ICT) services. In the beginning of the pandemic, we were 
welcomed by news reports of teachers and students having to go to rooftops or 
elevated places to connect to the internet.
Clearly, despite the government's efforts to promote digital inclusion - through 
the Free Internet Access in Public Places Act and the streamlining of requirements for 
the construction of cell towers, among others - rural areas continue to be sparsely 
covered and are not considered as a viable business location by telecommunication 
operators.5
To address this digital divide and facilitate infrastructure rollout in rural areas, 
this bill aims to incentivize small players and/or local ICT providers to expand their 
ICT services in rural areas through tax benefits.
At a time when virtual connectivity is almost as important as having access to 
electricity, it is only appropriate that the government step up to address digital 
inequality. After all, it wiil not only help rural communities but also improve the 
chances of the country to revive its economy after the pandemic.
In view of the forgoing, the immediate passage of this biii is earnestiy sought.
^RACE POE
4 Getting Connected: The Impact of Mobile Phone Connectivity in the Rural Philippines. Retrieved from https://www.poverty- 
action.org/study/getting-connected-impact-mobile-phone-connectivity-mral-phIlippines
5 Rural Communications. Retrieved from https://www.itu.int/en/ITU-D/Technology/Pages/RuralCommunications.aspx


EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session
)
SENATE 
S. No. 2131
RECEIVED
FILED
DATE
TJME
BILLS
NDEX
Introduced by Senator Grace Poe
AN ACT
PROMOTING THE GROWTH AND DEVELOPMENT OF WIRED INFORMATION 
AND COMMUNICATIONS TECHNOLOGY (ICT) INFRASTRUCTURE IN RURAL 
AREAS, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
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Section 1. Short Title. -This Act shall be known as "Rural Wired Connectivity
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Development Act."
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Sec. 2. Declaration of Policy. -The State reaffirms its recognition of the vitai
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role of communication and information in nation-building, as stated in Article II,
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Section 24, of the Constitution. As such, it is hereby deciared the policy of the State
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to improve Internet accessibiiity in rural areas and promote digital equality.
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Sec. 3. Definition of Terms. - For purposes of this Act, the following terms shall
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mean:
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a) 
Customer Premises Equipment (CPE) - refers to service provider
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equipment set up on the physical location of the subscriber to provide the subscriber
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with information and communications technoiogy (ICT) services. A CPE may include,
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but is not limited to, a teiephone handset, modems, and router.
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b) 
Connection distance - refers to the length of wire between the facility
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and the CPE required for the smaii player to provide services to a subscriber.
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c) 
Cost of CPE- refers to the wholesale cost, as purchased by the small
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player, of the CPE that is installed at the physical location of the subscriber.


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d) Cost to connect- refers to the sum of the following costs:
i. 
Cost of the wire used to connect the facility to the CPE of the 
subscriber;
ii. 
Costs related to equipment used by the small player to ensure an 
acceptable level of quality of service, such as signal amplifiers, which are 
instailed outside of the facility and aiong the connection distance;
Hi. Costs related to the mounting ofthe wire in compliance with good 
engineering practice, such as, but is not limited to, brackets, staples, and 
hangers used along the connection distance.
iv. Costs related to the mounting of the wire in compliance with third- 
party business arrangements, such as, but not limited to, pole rental fees.
e) 
Facility- refers to a permanent structure, comprised of (a) all installed
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electrical and electronic wiring, cabling, and equipment; and (b) ali supporting
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structures, such as utility, ground network, and electrical supporting structures, from
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which wired services are deiivered to subscribers.
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f) 
Small player - refers to any entity, duiy authorized by the National
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Telecommunications Commission (NTC) to provide ICT services, including internet
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connectivity, with the following characteristics:
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i. 
Piace of business registration - a small player must be registered
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in a city or municipaiity where at least twenty-five percent (25%) of barangays
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are classified as rural by the Philippine Statistics Authority (PSA);
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ii. 
Place of operation - a small player must be operating at least one
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facility in a city or municipality where at least fifty percent (50%) of barangays
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are classified as rural by the PSA;
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iii. 
Income tax - a small player must not have been liable to pay an
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income tax greater than five hundred thousand pesos (PHP 500,000) in the
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previous year; and,
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iv. 
Number of subscribers - a smali player must not be servicing
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greater than ten thousand (10,000) subscribers nationwide.
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g) 
Wire- for purposes of this Act, "wire" refers to a physical medium, such
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as, but not limited to, copper wire, coaxial cable, or optical fiber, that is used to deliver
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ICT services.


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h) 
WiredICTservices- refers to ICT services that are delivered using wire.
ICr services that are delivered using radio frequencies without the need for a physical 
connection between the facility and the CPE are not included in this definition and are 
described as wireless ICT services.
Sec. 4. Qualification. - Subject to review by the Philippine Competition 
Commission (PCC), a small player shall be qualified to access the incentives provided 
in this Act if:
a. 
The small player is not one of several small players whose beneficial 
ownership is vested in a single person or corporation, or;
b. The small player is not a subsidiary of any corporation or conglomerate. 
Sec. 5. Access to Incentives. - A small player shall be granted an incentive for
connecting a new subscriber, provided that:
a. 
The connection distance between the facility and the subscriber shall not 
be less than fifteen (15) kilometers, or;
b. 
The barangay In which the subscriber is located is described as rural by 
the PSA.
Sec. 6. Proof of Installation. - Subject to existing regulations and evidence 
requirements of the Bureau of Internal Revenue (BIR), an Audited Financial Statement 
containing the following may be used by the small player to prove:
a. Income tax paid in the previous year;
b. Total number of subscribers;
c. Total number of new subscribers;
d. Total number of new subscribers for installations that may be granted 
incentives;
e. Total connection distance for installations that may be granted incentives;
f. Total cost to connect for installations that may be granted incentives; and
g. Total costs of the CPEs for installations that may be granted incentives. 
Nothing in this Act shall be construed as limitations to the power of the BIR and
other regulatory agencies to perform audits and other regulatory functions in pursuit 
of this Act.
Sec. 7. Incentives. - A small player may choose either, but not both, of the 
foliowing incentive schemes:


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a. 
Total of costs of CPEs of new installations, to be applied as a tax credit,
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for five years, or;
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b. 
Total of costs of CPEs and costs to connect new installations, to be
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applied as a tax credit, for three years.
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A small player may choose either, but not both, of the following taxes to which
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the tax credits may be applied:
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a. Value added tax, remitted quarterly, or;
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b. Income tax, remitted annually.
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Sec. 8. Penalties. - A small player who fraudulently accesses the incentives
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provided by this Act shall be penalized by three (3) times the total amount of tax
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credits granted.
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Sec. 9. Preparation of Revenue Memorandum Circular. -The BIR shall publish
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a Revenue Memorandum Circular for the implementation of this Act within 90 days
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from its approvai.
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Sec. 10. Separability clause. - If any portion or provision of this Act is declared
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unconstitutional, the remainder of the Act or any provisions not affected thereby shall
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remain in force and effect.
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Sec. 11. Repealing clause. -Any law, presidential decree or Issuance, executive
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order, letter of instruction, rule, or regulation inconsistent with the provisions of this
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Act is hereby repealed or modified accordingly.
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Sec. 12. Effectivity clause. -This Act shall take effect after fifteen (15) days
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following its complete publication in the Official Gazette or a newspaper of general
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circulation.
Approved,