HOUST YF REPRESENTATIVES

ECEIVED
SEVENTEENTH CONGRESS ) are, 17 AUS 2048
OF THE REPUBLIC OF THE PHILIPPINES -
First Regular Section )  TME_oior tn

= BY: uh
HOUSE OF REPRESENTATIVES

REGISTRATION LArT
House Bill NQQPB |_BWLLS V9 nel cs -avicr

Introduced by Representative Vietor A. Yap

EXPLANATORY NOTE

Existing and emerging information and communications technologies and
applications now enable broadcast, telecommunications, internet and other platforms or
networks to compete with one another, and to deliver the same products and services.
Equally important, digital delivery now empowers a single player to provide a range of
products and services over a single platform.

Historically different and separate regulatory traditions however, still prescribe
different rules for players based on the technologies they use to provide products and
services, despite their ability to effectively compete in the same markets. As such, current
laws that govern information and communications technologies are no longer appropriate,
and do not foster free and fair competition.

Addressing the legal and policy challenges posed by this new converged reality
requires a single legal framework that achieves a balance between creating the right
incentives for investment and innovation on the one hand, and enforcing necessary rules
and arrangements to promote competition and universal access to information and
communications technology, on the other.

This bill known as the “Information and Communications Technology (ICT)
Development Act of the Philippines” initiates a dynamic policy paradigm aimed at: (a)
encouraging development of ICT as an integral part of national progress; (b) fostering,
universal access to ICT; (c) ensuring a fair and competitive market for ICT service
providers with the aim of serving the consumers first; (d) regulating the radio frequency
spectrum in compliance with international law and the public weal; and among others (2)
generating reasonable government revenues without hindering private endeavour.

This is an important measure for national development and hence its
unquestionable necessity requires its immediate passage.

VICTOR A. YAP
Representative, 2nd District of Tarlac


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SEVENTEENTH CONGRESS )
OF THE REPUBLIC OF THE PHILIPPINES )
First Regular Section )

HOUSE OF REPRESENTATIVES

2876

House Bill No.

Introduced by Representative Victor A. Yap

AN ACT
TO PROMOTE AND GOVERN THE DEVELOPMENT, REGULATION AND
PROMOTION OF ACCESS TO CONVERGE INFORMATION AND
COMMUNICATIONS TECHNOLOGIES AND SERVICES IN THE PHILIPPINES

Be it enacted by the Senate and House of Representatives in Congress assembled:
ARTICLE I.
GENERAL PROVISIONS

Sec. 1. Short Title. — This Act shall be known as the “Information and Communications

Technology (ICT) Development Act of the Philippines”.

Sec. 2. Declaration of Policy. ~ Recognizing the vital role that converging information and
communications technologies play in the overall social and economic future of the Philippines,
and pursuant to the Constitutional goals for the national economy to attain a more equitable
distribution of opportunities, income, and wealth; a sustained increase in the amount of goods
and services produced by the nation for the benefit of the people; and an expanding
productivity as the key to raising the quality of life for all, the State shall:

a. Encourage the continued development and maintenance of viable, efficient, reliable and
universal information and communications technology infrastructures as vital tools to
nation-building and development;

b. Provide universal access to information and communications technologies, particularly
in unserved and underserved areas;

c. Foster a free and fair competitive environment where convergence service providers
are free to make business decisions, and to interact and compete with one another in
providing products and services; with the goal of promoting innovation, efficiency,
access and broader choices at affordable prices for the general public;

d. Administer and efficiently allocate the radio frequency spectrum in accordance with
international agreements and conventions to which the Philippines is a party, and in a

manner that best serves the public interest and the promotion of greater competition in


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the market;

e. Ensure that rates and tariff charges are fair, just and reasonable, and consistent with the
goals of fostering competition in the market;

£ Encourage and promote the continuing role of the private sector as the engine of rapid
and efficient growth in the information and communications technology sector, while
retaining the government's right and residual powers to respond appropriately where
the market fails to provide efficient access to such technologies, or to promote greater
competition in the market;

g. Create an environment of regulatory certainty and operational conditions necessary to
assure and encourage the continued local and international investment in, and
development of, the Philippines’ information and communications technology sector;

h. Establish a competition framework that is responsive to the technical and market
realities of convergence, considers the fundamental characteristics and challenges of
the information and communications technology industries of the Philippines and,
promotes and sustains the interests of the local sector and all its stakeholders;

i, Manage an orderly transition from the existing arrangements of traditional
communications industry structures to a more complex and globalized convergence
environment; and

j. Develop an effective national framework that responds to the global opportunities and
challenges of convergence, and also addresses the specific characteristics of the

Philippines market.

Sec. 3. Scope. - This Act shall apply to and be enforceable against any person or entity
engaged in the ownership, operation and provision of information and communications

technology products and services in the Philippines.

SEC. 4. Definitions. — For purposes of this Act, the following terms shalll be used:
a. “Applications service” refers to particular functions or capabilities such as voice
services, data services, content-based services, electronic commerce, and other
transmission services that are provided to end-users through one or more network
facilities and/or services;

b. “Commission” refers to the National Telecommunications Commission;

c. “communications” refers to any communications, whether between persons and
persons, things and things, or persons and things in the form of sound, data, text, visual
images, signals or any other form or any combination of those forms;

d. “communications service” refers to a service for the delivery of communications to

users by means of one or more network services and may include telecommunications


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services, subscribed television services, broadcasting services, internet services and
other value added services;

“content” refers to any sound, text, still picture, moving picture or other audio visual
representation, tactile representation or any other combination of these which is capable
of being created, manipulated, stored, retrieved and transmitted electronically;
“content applications service” refers to an applications service that provides content;
“convergence” can refer either to (a) the use of different ICT platforms or networks,
such as but not necessarily limited to telecommunications, broadcasting, electronic
commerce and data processing, to deliver the same ICT product and/or service; or (b)
the delivery of a range of ICT products and/or services by a single company using one
or several of its own ICT platforms or networks;

“Dominant Position” refers to a position of economic strength that an entity or entities
hold which makes it capable of controlling the relevant market independently from any
or a combination of the following: competitors, customers, suppliers, or consumers;
“Department” refers to the Department of Information and Communications
Technology:

“Information and Communications Technology (ICT) service providers” refers to
network facilities providers, network service providers, applications service providers,
and content applications service providers.

“mass media service” is a type of content applications service provided through the
transmission of free to air commercial radio or television messages for reception of a

broad audience in a geographic area;

‘mass media service provider” refers to an entity which is authorized to provide mass
media services;

“network facilities” means any element or combination of elements of transmission
and distribution facilities used principally for, or in connection with, the provision of
network services to the general public or to other convergence service providers, but
does not include customer equipment, or infrastructure intended to provide network
services to small and limited areas such as schools, subdivisions and other
geographically discrete areas as may be defined by the Implementing Rules and
Regulations of this Act;

“network facilities provider” refers to a public utility that owns or operates network
facilities, and who operates physical network facilities and related infrastructure and
systems, including but not limited to broadband cables, telecommunications lines and
exchanges, radiocommunications transmission equipment, mobile base stations, and
broadcasting transmission towers and equipment.

“network service” refers to a service which utilizes network facilities and provides a

platform for the delivery of communications services to provide the basic connectivity


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and bandwidth necessary to support applications services and products; and to enable
connectivity and/or transport between different networks.

p. “significant market power obligations” are obligations in relation to access, price
setting, separate accounting for interconnection or access services, publication, non-
discrimination, and/or other requirements that may be imposed by the Commission on
an entity that it determines as holding a dominant position in a relevant market.

q. “Universal Access Fund” refers to a fund established by the Department for the
purpose of ensuring the availability of a minimum set of reliable and affordable
information and communications technology products and/or services throughout the

Philippines, and particularly in unserved and underserved areas of the country.

ARTICLE Il. ICT SECTOR SERVICE PROVIDERS

Sec. 5. Categories of Service Providers. — The ICT service providers shall be comprised of
network facilities providers, network service providers, applications service providers, and

content applications service providers.

Sec. 6. Market Entry. ~ In the interest of fuller competition, transfer of technology and
knowledge, and the overall welfare of the consuming public, the entry of new ICT service
providers, including foreign participation in the ICT sector, shall be encouraged, except as

provided hereunder.

SEC. 7. Ownership and Management, ~ Network facilities providers, as public utilities, shall
be owned by citizens of the Philippines, corporations or associations, cooperatives,
partnerships or joint ventures organized under the laws of the Philippines, at least 60% of
whose aggregate common stock is owned by such citizens. The participation of foreign
investors on the governing body of any entity providing network services shall be limited to

their proportionate share in its capital

Mass media service providers shall be wholly (100%) owned by citizens of the Philippines,
corporations or associations, cooperatives, partnerships or joint ventures organized under the

laws of the Philippines.

All other service providers under this Act shall not be subject to ownership and/or management

restrictions on foreign investment.

Sec. 8. Franchise and Other Authorization Requirements. — Any network facilities provider
or mass media service provider shall first obtain a legislative franchise, certificate of public


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convenience and necessity, and other governmental authorizations as may be required by

existing laws.

No legislative franchise shall be required of other ICT service providers, except where such

providers own or operate a network facility as defined under this Act.

The Commission may identify and impose the licensing, registration and other requirements
for the different ICT services, as may be necessary in the public interest or to further promote
market competition, and adopt an administrative process to facilitate greater entry of service

providers into the ICT sector.

Sec. 9, Lease of Facilities. - Network facilities providers are obliged to provide network
services if requested by any ICT sector service provider unless: (i) the request for service is on
non-commercial terms and conditions; (ii) the provision of service is likely to cause material
damage to network facilities; or (iii) the network service provider has grounds to believe that

the provision of service would be in breach of the law.

Network service providers shall have the right to acquire network services from other network

service providers.

SEC. 10. Registration of Access Agreements — Access arrangements for network facilities

and/or services shall be negotiated between the parties.

Where the parties cannot agree upon the terms and conditions for the supply of network
facilities or services, either party may submit the matter to the Commission for resolution. The
Commission shall intervene to resolve the matter only if it is satisfied that the parties have had
a reasonable opportunity to negotiate on the terms and conditions of access and such

negotiations have failed

Where the parties reach an agreement for the provision of network facilities or network access

and/or services, such agreement shall be submitted to and registered with the Commission.

No written access agreement for the provision of listed network facilities or network services

shall be enforceable unless it has been registered with the Commission.

Sec. 11 — Residual Powers.

The Commission shall retain its residual powers to regulate
access charges, rates or tariffs where there is a lack of sufficient competition; where one of the

parties involved is a dominant entity; when ruinous competition results; or when a monopoly


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or a cartel or combination in restraint of free competition exists and the rates or tariffs are

distorted or unable to function freely and the public is adversely affected.

Sec. 12. Equality of Treatment. ~ Any advantage, favor, privilege, exemption, or immunity
granted under existing franchises, or may hereafter be granted, shall ipso facto become part of
franchises covered under this Act and shall be accorded immediately and unconditionally to
the grantees of such franchises: Provided, however, that the foregoing shall neither apply to
nor affect provisions of franchises concerning territory covered by the franchise, the life span

of the franchise, or the type of service authorized by the franchise.

ARTICLE III. COMPETITION

Sec. 13. Competition Practice. - Service providers shall not engage in conduct which has the

purpose or effect of substantially lessening competition in the ICT sector.

The Commission shall work with, and assist the Philippine Competition Commission to set and
publish guidelines which clarify the meaning of “substantial lessening of competition”. Such
guidelines may include reference to:

(a) the relevant economic market;

() global trends in the relevant market:

(©) the impact of the conduct on the number of competitors in a market and their

market shares;

(d) the impact of the conduct on barriers to entry into the market;

(e) the impact of the conduct on the range of services in the market;

(8) the impact of the conduct on the cost and profit structures in the market; and

(g) any other matters which the Commission and/or the Philippine Competition

Commission deem to be relevant.

Sec. 14. Standard Access Obligations for Facilities and Services. — A network facilities

provider and a network service provider shall provide access to their network facilities or

network services to any other network facilities provider, network service provider,
applications service provider, or content applications service provider, who makes a written
request for access to such network facilities provider or network service provider on

reasonable terms and conditions.

The access provided by one provider (“the first provider”) to another provider under
subsection (1), shall be:

(a) of at least the same or more favorable technical standard and quality as the


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technical standard and quality provided on the first provider's network facilities or
network services; and

(b) on an equitable and a non-discriminatory basis.

The Commission shall work with and assist the Philippine Competition Commission to set and

publish the appropriate penalties and fines to be imposed for any violation of this section.

Sec. 15. Non-Discrimination. — Service providers shall not discriminate between

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entities/persons who acquire network or communications services of a particular kind in
10 relation to the charges for the service, timing of the service delivery, the terms and conditions
11 on which the service is supplied and the performance conditions/quality of the service.

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13. Sec. 16. Market Dominance. — The Commission may determine that a service provider is in a
14 — dominant position in a relevant market in the ICT sector.

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16 The Commission shall work with, and assist the Philippine Competition Commission to

17 publish guidelines which clarify how it will apply the test of “dominant position” to a licensee.
18 The guidelines may specify the matters which the Commission may take into account,

19 including:

20 (a) the relevant economic market;
21 (b) global technology and commercial trends affecting market power;

22 (c) the market share of the licensee;

23 (d) the licensee’s power to make independent rate setting decisions;

24 (e) the degree of product or service differentiation and sales promotion in the market;
25 and

26 (f) any other matters which the Commission deems as relevant.

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28 SEC. 17. Significant Market Power Obligations, — The Commission, in consultation with the
29. Philippine Competition Commission, may set and direct a provider in a dominant position in a
30 relevant market to abide by a set of significant market power obligations in order to prevent or
31 mitigate the possibility of conduct that may have the effect of substantially lessening
32 competition in the ICT market. Such obligations shall take immediate effect, unless reversed or
33 subsequently disapproved by the Philippine Competition Commission.

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35 SEC. 18. Anticompetitive Conduct. ~ The Commission, upon petition by an interested party or
36 — motu propio, may order a dominant provider to cease a conduct in that market which has, or
37 may have, the effect of substantially lessening competition in any ICT sector market, and to

38 implement appropriate remedies.


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The Commission shall work with and assist the Philippine Competition Commission to publish
guidelines for this purpose, including setting appropriate penalties and fines for violations

thereof.

ARTICLE IV. UNIVERSAL ACCESS

Sec. 19. Universal Access Fund. — The Department shall establish a Universal Access Fund.
The Secretary of the Department shall issue the rules and regulations that would govern the
establishment of the Universal Access Fund, including setting the amounts to be required from
ICT sector service providers or by any other person to be contributed to the Universal Access
Fund, and any other matters related to or incidental to the establishment and operation of the

Universal Access Fund.

The Department shall appoint an independent manager of the Universal Access Fund to ensure

that the contributions will be used exclusively in accordance with the purpose of the Fund.

The Department will ensure that the books of account and other records of the Universal
‘Access Fund are independently audited each year in accordance with the purpose of the Fund
and generally accepted accounting principles, and that a report of the audit is made publicly

available.

Sec. 20. Access to Information. — Every person who is a Filipino citizen shall have the right
to, and shall, upon request, be given prompt access to any and all information and records
pertaining to the Universal Access Fund. The Department, Commission and all other
government agencies who may have been involved in any matter of relevance to the Fund,

shall make available to any requesting person all information and records pertaining to official

acts, transactions, or decisions, as well as government research data used as _a basis for UAF-
related policy or action, regardless of their physical form or format in which they are

contained and by whom they were made, for scrutiny, copying and/or reproduction

ARTICLE V. RIGHTS OF USERS

Sec. 21. Rights of End Users. ~ Notwithstanding rights provided generally under this Act or
other applicable laws, users of ICT services shall be afforded the following rights:

a. Right to change from one ICT service provider to another;

b. Right to non-discriminatory, reliable, and efficient ICT products and services

conforming to the minimum standards prescribed by the Commission;


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c. Right to choose and pay only for the ICT service(s) required;

d. Right to regular, timely, unbundled and separate service charges, accurate billing, and
efficient service:

e. Right to thorough and fair investigation, and prompt resolution by the Commission of
any valid service related complaint; and

f. Right to privacy in the use of ICT products and services.

ARTICLE V._ INSTITUTIONAL RESPONSIBILITH!

SEC. 22. Powers of the Department of Information and Communications Technology. — The
Department, in addition to its existing powers, functions and responsibilities, and in
coordination with other concerned agencies, shall:

a. Ensure that the national policies and objectives as set out in this Act are actively
pursued;

b. Develop operational and administrative arrangements to support the establishment of a
Universal Access Fund;

c. Recommend the grant of incentives to service providers in unserved areas, educational
institutions such as schools and libraries, social-service agencies, tourist destinations
such as national parks, and underserved rural areas;

d. Promote the development and transfer of technologies that allow efficient deployment
of communications services; and

e. Supervise and approve the internal restructuring of the Commission to reflect the

objectives of this Act.

Sec. 23. Powers of the National Telecommunications Commission. — The National
Telecommunications Commission shall be the principal implementing agency of this Act, and
as such, shall take the necessary measures and remove any impediments to implement the
policies and objectives set forth herein, It shall issue and adopt the rules and regulations

necessary for the effective and efficient implementation of this Act.

The Commission, in addition to its existing powers, functions and responsibilities, shall:
a. Prepare the implementing rules and regulations for this Act, and submit the same to the
Department for approval;
b. Prepare and submit an internal restructuring plan for approval by the Department, and
to enable the Commission to meet the objectives of the Act;
Ensure that all entities provide services in a non-discriminatory manner;

d. Ensure the interconnection and inter-operability of all networks;


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e. Working with the Philippine Competition Commission, formulate and implement rules
to prevent unfair competition and trade practices;

£ Require the submission by service providers of periodic and standardized reports of
finances, operations and industry development;

g. Formulate and implement rules and regulations and procedures to protect the rights of
the users;

h. Formulate and implement rules, regulations, and procedures for the prompt issuance of
authorizations, certificates, licenses and permits required of the service providers; and

i, Enforce the promulgated fines and penalties for violations of any provision of this Act.

Sec. 24. Composition of the Commission. - The Commission shall be composed of a

Chairperson and two (2) Commissioners.

The Chairperson and Commissioners shall be citizens and residents of the Philippines, of good
moral character, of recognized probity and independence and must have distinguished
themselves professionally in public, civic or academic service in any of the following fields:
economics, law, finance, commerce or engineering. They must have been in the active practice
of their professions for at least ten (10) years, and must not have been candidates for any
elective national or local office in the immediately preceding elections, whether regular or
special: Provided, That at least one (1) shall be a member of the Philippine Bar with at least
ten (10) years of experience in the active practice of law, and at least one (1) shall be an

economist.

The Chairperson and the Commissioners who shall have the rank equivalent of undersecretary

and assistant secretary, respectively, shall be appointed by the President.

Sec. 25. Term of Office. - The term of office of the Chairperson and the Commissioners shall
be seven (7) years without reappointment. Of the first set of appointees following the
enactment of this Act, the Chairperson shall hold office for seven (7) years and of the two (2)
Commissioners, one (1) shall hold office for a term of five (5) years and one (1) for a term of

three (3) years.

In case a vacancy occurs before the expiration of the term of office, the appointment to such

vacancy shall only be for the unexpired term of the predecessor.

The Chairperson and the Commissioners shall enjoy security of tenure and shall not be

suspended or removed from office except for just cause as provided by law.

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Sec. 26. Prohibitions and Disqualifications. - The Commissioners shall not, during their

tenure, hold any other office or employment. They shall not, during their tenure, directly or

indirectly practice any profession, except in a teaching capacity, participate in any business, or
be financially interested in any contract with, or any franchise, or special privileges granted by
the government or any subdivision, agency, or instrumentality thereof, including government-
owned and-controlled corporations or their subsidiaries. They shall strictly avoid conflict of

interest in the conduct of their office.

They shall not be qualified to run for any office in the election immediately succeeding their

cessation from office.

Neither shall they be allowed to personally appear or practice as counsel or agent on any
matter pending before the Commission for two (2) years following their cessation from office.
No spouse or relative by consanguinity or affinity within the fourth civil degree of any of the
Commissioners, the Chairperson and the Executive Director of the Commission may appear as
counsel nor agent on any matter pending before the Commission or transact business directly

or indirectly therein during incumbency and within two (2) years from cessation of office.

Sec. 27. Compensation and Other Emoluments for Members and Personnel of the
Commission. — The compensation and other emoluments for the members and personnel of the
Commission shall be exempted from the coverage of Republic Act No. 6758, otherwise known
as the “Salary Standardization Act”. For this purpose, the salaries and other emoluments of the
Chairperson, the Commissioners, and personnel of the Commission shall be set based on an
objective classification system, taking into consideration the importance and responsibilities
attached to the respective positions, and shall be submitted to the President of the Philippines

for his approval

Sec. 28. Quorum. — Two (2) members of the Commission shall constitute a quorum and the
affirmative vote of two (2) members shall be necessary for the adoption of any rule, ruling,

order, resolution, decision or other acts of the Commission.
SEC. 29. Executive Director and Staff. ~ The Commission shall appoint, fix the compensation,
and determine the status, qualifications, and duties of its supporting staff, which shall include

an Executive Director of the Commission.

The Executive Director shall be appointed by the Commission and shall have relevant

experience in any of the fields of law, economics, commerce, management, finance or

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engineering for at least ten (10) years. The members of the technical staff, except those

performing purely clerical functions, shall possess at least a Bachelor’s Degree.

ARTICLE VI. PENAL PROVISION

SE

accordance with due process of law and following the schedule of fines and penalties which

30. Sanctions. — Failure to comply with any provision of this Act shall be dealt with in

shall promulgated by the Commission in accordance with the provisions of this Act.

ARTICLE VII. FINAL PROVISIONS

SEC. 31. Policy Implementation. — The Commission, in consultation with the concerned
agencies and sectors, shall formulate and adopt, not later than ninety (90) days from the
effectivity of this Act, the necessary implementing rules and regulations for the

implementation of this Act, and shall prescribe appropriate penalties and sanctions therefore.

Sec.

Competition Commission shall have original and primary jurisdiction in the enforcement and

32. Relationship with Philippine Competition Commission. — The Philippine

regulation of all competition-related issues. The Commission shall work with the Philippine
Competition Commission to issue rules and regulations to promote competition, protect
consumers, and prevent abuse of market power by dominant players within the information

and communications technology sector.

Sec. 33. Transitory Provisions. — Upon the effectivity of this Act, all existing and authorized
providers of network and communications services shall be given one (1) year to comply with

the requirements of this Act.

Existing legislative franchises of telecommunications, broadcast, Cable TV, satellite TV, and
other communications service entities shall be considered as franchises for the provision of

network facility services.

Existing franchises of free-to-air broadcast entities shall be considered as franchises for the

provision of mass media services.

Sec. 34, Separability Clause. — Any portion or provisions of this Act that may be declared

unconstitutional or invalid shall not have the effect if nullifying other portions or provisions
hereof as long as such remaining portions or provisions can still subsist and be given effect in

their entirety

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Sec. 35. Repealing Clause. — Republic Act 7925, otherwise known as the Public
Telecommunications Policy Act of the Philippines, and all other laws, ordinances, rules,
regulations and other issuances or parts thereof, which are inconsistent with this Act are hereby

repealed, or modified accordingly.
Sec. 36. Effectivity Clause. — This Act shall take effect fifteen (15) days from the date of its
publication in the Official Gazette or in at least two (2) major newspapers of general
circulation, provided further that at least three (3) certified copies thereof shall have been filed

with the University of the Philippines Law Center.

Approved.

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