FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
SENATE 
Senate Bill No. 501 
10 .a -1 Ai 31 
~M;P tw: ~:-,"." 
)/ 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
The telecommunications and information services industries of the Philippines 
stand at a critical juncture today. The liberalization policies undertaken in the recent past 
have brought noticeable gains in access and improved service to consumers. 
At the same time, key developments in information technology, such as computerization 
and the digitalization of broadband services have rendered traditional service 
differentiation obsolete. Networks are now able to carry simultaneously voice, video, and 
data. The convergence of these technologies services, which is the objective of this bill, 
now enables an optimization of networks with resultant reductions in costs and new and 
increased service offerings. 
The current legislative and regulatory scheme prevents the full realization of the 
benefits currently available. R.A. 7925, drafted over five years ago and E.O. 436 "no 
longer adequately address the regulatory status of cable television, Intemet and other 
multi-media services that have now emerged as major industries. 
It is readily accepted that our information services industries would greatly benefit 
from regulatory clarity and predictability, increased foreign investment and the availability 
of new services to address identifiable social and economic goals, such as increasing 
universal access and educational television delivered via satellite to remote areas. 
The bill also supports the national goal of establishing a world-class Philippine 
Information Infrastructure interconnected to the Asia Pacific Information Infrastructure 
and the Global Information. Infrastructure by promoting the development, delivery and 
use of convergent communication technologies and services. 
The proposed legislation removes unnecessary regulatory prohibitions, is pro-
investment, while respecting Constitutional limitations on foreign investments in certain 
industries. 
There is a consensus across the affected industry sectors that this bill should be 
enacted. In light of the above explanation, we urge the early passage of this bill. 
~<rOV EJERCITO ESTRADA 
Senator 


FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
SENATE 
Senate Bill No. 501 
\0 ':0FflC50F~~ liCR£TAfIV 
) 
) 
) 
HI 
.AI.. -1 1\8 :31 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
TO ESTABLISH STRUCTURAL REFORMS IN THE INFORMATION AND 
COMMUNICATIONS SECTOR TO PROMOTE DEVELOPMENT, DELIVERY 
AND USE OF CONVERGENT SERVICES. 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Short Title. - This Act shall be known as the "Convergence 
Policy Act of the Philippines of 2010". 
SEC. 2. Scope and Limitations. -This Act shall apply to application 
services and network services as defined herein. In does not deal with the 
regulation of the content provided by such services. 
SEC. 3. Definitions - For purposes of this Act, the following terms shall: 
(a) Convergence - the integration of two or more communications services in 
one common network; technologies moving together towards a common 
point and elimination of differences between the provisioning of video, 
audio and data, using digital and other emerging technologies; the coming 
together of two or more disparate disciplines or technologies; the ability of 
different network platforms to carry any and all kinds of services, and the 
coming together of consumer devices such as, but not limited to the 
telephone, television and, personal computer. 
(b) Audio communication services -
services provided through the 
transmission and reception of sound signals including voice. 
(c) Data communication services -
services provided through the 
transmission and reception of fixed images and or texts, including 
alphanumeric and special characters using wire or wireless means. 
(d) Network - a physical infrastructure comprising of two or more sets of 
modes and links capable of connecting two or more defined points. 
(e) Network .service - a service that provides connectivity between and 
among application service providers and end-users. 


(f) Application Service - a service that provides audio, video, data, or any 
combination or enhancements thereof that are captured, processed, 
stored and communicated through electronic means. 
(g) Closed-user group - a lawfully organized group of individuals having its 
own communication network within a limited contiguous geographical area 
such as a building, residential subdivision, industrial park, economic zone, 
commercial complex and unserved barangays. 
SEC. 4. Declaration of National Policies - The development and delivery of 
application services converged through a single network shall be pursued in 
accordance with the following national policies: 
a. To enhance the vital role of communications and information in nation-
building and to the economic development and security of the Philippines; 
b. To respond to technological advances that made possible the provisioning 
of applications communications services converged through a single 
network thus allowing a more efficient utilization of network facilities. 
c. To promote the development and 
use of increased bandwidth, 
transmission capacity, and advanced communication networks. 
d. To facilitate, contribute and expedite the goal of the government in 
achieving universal access and thus strengthen the economic, educational 
and cultural, social and political fabric of the Philippines. 
e. To 
attract 
investments 
in 
the 
building 
of 
telecommunications 
infrastructures and In the provisioning of application services subject to 
laws on foreign ownership limitations; and 
f. To provide applications services users the effective power to choose 
among convergent applications services providers. 
SEC. 5. Policy Objectives - Pursuant to the above national policies, this Act 
is enacted to address certain legal and regulatory issues arising from the 
technological advances rendering possible the delivery of all kinds of applications 
services through a single network, including but not limited to, the ownership and 
management of application service providers and network service providers, the 
need for a legislative franchise and other governmental authorizations, consumer 
rights, fair competition, rights and obligations of service providers, and powers of 
concerned government agencies. 
SEC. 6. Ownership and Management - Application Service Providers shall 
be subject to rules and restrictions on foreign ownership, control and operation 
as provided under the Constitution and existing laws. In any case where different 
rules and restrictions apply to the individual communications services converged, 
that which is most restrictive on foreign ownership, control and operation shall 
apply. 
Network Service Providers shall be open to ownership, control and 
operation by citizens of the Philippines and by corporations or cooperatives 
organized under Philippine laws at least sixty percent (60%) of the capital of 
which is owned and controlled by citizens of the Philippines. 
Persons or entities acting both as Applications Service Providers and 
Network Service Providers shall be subject to rules and restrictions on foreign 
ownership, control and operation as provided under the Constitution, this Act and 
other existing laws. In any case where different rules and restrictions apply to the 
individual Applications Services converged and to those provided under this Act 


in the case of Network Services, that which is most restrictive on foreign 
ownership, control and operation shall apply. 
The participation of foreign nationals in the governing body of any 
Applications Service Provider and/or Network Service Provider shall be limited to 
their proportionate share in its capital. 
SEC. 7. Franchise and Other Government Authorizations - All Network 
Service Providers that shall operate on a nation-wide or region wide basis shall 
obtain a legislative franchise, while all other Network Service Providers shall 
obtain a local franchise only from the appropriate local government units wherein 
they shall operate; Provided, that all Network Service Providers shall also secure 
all such certificates, permits, licenses and authorizations as may be required by 
the National Telecommunications Commission and other relevant agencies 
under such rules and regulations existing and/or to be issued by such agencies. 
SEC. 8. Lease of Facilities - All network service providers may lease or 
sublease capacity to applications service providers other network access service 
providers. 
SEC. 9. Non-Discriminatory Service - All network service providers shall 
provide their services to all application service providers and other network 
service providers in a non-discriminatory manner. 
SEC. 10. Rates and Tariffs - Network services and applications services 
shall be individually priced. The aggregate price of two or more converged 
applications services shall be less than the sum of the individual prices of the 
applications services availed of.' Prices shall be based on the prevailing cost of 
providing the service/so 
An entity providing both network service and application services shall 
maintain a separate book of accounts for each service. 
Any entity providing network service shall apply uniform rates to all 
applications service providers, including those affiliated with such entity, and to 
all other network service providers. 
The Commission shall establish rates and tariffs, which are fair and 
reasonable and which provide for fair and just competition for regulated services. 
The Commission shall exempt, pursuant to an application, any specific 
convergent applications service and network service from its rate or tariff 
regulations if the service has sufficient competition to ensure fair and reasonable 
rates or tariffs. The Commission shall, however, retain its residual powers to 
regulate rates or tariffs when ruinous competition results or when a monopoly 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. In such cases, the Commission shall either establish a floor or ceiling 
on the rates or tariffs. 
SEC. 11. Equity 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 to the grantees of such franchises insofar as such are relevant 
and applicable: 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 or service authorized by the franchise. 


· . 
SEC. 12. Rights of User - Users' rights shall be recognized including the 
following: 
a. Right to change from one convergent applications service provider 
or network service provider to another. 
b. Right to provide accessory facilities to their customer premises 
equipment (CPE) in addition to the facilities provided by the service 
provider under this Act, to enable him to access competitive 
convergent communication services. 
c. Right to form closed-user groups and to connect their networks with 
any duly authorized, network service providers operating therein as 
subscribers there to. 
d. Right to 
non-discriminatory, 
reliable, 
and 
efficient services 
conforming 
to 
the 
minimum 
standards 
prescribed 
by the 
Commission. 
e. Right to choose and pay only for the service(s) availed of. 
f. 
Right to regular, timely, and accurate billing and courteous and 
efficient service. 
g. Right to thorough and fair investigation and prompt resolution by 
the Commission of any service-related complaint. 
, 
SEC. 13. Rights of Service Providers - Service Providers shall have the 
following rights: 
a. Right to prompt resolution by the Commission of any petition for 
service rates adjustments. 
b. Right to demand its users the connection of only typed approved CPEs 
by the NTC or duly recognized NTC accreditation bodies. 
c. Right to prompt interconnection in a non-discriminatory manner at just 
and reasonable rates and conditions, and prompt resolution of any 
disputes pertaining thereto. 
SEC. 14. Department of Transportation and Communications (DOTC) 
-
The Department, 
in 
addition to its existing powers, functions and 
responsibilities, and in coordination with other concerned agencies, shall 
pursuant to this Act: 
a. Ensure that the policies and objectives of this Act are fully adhered to; 
b. Recommend incentives to convergent applications services providers 
and network service providers in unserved areas, educational 
institutions, libraries, social-service agencies, tourist destinations such 
as national parks, and under served rural areas. 
c. Promote the development and transfer of technologies that allow 
convergence of applications services. 
SEC. 15. National Telecommunications Commission (NTC) -
The 
Commission in addition to its existing powers, functions and responsibilities, 
shall, pursuant to this Act: 
a. Ensure that all entities provide services in a non-discriminatory 
manner. 
b. Ensure the interconnection and inter-operability of all networks. 
c. Formulate and implement a numbering or addressing system to 
facilitate access to communication services. 
d. Formulate and implement rules to prevent unfair competition and trade 
practices. 


e. Formulate and implement rules and regulations and procedures to act 
upon application for exemption from regulation of rates and tariffs. 
f. 
Require the submission by the network service providers and 
application service providers of periodic reports of finances and 
operations. 
g. Prescribe and collect fees and charges to cover reasonable costs and 
expenses for the regulation and supervision of network service 
providers and application service providers. 
h. Formulate and implement rules and regulations and procedures to 
protect the rights of the service providers and users. 
i. 
Formulate and implement rules, regulations, and procedures for the 
prompt issuance of authorizations, certificates, licenses and permits for 
the provision of services under this Act. 
j. 
Promulgate the schedule of fines and penalties to be issued for 
violations of any provision of this Act. 
SEC. 16. Sanctions - Failure to comply with any provision of this Act shall 
be dealt with in accordance with the schedule of fines and penalties to be 
promulgated and issued by the NTC. 
SEC. 17. Separability Clause - Any portion or provisions of this Act that 
may be declared unconstitutional or invalid shall not have the effect of nullifying 
other portions or provision hereof as long as such remaining portions or 
provisions can still subsist and be given effect in their entirety. 
SEC. 18. Repealing Clause - All laws, ordinances, rules, regulations and 
other issuances or parts thereof, which are inconsistent with this Act are hereby 
repealed or modified. Nothing in this Act shall be construed as to exempt an 
entity from a provision of any laW relevant to any of services converged in its 
business by reason solely of the fact that such service is not being offered as a 
separate service but as service converged with another. 
SEC. 19. Effectivity- his Act shall take effect fifteen (15) days from the 
date of its publication in the Official Gazette or in at least two (2) newspapers of 
general circulation. 
Approved,