Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Eighteenth Congress
First Regular Session

64
HOUSE BILL NO.

INTRODUCED BY: HON. JERICHO JONAS B. NOGRALES

EXPLANATORY NOTE

This proposed law seeks to extend ABS-CBN Convergence, Inc.’s (formerly, Multi-Media
Telephony, Inc.) legislative franchise for another twenty-five (25) years.

‘ABS-CBN Convergence, Inc. was incorporated on September 20, 1993. As of 2014, ABS-
CBN Convergence, Inc. operates both a Code Division Multiple Access (CDMA) 2000 1Xrtt/1x
Evolution Data Only (EV-DO) Network for fixed and mobile voice/high-speed data services (CDMA
Business).

On April 23, 2002, the National Telecommunications Commission (NTC) granted ABS-CBN
Convergence, Inc. a Certificate of Public Convenience and Necessity (CPCN) to procure, install,
and maintain an Internal Protocol Access Note for a period co-terminus with the life of its
legislative franchise under Republic Act No. 8332, subject to certain conditions set by the NTC.
The CPCN will expire in 2022. Furthermore, on the same date, the NTC granted ABS-CBN
Convergence, Inc., provisional authority (PA) to offer Local Exchange Carrier Service using its duly
authorized broadband network covering 53 cities and 37 municipalities nationwide. In October
2005, ABS-CBN Convergence, Inc., was awarded a Public Mobile Telecommunications Systems
(PMTS) license by the NTC allowing ABS-CBN Convergence, Inc., to introduce mobile phone
service.

In 2013, ABS-CBN Convergence, Inc., expanded its telecommunications business via a
network sharing agreement with Globe Telecom, Inc. (Globe). The groundbreaking partnership
bridges two separate industries — it enables ABS-CBN Corporation to deliver its content and offer
traditional telecommunication services on mobile devices. Through the network-sharing
agreement, Globe provides capacity and coverage on its existing cellular mobile telephony

network to ABS-CBN Convergence, Inc., on a nationwide basis.


ABS-CBN Convergence, Inc., sees a lot of opportunities in the wireless market, especially
in the wireless broadband segment. The next phase in competition in the telecommunications
industry lies in broadband internet service. Wireless broadband service is seen by ABS-CBN
Convergence, Inc, as the preferred choice of service due to its ease in use and mobility. As such,
‘ABS-CBN Convergence, Inc. decided that it will expand its current wireless business by
introducing more products and partnerships.

The extension of ABS-CBN Convergence, Inc.'s franchise will allow ABS-CBN Convergence,
Inc., to continue providing various telecommunications services throughout the country at rates
affordable to the consuming public. It ensures that there is at least a third player in the
telecommunications industry other than Globe Telecoms Inc. and Smart Communications.
Extending ABS-CBN Convergence, Inc.'s franchise will also ensure the uninterrupted and
improved delivery of its service to the Filipino people.

Itis to the best interest of the State and public that ABS-CBN Convergence, Inc.'s franchise
be extended.

In view of the foregoing, the passage of this measure is earnestly sought.

JERIGHO JONAS B. NOGRALES


Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon City

Eighteenth Congress
First Regular Session

3064
HOUSE BILL NO.

INTRODUCED BY: HON. JERICHO JONAS B. NOGRALES

AN ACT RENEWING FOR ANOTHER TWENTY- FIVE (25) YEARS THE FRANCHISE GRANTED TO
MULTI-MEDIA TELEPHONY, INC (PRESENTLY KNOWN AS ABS-CBN CONVERGENCE, INC.) UNDER
REPUBLIC ACT NO. 7908, ENTITLED “AN ACT GRANTING THE MULTI-MEDIA TELEPHONY
INCORPORATED, A FRANCHISE TO CONSTRUCT, ESTABLISH, OPERATE AND MAINTAIN RADIO
PAGING SYSTEM IN THE PHILIPPINES AND FOR OTHER PURPOSES,” AS AMENDED BY REPUBLIC
ACT. NO. 8332

Be it enacted by the Senate and the House of Representatives of the Philippines in Congress
assembled:

Section 1. Nature and Scope of Franchise ~ Subject to the provisions of the Philippine
Constitution and applicable laws, rules and regulations, the franchise granted to Multi-Media
Telephony, Inc. (presently known as ABS-CBN Convergence, Inc.) hereunder referred to as the
grantee, its successors or assignees, to construct, establish, install, maintain, lease, purchase,
operate and carry on the business of providing telecommunications, including electronic
telecommunications or electronic communications service throughout the Philippines and
between the Philippines and other countries and territories, including outer space, as public
interest may warrant, for public domestic and international telecommunications is hereby
extended for twenty-five (25) years from effectivity of this Act. For this purpose, the grantee is
hereby granted the right to construct, establish, install, maintain, lease, purchase and operate
the corresponding transmitting and receiving stations, satellites, lines, systems, networks,
international gateways, local exchanges, and platforms as it may consider necessary, convenient,
or reasonable.

In this Act, the term “telecommunication” shall include “electronic communication”. In addition,
the following terms shall have the meanings set forth herein:

“Electronic communications network” shall mean: (a) a transmission'system for conveyance, by
use of electrical magnetic or electro-magnetic energy, of signals of any description; and (b) any
of the following as are used by the person providing the system and in association with it, for


conveyance of the signals: (1) apparatus comprised in the system; (2) apparatus used for the
switching and routing of the signals; and (3) software and stored data.

“Electronic communications service’ shall mean a service consisting in, or having as its signals. It
includes wire and/or wireless telecommunications systems including international and local
exchange earner (LEC), international and domestic gateway facility, international and domestic
submarine cable landing stations, mobile cellular, copper, fiber optic, coaxial cable, satellite
transmit and receive systems, switches, and their value-added services such as the transmission
of voice, data, facsimile, control signs, audio and video, information services and all other
telecommunications systems technologies as are at present available or will be made available
through technological advances or innovations in the future.

Section 2. Manner of Operation of Stations or Facilities. The stations or facilities of the grantee
shall be constructed and operated in a manner as will, at most, result only in the minimum
interference on the wavelength or frequencies of the existing stations or other stations which
may be established by law, without in any way diminishing its own right to use its selected
wavelength or frequencies and the quality of transmission or reception thereon as should
maximize rendition of the grantee’s services and/or the availability thereof.

Section 3. Authority of the National Telecommunications Commission. - The grantee shall
secure from the National Telecommunications Commission, hereinafter referred to as the
Commission, a certificate of public convenience or the appropriate permits and licenses for the
location, construction, installation and operation of its telecommunication systems. In issuing the
certificate, the Commission shall have the power to impose such condition relative to the
construction, operation, maintenance, or service level of the telecommunication system. The
Commission shall have the authority to regulate the construction and operation of its
telecommunication systems. The grantee shall not use any frequency in the radio spectrum
without having been authorized by the Commission. Such certificate shall state the areas covered
and date the grantee shall commence the service. The Commission, however shall not
unreasonably withhold or delay the grant of any such authority, permits or licenses.

Section 4. Responsibility to the Public. - The grantee shall conform to the ethics of honest
enterprise and shall not use its station for obscene or indecent transmission or for dissemination
of deliberately false information or willful misinterpretation, or assist in subversive or
treasonable acts.

The grantee shall provide basic or enhanced telephone service in any municipality in the
Philippines where it has an approved certificate of public convenience for the establishment,
‘operation, and maintenance of a local exchange service, without discrimination to any applicant
therefor, in the order of the date of their applications, up to the limit of the capacity of its local
telephone exchange, and should the demand for the telephone service at any time increase
beyond the capacity thereof, the grantee shall increase the same to meet such demand:
Provided, That in case the total demand to be satisfied by the expansion is less than the smallest
viable local exchange available in the market as determined by the Commission, the grantee shall
not be obliged to furnish said service, unless the applicant for telephone service defrays the


actual expenses to the installation of the telecommunication apparatus necessary for such
services and in such case the Commission may extend the time within which the grantee shall
furnish such service.

The grantee shall operate and maintain all its stations, lines, cables, systems, and equipment for
the transmission and reception of messages, signals and pulses in a satisfactory manner at all
times, and as far as economical and practicable, modify, improve or change such stations, lines,
cables, systems and equipment to keep abreast with the advances in science and technology.

Section 5. Rates for Services. — The charges and rates for telecommunications services of the
grantee, except the rates and charges on those that may hereafter be declared or considered as
nonregulated services, whether flat rates or measured rates or variation thereof, shall be
subjected to the approval of the Commission or its legal successors. The rates to be charges by
the grantee shall be unbundled, separable, and distinct among the services offered and shall be
determined in such a manner that regulated services do not subsidize the unregulated ones.

Section 6. Right of Government. — A special right is hereby reserved to the President of the
Philippines, in times of war, rebellion, public peril, calamity, emergency, disaster, or disturbance
of peace and order, to temporarily take over and operate the stations, transmissions, facilities,
or equipment of the grantee, to temporarily suspend the operation of any station, transmitter,
facility, or equipment in the interest of public safety, security and public welfare, or to authorize
the temporary use and operation thereof by any agency of the government, upon due
compensation to the grantee, for the use of said stations, transmitters, facilities, or equipment
during the period when the franchise shall be operated.

The radio spectrum is a finite resource that is a part of the national patrimony and the use thereof
is a privilege conferred upon the grantee by the state and may be withdrawn anytime, after due
Process.

Section 7. Term of Franchise. ~ The franchise shall be extended and in effect for a period of
twenty-five (25) years from the date of the effectivity of this Act, unless sooner revoked or
cancelled. In the event the grantee fails to operate continuously for two (2) years, this franchise
shall be deemed ipso facto revoked.

Section 8. Acceptance and Compliance. ~ Acceptance of this franchise shall be given in writing
within sixty (60) days from the effectivity of this Act. Upon giving such acceptance, the grantee
shall exercise the privileges granted under this Act. Non acceptance shall render the franchise
void.

Section 9. Bond. -The grantee shall file a bond issued in favor of the National Telecommunication
Commission, which shall determine the amount, to guarantee the compliance with and
fulfillment of the conditions, under which this franchise is granted. If after five (5) years from the
date of the approval of its permit by the Commission, the grantee shall have fulfilled the same,


the bond shall be cancelled by the Commission. Otherwise, the bond shall be forfeited in favor
of the Government and the franchise ipso facto revoked.

Section 10. Right of Interconnection. — The grantee is hereby authorized to connect or demand
connection of its telecommunications systems to any other telecommunications systems
installed, operated and maintained by any other duly-authorized person or entity in the
Philippines for the purpose of providing extended and improved telecommunications service to
the public under such terms and conditions mutually agreed upon by the parties concerned and
the same shall be subjected to the review or modification of the Commission.

Section 11. Tax Provision. — The grantee, its successors or assigns, shall be liable to pay the same
taxes on their real estate, buildings and personal property, exclusive of this franchise, as other
Persons or corporations are now or hereafter may be required by law to pay. In addition, thereto,
the grantee, its successors or assigns, shall pay the value-added tax under Republic Act No. 7716
or a franchise tax of three (3%) percent per annum or at such percentage as may be prescribed
by law, on all gross receipts of its telecommunications business transacted under this franchise,
whichever is higher: Provided, That the grantee, its successors or assigns, shall continue to be
liable for income taxes payable under Title II of the National Internal Revenue Code pursuant to
Section 2 of Executive Order No. 72, unless the latter enactment is amended or repealed, in which
case the amendment or repeal shall be applicable thereto.

The grantee shall file the return with and pay the taxes due thereon to the Commissioner of
Internal Revenue or his duly authorized representatives in accordance with the National Internal
Revenue Code and the return shall be subject to audit by Bureau of Internal Revenue.

Section 12. Gross Receipts. - The grantee, its successors or assigns, shall keep a separate account
of the gross receipts of the business transacted by it and shall furnish the Commission on Audit
and the National Treasury a copy of such account not later than the thirty-first day of January of
each year, for the preceding twelve (12) months.

Section 13. Books and Accounts. - The books and accounts of the grantee, its successors or
assigns, shall always be open to the inspection of the Commissioner on Audit or his duly
authorized representatives, and it shall be the duty of the grantee to submit to the Commission
on Audit, two (2) copies of the quarterly reports on the gross receipts, the net profits and the
general condition of the business.

Section 14. Warranty in favor of National and Local Government. - The grantee shall hold the
national, provincial, city, and municipal government of the Philippines harmless from all claims,
account, demands or actions arising out of accidents or injuries, whether to property or to
persons, caused by the construction or operation of the stations, transmitters, facilities, and
equipment of the grantee.

Section 15. Sales, Lease, Transfer, Usufruct, etc. ~The grantee shall not lease, transfer, grant the
usufruct of, sell nor assign this franchise or the right and privileges acquired thereunder to any


person, firm, company, corporation or other commercial or legal entity, nor merge with any
corporation or entity, nor shall the controlling interest in the grantee be transferred, whether as
a whole or in parts and whether simultaneously or contemporaneously, to any such person, firm,
company, corporation or entity without the prior approval of the Congress of the Philippines. Any
person or entity to which this franchise is sold, transferred or assigned, shall be subject to the
same conditions, terms, restrictions, and limitations of this Act.

Section 16. Dispersal of Ownership. - In accordance with the constitutional provisions to
encourage public participation in the public utilities, the grantee shall offer at least thirty per
centum (30%) of its outstanding capital stocks or a higher percentage that may hereafter be
provided by law in any securities exchange in the Philippines within five (5) years from the
renewal of its franchise; Provided, That in cases where public offer of shares is not
applicable/feasible, other methods of encouraging public participation by citizens and
corporations operating public utilities must be implemented. Noncompliance therewith shall
render the franchise ipso facto revoked.

Section 17. Equality Clause. — Any advantage, favor, privilege, exemption, or immunity granted
under existing franchise, or which may hereafter be granted upon prior review and approval of
Congress, shall become part of this franchise and shall be accorded immediately and
unconditionally to the herein grantee: Provided, That the forgoing shall neither apply to nor
affect provisions of telecommunications franchises concerning territory covered by the franchise,
the lifespan of the franchise or the type of service authorized by the franchise.

Section 18. Separability Clause. — If any of the sections or provisions of this Act is held invalid, all
the other provisions not affected thereby shall remain valid.

Section 19. Repealability and Nonexclusivity Clause. — This franchise shall be subject to
amendment, alteration, or repeal by the Congress of the Philippines when the public interest so
requires and shall not be interpreted as an exclusive grant of the privileges herein provided for.

Section 20. Reportorial Requirement. — The grantee shall submit an annual report to the
Congress of the Philippines on its compliance with the terms and conditions of its franchise and
on its operations within sixty (60) days from the end of every year.

Section 21. Effectivity Clause. — This Act shall take effect fifteen (15) days from the date of its
publication in at least two (2) newspaper of general circulation.

Approved.