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Republic of the Philippines [6 RECEIVED
HOUSE OF REPRESENTATIVES — [DATE September 13, 20224
— * TIME 5:02pm
NINETEETH CONGRESS Xe, BY i
First Regular Session 9

HOUSE BILL No.4775

Introduced by REP. REX GATCHALIAN

AN ACT
PROMOTING CONSUMER CHOICE AND FOSTERING COMPETITION IN THE
TELECOMMUNICATIONS INDUSTRY BY MANDATING THE UNLOCKING OF
MOBILE COMMUNICATION DEVICES

EXPLANATORY NOTE

‘Switching to another service provider for improved wireless services and better
options is a consumer right. However, the exercise of this right is impaired by public
telecommunications entities when they lock mobile communication devices to their
respective networks. Locking these devices makes it difficult for consumers to take
advantage of competitive and better offers available in the market because the
process of unlocking mobile communication devices normally voids the devices’
warranty.

In addition, locking not only deprives consumers the easy movement - using
the same device — from their current telecommunications service provider to the one
that best fits their needs and preferences. It also limits competition between and
among industry players who are able to reduce subscriber turnover by using device

locking as a deterrent, or even an irritant, to subscribers from switching providers.

While the National Telecommunications Commission has mandated the
unlocking of mobile phones and devices under Memorandum Circular No. 01-05
2019 dated 31 May 2019, its applicability is limited to (1) postpaid devices which
have complied with the applicable postpaid service contract; and (2) prepaid devices
which have complied with the usage requirements or agreed terms and conditions.


This legislative proposal mandates the unlocking of mobile wireless devices
within definitive six- and nine-month periods from the date of purchase of the device.
Under this bill, the eligibility of such devices for unlocking does not depend on the
imposition of different lock-in periods that unduly binds the consumer to the public

telecommunications entity that no longer provides quality services.

It also mandates the unlocking of subsidized units or those mobile wireless
devices with accompanying subscription contracts before the lapse of the mandated
nine-month period - on-demand for a fixed and reasonable unlocking fee without
voiding their warranties. This allows consumers to effectively have their devices
officially unlocked at any time without having to resort to third parties for unlocking
and risking possible warranty issues.

Furthermore, the bill requires every public telecommunications entity or
retailer of mobile wireless devices to provide every consumer sufficient information
on (1) official channels for unlocking mobile wireless devices without voiding their
warranties; and (2) the manner, method or fee associated with the process of
unlocking these devices.

Existing business services and products affected by the implementation of this
Act are given a six- (6) month transitory period from the effectivity of the
implementing rules and regulations to comply with its requirements.

This legislation will contribute to the evolution of a more dynamic marketplace
in the telecommunications industry where consumer choice is dictated by quality,

price, and best value for money.

In view of the foregoing, approval of this bill is earnestly sought.

IN. REX GATCHALIAN
Representative
14 District, Valenzuela City


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Republic of the Philippines
HOUSE OF REPRESENTATIVES,

NINETEENTH CONGRESS
First Regular Session

HOUSE BILL No.4775

Introduced by REP. REX GATCHALIAN

AN ACT
PROMOTING CONSUMER CHOICE AND FOSTERING COMPETITION IN THE
‘TELECOMMUNICATIONS INDUSTRY BY MANDATING THE UNLOCKING OF
MOBILE COMMUNICATION DEVICES

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

SECTION 1. Short Title. - This Act shall be known as the “Network Freedom
Act.”

SEC.2. Declaration of Policy. - The State recognizes the vital role of
information and communications technology in nation-building. Under Article 2,
Title I of Republic Act No. 7394, otherwise known as the “Consumer Act of the
Philippines,” the State shall protect the interests of the consumer, promote his or her
welfare, and establish the standards of conduct for business and industry. Towards
this end, the State shall implement measures to achieve the following objectives: (1)
protect the consumer against deceptive, unfair, and unconscionable sales act and
practices; and (b) provide information and education to facilitate sound choice and

proper exercise of consumer rights.

SEC. 3. Definition of Terms. - As used in this Act:

(A) Lock-in Period refers to the duration of the mobile services subscription
contract between the public telecommunications entity and the
consumer within which the latter agrees to exclusively maintain a
monthly postpaid subscription with such entity.

(8) Mobile Services Subscription Contract refers to an agreement between a

public telecommunications entity and a consumer for a postpaid


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subscription on the use of such entity’s network for wireless
communications and other telecommunications services covering a

particular period of time.

(C) Mobile Communication Device refers to any wireless telephone handset,
tablet, or any other wireless device that operates on a wireless

telecommunications network.

(D) Public Telecommunications Entity or PTE refers to any duly enfranchised
and authorized public telecommunications entity that offers voice,
short messaging system (SMS) or text, mobile data, value added
services (VAS), or any other mobile telecommunications services to the
public for a fee.

(E) Unlocking refers to the disabling of the software on a mobile
communication device that prevents a consumer from activating a
device designed for one provider’s network on another provider's
network even if that network is technologically compatible. Unlocking
a mobile communication device allows consumers to utilize their device
across multiple compatible networks.

SEC. 4.  Mandating the Unlocking of Unsubsidized Mobile Communication
Devices within Six Months from Date of Purchase. - A PTE or retailer of mobile
communication devices may sell such devices as unsubsidized units or without any
accompanying mobile services subscription contract while locked to a specific
network: Provided, That these devices shall be automatically unlocked on or before
the sixth month from the date of purchase: Provided, further, That it shall be the
obligation of the PTE or retailer of mobile communication devices to provide official
channels for unlocking mobile communication devices without voiding their
warranties in accordance with Sec. 6 of this Act.

SEC. 5. Mandating the Unlocking of Subsidized Mobile Communication
Devices within Nine Months from Date of Purchase; No Extension of Lock-in Period for
Subsidized Devices without Prior Approval of the National Telecommunications
Commission; Unlocking on-Demand; Warrant Coverage. - a PTE or retailer of mobile
communication devices may sell such devices as subsidized units or with
accompanying mobile services subscription contract while locked to a specific


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network: Provided, That the total lock-in period for subsidized devices shall in no
case exceed the period of nine (9) months: Provided, further, That there shall be no
extension of the lock-in period of subsidized devices without prior approval of the
National Telecommunications Commission; Provided, furthermore, That after the
completion of the lock-in period or upon full payment of the device, the PTE shall
unlock the device, or give the consumer the means to unlock the same, on-demand,
and completely free of charge: Provided, finally, That before the completion of the
lock-in period, the PTE shall unlock the device, or give the consumer the means to
unlock the same, on-demand, and for a fixed and reasonable unlocking fee.

Mobile communication devices that have been unlocked under this section
shall continue to be covered by their respective warranties.

SEC. 6. Obligation of Public Telecommunications Entities or Retailers to
Provide Official Channels for Unlocking Mobile Communication Devices Without Voiding
Warranties. - Every PTE or retailer of mobile communication devices shall, following
the terms and conditions under the implementing rules and regulations of this Act,
provide official channels for unlocking mobile communication devices without

voiding their warranties.

For purposes of transparency, sufficient information on the manner, method
or fee associated with the process of unlocking these devices shall be provided to
every consumer, stipulated in writing, and made an integral part of the mobile
services subscription contract.

SEC.7. Administrative Penalties. - For every failure to comply with, or
for every instance of violation of any provision of this Act, the PTE shall pay a fine of
not less than One Hundred Thousand Pesos (P100,000.00) up to Three Hundred
Thousand Pesos (P300,000.00) for the first offense, and a fine of not less than Four
Hundred Thousand Pesos (P400,000.00) up to Six Hundred Thousand Pesos
(P600,000.00) for the second offense. In case of a subsequent offense, the penalty
shall be a fine of not less than Seven Hundred Thousand Pesos (P700,000.00) up to
One Million Pesos (P1,000,000.00) and revocation of the PTE’s franchise to operate.

SEC. 8. Implementing Rules and Regulations. - The National

Telecommunications Commission, in coordination with the Department of Trade and


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Industry, the Department of Information and Communications Technology, the
Philippine Competition Commission, and other concerned agencies shall, within
sixty (60) days from the effectivity of this Act, promulgate and submit the
implementing rules and regulations (IRR) for its effective implementation. The IRR
shall not preclude the NTC from issuing subsequent circulars, rules and regulations

to make the unlocking process more convenient for the consumer.

SEC.9. Transitory Provision. - Existing business services and products
affected by the implementation of this Act shall be given a six- (6) month transitory
period from the effectivity of the IRR to comply with the requirements of this Act.

SEC. 10.  Separability Clause. - If any provision of this Act is held invalid
or unconstitutional, the other provisions not affected thereby shall remain in full
force and effect.

SEC. 11. Repealing Clause. - All laws, decrees, executive orders,
proclamations, rules and regulations, and issuances, or parts thereof which are
inconsistent with the provisions of this Act, are hereby repealed, amended, or
modified accordingly.

SEC. 12. Effectivity Clause. - This Act shall take effect fifteen (15) days
after its publication in the Official Gazette or in any newspaper of general circulation.

Approved,