HOUSE OF THE REPRESENTAIVES
Constitution Hills, Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. _1361

Introduced by
REPRESENTATIVE BERNADETTE HERRERA-DY

AN ACT MANDATING THE CREATION OF A PHILIPPINE EXCLUSIVE
INTERNATIONAL GATEWAY, PRESCRIBING THE MANNER OF CREATION,
CONTROL AND TAXATION THEREOF

EXPLANATORY NOTE
The 1987 Constitution (Article 2, Section 24) fully recognizes the vital role of

communications nation building and provides for the emergence of
communications structures suitable to the needs and aspirations of the nation.

This bill seeks to mandate the creation of a Philippine Exclusive International
Gateway. Such gateway shall act as the single transit point of all communications,
including data, voice, messages, SMS, among others, inward to the Philippines or
outward to other countries.

The use of exclusive international gateways have been successful in other
countries, specifically Australia, the United States, Pakistan, Zambia, Bangladesh,
Kenya, among many others. Such gateways have enabled efficient use and
management of international communications, provided higher levels of security of
communications, supplied a higher quali ternational calls to and from the
Philippines, and served as a venue for substantial revenue generation for the
government.

The costs of establishing, maintaining and operating such gateways entai
significantly high costs and require a specialized degree of technical know-how and
expertise. Following the example of other countries, this bill seeks to mandate the

Private
Partnership with a private partner that is knowledgeable and experienced in the
establishment, maintenance and operation of such gateways.

Considering the pursuant to its charter, Executive Order No. 546, the National
Telecommunications | Commission empowered to regulate the
telecommunications industry. One of its powers, under Section 15, paragraph k of
the said Executive Order, permits the Commission to perform such other functions
as may be provided for by law. Hence, this bill mandates the National



Telecommunications Commission (NTC), the primary governmental agency in
charge of the regulation of the telecommunications industry, to seek the proper
partner through the bidding procedures already established by law. The NTC would
also empowered by this bill to exercise supervisory powers over the gateway,
specifically as to the technical aspects of use, traffic management, and data
security. Finally, the NTC is also empowered, pursuant to its charter, to establish
the benchmark rates by which the license fees, tariffs and termination fees shall be
based.

As a revenue generator, this bill recognizes the significant role of priority industries
in the provision of employment and influx of foreign ct investments. In reverence
thereto, this bill provides a tariff exemption for all industries listed in the annual
Investments Priority Plan with regards to their usage, if any, of the exclu:
international gateway.

seeks to mandate the establishment of the Philippine Exclusive
International Gateway, to be implemented by the NTC accordingly.

In view of the foregoing considerations, approval of this bi

recommended.
BERNADETTE ‘evenvv

is highly and earnestly


HOUSE OF THE REPRESENTAIVES
Constitution Hills, Quezon City

EIGHTEENTH CONGRESS.
First Regular Session

HOUSE BILL No. 1361

introduced by
REPRESENTATIVE BERNADETTE HERRERA-DY

AN ACT MANDATING THE CREATION OF A PHILIPPINE EXCLUSIVE
INTERNATIONAL GATEWAY, PRESCRIBING THE MANNER OF CREATION,
CONTROL AND TAXATION THEREOF

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

SECTION 1 Short Title. This Act shall be known as the “Exclusive International
Gateway Act of___”

SECTION 2. Declaration of Policy. The State recognizes the vital role of the
telecommunications industry in national growth and development.

The state likewise recognizes taxation provides the lifeblood of the nation, through
which the agencies of the government continue to operate and which the state
effects its functions for the benefit of its constituents.

Towards this end, the State shall protect the mutual interests of consumers and
service providers through a provision of a modernization of communication systems
through an exclusive international gateway for all incoming and outgoing
international communications.

SECTION 3. Definition of Terms. - For purposes of this Act, the following terms are
hereby defined:

a) “BIR” - refers to the Bureau of Internal Revenue.

b) “Call” — refers to a call (including any message conveyed by means of a
telecommunication system) which originates in the telecommunication
system of any service provider in the Philippines, conveyed by the license via
the exclusive international gateway facility and which terminates in a
telecommunication system in a country other than the Philippines, or vice
versa.



c) “Exclusive International Gateway or EIG" — refers to the exclusive
telecommunications transit portal through which all incoming and outgoing

d) “Exclusive International Gateway (EIG) Facility” — refers to the
telecommunication systems and telecommunication fa S owned,
installed, maintained, operated and used by the Licensee for the purposes of
providing international telecommunications services.

icense” — refers to the authority issued by the NTC to a private corporation
to establish, operate and maintain the exclusive international gateway.

- refers to the private corporation selected to establish, operate
the exclusive international gateway, following the issuance of a
sense by the NTC.

g) ‘License Fee Income” — refers to the total annual invoiced revenue of the
Licensee (less discounts, value added taxes and other indirect taxes) derived
from telecommunications service providers.

h) “Message” — refers to any sound, signal, sign or image conveyed by means
of the exclusive international gateway.

i) “NEDA” - refers to the National Economic and Development Authority.
j) “NTC” - refers to the National Telecommunications Commission.

k) “Telecommunications Service Providers” — refers to any public switched
telecommunication service licensee or any entity licensed to provide similar
services, mobile cellular telecommunication service licensee or any entity
licensed to provide similar services under the laws of the Philippines. These
shall include fixed line operators, cellular service operators, etc.

SECTION 4. Establishment of Exclusive International Gateway. An exclusive
international gateway shall be established pursuant to the provisions of this Act.
Such gateway shall serve as the exclusive telecommunications transit portal
through which all incoming and outgoing international calls, messages and data
issions will pass, er from sources overseas towards the Philippines, or
from sources within the Philippines directed overseas.

The exclusive international gateway shall be created through a public-private
partnership, joint venture or build-operate-transfer agreement between a quali
private corporation and the Philippine government, subject to the procedures and
processes under existing laws.

The selection of the qualified private corporation shall be accomplished through a
pub ‘accordance with the Build-Operate-Transfer Law, its
implementing rules and regulations, the Joint Venture Guidelines, and the
Procurement Law.



SECTION 4. Pre-qualification, Bids and Awards Committee. For purposes of
solicitation, bidding and pre-qualification of bidders to the Exclusive International
Gateway, the NTC shall create a Pre-qualification, Bids and Awards Committee
(PBAC) composed of the followit

The commissioner of the NTC;

One technical officer knowledgeable with the technical aspects or
requirements of the project, assigned by the NTC;

One technical finance officer, assigned by the NTC;

One management or operation officer, assigned by the NT!
The Administrator of the NEDA or his representative;

Two representatives from the private sector involved in the
telecommunications industry.

One representative from the PPP Center of the Phi
Center).

8. One representative from the Commission on Audit.

on

ATO

N

es (formerly the BOT

Those enumerated under numbers six to eight above shall be deemed non-
voting observers of the PBAC.

The PBAC shall be responsible for all aspects of the pre-bi ig and bi
process in the case of solicited proposals, and for the comparative bi
process, in the case of Unsolicited Proposals, including, among others, the
preparation of the bidding/tender documents, publication of the invitation to pre-
qualify and bid, pre-qualification of prospective bidders, conduct of pre-bid
conferences and issuance of supplemental notices, interpretation of the rules
regarding the bidding, the conduct of bidding, evaluation of bids, resolution of
disputes between bidders, and recommendation for the acceptance of the bid
and/or for the award of the project.

‘The PBAC shall, following all processes and procedures mandated by existing
laws on public bidding, shall render an award to one private entity, who shall be
responsible for the establishment and operation of the exclusive international
gateway.

The NTC shall, pursuant to the award, issue a license to the private partner
authorizing the latter to establish and operate the exclusive international
gateway for a period of time as will be determined by the implementing rules and
regulations of this Act. Provided, that the initial term of the license shall be for a
period of twenty-five years (25 years) from the issuance of such license.

SECTION 5. Responsibilities of the Private Partner. Subject to the provisions of
‘Act and its implementing rules and regulations, the licensed private entity to
which the establishment and operation of the exclusive international gateway is
awarded, shal

1. Establish the complete international gateway infrastructure, including all the

westment required to set up the equipment and earth stations.

2. Establish the interconnection with the telecommunications service providers
and in the Philippines and international telecommunications service
providers.



‘subject to the period provided for in the award to the private entity and the
implementing rules and regulations of this Act.

international gateway.

5. Provide the NTC, the BIR, and this Congress of periodic reports regar
the use of and traffic within the gateway, and other pertinent data.

6. Train selected Filipino nationals in the technical aspects of the operation,
maintenance and processes of the exclusive international gateway

9

SECTION 6. Responsibilities of the NTC. The NTC shall be the focal agency in
the initiative provided for in this Act, pursuant to its mandate under Executive Order
No. 546, Section 15. The responsibilities of the NTC pursuant to this Act shall
include:

1. Supervise the technical aspects of the operations and maintenance of the
exclusive international gateway, specifically as to the manner of use, flow of
traffic of communication, and security of data and communication.

2. Establish benchmark figures for tariff purposes, such as inbound and
outbound monthly minutes and termination fees.

3. Select Filipino nationals for training through on-the-job trai
the private partner.

4. Assess and critique the efficiency of the private partner in its operations and
maintenance.

1g programs with

SECTION 7. License Fees. In consideration for the grant of the license, the
Licensee shall pay to the NTC a fixed license fee in respect to the initial term of the
license in an amount to be determined by the NTC as determined in the
Implementing Rules and Regulations of this Act.

‘An annual variable license fee shall also be paid by the licensee to the NTC in an
amount equal to 0.5% or one-half of one percent of the audited license fee income
as defined in this Act.

SECTION 8. Tariffs on use of the Exclusive International Gateway. The use of
the exclusive international gateway shall be taxed at established rates per minute
of use, regardless of whether the communications originate through fixed lines,
cellular phones, data or computer systems, etc., and termination fee charges at
rates to be established by the BIR and the NTC.

SECTION 8. Tariff-Exempt Industries. In recognition of the business and
investment generation of certain industries, the industries listed in the annual
Plan (IPP) shall enjoy tariff exemption on the usage of the
exclusive international gateway for the duration of such priority on such industries
as provided for in the annual IPP.

SECTION 8. Executive Officers Charged with Execution of this Act. The
Commissioner of the National Telecommunication Commission shall be the



executive officer charged with can isions of this Act, with authority
to assign the direct executive control of the enforcement of its provisions and the
rules and regulations that may hereafter be promulgated in accordance therewith to
such representatives, bureau, office or service as said Commissioner may
designate.

SECTION 9. Separability Clause. In the event that any provision of this Act is
declared unconstitutional, invalid, or illegal, the constitutionality, validity, or legality
of the remainder of the provisions of this Act shall not be affected thereby.

SECTION 10. Repealing Clause. All laws, pre: | decrees, letters of
instructions, executive orders, administrative orders, rules, regulations, and other
issuances or parts thereof which are contrary to or inconsistent with the provisions
of this Act are hereby revoked, repealed or modified accordingly.

SECTION 11. Effectivity. This Act shall take effect fifteen (15) days following the
completion of its publication in any two (2) national newspapers of general
circulation.

Approved,...