Telco Hao Shao
By: Rg San Luis
Tags: Philippines, Internet, Duterte, Corruption, Telco

Telco Hao Shao

Hao shao. When the President arrived in Davao after attending the APEC Summit in Vietnam last 2017 his arrival statement mentioned his directive to the DICT to get cracking on the third telco selection process.

There was a palpable sense of urgency in his tone which was probably an offshoot of what he saw as the astounding development of Vietnam. The summit wasn't held at Ho Chi Minh or Hanoi. It was held at the now tourist site of Da Nang where the US Navy and Air Force operated out of during the Vietnam War.

The deadline set was March and this wasn't met. The DICT kept on moving the deadline citing as reason the insistence of the Cabinet Economic Cluster to act as an oversight committee in formulating the guidelines.

Consultations were made with industry stakeholders and finally the draft rules were released and eventually finalized. The bidding was held last November and the actual bidding left participants and the public with a bad taste in the mouth as far as the selection process was concerned.

The perception was the bidding was rigged to allow only one bidder to win. The President made mention of China Telecom when he issued the order to the DICT. The consortium of companies under the umbrella of Dennis Uy bought bid documents and it wasn't a surprise that their technology partner was China Telecom.

Post-bidding requirements had to be complied with within a specific time frame. Sen. Poe's Senate committee stepped in to review the franchise of Mislatel, a company which had been dormant after it was awarded a congressional franchise to operate. It did not meet two basic requirements which was to establish and operate a telecommunications gateway in its franchise area and publicly list its shares on the local bourse.

Two hearings of Poe's Senate committee had the consortium arguing that its franchise was not invalid which ran contrary to the opinion of Sen. Drilon. The only agreement between the two parties is the franchise was now defective considering it had not met the basic requirements.

The Uy consortium obtained a certification from the counterpart committee in the House of Representatives that the Mislatel franchise was valid days after it won the bidding. How did the House come to a different conclusion than the Senate?

Last night the Senate passed a bill amending the franchise of Mislatel to reflect the change in ownership which had also been questioned since this is also prohibited under the terms of the franchise. The Senate measure as labeled as the cure for Mislatel's compliance deficiency.

The issue of faster internet speeds was one of the campaign promises of then candidate Duterte. He promised the public that the duopoly of PLDT and Globe would be broken by the entry of a third company.

Frequency hegemony was established after the smaller companies, which had been awarded frequencies to operate a cellular mobile telephone system in the advent of telecom deregulation during the Ramos administration, began selling their companies to the larger well-capitalized dominant players such as Globe and PLDT.

Islacom was sold to Globe. Smart Communications was sold to PLDT together with Sun Cellular later on. Other companies didn't have the financial wherewithal to operate at all but still managed to hold on to their frequencies.

San Miguel began buying up these companies for their frequencies in preparation for its entry in the telecoms arena but backed out due to capital constraints as a result of over diversification. Just before the Aquino administration bowed out, San Miguel sold the company holding the rights to the 700 MHz band to PLDT and Globe.

No Senator or Congressman questioned the sale of what is supposed to be national patrimony. In other countries, frequency spectrums are sold to the highest bidder in billion dollar auctions. In the Philippines, they are given away even if the public continues to suffer from poor internet speeds.

It will take some time for Mislatel to be able to begin operations as it needs to roll out its network infrastructure first. The question is now what guarantee does the public have that the company will be held accountable under the highest committed level of service it stipulated to in its bid?

The Senate action on its franchise sets a bad precedent for foreign telcos which would definitely have second thoughts about entering the Philippine market. As it is, Congress still has not amended the Public Utilities Act of 1906 which requires that telecommunications be majority-owned by Philippine registered and controlled corporations.

What is evident now is the public is the biggest loser again as mobile communications and broadband services will go from a duopoly to a cartel just like what happened with oil and power deregulation measures.

Our ASEAN neighbors have all released their digital blueprints as it is generally believed to be the growth driver for the fourth industrial revolution.

The Philippines is stuck with slow and expensive internet which means it will fall further behind. Myanmar is smaller than the Philippines in land area but it has four telcos operating. Its target is to connect the whole country to the internet by 2020.

In the next ten years, Myanmar, Laos and Cambodia will come level with or even overtake the Philippines as their pace of growth and development is going to be faster.