PCC says third-player success to depend on regulatory reform

By Denise A. Valdez
Reporter
THE Philippine Competition Commission (PCC) said policy reforms are needed in the Department of Information and Communications Technology (DICT) and the National Telecommunications Commission (NTC) to ensure that the telecom industry’s third player can compete effectively with incumbents PLDT, Inc. and Globe Telecom, Inc.
In a phone interview last week, PCC Commissioner Johannes Benjamin R. Bernabe told ����ý the regulator has flagged the need for reforms to the DICT and NTC, as early as the release of the terms of reference for selecting the third player.
“[W]e in the PCC sat down with NTC and DICT and emphasized to them that what they are providing in terms of frequencies, rights and assets for the third telco will not be sufficient to ensure the third telco will be as competitive and expand its business operations post-award. We pointed out critical regulations that need to be revisited,” he said.
Mr. Bernabe said some examples of these regulations are the distribution of spectrum among the telcos, the allocation of second generation (2G) frequency to the third player, and infrastructure sharing among service providers.
The government is giving the third player radio frequency bands of 700 megahertz (MHz), 2100 MHz, 2000 MHz, 2.5 gigahertz (GHz), 3.3 GHz and 3.5 GHz. Despite this, Mr. Bernabe said PLDT and Globe still own more spectrum for their operations, raising the need to look into spectrum distribution.
“We are for a more rational spectrum (distribution) program. They’re (DICT and NTC) in agreement but the timeline and modality of implementing this program will take time,” he said.
Mr. Bernabe said some options it laid out to the NTC include a clawback option on some frequency currently owned by PLDT and Globe, via a mechanism like increasing the annual spectrum user fee to push the incumbents to give up underutilized frequency.
Another is the ongoing review of PLDT’s and Globe’s acquisition of the 700-mHz band from San Miguel Corp. “[I]n the approval process of NTC of the co-use of these frequencies, there are conditions attached, and among those are improved internet access, improved speed and quality… The natural consequence… is if there has not been significant improvement then NTC can also claw back some of these frequencies currently held by PLDT and Globe,” he said.
The commissioner also noted that the third telco will not be awarded frequency for 2G rollout, as these are exclusively held by the PLDT and Globe. He said PCC data shows only 60% to 70% of the population owns smartphones, and therefore the remaining 30% to 40% are limited to network services powered by 2G such as text and voice messaging.
“Because the third telco doesn’t have the frequencies to have these services, they’re not able to serve 30% to 40% of the market. One solution is come up with a circular which mandates PLDT and Globe to allow the third telco to co-use or engage in roaming,” he said.
With regard to infrastructure, Mr. Bernabe said the government must also start working on the infrastructure sharing policy that would allow more than two tower companies to operate. This way, the third player may start operations without deploying its own cell sites.
The government presented in September a draft policy on infrastructure sharing which limits the installation of towers to only two registered tower companies. Review of stakeholders’ comments on the proposed policy is still pending at the DICT.
Mr. Bernabe said although the commitments of the third player are time-bound, the PCC believes it is not impossible to fulfill, contrary to the doubts raised by PLDT and Globe.
“I think it’s fairly realistic… Of course it’s unrealistic to expect that in six months or one year that the third telco would pose a significant challenge already to the two dominant players. It will require time. But if they play their cards right and all these regulatory reforms are put in place, they can do it,” he said.
The government declared last week the consortium of China Telecommunications Corp., Dennis A. Uy’s Udenna Corp. and Chelsea Logistics Holdings Corp., as well as franchise holder Mindanao Islamic Telephone Company, Inc. (Mislatel) the third player. The group now has 90 days to submit its business and rollout plans to the NTC, among others, before it is given the frequency bands and Certificate of Public Convenience and Necessity (CPCN).
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in ����ý through the Philippine Star Group, which it controls.