MANILA -- The Department of Information and Communications Technology (DICT) managed to implement various initiatives aimed at ensuring faster and affordable communication services to the Filipino public in 2019.
A significant achievement for the DICT this year is the selection of the third major player in the telco industry that will compete with the existing duopoly of PLDT and Globe Telecom.
The National Telecommunications Commission (NTC) has awarded the third telco slot to Mislatel Consortium after it has won the bidding that was conducted last November 7.
Mislatel, a joint venture of Udenna Corporation of businessman Dennis Uy and Chinese state-owned firm China Telecom, was the remaining bidder when Sear Telecom and the Philippine Telephone and Telegraph Corporation were disqualified after they failed to submit the PHP700-million participation security and certification of technical capability from the NTC in the operations and delivery of telco services.
Mislatel has committed to provide Internet speeds of 55Mbps covering 84 percent of the population with capital expenditures (capex) of around PHP250 billion over a five-year period. The consortium stands to lose its performance bond of PHP24 billion or 10 percent of its capex if it would fail to make good on its commitments.
The third telco player was selected based on its financial and technical capability to deliver high-quality communication services to the country.
The guidelines in the selection process, which was crafted by the DICT in consultation with various stakeholders of the telco industry, utilized the highest committed level of service, which awarded to a bidder corresponding points based on network coverage, broadband speeds, and annual capital and operating expenditures over a five-year commitment period.
DICT Acting Secretary Eliseo Rio Jr. has said that the guidelines are aimed at ensuring the viability of the new major telco player to compete with the existing duopoly in delivering telco services to consumers.
“The third telco will come in a playing field where it has to compete with Globe and Smart. Globe and Smart have all the subscribers already once the third telco comes in it has to attract the subscribers of Globe and Smart. Of course, Globe and Smart will also put up their own marketing strategies and they have to retain subscribers. This is the fight where the third telco will be coming into,” Rio said in an earlier interview.
Mislatel was given 90 days from the awarding of the bidding to submit related documents including: congressional approval of its franchise; registration from the Securities and Exchange Commission; approval of the Philippine Competition Commission of its bidding agreement implementation; posting of the performance security bond and its rollout plan for the entire commitment period for the processing of its Certificate of Public Convenience and Necessity (CPCN) by the NTC.
The consortium expects to be able to start its commercial operations within a year and a half of the issuance of its CPCN.
PLDT, Globe welcome entry of third telco player
Meanwhile, PLDT and Globe Telecom have welcomed the entry of the new telco player, saying this promotes competition in the industry and will benefit the consumers.
PLDT said it is eyeing to increase its capital expenditures next year for the deployment of its wireless services and rollout of 5th generation technology (5G) cell sites across the country.
“Wireless is still a significant portion, especially now that we’re going to spend. So, we’re expanding some 3G, a lot of 4G sites and then beginning to build out the 5G,” PLDT Chairman and CEO Manuel V. Pangilinan said in an interview with reporters late November.
The PLDT chief projects the telco’s performance to further strengthen next year due to the growth of its wireless services, as well as its Home and Enterprise business segments.
PLDT has allocated PHP58 billion in capital expenditures this year for the rollout of its fixed and mobile networks.
For its part, Globe said the new player has the potential of opening new sources of revenue streams for telcos while providing consumers with more innovative products and services.
“We are glad for the smooth selection process undertaken by DICT and NTC. As previously and continuously stated, we hope the government will equally support the existing telcos like Globe, which continue to provide services to millions of Filipinos, and in the case of Globe, over 67 million total subscribers,” according to Globe General Counsel Froilan Castelo.
The company said it is in the process of divesting its tower assets and incorporating a separate tower holding company that will allow the third telco player to roll out its network and launch operations. This will also give smaller players the opportunity to scale up their business without the burden of high capital expenditures.
The telco has allocated USD850 million as capex for 2018, which were used to expand its data network amid the rising demand for mobile data services and online streaming content.
The selection of the third telco player was the culmination of an initiative started in November last year, when President Rodrigo Duterte pushed for the entry of a new telco firm in the country that can compete with the existing duopoly in providing faster and affordable Internet services to the public.
Common tower policy
The DICT is currently crafting a policy that will allow the establishment of tower companies that will build and deploy cell sites and other facilities that will be leased to telco firms for the delivery of services to consumers.
The department assures that it will engage with industry stakeholders in the formulation of the common tower policy guidelines.
Stakeholders in the industry have expressed their view that allowing the entry of more tower providers will promote competition and benefit consumers through improved communication services.
“We are trying to come up with something that is agreeable to everyone because we really need the common towers,” Rio said in an interview with the Philippine News Agency (PNA) last month.
The draft common tower policy guidelines provide for only two independent tower companies to be accredited by the DICT to build and share their towers for the use of telcos.
Presidential Adviser for Information and Communications Technology Ramon Jacinto is pushing for the proposed guidelines because in his opinion, during a recent public consultation, Globe and Smart have lost the ‘moral ascendancy’ to build cell towers in the country.
The DICT has sought the guidance of the Philippine Competition Commission and the Office of the Solicitor General with both agencies saying that the proposed guidelines may lead to ‘anti-competitive’ behavior in the telco industry.
Meanwhile, the department has signed a Memorandum of Understanding with infrastructure firm ISOC Infrastructures Inc. (ISOC Infra) to become the first common tower provider in the country.
This will enable the company to establish cell towers and other facilities that may be leased by all telecommunication firms to expand their facilities and enhance the quality of service.
The MOU will mandate ISOC to work with telco companies for the rollout of the cell sites, especially in areas across the country that need access and connectivity.
The DICT will facilitate the permitting and regulatory process, help identify and provide sites for the towers, such as public buildings, government lots, among others.
The Philippines has the lowest cell density in Asia, compared with neighboring countries like India, Indonesia, China, and Vietnam for the first half of this year, based on a recent report of TowerXChange and We Are Social.
Data showed that the user-per-cell site density in the Philippines is about 4,036, based on estimates of 16,600 total cell sites against 67 million Internet users.
The lack of cell towers has been identified as one of the barriers that result in the slow and costly Internet services currently being experienced in the country.
Fiber network deals
The DICT has signed an agreement with the National Grid Corporation of the Philippines and the National Transmission Corporation for the use of its dark fiber or spare optical fiber for the implementation of the National Broadband Network.
The total length of the dark fiber network that will be used by the DICT is 6,154 km., spanning Luzon to Mindanao, which would enable the department to deliver Internet services to remote areas that are not easily accessed by existing telco companies.
This will also serve as a backbone to the Luzon Bypass Infrastructure, which will provide a bypass route for international submarine cable systems from the Luzon Strait, which is prone to multiple simultaneous submarine cable breaks.
A submarine cable system that will land on the cable stations and provide direct connections from Luzon to Internet hubs in the United States and Asia will be constructed and operated.
Facebook, which will use the broadband infrastructure, will provide frequency spectrums equivalent to at least 2 million Mbps, expanding the capacity available for the government’s information and communications technology projects, such as the National Broadband Plan, National Government Portal, and the Free Public Wi-Fi program.
Lowering interconnection rates
The DICT has ordered the NTC to craft policies that would result in the reduction of interconnection rates for both short messaging services (SMS) and voice calls of telcos through its Department Order No. 002-2018.
The NTC released an order last July, wherein telcos will be charging PHP0.50 per minute from PHP2.50 per minute for voice calls while text messaging will be at PHP0.05 per text message from PHP0.15.
The department has said that mobile voice and SMS rates in the Philippines are among the highest in Asia. It added that affordable interconnection rates will encourage the entry of new competitors in the telco industry. (PNA)
