Bill to reform PH telco industry eyed by 2017

MANILA, Philippines – The Senate committee on economic affairs plans to create a bill by 2017 that will ultimately reform the country's telecommunications industry, expanding the powers of regulators and allowing foreigners 100% ownership.

"Yes, there are so many things that need to be reformed in the telecom industry. Definitely regulatory is one…Number two is looking at the Public Service Act," said committee chairman Senator Sherwin Gatchalian on Thursday, December 8.

Putting more teeth into the National Telecommunications Commission (NTC) and allowing foreign players to operate in the country without the 40% ownership restriction are among the reforms eyed to be tackled in the bill, Gatchalian said on the sidelines of a Senate hearing in Pasay City.

Expanding the NTC's powers

For Tonyo Cruz, president of consumer group TXTPower, the "NTC is betraying the interest of the public by how it manages the industry as a whole."

According to the Philippine Competition Commission (PCC), it took the NTC only 3 days to review and give PLDT Incorporated and Globe Telecom Incorporated the permission to use the state-owned 700 megahertz (MHz) spectrum, which was previously held by a subsidiary of San Miguel Corporation (SMC).

The two telecommunications giants sought NTC permission to use the spectrum frequency when it bought all of San Miguel's telco assets.

"We denounce NTC for approving what seems to be a midnight deal between SMC, Globe, and PLDT," Cruz said.

Gatchalian assured the consumer group that his committee will look into how the NTC could be reorganized.

"We need to strengthen the powers of the regulator. Make sure that it's independent, it should have extensive powers to make sure that the consumers are protected and competition is healthy," the senator said.

In the 2016 General Appropriations Act (GAA), a total of P399.475 million had been earmarked for the NTC.

"NTC is legislated to fail. In the past, [the chairmanship of the NTC has been] seen as [a] position given to retiring generals. It becomes [a] political prize. Reorganize NTC. They always have to beg for their budget. They are really hampered," Gigo Alampay, component lead for USAID Trade-Related Assistance for Development (TRADE) Project at Deloitte Consulting LLP, said during the hearing.

Exclude telcos from public utilities

For PCC Commissioner Johannes Benjamin Bernabe, outdated laws restrain prospective joint ventures and the entry of new players, thus limiting competition in the telco industry.

Last July, senators Paolo Benigno Aquino IV and Joel Villanueva filed Senate Bill No. 695 or the amendments to the Public Service Act.

Among the amendments to the 80-year-old Public Service Act or Commonwealth Act No. 146 – the exclusion of telecommunications from the definition of a public utility.

This would mean there would be no need to amend the 1987 Philippine Constitution to liberalize the country's telecommunications sector and allow foreign players to operate as public utilities, Bernabe had said.

If Senate Bill No. 695 is passed, Bernabe said the only activities that would be classified as public utilities and therefore limited to 40% foreign equity are the following:

Asked if his committee is willing to push for the bill, Gatchalian replied: "I'm in favor of removing the telecom industry in the limitation for public services without a doubt. New technology comes from abroad. So should foreign companies come here to bring in the new technology, then all of us will benefit, so it will improve competition, improve innovation."

PCC's Bernabe said this would be a win-win solution for consumers and operators, as it will harness competition and help telcos with capital expenditures.

The country's two telecommunications giants had even welcomed President Rodrigo Duterte's pronouncements to open up sectors to foreign players, as it will "benefit both consumers and the industries." (READ: PLDT, Globe, Meralco: Yes to foreign players– Rappler.com