THE third entrant in the telecommunications industry will have limited spectrum to work with and may have to compete in areas like cell site construction or fixed-line Internet, where the need for frequency is not as critical, the acting head of the Department of Information and Communications Technology (DICT) said.
In a social media post, DICT officer-in-charge and Undersecretary Eliseo M. Rio, Jr. said that no matter how “financially and technically robust” the third player may be, the frequencies available are not comparable to the ones allocated to PLDT, Inc. and Globe Telecom, Inc.
An official of the Philippine Competition Commission (PCC) said last week that based on the commission’s data, only 12.8% of the spectrum will be available for a potential third player.
The incumbents acquired the coveted 700-mHz band from San Miguel Corp. (SMC), which last year sold off its telco assets.
Mr. Rio said possible areas in which the third player can compete include building cell phone tower for lease to other companies including the incumbents, and fixed-line Internet service to underserved areas.
“The third player come in where Globe and (PLDT unit) Smart are not strong and in an area that does not need much frequency — the fixed line access to the Internet. When people go to establishments, their offices and homes, they will no longer look for Globe and Smart/PLDT but for the fast and inexpensive internet access of the third player, mostly through FTTP (fiber to the premises),” Mr. Rio said.
Another solution, he said is for the third player to “be the common tower provider of telcos, including itself.”
Mr. Rio has said that the country lacks cell sites, which currently number only 20,000, when the need is for 67,000. “This is three times more than what the industry has constructed in about two decades,” he added.
In an earlier post, Mr. Rio said that around more than 5,000 subscribers share a tower on average when an ideal ratio would be 1,000 subscribers per tower. He added that while PLDT and Globe acquired more frequencies from SMC, there was “no real improvement on their quality of service” because of the lack of towers, and that the two telcos’ capacity to build towers is only around 2,000 a year.
Another remedy for the third player would be to adopt a business model of “being a telco of telcos,” Mr. Rio said.
“At absolutely no last-mile cost to them, Globe and Smart will immediately increase their services to their subscribers in more areas than before. For this service, the third telco can split the revenue generated by its cellsites with Globe and Smart, on maybe a 75-25% ratio in favor of the third telco.”
Malacañang has identified China Telecom Corp. Ltd. as the Chinese government’s choice to enter the Philippine market.
However, China Telecom’s local partner has yet to emerge. The law only allows for maximum 40% foreign ownership for telco businesses.
Philippine Telegraph and Telephone Corp. (PT&T) has expressed its intention to become the “de facto” third player. It plans to roll out a nationwide broadband network in three years.
Chairman Salvador T. Zamora said that it is in preliminary talks with China Telecom, but said that the Chinese company is also in talks with other potential partners.
Mr. Zamora said the company would like a share of the 700 mHz spectrum, though it has applied to the National Telecommunications Commission for an allocation of spectrum in the 3400-3600 mHz band.
In a statement, Globe Senior Vice-President for Corporate Communications Ma. Yolanda C. Crisanto said, “Any government support that would expand or improve existing telecommunications infrastructure, including cell sites, would benefit the industry, and eventually the country as a whole.”
“Globe Telecom is ready to compete in view of another telco player especially if this would pave the way for a more active participation in developing the industry. If the entry of a new player can increase the density of cell sites in the country, existing players like Globe also stand to benefit.”
Ms. Crisanto however reiterated a previous statement of Globe that building cell sites and providing good service is hindered by right-of-way issues and red tape.
“Time and again, we have maintained that the biggest hurdle in delivering consistently good Internet service is the cumbersome permitting and right-of-way issues that prevent us from building the last-mile connectivity. Moreover, similar to how spectrum was distributed to existing players, the allocation of frequencies should be commensurate to the number of customers that any player provides services to,” Ms. Crisanto said.
PLDT Head of Public Affairs and Spokesperson Ramon R. Isberto, said in a statement: “With respect to cell sites, we have been doing two things over the past year. First, we have been re-equipping our existing sites with additional LTE (long-term evolution) and 3G base stations to further improve our mobile data services. We have made much progress here and expect to finish that process by next year and bring better high speed mobile data to over 90% of the country’s cities and towns.”
“Second, we are also acquiring additional sites. In both cases, we face challenges, particularly in acquiring new sites. Some of these problems stem from the numerous government permits required. Others stem from the difficulties in obtaining homeowner approval.”
Mr. Rio said in a post on Dec. 16 that the DICT is working to address the problem of red tape, and said that President Rodrigo R. Duterte “approved in principle” a draft executive order to hasten the process, endorsed by former DICT Secretary Rodolfo A. Salalima.
Mr. Rio added that the government could go into a public-private partnership agreement with a tower provider, to build common towers to be leased to the telcos, including a third player.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls. — Patrizia Paola C. Marcelo
