Control over the internet highway

Big telecommunications players once bristled at the idea of open access, or allowing smaller internet providers to piggyback on their systems. Recently, however, they signaled support for the Konektadong Pinoy Act, which paves the way for just that, and appear to have dropped plans to challenge the new law in court.

Konektadong Pinoy, enacted last month, removed political franchise hurdles. Under the law, those intending to provide internet services no longer need a congressional franchise or a Certificate of Public Convenience and Necessity (CPCN) to do business. Instead, they simply register with the National Telecommunications Commission (NTC).

The law also provides for open access. Big networks must rent out capacity to new players. Also, frequencies held by incumbents that are idle or underused can be reassigned. Moreover, foreign and local satellite providers can interconnect more easily.

This augurs well for a geographically fragmented country that badly needs cheap internet service. It was no small shift for telcos to now consider win-win arrangements, given that they previously warned of possible lawsuits against Konektadong Pinoy for being unfair to incumbents.

Moving forward, I believe that the challenge is fairness, particularly in crafting rules that honor past investments, attract new players, and give the public cheaper, faster internet. If big telcos must allow access to their systems, then they should be compensated fairly.

Frankly, this was a twist I did not expect. I anticipated a protracted legal battle, yet the very companies that had warned of constitutional violations have now publicly supported the Konektadong Pinoy Act. Their change of heart looks pragmatic: better to help shape the rules than fight a long court battle.

After all, public and government support was unlikely to be on their side. Supporters of Konektadong Pinoy could have easily cast incumbents’ opposition as greed and a desire to protect market share and profits at the expense of consumers, with the government as enabler.

With big telcos extending the olive branch, a win-win is possible. But support should not mean surrendering fairness. The challenge for government is to craft the law’s implementing rules, within 90 days, in a way that makes everyone win: incumbents, challengers, and above all, the public.

The enactment of Konektadong Pinoy reshuffled the balance of interests. The biggest winners are ordinary consumers, who stand to gain more choices, potentially lower prices, and wider coverage as smaller internet service providers (ISPs) are allowed to plug into big networks.

New and small ISPs, cooperatives, and even local governments are winners too, since they no longer need to chase expensive franchises or CPCNs. Registration with the NTC is enough, and access to existing infrastructure becomes a right rather than a privilege.

Foreign satellite companies such as Starlink, Amazon Kuiper, and OneWeb also benefit, as they now have a clearer path to integrate into the Philippine market and tap local systems. It will be easier for these broadband projects to offer high-speed internet using low-earth orbit (LEO) satellites.

The government also emerges stronger under Konektadong Pinoy. The Department of Information and Communications Technology (DICT) and the NTC now have greater clarity on how to enforce open access, reassign idle spectrum, and resolve disputes quickly.

But where there are winners, there are losers. The biggest losers are the incumbents (PLDT, Smart, Globe, Dito, and even Converge) who must open their costly networks to others at regulated terms, eroding their former advantage of scale and exclusivity. They also risk thinner margins and greater competition. Congress also loses, as it no longer controls the gatekeeping power of franchises for data transmission, cutting off a traditional source of influence.

Still, these downsides do not mean incumbents are doomed. With fair and equitable implementing rules, big telcos could monetize their networks at scale and earn even more by leasing access to smaller ISPs. Even with competition, they will continue to make money off the back end.

President Ferdinand Marcos, Jr. neither signed nor vetoed the measure. Instead, he allowed it to lapse into law in August. This pragmatic move let him avoid a direct clash with big telcos worried about sunk costs, as well as reform advocates and the public who would have bristled at a veto. By letting the bill lapse into law, Malacañang kept a political distance, and perhaps rightly so.

Konektadong Pinoy is about opening the pipes, forcibly. It lowers barriers for new internet providers, forces big networks to share access at fair prices, and makes better use of spectrum and satellite technology. For PLDT, Globe, Dito, and Converge, this means a government mandate to share their internet highways with others. For new players, it means they no longer need to finance and build their own highways from scratch.

The challenge now is to ensure balance. This is easier said than done. Negotiations and compromises are inevitable. But in the end, incumbents must be treated fairly for their investments, while new players must gain access to benefit consumers.

It is understandable why incumbents initially opposed the law. PLDT and Globe built their networks under old rules: congressional franchises, CPCNs, and billions of pesos invested in fiber, towers, and spectrum. Being forced to share these assets with competitors at government-set terms looked like expropriation.

At first, PLDT and Globe seemed poised to lose control, revenue, market share, and incentive to invest further. Why then the change of heart? Perhaps they realized their legal case was weak, or that the issue had little public sympathy. More likely, they saw that fighting the law risked reputational damage, hurt share prices, and created long-term uncertainty.

By embracing the law, telcos can now join the process of shaping its terms, particularly pricing and transition rules. This ensures that fairness will guide the outcome: incumbents are not punished for investing under old rules, and new players are not priced out.

The way forward should recognize past investments with a fair rate of return and allow transition periods for recovery. Moving ahead, new players should be guaranteed clear and affordable access. The process must be transparent to deliver lower prices and better service to consumers.

One option is rate-of-return protection. Incumbents can recover old investments through regulated access prices that guarantee a fair return over a defined period. Wholesale rates can start higher and drop gradually over five to seven years as costs are recovered and more players enter.

Government can also provide incentives for pioneering efforts, such as limited premium pricing for those investing in underserved areas. Incumbents can also be granted property tax relief for fiber and towers dedicated to open-access compliance.

Alternatively, telcos can spin off or pool passive infrastructure such as ducts, fiber, and towers into a wholesale utility, whether listed or structured as a public-private partnership. All players could then rent access on equal terms. A neutral backbone company or cooperative could manage these assets, with all telcos as equity partners.

PLDT, Globe, and Converge currently own the internet highways, the fiber backbones, towers, and gateways. They remain core providers, but must now also lease space to others at government-set terms. New players will then compete for customers by using these highways rather than building their own.

These telcos also control frequencies, the radio “lanes” used for mobile signals; termination points, where networks hand off calls or data; and gateways such as submarine cables and international exchanges that connect the Philippines to the global internet. What they do not control are satellites, which can beam internet directly to remote areas, bypassing towers and fiber.

With open access, satellite providers beyond Starlink — Amazon’s Project Kuiper, OneWeb, even China’s Guowang — can register with the NTC and provide service. Regional players can also scale up by plugging into incumbents’ network. Enterprises and cooperatives with resources and expertise can also opt to run their own community networks.

Open access promises lower prices through competition, better coverage via satellites and small ISPs, more consumer choice, and perhaps better deals. But these benefits will materialize only if government enforces fair rules that harness the law’s potential.

Will access prices guarantee fair returns while enabling entry? Will incumbents get a recovery period? Will new players be properly screened? Will idle frequencies be reassigned transparently? Will disputes be resolved swiftly? The next 90 days will be crucial, and the government needs all the help it can get.