Search for third major telco clears major hurdle

By Victor V. Saulon, Sub-Editor
THE QUEST for the country’s third major telecommunications service provider advanced on Friday after a government team settled on the highest committed level of service (HCLoS) as basis for competition.
The oversight committee — composed of representatives of the Department of Information Communications and Technology (DICT), Department of Finance (DoF), Office of the Executive Secretary and National Security Adviser — opted for terms of reference (ToR) based on the HCLoS rather than on auction of frequencies.
“Yes,” DICT Acting Secretary Eliseo M. Rio, Jr. replied in a mobile phone message when asked if HCLoS emerged as the preferred option by the oversight committee.
“There will be adjustments based on the public hearing.”
The panel voted against the auction of frequencies, which is said to be favored by the DoF in selecting the third major telco.
“I am happy to report that all members [of the oversight committee] were very, very supportive of this task of coming up with the selection of the third telco and it was a consensus actually that happened except that there were some concerns,” Mr. Rio said in a press conference later on Friday.
Those concerns were aired by the DoF, which wanted to be sure that the selection process would “really come up with the most effective telco to be able to give and improve our telecommunications services,” he said.
Mr. Rio said the DoF also wanted assurance that the third major telco has the financial and technical capability to give the best service, which he said implied the availability of frequency. He said this could be resolved with the frequency from Bayan Telecommunications, Inc., which had been taken over by Globe Telecom, Inc.
“Hopefully, with the help of SolGen [Solicitor General, the government legal counsel] we can resolve this next week. Once resolved, the terms of reference will now go through legal process,” he said.
The final ToR choice follows a July 6 hearing by the DICT to ask industry stakeholders on their preferred selection criteria. HCLoS came out as the preferred option.
Mr. Rio subsequently said he would have to resign if the interagency committee were to still select the frequency auction-based ToR, since he felt he could not support it.
“Hopefully, before Christmas doon na ‘yung bidding (that will be the schedule of the bidding),” he said, adding that schedule will follow the required publishing of the ToR and the public hearings to be held.
He said the winner, as determined by the point system devised by a selection committee, should be named in early 2019.
“More or less, we can start rolling out February or March next year and maybe they can get their first subscribers [in] another six months from that,” he said.
“By the end of 2019, they will have substantial subscribers already.”
Mr. Rio earlier this month said he expected the new telco player to be known by late September or early October.
He said the third player would be entering an industry with a level playing field, and at a time when technology had advanced in its favor.
The local telecommunications business is currently dominated by Smart Communications, Inc. and Globe Telecom, Inc.
Smart is the mobile subsidiary of PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.
“The third player can leapfrog to a more recent technology. So, ‘di na siya masyadong mahihirapan (It should’t encounter much difficulty),” he said.
He said Globe and Smart have legacy baggage — the 2G Internet speed that is being phased out even as this outdated technology still serves about 30 million subscribers.
Under the HCLoS selection criteria, the commitment on national population coverage as well as annual capital and operational expenditure have equal weights of 40% each, while the minimum average broadband speed has 20%.
The selection committee is headed by the chairman of the National Telecommunications Commission, which is attached to the DICT, plus up to four other members.
The annual minimum levels for each of the criteria are 30% for national population coverage; 5 megabits per second for the minimum average broadband speed and P40 billion for capital and operational expenditure.