DICT backs assigning frequency to ‘third player,’ not auction

THE Department of Information and Communications Technology (DICT) is pushing for awarding of frequencies to the telecommunications industry’s third entrant to reduce its financial burden, the acting head of the department said.
DICT Acting Secretary Eliseo M. Rio, Jr. said that the Department of Finance (DoF), a member of the oversight committee for the selection process of the “third player,” wanted to have an auction for frequency, which the DICT opposed.
“The DoF wants to auction the frequencies, and the third player will be the highest bidder. We think this is anti-competitive because the incumbent telcos never bought their frequencies from the government,” Mr. Rio said in a text message. “It will put a big burden on a new player by (forcing it to) put up a huge amount up front that has nothing to do with putting up an infrastructure and improving telecommunications services.”
Mr. Rio said that an auction can be done for new frequency like those that for use in fifth-generation (5G) services, but not for those that were awarded without payment to the government.
“Auction can be done for all telcos with new frequencies like the coming 5G, but not for a new player that has to compete with incumbent telcos that never bought frequency from the government. It was awarded to them for free,” he said.
The oversight committee met on June 15, with no final terms of reference (ToR) for third-player selection approved after the meeting. It was reported that member agencies of the committee rejected the ToR presented by the National Telecommunications Commission (NTC), asking it to assign more weight to the initial financial outlay.
Mr. Rio told reporters last week that the NTC can finish the new ToR in two weeks. He also last week denied that the selection process is completed, but expressed disappointment regarding the new delay.
Mr. Rio has said that the awarding of frequency, as well as future reallocation of spectrum, will be attractive for those considering investing in the third player.
The last time the NTC assigned frequency was through a “beauty contest” and not through a bidding process. In a beauty contest, selectors judge an offer by the attractiveness of the rollout terms offered, rather than the size of the bid.
Around 300 megahertz (MHz) of frequency is assignable to a third player. The DICT had said this is sufficient for a third player to compete with incumbents PLDT, Inc. and Globe Telecom, Inc.
According to data from the NTC, 30.32% of all available radio frequency is allocated to PLDT while Globe holds around 24.9%. Some 39.35% is unassigned or under litigation, with about 5.41% remaining.
The third player will be required to spend massively on infrastructure to compete with the two incumbents. DoF Secretary Carlos G. Dominguez III has said in a statement that the third player may need at least P200 billion to compete.
Current requirements include paid-in capital of at least P10 billion; experience in providing, delivering, and operating of telecommunications services over the last five years; a congressional franchise not related to either PLDT or Globe; and no uncontested liabilities with the NTC as of Jan. 31, 2018.
Mr. Rio said that the department is looking at awarding the contract based on the highest committed level of service (HCLOS), and points given to a financial rollout during the first five years of operation. The third player may also be obliged to submit a performance bond.
The latest failure to release the ToR puts pressure on the government timetable of selecting the third player within the year.
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