Grant of telecom franchise not exclusive to 1 firm — SC

The Supreme Court has ruled that the grant of a franchise in a particular area can not be exclusive to a telecommunications firm to provide healthy competition and ensure adequate services to the public.

In a 20-page decision penned by Justice Alicia Austria Martinez, the SC Second Division upheld the Court of Appeals’ ruling that affirmed the grant by the National Telecommunications Commission (NTC) of a provisional authority to Bayan Telecommunications Corp. (Bayantel) to provide local exchange service in Manila and Navotas, even if these areas were already being served by another telecommunications firm.

On Sept. 25, 1995, the NTC granted a PA to Telecommunications Technologies Philippines, Inc. (TTPI), an affiliate of Eastern Telecommunications Philippines, Inc. (ETPI), to install and operate a local exchange service in Batanes, Cagayan Valley, Isabela, Kalinga-Apayao, Nueva Vizcaya, Ifugao, Quirino and the cities of Manila and Caloocan, as well as the municipality of Navotas.

Two years later on Nov. 10, 1997, NTC granted Bayantel a similar PA covering Manila and Navotas. TTPI assailed NTC’s action before the CA but the appellate court upheld the telecom regulatory body.

"After a review of the records of the case, this court finds no grave abuse of discretion committed by the Court of Appeals in sustaining the NTC’s grant of provisional authority to ICC (Bayantel)," the SC said.

In upholding the CA, the SC said TTPI could not claim any exclusive right to render telecommunication service in areas which the NTC considered to be in need of additional providers.

The SC said the power of NTC to grant a provisional authority had long been settled being the regulatory agency of the National Government with jurisdiction over all telecommunication entities.

The SC noted that in a similar case of Pilipino Telephone Corp. versus NTC, the court likewise upheld the telecom regulatory body’s decision to grant PA to ICC (Bayantel) in several areas in Mindanao where Piltel was already providing the same service.

Citing its ruling in the case of Republic v. Express Telecommunication’s Co., the SC noted that "the Constitution is quite emphatic that the operation of a public utility shall not be exclusive."

"More than anything else, public service should be the primordial objective of local exchange operators. The entry of another provider in areas covered by TPPI should pose a challenge for it to improve its quality of service. Ultimately, it will be the public that will benefit," the SC said.

The SC noted that the NTC granted PA to ICC for Navotas and Manila because of an increasing demand for local lines in these areas and to speed up the installation of lines in order for these areas to catch up with neighboring cities.

"This in fact, is tantamount to a finding that the existing local exchange operator failed to meet the growing demand for lines," the SC said.

The SC dismissed TTPI’s contention that NTC’s grant of PA to ICC (Bayantel) was in violation of Department of Transportation and Communication Circular 91-260 providing that the NTC should authorize only one franchised local carrier to provide service within the boundary of a designated local exchange area.

The service area scheme, according to the SC, was omitted in Executive Order 109 on the Local Exchange Carrier Service and the Public Telecommunications Policy Act of the Philippines, enacted on March 23, 1995, which adopted a policy of equal competition among the local exchange providers.

The court held that EO 109 acknowledges the need "to promulgate new policy directives to meet the targets of government, specifically to ensure the orderly development of the telecommunications sector through the provision of service to all areas of the country; to satisfy the unserviced demand for telephones; and to provide healthy competition among authorized service providers."