Globe seeks level playing field in PLDT-Digitel deal

MANILA, Philippines- Challenging government’s resolve to level the playing field, Globe Telecom has urged industry regulator National Telecommunications Commission (NTC) to scrutinize the pending mega-merger between PLDT and Digitel, citing that this deal “strikes at the very heart and foundation” of the law liberalizing the local telecom sector.

In a position paper, Globe legal counsel Rodolfo Salalima asked the NTC to act on the PLDT-Digitel deal by “implementing pre-emptive moves and regulations to protect the gains of Republic Act 7295, the fair and free competition in the market place and, ultimately, the public good and welfare.”

He noted that RA 7295, or the Public Telecommunications Policy Act, was passed in 1995 “because of the need for the country to liberalize and demonopolize” as the dominant carrier – with its clout, power and influence – constricted and stifled, instead of led, the growth and expansion of public telecom services.

Philippine Long Distance Telephone Co. (PLDT), the perennial leader in the telecom sector, last March forged a deal to acquire a majority stake in third-leading player Digital Telecommunications Philippines Inc. (Digitel), consolidating forces to account for more than 70 percent of the telecom business. The agreement is expected to close in June.

Salalima reiterated that the NTC “cannot and must not shirk for its legal obligation to intervene in the PLDT-Digitel deal and regulate, if not forestall, the deal’s grave implications and impact on free competition and, in the long term, the common good.”

“NTC must start leveling the playing field now in the name of free competition or risk a return to the monopoly of old and precisely abandoned by RA 7295.”

Along this line, Salalima said the NTC should also rationally look into the spectrum frequency assignment which should be evenly distributed among the rest of the industry players, including second-ranked Globe, “to protect and give them and even fighting chance against PLDT.”

Spectrum, the service delivery platform for telecommunications, represents the means or tooks by which a public telecom company delivers services to a fixed number of subscribers. Thus, a wider spectrum frequency can accommodate more subscribers.

However, the radio frequency spectrum is a scarce public resource which the government, through the NTC, allocates to qualified service providers.

Salalima pointed out that in cellular service, Globe’s frequencies against PLDT stand at a ratio of 1:3.5 in the latter’s favor. With more spectrum, PLDT-Digitel will be able to serve more customers and deliver more services than Globe.

Meanwhile, Senator Joker Arroyo has called for an inquiry into the recent share swap deal between PLDT and Digitel in order to clear up all of the legal questions surrounding the deal.

Arroyo filed Senate Resolution 477 directing the Senate committee on public services to conduct the inquiry “with the end in view of determining whether the transaction is consistent with or not in violation of certain provisions of their respective legislative franchises and that the arrangement would be to the public interest.”

In an earlier statement, Arroyo questioned the transaction because this was approved and announced by the two telecommunications companies without going through Congress as required by law.

Arroyo said that the two parties involved, along with the National Telecommunications Commission and the Securities and Exchange Commission cannot just talk among themselves and go ahead with the deal as if Congress does not exist.

“The National Telecommunications Commission is mandated to protect consumers and level the playing field under Republic Act No. 7925 or the Public Telecommunications Policy Act,” Arroyo said.