DICT to seek for an extension of deadline for entry of 3rd telco provider

MANILA, Philippines — The Department of Information and Communications Technology on Wednesday said it will relay to President Rodrigo Duterte concerns over the deadline for the entry of a third telecom player after potential entrants sought for more time to prepare.

In November last year, Duterte invited China to be his country’s third telecom provider that will challenge a longstanding duopoly.

Beijing later picked China Telecom to invest in the Philippines, backed by a consortium of Filipino businesses. A third telecom carrier is targeted to be up and running by the first quarter of 2018.

During the DICT’s first public consultation for the arrival of a third telecom provider, participants pointed out that the March 2018 deadline is “too tight.”

In response, DICT Officer-in-Charge and Undersecretary Eliseo Rio, Jr. said his agency will ask for an extension of “two months probably, from end of March.”

“So five months overall,” Rio said, adding that the DICT can only seek for an extension of a few months, not one year.

“We can’t wait for one year. I’m sure the president will not just ask us to resign but kick us out,” Rio was quoted as saying in a report by Bloomberg TV Philippines.

Aside from China Telecom, Malacañang had said South Korea’s LG Uplus Corp., Japan’s KDDI, and a Taiwanese telecom firm that was yet to be revealed were also eyeing the Philippines’ third telecom slot.

READ: Andanar: Firms from Japan, Taiwan also interested in being third telco player

According to a timeline presented by the DICT, the drafting of a memorandum circular—which contains the terms of reference for the selection and assignment of radio frequencies for the new player—will happen from January 9-19.

The memorandum circular is targeted to take effect on March 6, while the acceptance of bidding documents from participants is set on March 27.  The third entrant in the telecom industry is expected to be announced on April 2.

Rio last January 8 signed Memorandum Order No. 001 which spells out the guidelines for the entry of a new major player in the Philippine telecom market.

Under MO No. 001, companies that are interested in the third telecom spot must possess a valid congressional telecommunications franchise, and have a written and binding commitment from a foreign joint venture company, if applicable.

Applicants must also not be an affiliate of Globe Group or PLDT Group of companies.

“The applicant with the highest committed investment for the first five years shall be selected. This commitment should be secured with a performance bond,” section 2 of the document read.

“The new major player shall be assigned radio frequency bands that are now available for assignment as identified by the NTC. Non-compliance with its commitment under section 2 hereof shall result in the automatic recall of the assigned radio frequencies,” it added.

In a January 17 report by BusinessWorld, Rio said plans to reallocate mobile frequency may require legislation, possibly prolonging the process of introducing a third player in the telecom industry.

Incumbents PLDT, Inc. and Globe Telecom, Inc. hold the majority of radio frequencies. The two telecom giants have said they are using frequencies in the 700-megahertz (MHz) spectrum which they acquired from their purchase in 2016 of San Miguel Corp.’s telco assets.

The Philippine Competition Commission estimates that only 12.8 percent of the spectrum will be available for a potential third player.

Under the Constitution, foreign investors are only allowed up to 40 percent on certain businesses and industries. Hence, applicants will need to seek a local partner, and will require the approval of the PCC for a joint venture.

READ: China allays 'security threats' fear over entry of Chinese telecom to Philippines