Gov't mulls wider range of sanctions for 3rd telco's unmet commitments

MANILA, Philippines — To ensure that the new challenger won’t slack off, the government is planning a wider range of options in imposing sanctions on the third telecommunications player should the company fail to meet its committed level of service.

The expanded penalties, contained in the revised draft terms of reference (TOR) for the selection of new telecom carrier, comes as the state seeks to improve services by breaking a longstanding duopoly.

President Rodrigo Duterte had invited foreign firms, backed by a consortium of Filipino businesses, to take a role in the country’s wireless communications market to stir up competition.

According to the draft document, which was seen by Philstar.com, the National Telecommunications Commission will have the following options should the new telecom company miss any of its key rollout commitments:

• Provide the new telecom player a “reasonable period” to remedy the breach of its committed level of service.
• Forfeiture of the performance security, which is equivalent to 5 percent of the company’s total committed capital expenditure for the next five years.
• Challenge the issuance of telecom license to the company through a quo warranto proceeding, on the grounds of failure to meet the “special committed level of service conditions.”
• Proceed to the process of recalling the radio frequencies assigned to the company.
• A combination of any of the above options.

The Department of Information and Communications Technology earlier said that instead of choosing the third telecom provider based on “amount of money you want to invest,” the government will select the company with the highest committed investment and level of service for the next five years.

To note, the initial draft of the TOR released by the DICT last February spelled out that radio frequencies assigned to the winning company will be automatically recalled should the new player fail to fulfil its commitments.

The previous draft also indicated that non-compliance with the 70:30 debt-to-equity ratio will result to the withdrawal of award, and the applicant with the second highest bid will undergo post-qualification.

DICT Officer-in-Charge Eliseo Rio Jr. earlier said his department has a “self-imposed timeline” of choosing the industry's new telecom carrier before Duterte delivers his next State of the Nation Address in July. The Palace had initially said the third telco would be named within the first quarter of 2018. 

Meanwhile, incumbents PLDT and Globe say they welcome the competition.

The government is reportedly hoping to release the final TOR in the next few weeks.