Telcos seek reduction in spectrum user fees

MANILA, Philippines — As the government has improved the ease of doing business in telco, the industry is asking it to work on minimizing costs next, starting with a mandatory fee requiring P5 billion yearly.

The Philippine Chamber of Telecommunication Operators (PCTO) is pushing for the reduction, if not elimination, of spectrum user fees (SUF) that the government charges on telcos.

Telcos pay SUF to the National Telecommunications Commission (NTC) annually depending on the volume of spectrum they use and the kind of service they provide.

The industry paid almost P27 billion in SUF to the NTC from 2018 to 2022, averaging P5.39 billion a year and growing by 12 percent annually during the period. Telcos were slapped the highest SUF in 2022, when they were billed a combined P6.73 billion.

PCTO vice president Roy Ibay said the higher the cost of doing business, the harder for telcos to expand their networks. The PCTO hopes that the government can consider reducing the SUF so providers can allocate more capital for infrastructure buildup.

With telcos spending more for network upgrade, they can help the government raise the number of households with internet access from 17.7 percent in 2019, to 60 percent in 2028, a target laid out under the Philippine Development Plan 2023-2028.

Ibay warned that the SUF would later on become costlier for telcos to pay up, as subscribers are bound to consume more data and demand higher spectrum in this digital era.

“The problem is worsening as mobile users put even greater demands on networks which in turn require operators to use more spectrum,” Ibay said.

Operators can also allocate their savings from a lower SUF to build new assets in geographically isolated and disadvantaged areas (GIDAs). Ibay said the fees collected in 2022 can already cover three percent of industry-wide capex.

“Roughly my estimate is that P7 billion is around two to three percent of the total telco industry capex annually. If SUF is either reduced or eliminated, then a telco infrastructure growth focused on GIDAs can be boosted tremendously,” Ibay said.

Infrawatch PH convenor Terry Ridon asked the Private Sector Advisory Council (PSAC) to propose to President Marcos the lowering of the SUF.

The PSAC played a crucial role in pushing for the signing of Executive Order 32 that simplified the permitting process for connectivity projects, enabling telcos to roll out faster.

“The PSAC wields significant influence on the executive to push for the lowering of SUF, and it should consider taking this on as a major public policy campaign,” Ridon told The STAR.

However, Ridon warned against slashing the SUF without considering its impact on government income. The SUF funds the P2.5 billion requirement of the Free Public Internet Access Program (FPIAP), which puts internet sites in public spaces, such as government offices and schools.

Ibay said the government has to shoulder the burden of financing the FPIAP by hiking the budget of the Department of Information and Communications Technology (DICT). Also, the PSAC has a pending proposal for the government to invest P240 billion on connectivity infrastructure.

The council also wants the DICT to receive at least P60 billion every year so that the agency can sustain free internet in 125,000 public facilities.

Based on estimates from telco multinational Ericsson, countries gain a 0.8-percent hike in gross domestic product for every 10-percent increase in mobile subscribers.

With this, Ericsson head of market areas Southeast Asia, Oceania and India Andres Vicente told The STAR that the Philippines can grow its economy if the government cuts telco fees, allowing providers to spend more for network expansion.