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Corporate Securities Info

Review frequencies allocation

/ 05:40 AM February 12, 2018

President Duterte’s order to the Department of Information and Communications Technology (DICT) to take back from PLDT, free of charge, certain radio frequencies it uses is a step in the right direction in rationalizing the management of these valuable assets.

Radio frequencies are electromagnetic waves through which voice messages and data are transmitted or exchanged between communicating parties.

The National Telecommunications Commission (NTC) is responsible for the allocation and use of frequencies.

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The assignment and regulation of frequencies is necessary to avoid overlaps and to enable the NTC to monitor their use. Thus, for security reasons, some frequencies are reserved for the exclusive use of the military and law enforcement agencies.

If the NTC finds the application meritorious, it awards the requested frequency to the applicant and imposes a “spectrum user” fee for its use. The fee is based, among others, on the scope (or quality) of the frequency and usage volume.

Since the application procedure is administrative in character, the NTC has a wide latitude or discretion, subject to certain technical criteria, in deciding on the award. Like other administrative offices, the human element (read: political factor) plays a significant role in the awarding process.

Once a frequency is awarded, “ownership” over it remains with the awardee as long as the spectrum user fees are promptly paid and the awardee does not do anything that may justify its suspension or termination.

The frequencies that the President ordered returned to the government, and which PLDT quickly did without demanding compensation, were assigned to a company that PLDT earlier acquired. They were used sparingly by the original awardee.

The practice of “warehousing” frequencies, and later selling them for a higher price to other parties is common knowledge in the industry. This scheme is made possible and abetted by the existing rules which treat this government asset like an ordinary household commodity.

In 2010, the NTC tried to auction off an unassigned frequency that is useful to a certain level of cellular communications. Upon the petition of an allegedly aggrieved telco, the Court of Appeals stopped the auction. To date, the case is still pending in court.

For years, telco experts have sought the realignment of the policies on frequencies with those of developed economies where their utilization is maximized by, among others, auctioning them to the highest bidders and imposing conditions for their optimal usage.

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The rationale is, frequencies are scarce, or there is a limit to the frequencies that can be efficiently used, so it is essential they are used in a manner that ensures their maximum utilization for the benefit of the most number of people.

This market-based approach assures the government of higher revenue compared to usage fees, and encourages the use of this scarce resource in the most efficient way.

The DICT should not be content with the recovery of certain frequencies for eventual assignment to the telco that the President wants to operate to break the duopoly of PLDT and Globe.

With the momentum provided by the President’s action, the DICT should now work for the issuance of an executive order that would revise the existing procedure on frequency allocation to make it responsive to the times.

It should strike while the iron is hot to improve the telco environment before the duopoly can put up more roadblocks to that objective.

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TAGS: Department of Information and Communications Technology (DICT), PLDT, President Duterte, radio frequencies
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