DICT passes major hurdle in search for third telco
In choosing a new major telco player, the government oversight committee resolved on Friday to drop a proposed spectrum auction and adopt a set of rules that will reward participants seeking to give the highest committed level of service (HCLoS).
The decision, seen as a win for the Department of Information and Communications Technology (DICT)-backed HCLoS model, breaks an impasse that has delayed the release of the final rules for the selection of a challenger to the PLDT Inc. and Globe Telecom duopoly.
Eliseo Rio Jr., DICT acting secretary, said in an interview on Friday that the HCLoS model will be used, but with certain conditions.
“The auction is no more,” said Rio, who days before threatened to resign outright should the oversight committee vote in favor of an auction, which was being championed by the Department of Finance (DOF).
Asked whether he would still resign, Rio said “not yet.”
Rio, chair of the oversight committee, called for a meeting on Friday at the Diamond Hotel Manila. The agenda was for the committee members to finally choose the terms of reference to be used in selecting which new major telco player will get a set of coveted 3G, 4G and potential 5G radio frequencies.
In attendance were two other members, Executive Secretary Salvador Medialdea and National Security Adviser Hermogenes Esperon. Finance Secretary Carlos Dominguez III did not attend, sending two other representatives in his place.
Rio said the conditions included the resolution of a legal row over a set of 3G frequencies dating back to 2005.
Among those that sought the frequencies but was disqualified was Bayan Telecommunications, then owned by the Lopez family before it was acquired by Globe in 2015. The disqualification was contested by Bayantel in a case that is now pending in the Supreme Court. Other companies are also seeking the contested 3G spectrum.
Rio said they were already in the process of resolving the matter through compromise agreements. Those issues needed to be addressed before the terms of reference could be finalized, he said.
During Friday’s meeting, Rio said the committee also decided that spectrum user fees had to be adjusted higher. This was partly to satisfy the DOF’s desire for more state revenues given that the auction model, which called for a minimum bid price of P6 billion, was dropped.
“There will be a memorandum circular for the study on how to increase spectrum user fees,” Rio said. He cited fees for 2G frequencies, all of which are held by PLDT and Globe.
Under the draft HCLoS rules, the minimum annual standards were set at 30 percent in terms of national population coverage, 5 Megabits per second for internet speed and P40 billion in capital and operational expenditure per year over a five-year commitment period.
Bidders can offer better terms in each of those metrics to score more points in the selection process.
Rio earlier warned against an auction, saying this would lead to a bidding war that would burden a new player with billions of pesos in upfront costs. These would eventually be passed on to consumers.
This option also goes against the objective of President Duterte, who wants fresh competition to lower prices and improve the quality of services. The President is holding his third State of the Nation Address on Monday.
