DICT tightens technical requirements as PH searches for 3rd telco player
The Department of Information and Communications Technology (DICT) tightened a key technical requirement as it eased certain financial burdens in the selection rules for a new major telco player.
Based on a new set of draft rules, released online on Wednesday, the DICT said a company or member of a consortium must have at least 10 years of experience in the delivery and operations of telecommunications services on a “national scale.”
The DICT previously required at least five years of experience although no geographical parameters were set.
It also removed hefty deposit payments, equivalent to 20 percent of the committed annual capital and operational expenditure, previously listed under the obligations of a new major player.
The DICT, however, kept the performance security, which will either be a 10 percent cash bond or 30 percent surety bond.
The move signaled that the Duterte administration wanted contenders with deep technical capabilities to compete with the PLDT Inc. and Globe Telecom duopoly.
The tweaks were aligned with President Duterte’s recent State of the Nation Address where he stated that a new major player must provide “the best possible services at reasonably accessible prices.”
At stake are a set of frequencies in the 700 Megahertz, 2100 MHz, 2.5 Gigahertz, 3.3 GHz and 3.5 GHz bands, which the government hopes to award by the fourth quarter of 2018.
The other portions of the draft rules, which use the highest committed level of service model, were maintained.
To participate, an interested company or group must have a congressional franchise that is “not a related party” to the dominant players — the PLDT Group and Globe Telecom.
The company or members of a consortium must also have a paid-in capital of at least P10 billion. It must also not have any uncontested obligations to the National Telecommunications Commission as of Sept. 30, 2018.
In choosing a third telco, a selection committee will mainly consider national population coverage and proposed investment (each with a weight of 40 percent) over a five year period. The remaining 20 percent was set aside for broadband speed.
A new major telco player must ensure at least 10 percent population coverage in the first year, going up 10 percentage points every year until a minimum 50 percent coverage is reached in the fifth year.
Better offers can be made for each year to score additional points in the selection process.
The minimum investment was set at P40 billion annually over five years while the minimum broadband speed is 5 megabits per second.
As with population coverage, bidders can offer better terms in those parameters to score more points.
A unique aspect in this process is a commitment by the new major telco player to amend its articles of incorporation to bar it from merging with a dominant telco, or any player with a market share of at least 40 percent.
Should it become a related party with a dominant player, it must voluntarily return the assigned radio frequencies to the NTC “without condition.”
The DICT rules also showed that should the new major player commit a breach of its commitments and it remains noncompliant for at least six months, the penalties include forfeiture of its performance security and the recall of its radio frequencies. /vvp
