Telcos’ 700 MHz buyout anti-consumer, says group

THE LOCAL chapter of a global non-profit organization assailed the recent buyout of San Miguel Corp.’s telecommunications assets, saying this went against the best interest of consumers as it “locked out” future competitors.

A letter being drafted by the Internet Society-Philippines Chapter to the Philippine Competition Commission took a different approach in criticizing the P70-billion acquisition launched by industry incumbents PLDT and Globe Telecom: It said the deal was not technically justified.

PLDT and Globe said they needed access to SMC’s valuable but unused radio frequencies, especially those in the 700 megahertz band to improve mobile internet services amid criticism over spotty quality and high costs compared to regional peers.

The 700 MHz spectrum is a low-band frequency meaning it was the most efficient in covering wide spaces and inside buildings. Before the transaction, SMC held almost all of the 700 MHz band. Since their pleas to the government fell on deaf ears, PLDT and Globe decided to buy SMC’s telco unit Vega Telecom last May 30.

The Internet Society noted in its June 20, 2016 draft letter, a copy of which was obtained by the Inquirer, that PLDT and Globe already had “more than sufficient spectrum” assets to improve services.

“It is clear that many if not most other telcoms operators worldwide do much more (service) using less (spectrum), and many do not even use 700 MHz,” the Internet Society- Philippines said in its letter.

“Technical issues thus cannot be used to justify the takeover of even more spectrum assets which effectively locks out new or emerging market players,” it added.

It added that the 700 MHz was not unique and other low-band frequencies that PLDT and Globe already controlled—such as those in the 850 MHz and 900 MHz bands—have similar properties.

“Empirically, while many countries have (differing) spectrum plans for the 700 MHz band, most countries do not even use 700 MHz, yet all if not most of these countries provide much faster average internet speeds than the Philippines,” it said.

“Clearly, the 700 MHz band is neither necessary nor sufficient for providing good internet connectivity,” the organization noted.

The letter comes in aid of the PCC, which insisted the massive deal would be placed under “comprehensive review” and required its approval.  This is despite arguments raised by Globe and PLDT’s lawyers, who said it had automatic approval based on the PCC’s own circulars and because the transaction was sealed before the anti-trust body’s implementing rules came out.

Globe and PLDT nevertheless secured approval from the National Telecommunications Commission to co-use SMC’s frequency assets. Deployment of the 700 MHz started days after the acquisition was sealed.

Internet Society Philippines said spectrum allocation should not be based on the current number of subscribers, as PLDT and Globe have argued.

“Global best practice is to reserve (and keep unused) spectrum for potential market entrants,” it said.

It cited the case of Singapore, which has “one of the fastest internet speeds in the world” but still reserves spectrum for new players, even providing entrants a “discount vis-a-vis incumbents.”