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NTC wants 3rd telco player within Duterte term

/ 12:25 AM August 08, 2016

THE NATIONAL Telecommunications Commission (NTC) wants to launch a landmark multibillion-peso auction for a slice of 3G and 4G telecommunications frequencies within the term of President Duterte to encourage the entry of a new telco player.

The plan, according to NTC commissioner Gamaliel Cordoba, could pave the way for the entry of a challenger to the PLDT-Globe Telecom duopoly.

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“We want a third player to come in,” Cordoba told reporters at the sidelines of the Department of Information and Communications Technology’s (DICT) public consultation for its implementing rules and regulations.

He said the frequencies would be reserved for a new player, thus PLDT and Globe would not be allowed to bid.

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The prospect of another market player vanished after PLDT and Globe last May 30 jointly bought out San Miguel Corp.’s Vega Telecom, which controlled valuable but unused radio frequencies, for close to P70 billion.

SMC abandoned its plans after talks with potential partner Telstra Corp. Ltd. of Australia collapsed last March and as SMC president Ramon Ang later revealed worries about legal threats from PLDT and Globe.

This early, pro-consumer groups expressed skepticism about the planned auction, saying the “overwhelming” share of spectrum assets held by PLDT and Globe would scare away new competition. Moreover, the bidding exercise was likely hinged on the outcome of legal cases that emerged after Globe and PLDT sued the Philippine Competition Commission, which wanted to review the SMC sale transaction.

According to Cordoba, the spectrum assets to be auctioned would mainly include a portfolio of frequencies returned to the government from two merger deals in the last five years.

It will include 10 Megahertz 3G frequencies of Connectivity Unlimited Resources Enterprise (Cure) that PLDT was told to give up after buying out Digital Telecommunications Philippines in 2011.

The government failed to auction this off on questions over valuation, although Cordoba said Cure’s 3G frequencies should fetch at least P1.5 billion.

Cordoba said that would be bid out together with the 700 MHz (20 MHz), 2500-2700 (15 MHz), 800 MHz (10 MHz) and 3400-3500 MHz (40 MHz) that were returned by PLDT-Globe after buying Vega.

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“We want a third player to get a whole array,” Cordoba said. He declined to comment on the specific timing and total value, saying that would be set by the DICT.

This would be the first auction of its kind in the country. Historically, frequency assets transferred from company to company via private deals, including the recent buyout of Vega. PLDT and Globe earlier said the acquisition was necessary to improve the quality of internet services, tagged as lagging behind the Philippines’s regional peers.

“NTC seems to be belatedly dealing with an old issue which they should have and could have easily done years ago. What the public will demand will be NTC accountability for the duopoly control over mobile spectrum,” Winthrop Yu, chair of the Internet Society-Philippines Chapter, said.

Radio frequencies are valuable and limited assets that the government owns and assigns for various uses, including telecommunications. These are essential in the telco industry and allow the transmission of various forms of data, enabling phone calls and text messaging as well as internet browsing on smartphones.

DICT’s newly appointed head, Rodolfo Salalima, a former Globe executive, said earlier that he was open to auctioning off frequencies. If these could not be bid out, Salalima said these should be assigned to the “best qualified telco who can make use of that frequency.”

The DICT chief also launched a frequency audit to end the practice of spectrum warehousing, or holding on to frequencies for speculative purposes without using these.

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