Foreign firms invited to break telco duopoly

The Philippines said its door was now wide open to new foreign telco players, translating into a broad policy for the first time since President Duterte launched criticisms against the industry duopoly of PLDT Inc. and Globe Telecom.

In a country where strong regulatory barriers exist, Department of Information and Communications Technology (DICT) Secretary Rodolfo Salalima outlined conditions for the assignment of telco frequencies, a prerequisite for providing services such as mobile internet, voice calls and text messaging.

Salalima, who was against auctioning off frequencies for state revenues, a common practice in other countries, revealed he preferred assigning frequencies to “legitimate” players who could bring in a large foreign partner with deep pockets and expertise.

“If any local franchisee wants to be the third or fourth operator of consequence in this country, bring in a foreign partner with the legal, technical, and financial credibility and capacity to mount a credible and effective competition against existing telcos,” Salalima said.

The pronouncement came months after Mr. Duterte threatened telcos to improve services or prepare for the entry of more foreign competition.

The DICT’s policy was announced as government kicked off the Philippine Telecoms Summit 2017, which aimed to provide a venue for stakeholders to resolve long-running issues on poor internet speed, coverage and affordability.

Salalima also warned companies seeking to “make billions” by hoarding frequency assets and creating bottlenecks for crucial new cell sites.

Gil Genio, Globe chief technology officer, said it was a “national shame” the Philippines had only 16,300 cell sites while Indonesia, which shares the country’s geographic features, had over 86,000.

Further details were also given on the government’s plan to invest in a multibillion peso national broadband backbone.

Earlier this week, the President gave the greenlight for the national broadband plan, the first time the project would be revisited since it was scrapped under the Arroyo administration due to corruption issues. According to the DICT, the project would serve missionary areas around the country.

Telco developments in the Philippines are almost entirely led by the private sector, with the industry controlled by just two companies: PLDT and Globe, backed respectively by Japan’s NTT Group and Singapore Telecommunications.

“Do we need more competition in the telco industry in our country? To my friends in the telco industry, I am sorry, I say yes. The soonest, the best,” Salalima, a former Globe senior official, said on Thursday.

The gap between internet services in the Philippines and regional neighbors remained wide.

United States-based Akamai Technologies ranked the Philippines at the bottom in Asia Pacific both in terms of fixed broadband speed and adoption in the fourth quarter of 2016. The Philippines, however, was still No. 1 in mobile internet speed.

Nonetheless, interest in the Philippines was high. Gamaliel A. Cordoba, head of the National Telecommunications Commission (NTC), said a handful of companies had expressed their interest to compete, including telcos from China.

But even that plan has run into fierce skepticism from experts, who disputed that the government had enough unassigned frequencies that would allow a full-service player to make a dent in competition.

“There is only enough if that new player is willing to invest in LTE only,” said Mary Grace Mirandilla Santos, referring to high-speed mobile internet.

On the sidelines of the forum, she said the new player would have no access to “workhorse” frequencies, which have already been fully assigned to PLDT and Globe for traditional text messaging and voice calls.

Salalima said the NTC would soon publish audit results on unused broadcast frequencies, adding “I don’t care who will be struck by this order.” He said unused mobile spectrum assets would be recalled by the government.

“Enough of frequency hoarding or warehousing for purely financial, speculative gains. Some have become billionaires. Why? Because they hoarded frequency assets,” he said.