For the selection of a new major telco player, the government has taken the unusual step of releasing a pair of draft rules ahead of the upcoming public consultation process next Friday.
The rules, distinguished by their emphasis on financial muscle on one hand and commitments for better internet speed and coverage on the other, underscored the differing views within the government oversight committee that crafted the said terms of reference (TOR).
The committed level of service TOR was championed by the Department of Information and Communications Technology (DICT) while the rules calling for an auction of the government’s unassigned radio frequency assets were favored by the Department of Finance (DOF).
The DICT, on late Wednesday, released the second draft of the TOR that considered the DOF’s desire for an auction. In this version, a minimum bid of P36.58 billion was set.
The DICT, in a statement, said the minimum bid amount was not yet final since experts from the International Telecommunication Union (ITU) had yet to provide their inputs.
The main parameter signaled that the company or group that offers the highest amount for the five-year rollout period will be named the new major player and will be awarded a slew of coveted 3G, 4G and potential 5G radio frequencies. In case of a tie, the winner will be decided through a “toss coin,” the draft rules showed.
The minimum requirements outlined in this version were 30 percent population coverage for the first year and at least 50 percent by the fifth year. The minimum average broadband speed was set at 10 megabits per second.
DICT Acting Secretay Eliseo Rio Jr. earlier said there was no need for an auction and to saddle a new player with billions of pesos in upfront costs given the massive capital spending needed to roll out a nationwide telco service.
He said it was unfair to the new player since PLDT Inc. and Globe Telecom were not subjected to any auction.
Rio said on Friday that both TORs would be taken up during the public stakeholders’ meeting next week.
The TOR favored by the DICT chief rewarded players that offered better internet coverage, speed and committed investment.
The so-called committed level of service (CLoS) draft rules, released days before, gave bidders extra points for promising to exceed the the minimum requirements.
These were 30 percent in terms of national population coverage, 5 megabits per second for internet speed and P40 billion in capital and operational expenditure a year.
“I think the CLoS approach would encapsulate the requirements, both financial and technical quite substantially,” said Miguel Bitanga, chief operating officer of Philippine Telegraph & Telephone Corp., among those vying for the third telco slot. He said the auction model still needed to be studied.
Apart from these areas, the two TORs were almost identical.
The main qualification was a congressional franchise that is “not a related party” to dominant players, which in this case are the PLDT Group and Globe. The company or members of a consortium must also have a paid-in capital of at least P10 billion.
The main technical qualification is for at least one member to have experience in “provisioning, delivery and operations” of a telco service for the last five years.
The new telco player must also 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.”