DICT: Entry of 3rd telco player rests on ‘quality of service’

The selection process for a third telco player is moving forward with the Department of Information and Communications Technology (DICT) resolving to publish a set of rules based on quality of service instead of pure financial muscle after a decisive vote on Friday.

This comes as a public stakeholders’ meeting was called to break the impasse between the DICT and Department of Finance (DOF) over which set of rules to follow.

The DICT’s favored terms of reference sought to select a new major telco player based on highest committed level of service (HCLoS) while the DOF wanted an auction, which had a revised floor price of over P6 billion.

At stake are a set of valuable 3G, 4G and potential 5G frequencies that a new major player will use to provide a slew of mobile services and break the PLDT Inc. and Globe Telecom “duopoly.”

The two differing TOR’s were put to a vote on Friday, with the HCLoS model winning by an overwhelming margin.

Out of 15 interested telcos, whose names were not revealed, the HCLoS was favored by 75 percent or at least 11 telcos. The remainder either abstained or favored the auction model.

When considering votes of all public stakeholders, the HCLoS was favored by 96 percent of participants.

DICT acting Secretary Eliseo Rio Jr., who had voiced out his opposition against the auction model because of the heavy financial burden it would place on a new telco player, said the public had spoken on Friday.

He said the results will be presented either in a Cabinet meeting on Monday or to the oversight committee crafting the rules. The DICT supervises the oversight committee, whose other members include the DOF, Office of the Executive Secretary and National Security Adviser.

Asked about potential opposition from Finance Secretary Carlos Dominguez III, Rio said the selection process was a “DICT affair.”

“In other words, I have full responsibility and therefore I have to decide that I have to go forward because I have been instructed by the President,” Rio told reporters after the results of the vote were released.

He explained that the recent delays in the third telco selection process were due to the deadlock within the oversight committee, adding that he is still expecting that a new telco player will be chosen within the year.

Throughout the meeting on Friday, various private sector stakeholders spoke favorably of the HCLoS model, which rewards a group that promises better internet speed, coverage, and investment.

Among its government supporters was Ramon “RJ” Jacinto, who advises President Rodrigo Duterte on economic affairs and ICT.

“If a player is obviously qualified, we should not put too many barriers,” Jacinto, who is finalizing the country’s first-ever common tower policy, said during the meeting on Friday.

Under the HCLoS rules, the minimum annual standards were set at 30 percent in terms of national population coverage, 5 Megabits per second for internet speed and P40 billion in capital and operational expenditure per year. This will be done via a five-year rollout period.

Bidders can offer better terms in each of those metrics to score more points in the selection process.

A key feature in this initiative was the requirement that the new telco player will be barred from merging with a dominant player, or a company with a market share of at least 40 percent.

This was included to prevent a repeat of cases in the past where telcos hoarded spectrum assets only to sell out to larger players for a profit.

To qualify, a company or consortium must have 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. /jpv

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