Crucial disagreements and the specter of a legal row emerged Thursday during the initial public consultation on the country’s first-ever common cell tower policy, a key initiative of the administration to support a new major telco player once it is selected before the end of 2018.
The government, mainly through Presidential adviser on ICT and economic affairs Ramon Jacinto together with the Department of Information and Communications Technology (DICT), is currently seeking public comments on its draft guidelines for shared telco infrastructure.
The policy, as drafted, includes the controversial measure to remove all future cell tower building activities from incumbents PLDT Inc. and Globe Telecom, upending a decades-old practice. This will instead be assigned to a maximum of two independent tower companies, which will go through a yet to be determined selection process.
The government believes that doing so will help speed up the rollout of cell towers, the lack of which has been blamed by the telco industry incumbents when issues on spotty mobile quality crop up.
Moreover, it argued that the policy would also benefit the telcos as they can sell their existing cell sites to the independent tower provider, which will earn from leasing space in their towers. This will free up cash for their network initiatives.
Ultimately, the government wants telco providers to share their tower assets as opposed to each company building and using their cell sites exclusively. This will be a boon to a third player, which will be starting its network from scratch.
Major issues, however, stand in the way.
For one, interested tower companies questioned the rationale of allowing only two companies to build cell sites. Under the rules, the National Telecommunications Commission (NTC) will award licenses to two tower companies for the first four years after the policy is implemented.
During the same event, Froilan Castelo, Globe General Counsel and Senior Vice President, doubted how an independent tower provider could do better given that they would still experience the same permitting bottlenecks that the telcos have faced.
“It is the bureaucracy that really kills us,” said Castelo, adding that Globe’s proposal is to establish a tower company subsidiary to be partly owned by the government in order to ease permitting issues, mainly on the local government unit level, which delay the construction of a single cell site by up to eight months.
“If we are going to make this exclusive, we do not know and we cannot see how this can speed up the rollout,” noted Castelo, adding that Globe was ready to share its assets through its own tower company.
The current rules state that a telco such as Globe or PLDT would be allowed to build only if the tower company is unable to do so 30 days after the request was made. This provision has been assailed by industry players as adding yet another layer of bureaucracy.
Castelo also said that barring Globe from building future towers will violate the terms of its franchise and its licenses from the NTC, which state that the company can build its own network.
“Preventing us from doing that will be considered as impairment of contract and in violation of the Philippine constitution,” Castelo said.
Jacinto countered that the current exercise stemmed from the poor level of services provided by the telco industry players.
“With all due respect, I think Globe and [PLDT subsidiary] Smart have lost their moral ascendancy to start building towers,” Jacinto said, without addressing the legal issues raised by Globe. “We will not be in this room if you are providing the service in the first place.”
To address permitting delays, Jacinto said the Duterte administration will exert its “moral influence” to speed up the approval process.
During the consultation, Manish Kasliwal, chief business officer in Asia of industry giant American Tower Corp. asked that the final rules allow more than two tower providers.
“Our view is there has to be a minimum of two tower companies or maybe more,” Kasliwal said.
Two other stakeholders, one of whom represented Norway’s Telenor, a telco that is accustomed to dealing with tower companies, also noted that there should not be a cap on the number of providers that want to enter.
“If the tower companies themselves find it more viable to have more, then why would the government limit it,” Mary Grace Mirandilla-Santos, lead convenor of advocacy group Better Broadband Alliance, said when sought for comment on Thursday.
Jacinto explained that initially limiting the number of tower providers will “protect the viability of the common tower company from the beginning.”
DICT acting secretary Eliseo Rio Jr. said they plan to finalize the guidelines on telco infrastructure sharing alongside the third telco selection process.
As noted, the government wants the tower companies to address the lack of cell sites in the Philippines.
PLDT and Globe together operate a combined 16,000 cell sites. This is far less than neighbors such as Vietnam and Indonesia, which have about 70,000 and 90,000 towers, respectively. As such, the government is seeking two tower companies that can build an additional 50,000 sites.
The practice of using common tower providers is prevalent in countries such as China, Australia, Indonesia, Vietnam.
Last July, Filipino company ISOC Infrastructures, together with Malaysia’s OCK Group Berhad, submitted an unsolicited proposal to build 25,000 cell towers across the country in seven years.
The consortium offered to spend as much as P100 billion, with the first P20 billion to be spent in three years. Rio said on Thursday that the offer was still being evaluated. /kga