Competition agency backs changes to public service law

The Philippine Competition Commission (PCC) wants the Public Service Act (PSA) amended, noting that some provisions in the 80-year-old law were not only outdated but also restrictive.

In a statement, PCC said it supported initiatives in Congress to amend the law, including the lifting of the foreign equity cap on certain industries, including telecommunications and transportation.

“If you look at certain sectors like telecommunications, one way of promoting a competitive environment is to open fully the market to foreign players. The foreign equity cap unfortunately discourages the entry of new foreign players in the sector that provide services to the public,” said PCC Commissioner Johannes Benjamin Bernabe.

Foreign citizens and firms can own the operation of public utilities up to only 40 percent, according to the Constitution, while the remaining 60 percent are for Filipinos.

PCC said that amending the PSA, which still considers ice plants and canals as public services or public utilities, was meant to address this legal obstacle by streamlining the list of activities to be considered public utilities under the Constitution.

Bernabe said the competition watchdog was proposing to change the definition of public utility to “a person who operates, manages and controls for public use the following: Electricity transmission; electricity distribution; water pipeline distribution systems; gas or petroleum pipeline distribution systems, and sewerage systems.”

“So there will be only five public utilities whose foreign ownership will be restricted to 40 percent,” he explained.

He said this meant that the industries that would be removed from the PSA’s definition of a public service or public utility would include telecommunications and transportation.

“In our proposed definition, we say that those business activities that have been delisted from the Public Service Act are considered as business affected with public interest and will continue to be regulated as such by the relevant sector regulators,” he said.

Moves to open the telecommunication sector to competition have gained traction following complaints about the poor internet service of the current duopoly of Globe Telecom and PLDT Inc.