Senators agree telcos must improve but split on Duterte threat of expropriation

MANILA, Philippines — Several senators agree that telecommunication services in the country need much improvement, but not all of them are on board President Rodrigo Duterte’s threat of government expropriation of the telecommunication companies.

Some businessmen saw the President’s warning as “a clear and present danger” to PLDT Smart and Globe Telecom after the House of Representatives recently denied broadcaster ABS-CBN’s application for renewal of its franchise.

In his address to a joint session of Congress on Monday, Duterte upbraided the two telcos for their poor service and gave them up to December to introduce improvements or face government expropriation.

China-backed third carrier

The President’s warning came as a third carrier, China-backed DITO Telecommunity, prepares for a March 2021 rollout. The new telco is owned by Udenna Corp. of Davao businessman Dennis Uy, a supporter of Duterte.

Shares of PLDT Smart and Globe Telecom tumbled while those of DITO Telecommunity gained on the Philippine Stock Exchange (PSE) on Tuesday.

PLDT Smart fell by as much as 3.6 percent in early trade but managed to eke out a 0.53-percent gain at the close.

Globe Telecom slipped by as much as 3.38 percent in the morning but was able to trim its loss to 0.5 percent by the end of trading.

The most common complaint against the two telcos is a slow internet connection. According to Speedtest Global Index, mobile download speed in the Philippines is around 16.17 megabits per second compared with the global average of 34.67 Mbps.

For Senate President Pro Tempore Ralph Recto, improving the services of the two telcos would happen if they would have more competition.

Government expropriation of the two companies is not the way to go, Recto said on Tuesday.

“[The] government has a terrible record in operating telecoms. Promoting competition is the way forward,” he said in a text message.

Scaring investors

Sen. Francis Pangilinan warned that President Duterte’s warning of expropriation could drive away investors, which could then affect the country’s economic recovery from the new coronavirus pandemic.

Pangilinan noted that the threat came after the shutdown of ABS-CBN and amid the government’s poor response to the pandemic.

“Threatening telcos with expropriation after shutting down the largest media network while displaying sheer government incompetence and failure in managing the COVID-19 response will only scare foreign and local investors from doing business in the Philippines and further hamper our economic recovery,” Pangilinan said.

But Senate President Vicente Sotto III liked what he heard, and said it was time for the telcos to shape up, especially with distance learning now the norm.

There is much the government can do about poorly performing telcos, Sotto said.

Congress could revoke their franchise and allow other investors to take over their operations, he said.

“If the President says revoke their franchise, it will move swiftly in Congress. That will die. And then we can have other investors take over,” Sotto told reporters.

If the telcos have problems with bureaucratic red tape, they could report it to the President since there is a law on the ease of doing business, he said.

They should not use red tape as an excuse for failing to improve their service, Sotto added.

What’s important, he said, is that telcos put up quality cell sites.

As for the possible negative effect on the business community of the President’s warning, Sotto said it may make the operating telcos nervous, but not those waiting to enter the industry.

Those doing their job well have nothing to be afraid of, he said.

“Why would you be afraid of the government if your work is complete and good?” Sotto said.

Wake-up call

Senate Minority Leader Franklin Drilon also agreed with Duterte that PLDT Smart and Globe Telecom need to improve their service, as even the Senate is suffering from a poor internet connection.

“Even in the Senate sometimes we have a teleconference talking about telcos and we could not hear each other, because the signals are very poor. I think there is no dispute that we need an improvement [as] far as telco is concerned,” Drilon said in a television interview.

Sen. Panfilo Lacson said the telcos should consider the President’s threat a wake-up call because he spoke the truth about their performance.

But he said the President failed to warn local officials who make things difficult for telcos by extorting money from them in exchange for issuing permits and licenses, and for protecting them from delays in the construction of their cell towers, especially in areas infested with communist insurgents.

Lacson also noted that Duterte’s threats had worked in the past to speed up processes and litigation.

“Whether government takeover of telcos is justified and compliant with the provisions of the Constitution given the circumstances is another matter altogether,” Lacson said.

Sen. Grace Poe said improving internet service and coverage could not be done by just obliging the telcos.

The regulators must be told as well to remove roadblocks to constructing telecommunication infrastructure, she said.

“Pertinent national agencies and local government[s] should step up so that the approval of at least 25 regulatory permits for the construction of cell towers will not take six months,” Poe said.

“Both [the] government and [the] telcos should work double time to give millions of Filipinos better and cheaper connectivity by the end of the year. We expect them to act with urgency and sense of duty for the sake of [our] people,” she added.

Poe also called for the approval of the e-government bill to make government services available online.

Economic future

Sen. Sonny Angara said the President had expressed the frustration of many sectors over poor telecommunication and internet services in the country.

There is a need for them to improve their services to help the country’s economic recovery, Angara said.

“Our economic future is dependent on the quality of the services these telcos provide and hopefully we improve in this respect. We cannot be competitive in many fields because our internet is too slow. This is essential to a swifter economic recovery,” he said.

Angara noted that after Duterte’s speech, there was a commitment from the telcos to upgrade their services.

Sen. Imee Marcos said that like many Filipinos, Duterte has reached the end of his patience with the telcos.

As for the President’s threat of expropriation, Marcos said Duterte was a lawyer and would not act in haste on the matter.

She said she also doubted that businessmen would be spooked by the President’s threat. Businessmen like to know that the government is determined to improve its digital infrastructure, Marcos said.

Competition law

But Francis Lim, president of the Management Association of the Philippines, said it was saddening that Mr. Duterte characterized present-day businessmen “as the same type of oligarchs who took advantage of the people during the Spanish regime.”

“This is so sad given how Philippine business has managed to grow despite the challenges along the way and how it has been helping the country through the years, which it ably demonstrated during the pandemic,” Lim said.

“To put things in proper perspective, our so-called big businesses still pale in comparison with their Asian counterparts. They should be nurtured to grow further to help generate more jobs for our countrymen and help our country compete with its peers.

Significantly, in 2015, Congress enacted a competition law to check any abuses that they commit, which is being proactively enforced by the Philippine Competition Commission,” said Lim, a former president of the PSE.

Meanwhile, Adel Tamano, chief administrative officer of DITO Telecommunity, said the third carrier was on track to meet its rollout date of March 2021.

“We cannot speak for what the President has mentioned in his State of the Nation Address,” Tamano said. “As far as DITO Telecommunity is concerned, we all share the concern of the President for the need to provide world-class connectivity to the Filipino people, especially in the face of the pandemic.”

—With a report from Doris Dumlao-Abadilla