Duterte offers China 3rd telco carrier slot

“The telecom duopoly is about to end,” Malacañang declared on Monday.

Presidential spokesperson Harry Roque announced that President Rodrigo Duterte had offered China the “privilege” of operating the third telco player in the country to “break up” the industry duopoly of PLDT and Globe Telecom.

Roque said Mr. Duterte made the offer during his meeting with Chinese Premier Li Keqiang in Malacañang last week.

He also said that former Information and Communication Secretary Rodolfo Salalima, who resigned in September after complaining of “corruption and interference,” might “have prevented the earlier breakup of the duopoly.”

In a press briefing, Roque said offering China to become the third telco operator in the country “is the latest instance of the President proving that he has the political will to do what is necessary to benefit the Filipino people.”

“I repeat, the announcement is that duopoly, that telecoms duopoly is about to end,” he said.

No specific Chinese company has been lined up, according to Roque.

He said the President chose China because it had the capital and the technology to provide efficient telecom service.

“Consider also the proximity and the fact that we want to avail ourselves of as much economic advantage that we could arising from the renewed friendly ties with China,” he added.

Third player welcome

Pierre Galla, cofounder of ICT advocacy group Democracy.Net.PH, said it was high time a third player entered the market to boost competition.

PLDT said it was the government’s prerogative to invite new players. “As for us, we welcome competition,” said PLDT spokesperson Ramon Isberto.

Eliseo Rio Jr., acting secretary at the Department of Information and Communications Technology (DICT), said a third player was welcome.

“In fact the more players the better. But there are constitutional limitations to foreign participation such as 40 percent ownership,” Rio said in a text message.

Industry players and experts have generally declined to comment, saying they first need to see how the Duterte administration would implement such a plan. One way is for a Chinese telco company to partner with a local player.

Philippine Telegraph & Telephone Corp. (PT&T), which has new owners led by Salvador B. Zamora II and Benjamin Bitanga, is in talks with potential foreign investors.

Among these investors, Zamora told the Inquirer in October, was state-owned China Telecom, that country’s third-largest telco. PT&T was earlier referred to by Mr. Duterte a few months ago as the third player.

Slowest, most intermittent

The Philippines’ data and voice services rank among the Asia-Pacific’s slowest and most intermittent. Last year, Mr. Duterte warned PLDT and Globe to shape up or face new competition.

PLDT and Globe have been accused of stifling competition and of failing to make necessary upgrades, accusations both have rejected.

They joined forces last year to buy for P70 billion radio frequency assets, including those in the coveted 700 megahertz (MHz) band, from a potential rival, San Miguel Corp, to kick-start telecom upgrades.

Presidential spokesperson Harry Roque —JOAN BONDOC

The 700 MHz is a low-band frequency prized for its ability to efficiently cover wide distances and penetrate buildings.

Critics say services are still lacking, however.

Outranked by 5 neighbors

The Philippines ranked 94th out of 121 countries for mobile internet, while it was 91st out of 131 countries for fixed broadband, according to the “Speedtest Global Index” study in September.

In both categories, the country was outranked by its five Southeast Asian neighbors—Cambodia, Vietnam, Thailand, Malaysia and Singapore.

Roque said the President had ordered that all applications from prospective new players be filed in the Office of the Executive Secretary, which was given 45 days to act on them.

“That’s how serious the President is in allowing a third-party carrier to come in,” he added.

Deal with Facebook

Roque noted that the government last week signed an agreement with an affiliate of Facebook for the building of “Luzon Bypass” of the Pacific Light Cable Network, which “will provide bandwidth of two terabits per second.”

“These 2 terabits is equivalent to the current capacity of the duopoly operators today,” he said.

Roque said the process of breaking up the telco duopoly “should have been sooner” if not for “delays” allegedly on the part of former Secretary Rodolfo Salalima of the DICT.

“This agreement with the subsidiary of Facebook should have been signed as early as December 2016. It was not signed by the former secretary of the DICT,” he said.

Roque said this was one of the areas of Salalima’s conflict of interest pinpointed by Cabinet investigators. Salalima previously served as senior vice president for corporate and regulatory affairs of Globe Telecom until 2008.

“It was further reported by the special investigating committee that the former DICT secretary likewise may have prevented the earlier breakup of the duopoly by delaying the use of satellites as (a) viable option,” he said.

National broadband plan

Roque noted that the initial cost for the national broadband plan (NBP) developed under Salalima “appeared excessive” at P200 billion because the recommendation did not consider the contribution that could be made by National Grid Corp., National Transmission Corp., fiber optic clients and the Philippine National Railway Communication project.

The DICT earlier said the NBP, a government-backed plan to deliver high-speed internet services to the country’s far-flung areas, could cost anywhere from P77 billion to P200 billion.

“Now, it would appear also that under the scheme being pushed by the former secretary of DICT, the NBP terrestrial backbone would still have left the duopoly with the right to connect the end users to the backbone,” Roque said.

“And this after government would have spent already P77 billion,” he added.

But with the agreement with the Facebook affiliate and the entry of a Chinese telco player, Roque said Filipinos could expect faster internet speed and better cellular technology. —With a report from the wires