Here’s the latest twist in the legal wrangling over the P70-billion deal involving the joint use by the country’s two biggest telecommunications companies—PLDT/Smart and Globe Telecom—of San Miguel Corp.’s (SMC) idle 700-megahertz (MHz) band assets.
The Office of the Solicitor General is now asking the Court of Appeals (CA) to lift its injunction on the review of the deal by the Philippine Competition Commission (PCC).
What happened after the two telcos acquired the 700-MHz frequencies that had been surrendered by SMC to the National Telecommunications Commission (NTC) was to start putting up long-term evolution (LTE) or 4G broadband facilities to accelerate the delivery of faster and cheaper Internet services.
But not so fast, the PCC said, for it had the power to review the deal as part of its mandate to stop anticompetitive behavior.
On August 30, the appellate court issued a writ of preliminary injunction stopping PCC from reviewing the deal.
That should have given the two telco giants’ combined subscribers of 117 million (PLDT/Smart—68.9 million, Globe—48.4 million) ample reason to rejoice over the prospect of faster and cheaper Internet, but it proved to be short-lived.
On Wednesday, September 14, the Office of the Solicitor General filed on behalf of PCC a Motion for Reconsideration (MR) asking the CA to lift the injunction order and let the PCC proceed with its review of the buyout deal.
The PCC asserted that the CA had “seriously erred” in stopping the PCC probe because, first, the petitioner does not have a clear legal right requiring protection by an injunctive relief and, second, the deal is against public interest as it would have a negative impact on the telecom industry.
The PCC’s Mergers and Acquisitions Office (MAO) had earlier said that its initial review of the P70-billion deal indicated that this was anticompetition because SMC, which had sold several telco units with the highly coveted 700-MHz bandwidths through Vega Telecom Inc. (VTI), had the potential to be a strong third player in the Philippine telecom industry and could have broken the duopoly of PLDT/Smart and Globe.
The two telcos are now saying the PCC review of the mega deal is illogical, for a number of reasons.
One, it is not the deal itself that is anticonsumer and disadvantageous to the public. It is the PCC inquiry that would hurt not only cellphone users, but also everybody, because the undue delay resulting from the proposed review undermines the order by the NTC for Globe and PLDT/Smart to roll out LTE services, and also undermines the directive by President Duterte for the telcos to deliver faster and cheaper Internet services.
Two, the claim that the deal has shut the door to SMC or any other entity as a competitive third player is anticonsumer on two grounds. One, SMC has surrendered its 700-MHz assets, after its planned partnership with Australia’s Telstra didn’t push through. And two, for it to become a highly competitive challenger to the two telco giants, it needs huge capital to put up a nationwide broadband network to give PLDT/Smart and Globe a run for their money.
Three, a third player can still enter the picture because part of the NTC-approved buyout deal is the return by PLDT/Smart and Globe of certain frequencies that the Commission can assign to a possible telco competitor.
In fact, a third player can still enter because Globe and PLDT/Smart have relinquished a total of 85 MHz across the 2G and 4G bands.
Four, a duopoly does not mean absence of competition because PLDT/Smart and Globe have long been engaged in a contest for subscribers that have benefited the domestic telco market in the form of cheaper text and voice-call rates and free mobile phones for their postpaid subscribers.
Five, the telcos have a legal right requiring protection, via the injunction order against the PCC review, since they have to beat the deadline by the NTC on the expedited rollout of faster broadband services as one of the conditions for the NTC’s approval of PLDT/Smart’s and Globe’s joint use of SMC’s idle 700 MHz assets.
The telcos want legal protection because the delay resulting from any PCC probe would adversely affect their ability to raise funds to put up the infrastructure needed to bring about faster and cheaper Internet speed, which is what the NTC—and President Duterte himself—had promised the electorate when he was still in the hustings.
E-mail: ernhil@yahoo.com.