Mislatel 3rd telco franchise up for Senate vote on Feb. 6

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By Butch Fernandez & Lorenz S. Marasigan

SENATORS are set to vote on Wednesday on House Resolution 23 seeking the transfer of ownership of Mindanao Islamic Telephone Co. Inc. (Mislatel) to a consortium recently named by the Department of Information and Communications Technology (DICT) and the National Telecommunications Commission (NTC) as the third telco.

The resolution, if approved, will pave the way for the transfer of Mislatel’s ownership to the consortium owned by Davao-based businessman Dennis Uy’s Udenna Corp., Chelsea Logistics Holdings Corp. and state-owned China Telecom.

 Sen. Grace Poe, who chairs the Senate committee tasked to review franchise applications, confirmed that Mislatel’s franchise application would be submitted for plenary voting on the February 6 session. 

“As chair, I sponsored it. It will still go through a vote. The reason why we did this is because this is the mandate of the Senate. I cannot decide on it as chairman [alone]. It has to be the collective wisdom of the body,” Poe said.

The senator, however, did not rule out the possibility that Mislatel’s franchise, if approved, “could still be questioned in courts.”

She clarified that the Senate panel “took out anything that pertains to calling Mislatel as a new major player or third telco [as] we are treating it as a regular franchise because later on, someone might go to the court and say Congress recognized Mislatel as the third telco.” Poe conceded that even if the Senate gives the green light for Mislatel to continue operating, interested parties are not precluded to avail themselves of legal remedies in the courts, explaining that she sponsored the Mislatel franchise “because of the public’s desperation” to have a new player that promises better telco services. She added that she felt it would be “unfair” not to present it on the floor to allow senators to debate on the issue.

“We are all looking forward to using a fast Internet service,” Poe said in Filipino. “It’s for the national interest that I’m doing this.”

Poe warned that Mislatel also risks losing more than P25 billion in performance bond “should they mess up” with their commitments in the first year of their operation. Poe further clarified that the resolution does not in any way preclude Congress from altering, modifying, amending or repealing Mislatel’s franchise granted under Republic Act 8627 “should it fail to make good its commitments regarding coverage and Internet speed.” She added “it does not also mean an automatic renewal of its franchise that is set to expire in 2023.”

‘Non sequitur’

In a related development, Eliseo M. Rio Jr., DICT chief, on Tuesday called the argument against the capability of third telco-designate Mislatel to improve Philippine Internet as a logically flawed claim. 

His statement came on the heels of an online news report that seems to infer that China Telecom Corp. Ltd. allegedly has no capability to deliver quality Internet services in the Philippines, as China lags behind countries such as South Korea, Japan and Singapore in terms of Internet speeds. 

“This argument is non sequitur, at the very least,” Rio said. 

He explained that if he were to follow the reasoning of the article, then Internet quality in the Philippines should have been on a par with Japan and Singapore by now, given that PLDT Inc.’s foreign partner is NTT of Japan, while Globe Telecom Inc.’s foreign investor is Singtel of Singapore. 

“Both of these countries are ranked in the top 10 in Internet speed worldwide. Our Internet speed will improve based on the commitments of our local telcos, not on who their foreign partners are,” Rio added. 

This, he said, is precisely the reason his group championed the highest committed level of service model for the selection of the new major player (NMP), and not the regular procurement scheme of an auction.

‘Stick to the law’ 

Meanwhile, senators cautioned third telco applicant Mislatel to stick to the law to avert a repeat of the aborted national broadband ZTE deal.

This even as Sen. Panfilo M. Lacson Sr. said on Tuesday it is up to the Court to render a verdict on Mislatel’s bid to challenge the Smart-Globe duopoly.

Asked if Congress should require Mislatel to reapply for a new franchise after it was deemed revoked based on issues raised by Senate Minority Leader Franklin M. Drilon citing failure to comply with conditions, Lacson said he would rather leave it for the judiciary to decide.

“My view is, whether Mislatel’s franchise has been revoked or not is for the Court to interpret. Nevertheless, Senator Drilon has evoked a healthy discussion on the issue at hand,” Lacson told the BusinessMirror.

At the same time, Sen. Francis Pangilinan reminded Mislatel to just follow the law to stay out of legal entanglements in doing business as third telco provider.

“Mislatel should be mindful that if it seeks to operate unhampered by possible lawsuits in the future, it should comply with all legal and constitutional requirements to establish its franchise operations,” Pangilinan said  in a separate text message to the BusinessMirror

Recalling the scuttled North Rail and ZTE NBN contracts, Pangilinan said these aborted deals “should serve as a warning to Mislatel and all other investors to keep all transactions above board.”

Mislatel—a group led by Udenna Corp. and China Telecom Corp. Ltd.—won the selection process in November, after two hopefuls failed to comply with the requirements on different counts.  Based on its offer, Mislatel will cover roughly 37 percent of the whole Philippines with a minimum Internet speed of 27 Mbps through a P150-billion capital and operational expenditures budget during its first year of operation. Its five-year commitment entails P257 billion in total money spent, which should provide for an 84-percent coverage with a minimum Internet speed of 55 Mbps. 

“As the NMP, Mislatel Consortium has committed Internet speeds that would bring us on a par with Singapore in five years. It is a commitment backed by a hefty performance bond of around P25.7 billion if it fails to deliver on its commitment,” Rio said.  Under the terms of the selection process, parties will have to post a performance bond—among other securities — equivalent to 10 percent of its total investment to ensure that it will deliver on its commitments to the government.  

“Globe and Smart never gave such a commitment backed by a performance bond in their more than 20 years of operation. Their foreign partners won’t back them on this unlike that of Mislatel’s,” Rio said. 

Currently, Mislatel’s fate is hanging by a thread, after lawmakers questioned the validity of its congressional franchise due to its inactivity. The Senate has yet to vote on the legitimacy of its franchise. 

However, it continues to finish the completion of the post-qualification requirements of the auction. It has until February 17 to submit all the documents that the NTC has required from it based on the terms of reference.   Once completed, the regulator may then award Mislatel its own certificate of public convenience and necessity and a swathe of radio frequencies, both of which will allow it to operate telco services across the Philippines.