The whole telecommunications industry is keenly awaiting the outcome of the case lodged before the National Telecommunications Commission (NTC) on the “unfair” allocation of a digital real estate, considered one of the key answers to the relatively slow Internet speeds in the Philippines.
While Globe Telecom Inc. has called the uneven distribution of the 700-megahertz (MHz) frequency band to one mobile services group as “anticompetitive,” the telecommunications regulator believes that moves to block out competition will also result in more dismal services down the line.
Globe Telecom Policy Division Director Ariel B. Tubayan said his company is ready to file a case before the Philippine Competition Commission (PCC) in July, should the regulator fail to act on its applications for a portion of the spectrum.
“Potentially, yes, we will approach the commission,” he said in a business forum, spearheaded by the Economic Journalists Association of the Philippines. “If we go by the timetable set by the commission, which is June, we can approach them by July.”
The competition body, set up in February, is currently crafting the implementing rules and regulations of the Philippine Competition Law. This set of standards should be out by June, PCC Chairman Arsenio M. Balisacan said.
“I think it’s not good to partner with our rival in approaching the commission, as this could send the wrong signals to people who we are teaming up with to put down the other player. We will act independently,” he added. Globe has been requesting for a “fair allocation” of the band from the NTC since 2006, Tubayan said, and the slowpoke action of the regulator on the telco’s filings have adverse effects, both on the company and its consumers.
“The Philippines is unable to cash in on its digital dividend because of this refusal of her regulator to allocate this band. Control over a key source for providing Long Term Evolution or LTE services is potentially anticompetitive,” he said.
The telco official added that the Philippines is losing P250 million in annual spectrum usage fees, claiming that the diversified conglomerate has not been utilizing the band for years now.
According to Balisacan, there are three ways by which his office can take a case. First is if there is a complaint filed before the commission; second, if there is a regulatory concern from an industry regulator; and third is out of its own volition.
“For each of these cases, there are processes that we have to follow. These are currently being identified, formulated in the implementing rules and regulations. The law, however, talks about undertaking a preliminary investigation, and if that review shows that there is a case for a more in-depth review, then formal review will have to be undertaken,” he explained. The results of the formal review will determine the plan of action that the commission shall undertake, whether that would mean the imposition of penalties or fines.
“In the case of Globe, any of these approaches can be used,” Balisacan said.
PLDT more hesitant
But while Globe is seriously considering approaching the competition regulating body, Philippine Long Distance Telephone Co. (PLDT) is more hesitant in doing so.
“We want to study that prospect first,” Ramon R. Isberto, the spokesman of the country’s largest telecommunications player, told the BusinessMirror via phone. “But with respect to our applications before the NTC, we would like the regulator to rule or decide on them.” Smart Communications Inc., the mobile arm of the tech titan, has written about eight letters to the telecom regulator for the re-farming of the 700-MHz spectrum. “Because there is no decision yet, it is still in limbo. The moment the regulator decides on our applications, then we would pursue the next step, whether or not they decide for us or against us,” Isberto added.
6 months or 10 years?
Edgardo V. Cabarios, the deputy commissioner of the telecommunications regulator, said his camp has been barred from commenting on the issue of the 700-MHz band, as a case for the refarming of the said spectrum has been filed before the commission.
Former lawmaker Rolex T. Sulpico earlier filed a case against San Miguel’s units for not utilizing the frequencies under the 700-MHz band “for years.” Sulpico was referring to these companies and their frequency allocations: Liberty Telecoms Holdings Inc. with 80 MHz, High Frequency Telecommunications with 10 MHz and New Century Telecommunications 10 MHz.
“It will take time, because of the presentation of evidence. In this kind of case, the respondents will be given a copy with an order directing them to answer the petition. When their answers come, we will set a hearing. There, the petitioner will present, and respondents will reply. It depends on how fast they could present all their evidence,” Cabarios said. This kind of case, he said, can reach the Court of Appeals and even the Supreme Court.
“Whether we decide for or against the case filed, a party may seek relief from the appellate court. It may even reach the Supreme Court, if neither parties give up,” he said.
Pressed for time, Cabarios is resigned to the idea of completing the quasi-judicial process before President Aquino bows out from office this June.
“We can do the process for as quick as six months. But if it reaches a higher court, then it will really take time. Resolving the issue on the 700-MHz can take up to 10 years,” Cabarios said.
Telecommunications experts and players all agree that operating mobile Internet services under the 700-MHz spectrum is cheaper and more efficient than operating under higher frequency bands. Spectrum is the real estate on which telecommunication operators develop their respective network to deliver services to customers. The amount of spectrum assigned to a telco impacts the cost to build capacity, overall network performance, ability to offer new multimedia services and general customer experience of wireless services. For clarity, the 700-MHz band is key for expanding mobile broadband into the outlying islands and rural provinces in the Philippines, enabling mobile operators to reduce capital and network costs, thereby accelerating rollout and lowering prices for end users, according to a report of international telecommunications association GSMA.
Utilizing the 700-MHz spectrum would allow the deployment of a high-capacity LTE-based wireless and fixed broadband network to deliver higher data rate and LTE wireless-broadband service. With the use of the 700-MHz frequency, broadband prices can go down further benefiting consumers.
And, without the access to the 700-MHz spectrum, incumbent telcos will have to spend more to provide better services to consumers.
Globe has set roughly P35 billion in capital expenditure this year, while rival PLDT will spend P43 billion this year. Bulk of this industry capital will be spent on the development of mobile and fixed Internet infrastructure across the Philippines.
Bell Telecommunications Philippines Inc. is expected to debut in urban areas in the country sometime this year. This, despite losing its titan of a partner, Telstra Corp. Ltd., Australia’s largest telecommunications company.