The president of the National Transmission Corp. (Transco) on Monday said the state firm is a candidate to be the local partner of state-run China Telecom Corp. in the much-hyped search for a third player in the country’s telecommunications industry.
“We can be the 60 percent,” said lawyer Melvin Matibag during a media gathering at the Department of Energy. “They have the technical expertise in operating and Transco has the facilities to offer. This will shorten the process.”
Matibag was quick to point out though that there are no discussions with China Telecom on this yet. “It’s beyond my pay grade. I think they are talking to somebody higher, maybe the secretary, secretary of finance or the Office of the President. What I did is to make the available recommendations.”
The Transco official is open to partnering with another local firm, if needed. “Or maybe not the entire 60 percent, we can still partner with a private entity.”
If all things fall in the proper place, Matibag said, “The way we project it, for Luzon we can do it in six months, and for the entire country for one year. This is from the time it’s going to be agreed and all.”
As a rule, foreign firms could not operate alone in the Philippine telco industry and would need to partner with a local company.
Another possible candidate to be China Telecom’s partner is Philippine Telegraph & Telephone Corp., which had said it was talking with China Telecom and Datang Telecom about strategic partnerships to challenge the PLDT group and Globe Telecom Inc.
President Duterte last month asked China to try to invest in the Philippine telecom industry.
“We want to push Transco to be part of whatever project it is, considering the owner of the facility is Transco,” Matibag added.
For Winthrop Yu, the chairman of the Internet Society of the Philippines, the entry of the Chinese telco is good for the market, as this could help heighten competition.
“The more the merrier,” he said. “The sooner the better.” Competition in the telco market has been limited between the two providers: PLDT and Globe. Introducing a new player will help further competition, thus, driving prices down, while services improve.
Spectrum limitation
Better Broadband Alliance convener Mary Grace Mirandilla-Santos, on the other hand, is quite curious on how China Telecom would enter the Philippine market.
“If, for example, the third telco plans to offer fiber broadband but will have to start from scratch, nationwide deployment would take five years,” she said.
There is also the issue on mobile-data services, which require telco operators to have a generous amount of frequencies to flourish in the market.
“If it plans to offer mobile broadband and other services, it will have to find a way to get the spectrum that it needs, most of which are with the incumbent telcos,” Santos said.
Data from the National Telecommunications Commission (NTC) showed that existing telcos hold the majority of the said real estate to date.
PLDT holds 400 MHz of the total holdings, while Globe has rights to 325 MHz.
What remains for budding telecom players is a mere 140-MHz frequencies in the 700-MHz, 850- MHz, 2100-MHz, 2500-MHz and 3500-MHz spectrums.
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 has an impact on the cost, the build capacity, overall network performance, ability to offer new multimedia services and general customer experience of wireless services.
Democracy.PH Founder Pierre Tito Galla added that China Telecom may find it hard to provide good mobile services, given the spectrum holdings available at the NTC.
“China Telecom may find that it could be prohibitive to provide SMS and voice services. They may not become a third mobile player to challenge the duopoly, but just another player in the wired space,” he said.
He added that, in order to make this setup work, the government needs to refarm and reallocate the spectrum holdings “as soon as possible.”
“We need spectrum refarming and reallocation as soon as possible, if we want more players,” he said.
Congressional franchise
When she learned that Transco will be China Telecom’s local partner, Santos raised the possible issue on the need for a Congressional franchise.
Santos is also curious as to how this would play in the Department of Information and Communications Technology’s (DICT) plan on using the power grid as backbone to its free Wi-fi Program.
“It would be interesting to see how this would affect the DICT’s plan to use the fiber in the power grid for building the Domestic Wideband Information Network and as the backbone of its free Wi-fi program,” she said.
‘Ready’
And, while PLDT is mum on the entry of China Telecom, Globe has signaled that it is ready to face a new comer in the market.
“We are ready to compete just as we have been doing all these years in this business,” Globe Spokesman Yolanda C. Crisanto said.
The Chinese government, which controls its phone carriers, picked China Telecom to be the one entering the Philippines, Communications Secretary Martin Andanar said last Sunday, citing information from a Cabinet meeting last week. China Telecom will have to look for a local partner with an existing franchise and a significant presence in the Philippines, Andanar said.
Shares of PLDT and Globe fell as Duterte, who has sought warmer ties with China amid a South China Sea territorial dispute, pushes through his pledges to open the phone market. For China Telecom, entering the Philippines would help the company expand into one of the fastest-growing economies in Asia.
Philippine Telegraph & Telephone Corp. said last month that it’s in partnership talks with China Telecom, China Mobile Ltd. and other Chinese companies. China Telecom confirmed in an e-mailed statement that it’s conducting a preliminary study on investing in the Philippines, but no concrete plan had been determined.
PLDT fell as much as 5.2 percent on Monday, while Globe Telecom dropped as much as 4.3 percent.
(With Bloomberg News)