Unwrapping Duterte’s Christmas gift to nation

President Duterte pledged in his last State of the Nation Address to bring in a new telco player to stir up competition and ensure that the country’s telecommunications services are reliable and inexpensive. Given the President’s imprimatur, the Department of Information and Communications Technology (DICT) and the National Telecommunications Commission (NTC) have been acting expeditiously on the matter.

However, a legal impediment recently emerged that may delay the President’s intent to name a new telco player before Christmas. Third telco aspirant Now Telecom, an affiliate of publicly listed company Now Corp., filed a case on Monday against the NTC for alleged legal violations in the new major player terms of reference, which took effect last week. Among other issues, the company alleged that the provisions in the TOR were not taken up during a series of public consultations, particularly the P700-million participation security, the P14-billion to P24-billion performance security and a P10-million nonrefundable appeal fee. It said these are barriers to entry and are “money-making schemes” imposed against the third telco.

The DICT, however, defended NTC and asked whether the case was filed just to delay the entry of a third telco. “The terms and conditions set in the terms of reference or memorandum circular for a new major player are in the interest of the Filipino people who desire better telecom services in the country. The DICT takes exception to Now Telecom’s allegations that this initiative is a money-making scheme,” DICT Acting Secretary Eliseo M. Rio Jr. said.

Rio said the third telco must not only be technically capable but should also have the financial muscle to compete with current telecom giants Globe and Smart. “The entry of a third telco is no small matter and to set the bar low for those who apparently cannot meet the standards is detrimental to the people who are the target beneficiaries,” Rio said, adding that Now Telecom did not question the requirements during the NTC public hearing.

The DICT official explained the inclusion of the fees in the guidelines for the selection of the third telco player: “The participation security aims to ensure participation of serious contenders, who have the required financial capability to be a third player that can compete with the existing duopoly. The participant is given certain options on what form they wish to put up the security such as cash, bank drafts or letters of credit.”

He said the “performance security seeks to assure the government that the third telco will deliver its commitments for the five-year commitment period. Requirements for cash deposits have been removed and the participant has been given options as to the forms provided in the TOR. And the appeal or protest fee is a usual item in the procurement processes, which will discourage frivolous motions and protests.”

Rio said the securities and fees required are consistent with the bidding and procurement processes and are even lower than those set by Republic Act 9184, or the Government Procurement Reform Act. “The TOR was the result of public consultations and hearings, review by the Oversight Committee and lengthy and comprehensive studies with international consultants. The public and stakeholders also had the opportunity to submit their position papers on the matter,” he said.

“The participation fee of P1 million paid by Now Telecom might have cost a significant impact on its mother company, Now Corp.’s operating income, which only stood at P6.3 million in 2017,” Rio said, adding that Now Telecom filed the case before the Manila Regional Trial Court on October 8, the same day the company bought the bidding documents.

Duterte has said the selection process for a third telco should not be delayed. He promised to make the announcement in December. It seems nobody but the Manila Regional Trial Court can stop the President from delivering his promised Christmas gift to 100 million Filipinos in the form of a third telco player.


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