Hanging by a thread

Ben D. Kritz

Ben D. Kritz

THE life of one of the last, and one of the very few actually consumer­friendly programs developed by the Aquino administration now hangs by a thread, and the potential consequences of its demise for anyone who wants adequate and reasonably priced basic services are grim indeed.

In a move that did not really surprise anyone, both PLDT and Globe on Tuesday filed petitions asking the Court of Appeals to stop the Philippine Competition Commission (PCC) from reviewing their P69.1­billion acquisition of the telecom assets of San Miguel Corp. back in May.

A day or so earlier, the PCC had publicly insisted that the deal was “not deemed approved,” because it had not yet completed its review of the transaction to ascertain whether or not it violated the Philippines’ nebulous anti­competition laws. The PCC’s position is significant, because it could possibly hold PLDT and Globe liable for proceeding with the deal without the legally required review, a violation that carries a penalty of one to five percent of the value of the transaction in question, or in this case, P691 million to P3.455 billion.

PLDT and Globe, on the other hand, argue that they can proceed with making use of the assets they acquired from SMC – primarily, access to an expanded broadcast spectrum – because the PCC’s own rules say they can; a memorandum circular that acknowledged the time gap between the passage of the Philippine Competition Act in February and the completion of the Act’s implementing rules and regulations at the end of May said, in so many words, that any deal completed during that time period would be “deemed approved.” Its reasonable implication is that transactions that had already been ongoing for some time and were about to be completed could not suddenly be made subject to rules that didn’t yet exist.

In simple terms, the telcos are splitting legal hairs to point out that their enormous deal with huge implications for anyone in the country who uses a telephone is valid because it was formally disclosed to the PCC on the day before the time period covered by the memo expired: Notice was given to the PCC on May 30; the implementing rules and regulations were published on May 31.

The PCC, on the other hand, is basically saying, “Come on, fellas, that’s really stretching it: Stop trying to fool everyone into thinking you really don’t know a deal this large with such far-reaching implications needs to be vetted.”

Essentially, the two sides are carrying on a fight between the government and big business that began months ago when the huge telco deal was first made public. Manny Pangilinan, the local satrap of Indonesia’s Salim family that actually owns PLDT, made the intemperate but not altogether unreasonable statement that government should just “leave business alone,” because its ham­handed attempts to carry out its regulatory responsibilities are an impediment to progress.

Understandably the government, represented by the newly hatched PCC, and much of the public took exception to that, which is also not altogether unreasonable. The public has a right to expect that government will encourage and enforce the fair provision of essential services, and at the same time, those service providers have a right to expect that the government’s oversight will be carried out fairly, efficiently, and as unobtrusively as possible.

The PCC’s claim that PLDT and Globe are engaging in “delaying tactics” to prevent the review is nonsensical. It is not in the companies’ interest to delay things, and the court filing in fact does not at all. Unless the CA says otherwise, there is nothing now to prevent them from continuing to make use of the assets they acquired from SMC while the court is considering their petitions. Rather it is the PCC who is delaying things in an effort to find either a way to honor the balance of public sentiment that allowing the telecom duopoly to tighten their already unbreakable grip on the market is a bad idea, and should be prevented, or at least a face­saving way to approve the deal without completely destroying the commission’s credibility.

It is difficult at this point to see how the PCC can win this fight. That is alarming, because its failure will practically spell the end of meaningful regulation in this country.

If the CA grants the restraining order the telcos are seeking, that’s it; the officials of the PCC may as well pack up their things and go home to update their CVs, because its credibility as an oversight body will be gone before it ever had a chance to exercise it. If the CA rejects the telcos’ petition, the PCC may have no choice but to approve the deal anyway; the harm the two providers could do to the country’s telecommunications infrastructure in retaliation for being jilted is just too much to risk, since successive governments have already allowed them to create a market where an alternative doesn’t exist, and could not possibly be brought in.

The root cause of all this is, of course, the lazily ignorant way laws have been made in this country for generations. Legislation is never done by the actual lawmakers, but behind closed doors weeks or months later by vested interests in the creation of “implementing rules and regulations,” something that, in every other civilized democracy, is part of the laws filed, debated, and passed by the Legislature in the first place.

That is a much broader problem, one that unfortunately the country will have to see manifested in many more crises like the current one involving the telcos before it even begins to recognize, let alone attempts to correct. As for the matter at hand, I’ll make a prediction: Because the issue has such far-reaching implications, some back channel maneuvering is going to have to be carried out by the concerned parties, and the result will be a quiet rejection of the petitions by the CA – it may just let them lapse without making a ruling, by scheduling a hearing on them for far enough into the future that a negotiated resolution can be accomplished in the meantime – and an approval of the deal, possibly with some credibility-salvaging but largely irrelevant strings attached, by the PCC after an expedited review.

That is not a satisfactory outcome for the public, but, as has been said countless times before, until the public decides to start paying a little closer attention to who it puts in the government and what those selected actually do once they’re there, the public has only itself to blame for much of its own misery.



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  1. It is so convenient to say blame the telcos for preventing competition, what with widespread public dissatisfaction with their service, not to mention the traditional Pinoy hostility towards ‘greedy oligarchs’. But is it relevant? Just what does all this have to do with preventing competition? On the one hand, we complain about bad service, while on the other hand, we clamor for government to stop efforts to improve that service. The PCC’s own IRR allows such efforts meant to better delivery of service. (Sec.2a; 5c) Yes, Mr. Kritz, the public needs to take a closer look at government’s role in preventing competition, like the ridiculously stringent and unreasonable requirements needed to set up cell site facilities. Globe and Smart had more than 10 years experience cutting through that jungle. Is it surprising that outside competition would rather look someplace else? Rather than trying to determine what is and isn’t anti-competitive behavior, government should remove all handicaps to prospective competitors.

  2. Mark Cojuangco on

    If the Consti is amended, provisions should be made that disallow responsibility for writing IRRs of RAs be passed down to agencies. It must be done by the House of Congress from where the Bill emanated.

    You’ll see packed committees & sessions then.

    Yes, this is a per peave.

  3. Amnata Pundit on

    I do not know who is right, PCC or the telcos, but as far as Im concerned their service still sucks and with their new offerings they actually cost more now. Maybe Ramon Ang is right, only the government can be the third player. With Duterte smelling like an anti-oligarch, we now have a chance to slap down the Ayalas for a change. By the way, instead of blaming the public for the jerks who get elected to government positions, you should advocate a revolution instead. Why? Because the system is rigged against Juan de la Cruz, as if you didn’t know, and only a revolution can change that.