Spectrum is not a duopoly



SPECTRUM is part of the national patrimony and never for the sole use of a duopoly that has left the country in the wretched position of having the slowest connectivity in the Asean region. Despite 25 years of franchises granted by Congress and their extension for another 25 years, the duopoly feels that theirs is an exclusive deal. That they can lord it over everyone despite the inefficiencies of their operations, setting aside public interest and blocking any new entrant to the industry such as what happened to Telstra.

How bad is spectrum allocation in the country? The duopoly and the failed third player, SMC/Telstra, were all spectrums consolidated from small owners who secured congressional franchises which they sat on for years waiting to leverage for a better deal. These spectrum lords will sell to the highest bidder and that has been the story of how Globe Telecom, Smart Communications, SMC-Telstra amassed and consolidated spectrum. Congress must audit the spectrum allocation and cancel franchises that have not been used so we can prevent another crisis like what happened to the 700 MHz that was sold to the duopoly after they put up several legal blocks against the entry of a third player, from local courts to national courts to the National Telecommunications Commission (NTC) to the Philippine Competition Commission (PCC).

The 700 MHz is a low-band frequency prized for its ability to efficiently cover wide distances and penetrate buildings.

Upon the sale the 700 MHz spectrum to them, the duopoly said that in six months, the people would see the improvement of our systems. That did not come. They started making excuses on why they were not able to construct additional towers by pointing out problems with local governments, among others. The DICT then offered a formula for government to build the towers, with the duopoly leasing them. Something is awfully wrong with that arrangement because that will be another freebie to firms which have been doing business as a duopoly for the past 25 years. Taxpayers’ money will pay for the capital expenditures of the duopoly?

Hence the news of a Luzon Bypass Infrastructure (LBI) LBI plan of the Department of Information and Communication Technology (DICT) and the Bases Conversion Development Authority (BCDA) is a welcome development. After the plan was made public, the duopoly publicity machine went on overdrive, raising the issue of “exclusivity of the asset by Facebook” and data privacy, as if the duopoly is the epitome of full-proof data management.

The DICT-BCDA-Facebook Landing Party Agreement (LPA) makes redundant the existing submarine cable owners, increases internet speed by increasing spectrum and reduces internet access cost. Two cable landing stations will be built in Baler, Aurora and another in Poro Point, San Fernando, La Union, and a 250-km fiber optic cable corridor connecting the two for a total cost of around P975 million. LBI will be completed by about the third quarter of 2019. Upon completion, LBI will be turned over by BCDA to DICT, which will then operate and maintain it for 25 years (extendable for another 25 years) at an approximate cost of P100 million a year. Facebook will be the first user of the LBI, for which it will pay the government at least 2,000,000 Mbps, or 2Tbps international cable link capacity, 25 percent of which will go to BCDA. This is more than the present capacity of either Globe or PLDT. The 2Tbps international cable link capacity has a peso value of around P4.8 billion a year, making the investment of the government almost negligible over the years.

DICT will “use part of the bandwidth capacity for all its Internet connectivity programs like the Domestic Wideband Information Network (DWIN) where all government agencies and offices down to the barangays, will be connected to very fast and free Internet access.” Think of ease of doing business, right? This will “bring government online services like healthcare, education, trade, employment and job opportunities, social welfare, etc., to even the most remote areas of the country.” Think of open government, right? This will “enable cashless transactions between citizens and government that would eliminate corruption.” Think of e-commerce. It will be used in compliance with RA10929, or the “Free Internet Access in Public Places Act,” where DICT plans to “install more than 250,000 wi-fi access points nationwide in provincial and municipal capitol and parks, government schools and SUCs, hospitals, bus and train stations, airports and piers, etc. In these places, our citizens will experience fast world-class Internet access at no charge.” Think of connecting the Last Mile!

Subsea cable is not only the technology available to connect the Philippines to the grid. There is also satellite. Google is planning to launch a fleet of 180 satellites to provide web access for the 4.8 billion people not yet online. Rural Philippines is not online and that’s around 12 million in 35 island provinces. On the other hand, with LBI, one can have cooperatives by local government units or communities connecting to it and managing the local node.

Another potential third player is Streamtech Systems Technologies, a telco owned by former Senate President Manny Villar. It has applied for a congressional franchise “to construct, install, establish, operate and maintain telecommunications systems throughout the Philippines.” Its application is now pending with the House of Representatives committee on legislative franchises. The Villar firm would “establish an international gateway facility, provide broadband service and set up public data networks.” Would the duopoly again place roadblocks against Streamtech? Against the politically connected Villars?

Smart was first granted a 25-year legislative franchise in 1992. On April 21, 2017, it secured from the 17th Congress an extension of its franchise up to 2042. It has 63.03 million in wireless subscribers. The franchise of Globe will lapse on December 24, 2030. In 2016, Globe dislodged Smart as the largest telco in the country with 65.8 million subscribers.

Twenty-five years and where are we? We’ve been milked dry by the duopoly. Filipinos are very patient but with Vietnam about to overtake us, we need to find solutions. Let’s fix this.


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