The proof of the pudding

2

DESPITE the misgivings of netizens on the sale of San Miguel Corp. (SMC)’s telecommunications business to the Philippine Long Distance Telephone Co. (PLDT) and Globe Telecoms (Globe), one positive outcome of the controversial deal is that a big block of the 700 MHz band will finally be put into good use.

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That’s because for the past three decades or so, the 700 MHz band has been unutilized or, at the very least, underutilized.

First, a little bit of history. According to industry insiders, the 80 MHz of spectrum of SMC in the 700 MHz band was originally assigned during the martial law era to Liberty Broadcasting Network (LBN), a company that was first granted a legislative franchise to operate radio and television broadcasting stations in 1964. We’re told that LBN’s 80 MHz of spectrum in the 700Mhz band lay dormant for a long time because its TV broadcasting business never really took off.

In Jan. 1994, Liberty Telecoms Holdings (Liberty) was formed as the holding (or parent) company of LBN, which was later renamed as Wi-Tribe Telecoms (and, eventually, Tori Spectrum Telecom). Liberty listed its shares in the Philippine Stock Exchange nine months later in Oct. 1994.

Before mobile phones and the internet, the 700 MHz band was principally used by broadcast companies for free-to-air TV, or what techies would call as the old analogue network—which, based on National Telecommunications Commission (NTC) regulations, is still the TV broadcast standard in the country. (Yes, we are decades behind US, Europe and Japan.)

It was only with the advent of smart phones and mobile internet that the 700 MHz band became a new and very valuable frontier in wireless communications. That’s because frequencies in the 700MHz band (and below) provide really good coverage since its airwaves can penetrate buildings and walls.

With its 700Mhz frequency and another 40 MHz in the 2.5-gigahertz band, Liberty ventured into the telecoms business. But the lack of operating capital forced the company to suspend its operations in April 2005. Four months later, faced with mounting debts, Liberty filed a petition for corporate rehabilitation.

Sometime in 2008, SMC took a majority stake in Liberty. With Liberty’s franchise and broadband licenses plus its 700 MHz and 2.5 GHz frequencies, together with the financial muscle of Qatar Telecom (QTel), the Middle Eastern telecoms company majority-owned by the State of Qatar, SMC entered the telecoms business the WiMAX (Worldwide Interoperability for Microwave Access) platform.

Although touted to be faster and cheaper than the 3G and GSM standard at the time, Liberty’s broadband business using the WiMAX standard failed to gain traction, with losses ballooning to billions of pesos.

Meanwhile, PLDT and Globe upgraded to the faster LTE (Long Term Evolution) standard. LTE is an acronym for a technical process of transmitting high-speed data to phones and other mobile devices.

The potential of the 700 MHz band, which was largely untapped by Liberty, explains why PLDT and Globe have been salivating for a piece of this valuable spectrum.

According to PLDT regulatory affairs and policy head Ray Espinosa, they have been requesting the NTC since 2008 not only to reassign the 700-MHz band from broadcast TV to mobile telephony, but also to distribute or allocate the frequency to existing telecoms operators.

Echoing PLDT’s gripe, Globe also called on the NTC to distribute the spectrum throughout the industry. Globe General Legal Counsel Froilan Castelo said the Philippines and Thailand are the only countries in the Asia-Pacific with major issues on the allocation of the 700 MHz band to mobile broadband technologies.

Which raises the question: Why did the NTC allow Liberty to use the 700 MHz for wireless broadband service in the first place when the frequency was assigned for use in broadcast TV only? Your answer is as good as mine.

But all that is water under the bridge after PLDT and Globe took over SMC’s telecoms business and frequencies.

The pressure is now on PLDT and Globe to prove that they can deliver faster, more reliable and affordable internet services throughout the country—the clarion call of incoming President Rody Duterte.

Perhaps this explains why Smart Communications (Smart) and Globe quickly fired up their first LTE cell sites using the 700-MHz frequency early this month.

Globe claims that tests conducted by the NTC near the site at Bougainvillea in UP Diliman, Quezon City, showed internet speeds of 66 Mbps (Megabits per second) to 100 Mbps (using Ookla’s Speed test application). Smart, on the other hand, says it achieved over 200 Mbps download speed in its 700 MHz-powered base station in Tanay, Rizal. Although one or two cell sites will definitely not impact internet speeds nationwide, it is an encouraging first step.

To be fair, there was a noticeable uptick in mobile LTE speeds ever since PLDT and Globe implemented their IP (internet protocol) domestic peering agreement, which allows them to access each other’s local network.

Given the results of their recent speed tests on the 700 MHz band, Filipino consumers will definitely be expecting PLDT and Globe to consistently generate at least 25 Mbps download speeds around major urban centers in the next few months.

That is the challenge faced by PLDT and Globe. Well, that is if they want to get the Philippine Competition Commission off their backs.

As the saying goes, “The proof of the pudding is in the eating.”

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2 Comments

  1. San Miguel, via Vega, was using Belltel to rollout their nation-wide network and had already purchased more than 1500 base stations for the 700MHz LTE band. Everything is manufactured and delivered to Manila.

    This is more than enough to cover the NCR and the populated Mega-Manila areas from Pampanga & Bulacan in the north and Cavite, Rizal, Laguna & Batangas in the south.

    528 base stations have already been installed in this Mega-Manila area and another 269 can be deployed quickly as the towers are ready, while tower construction is in progress for another 265 sites.

    NCR needs 650-700 base stations for excellent coverage and speed. Of this, Belltel has already installed 355, and 231 are fully commissioned and ready for customers.

    This compares with Smart’s stated plan to activate just 360 cell sites this year, and Globe’s stated plan for 200 sites.

    Belltel’s actual coverage today with just 213 sites covering 70% of the NCR. Well, that was until PLDT and Globe asked Belltel to turn them off.

    The pudding tasted good, but has been thrown in the bin. What a shame.

    Why can’t PLDT and Globe just use what has been built and give us great internet speeds immediately?

  2. Philip Blake on

    But the Philippine Compeition Commission is delaying the approval of this acquisition while it ‘studies’ it. (As we all know, when a government agency ‘studies’ something, it’s like a trip to limbo.) Therein lies the conundrum. How can the two telcos prove that their acquisition is beneficial to the public, and thus not warranting of interference from the PCC, when this same PCC will not grant the approval to put their acquisition to use? And let’s say the PCC decides that the deal is invalid. What then? Do they return the frequency to SMC when that company has already indicated it is not in a position to enter the market? Or does the NTC hold on to the frequency along with the others returned by the telcos in the hope that a third telco will pick them up, despite the fact that Telstra has already stated it would be impractical to invest against Smart and Globe so late in the game, not to mention hurdle all the regulatory obstacles like cell tower site acquisition, right-of-way issues, etc.? In short, so long as government interferes, the pudding will remain untasted.