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Government-Facebook tie up to become 3rd telco

By Luis Leoncio

The government is poised to become the third major player in the local telecommunications industry once its newly launched broadband infrastructure, which would help improve Internet speed and accessibility in the country, becomes operational by 2019.

The project, dubbed Strategic Engagement and Collaboration to Undertake a Reliable and Efficient Government Internet (SECURE GovNet), seeks to build an ultra high-speed information highway that would improve speed, affordability, and accessibility of broadband internet throughout the country.

The project seeks to facilitate the implementation of the National Broadband Plan, free public WiFi program, National Government Portal and other information and communication technology (ICT) projects of the Department of Information and Communications Technology (DICT).

“This project is an integral part of the National Broadband Plan, which will significantly reduce Internet costs and improve Internet speed. It will ease the implementation of DICT’s connectivity programs, such as the Free Public WiFi where we plan to have around 250,000 sites nationwide and the National Government Portal,” DICT Officer in Charge Undersecretary Eliseo Rio said during the signing of the High- Speed Internet Infrastructure Landing Party Agreement with the Bases Conversion and Development Authority (BCDA) and Facebook at the Bonifacio Global City last Wednesday.

Under the agreement, Facebook, which is the first party utilizing the infrastructure, will provide spectrums equivalent to at least 2 million megabytes per second (Mbps), expanding the capacity available for the government’s connectivity programs.

“These projects, as well as other connectivity projects of DICT and other line agencies of the government and LGUs will flourish in the long term now that we have access to the international gateway at low costs,” Rio said.

A submarine cable system that will land in the cable stations and provide direct connections from Luzon to Internet hubs in the United States and Asia will be constructed and operated.

“These two terabytes per second is almost equal to the current combined capability of Smart and Globe. We will now have the capability to become the third telco player in the country,” Rio said.

The DICT official said it will provide opportunities for minor telco providers to operate the broadband infrastructure on behalf of the government.

The BCDA will build the Luzon Bypass Infrastructure, consisting of two cable landing stations in Baler, Aurora and Poro Point in San Fernando, La Union connected by a 250-km. cable network corridor.

The infrastructure provides a terrestrial bypass route for international submarine cable systems seeking diversity from the Luzon Strait, which is prone to multiple simultaneous submarine cable breaks.

The construction of the cable landing stations and other facilities is estimated to cost the BCDA more than P900 million, to be funded through the 2018 national budget.

DICT will operate the bypass infrastructure, maintain the related facilities, and provide last-mile connectivity in the Philippines.

The Luzon Bypass Infrastructure will operate for 25 years from 2019 to 2044 and may be renewed 25 years thereafter.

“With the signing of the cable landing agreement, this signals the start of the procurement and construction process until early 2019,” Rio said.

President Duterte recently signed Republic Act 10929 which will provide free Internet access in national and local government offices; public basic education institutions; public hospitals, health centers, and rural health units, public parks and plazas, airports, seaports and bus terminals.

The Court of Appeals also last week ruled that the Philippine Competition Commission (PCC) can no longer probe the telco deal that involved the sale of San Miguel Corp’s (SMC) telco assets to both Philippine Long Distance Telephone Co. and Globe Telecom in a deal worth P69.l billion.

The transaction is “deemed approved,” the CA said as it cited the Philippine Competition Commission (PCC) for being “whimsical,” its actions “an afterthought” and guilty of “grave abuse of discretion.”

These were the sharp words of rebuke that the Court of Appeals (CA) said in a decision for the Writ of Preliminary Injunction enjoining PCC from reviewing the P69.1 billion transaction involving the sale of San Miguel Corp.’s telco assets to Philippine Long Distance Telephone Co. and Globe Telecom.

Promulgated on October 18, 2017, the CA decision penned by Associate Justice Ramon Bato, Jr. and concurred in by Associate Justices Manuel Barrios and Maria Elisa Sempio Dy, directed the “PCC, its officials and agents, or persons acting for and on its behalf to cease and desist from conducting proceedings for the pre-acquisition review” of the telco transaction.

The PCC had sought the review citing its mandate to scrutinize mergers and acquisitions in the business landscape for anti-competition issues. In this regard, it issued two letters enjoining both PLDT and Globe to submit relevant documents on the transaction for a look-see.

In its first letter of June 7, 2016, the PCC told the two telcos that what they submitted regarding the transaction were “defective in form and substance” and that the purported notification is not sufficiently compliant with the relevant requirements outlined in its Memorandum Circulars.

PCC Chairman Arsenio Balisacan followed this up with a second letter ten days later requiring Globe and PLDT submit co-use agreement and other related arrangements that would show that the subject acquisition does not substantially prevent, restrict or lessen competition in the relevant market.

This is what the CA cited in a gentle reminder to PCC that it apparently overlooked what the court said is a “deemed approved” transaction based on the rules it issued specifically two Memo Circulars regarding submissions to its office.

“PCC cannot whimsically disregard MC Nos. 16-001 and 16-002 because it considers necessary for the particular purpose of conducting a full review of the subject acquisition” which were approved by the National Telecommunications Commission , specifically the co-use arrangement.

Also, the CA said that it would have “deferred to the ruling of the PCC “ that what the two telcos submitted regarding the deal “is defective and deficient were it not for the fact that PCC gravely abused its discretion amounting to lack of or excess jurisdiction.”

Saying PCC’s findings that the notice lacks key terms in the deal “is unfounded and baseless and twitted the anti-competition agency for its “actual prejudice against the transaction”.

PLDT director Ray Espinosa had, by way of answer, to PCC’s first letter, said that the notice the telco filed “was fully compliant” with the agency’s rules, and that the relevant terms of the deal were disclosed.

The CA also took a swipe at the PCC for its apparent prejudice on the deal. Citing the June 7, 2016 first letter and the subsequent second letter of June 17, 2016, the court said that PCC’s statement “ousted it of jurisdiction.”

It also rebuked PCC for its claim that the telcos submitted what it termed items “that constitutes fraud or material misrepresentation.”

This claim of PCC “fails to convince the Court. Aside from being a complete afterthought, PCC’s claim is belied by the fact that the parties (Globe and PLDT) submitted the SPA and the NTC approvals of the co-use agreement.”

“If parties want to conceal the deal, they would not have submitted documents that embody the transaction and relevant documents, “ the CA said.

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