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Executive Secretary Salvador Medialdea

Palace must review multi-billion telco deal

The Office of the President through Executive Secretary Salvador Medialdea last week issued Administrative Order (AO) No. 11 creating an oversight committee for the Entry of a New Major Player in the Public Telecommunications Market.

The committee’s principal mandate according to the AO is to ensure that the country will have a reliable, inexpensive and secure telecommunications services.

We laud this move by the Palace and Secretary Medialdea.

By creating this committee which will be comprised of representatives from the Office of the Executive Secretary, Department of Information and Communications Technology, Department of Finance, and National Security Adviser, the palace can avoid a major blunder committed by the National Telecommunications Commission (NTC) two years ago.

We are referring to the NTC-sanctioned deal which allowed telecommunications giants Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom to secure the coveted 700 megahertz (MHz) spectrum, thus effectively eliminating a third alternative that would have created a more competitive and better communications and internet service.

The NTC headed by three-term commissioner Gamaliel Cordoba, turned it over almost without batting an eye.

The deal signed in May 31, 2016, or barely a month before President Duterte assumed the presidency, allowed the two telcos to acquire from San Miguel Corporation the coveted spectrum, which is able to penetrate walls and useful for providing in-building coverage.

To be able to craft the right policies that will truly benefit the Filipino consumers in the future, the committee should scrutinize the process by which the NTC handled and approved this multi-billion telco deal in the dying days of the Aquino administration.

Midnight sweetheart deal? Your guess is as good as mine. The NTC must have its own reason for approving the deal.

Personally, we believe that the NTC and Cordoba should have not allowed the deal given the proximity of the ascension to office of the Duterte administration.

The new Palace oversight committee should review if NTC’s decision to allow the deal was really advantageous for the Filipino consumers, or did it only benefit the corporate giants in the telco industry?

At the time of the signing, the primary agency tasked to formulate policies and guidelines in selecting players in the telecommunications industry was the NTC.

With the new EO, there will be more committee members who will craft the policies, rules and guidelines in selecting a third player in the industry.

It will be recalled that the two telecommunication giants last year completed the last tranche of payment for its P69.1-billion joint acquisition of SMC’s telecommunication assets despite the pending petition filed by the Philippine Competition Commission (PCC) to the Supreme Court (SC) to review the deal.

The PCC wanted to review the deal to safeguard consumer welfare over the long term.

PCC’s task would have been easier had the NTC done its job in conducting due diligence before it gave its imprimatur on the project.

Despite the apparent conclusion of the deal, we support PCC’s stand that the deal needs to be scrutinized.

What’s the use of having a competition watchdog if business giants choose to just ignore it’s powers?

We also believe that the SC, despite the apparent final payment made should still proceed and take into consideration PCC’s arguments.

Acording to PCC, the deal is one imbued with substantial public interest, given the public’s clamor for faster, better Internet services at affordable prices.

“This deal is not a simple business transaction that private parties can decide on their own. As we have emphasized in our court submissions, the review and possible imposition of conditions on the telco deal are intended to safeguard the interest of consumers in the long term,” PCC pointed out.

If the telcos are not hiding anything, why not allow the PCC or the Palace committee to review the deal?

We hope the new committee formed by the Palace can be more transparent than the NTC in formulating policies that would affect the lives of millions of Filipinos.

The committee should also give genuine competition a major push to lower the cost of telecommunications in the country and to put the power of choice in the hands of consumers.

Its members should revisit the NTC decision to allow the multi-billion transaction and learn from it.

Lastly, in reviewing the telco deal, they should avoid at all cost the common belief that the firms that are under the regulatory supervision of the NTC actually have a firm hold on this agency.

We believe there is a term for that: “regulatory capture.”

More on this in our future columns.

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