The Market Monitor Minding the Nation's Business
By Luis Leoncio
Corporate giants Philippine Long Distance Telephone Co. (PLDT), Globe Telecom and San Miguel Corp. (SMC) are girding up for what is expected to be a protracted, megabuck confrontation over the allocation of radio frequency that has been identifi ed for new-generation mobile technology.
The battle for the airwaves looms amid mounting pressure on these telcos for faster Internet connections in the face of the development of multimedia technology that demands high-speed data.
SMC had set up a telecommunications unit and is talking with Australia’s Telstra for a major mobile-phone venture, and its jewel is its license that entitles it to an exclusive use the 700-MHz spectrum.
But according to PLDT and Globe, this broadband channel should be shared by SMC with them to improve their Internet service, which local users describe as one of the slowest in the world.
Globe said it was “imperative” for the National Telecommunications Commission (NTC), as industry regulator, “to ensure that the 700-MHz band is made open to other telco players” to address concerns over the state of Internet services in the Philippines amid rising demand for data connectivity.
But SMC President Ramon S. Ang said SMC has no plans of sharing the spectrum with the two telcos.
“Between the two of them (PLDT and Globe), they have almost 300 MHz of LTE frequencies. Why do they need more? They have all the frequencies, all the technology. All they have to do is fine-tune what they have,” Ang said.
The NTC said that, for the frequency band to be reallocated, the spectrum should be recalled from SMC and reassigned.
But for that to happen, NTC Director Edgardo Cabarios said there has to be a “good reason” to recall the spectrum, such as if it has not been used or the holder has not been paying the required fees.
SMC’s telecom unit has not been remiss in its payments to the government and has acquired permits to purchase mobile network equipment, thus the right to the spectrum stays with the conglomerate, even if it does not have any working telecommunications network at present.
Globe and PLDT have been urging the NTC to assign a portion of the band to them to improve the notoriously slow Internet speeds.
SMC acquired the rights to nearly all of the 700-MHz band via its Wi-Tribe and High Telecommunication units.
Lawyer Rey Espinosa, PLDT head of regulatory affairs and policy, said Cabarios made misleading unoffi cial and personal statements regarding the true state of the 700 MHz radio frequency band and the procedure involved in reallocating the use of radio frequencies under NTC rules, particularly as a result of technological advancements and the consequent emerging global regulatory and commercial practices.
He said Cabarios’s statements created confusion in the minds of local and foreign investors who have been closely following developments in the Philippine telecommunication sector.
“While stating that the issue now surrounding the 700 MHz radio frequency band is a quasi-judicial matter (referring obviously to the quasi-judicial function of the Commission en banc), Cabarios, whose department’s function is purely administrative in nature, expressed unoffi cial and personal biased statements in favor of the current holders of the 700 MHz radio frequency, in clear and wanton disregard of applicable laws and regulations covering the repurposing of the use of radio frequencies,” Espinosa added.
The Asia Pacifi c Telecommunity and the International Telecommunication Union, in which the Philippines is an active member, recently identified the 700 MHz radio frequency band for international mobile telecommunication use from pure broadcast use.
In the recent World Radiocommunication Conference (WRC-15) in Geneva, Switzerland, recently, the ITU formally moved to allocate the 700 MHz band (specifi cally 694-790 MHz) to the global mobile industry.
ITU offi cials said this move was taken to help bridge the digital divide, pointing out that the long range of radio over the 700 MHz band would be especially beneficial for underserved rural areas.
These initiatives and actions underscore the globally recognized value of the 700 MHz radio frequency band in providing faster and more cost-efficient mobile Internet access, with superior coverage and better in-building penetration at a time of unprecedented global mobile data usage and growth.
The 700 MHz band (698-806 MHz band) had been previously allocated for the use of analog broadcast TV. The arrival of digital broadcasting technology (with its more efficient use of radio spectrum) has made it possible to reallocate broadcast spectrum for the use of mobile-phone services.
Studies showed that the economic benefits of using the 700 MHz band for mobile broadband far exceed those from broadcasting. In a 2012 report, the Boston Consulting Group and the GSMA said that, by 2020, the digital dividend for the Asia-Pacific region could be worth almost $1 trillion in additional GDP,” the report said.
Discussions for this spectrum reallocation in the International Telecommunications Union (ITU)—often referred to as “the digital dividend”—gained momentum in the mid-2000s as mobiledata traffic grew rapidly, powered by increasingly more powerful mobile data technologies.
A year after the ITU decision, on November 25 2008, Smart Communications fi led its application for 700 MHz frequency bands. It followed up this application with letters dated March 2, 2009; May 2, 2011, 10 August 10, 2011, 10 February 10, 2012; and March 12, 2012.