The Market Monitor Minding the Nation's Business
By Riza Lozada
An influential foreign trade group said the government “must” require the use of the precious frequency band available for fast Internet transmissions and “compel” companies that have it but are not using it “to give it up.”
The newly formed Philippine Competition Commision (PCC) will have to adopt a “more transparent allocation process” in spectrum management through the “use-it-or-lose-it” approach, the Joint Foreign Chambers of Commerce of the Philippines (JFCCP) said in a policy advocacy study.
The PCC is headed by former National Economic and Development Authority Director-General Arsenio Balisacan, who was also socioeconomic planning secretary.
He has let it be known that his first priorities were the high energy prices in the country, which Balisacan himself described as one a major issue bedevilling the government’s anti-poverty program, and urgent telecommunications issues, notably the country’s notoriously slow Internet.
Earlier, telecommunication rivals Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom issued a joint statement against San Miguel Corp. (SMC), denouncing what they said was an “anti-competition act” of the food-based conglomerate in holding on to the 700 MHz band without actually using it.
The band is needed for the upgrade of Internet connections.Both PLDT and Globe called for the frequency to be equitably distributed in a transparent manner among existing operators and new entrants.
They said that while they have repeatedly applied for an allocation of the 700 MHz frequency from the National Telecommunications Commission (NTC), the regulator, to date, has not acted on their applications. Industry estimates showed that the whole spectrum, if properly allocated through an auction, could earn for the government between $930 million (P44.6 billion at the current P48 to $1 exchange) and $2.7 billion (P129.6 billion).
The spectrum is commonly used in the broadcast industry for the transmission of television and radio signals but the introduction of the so-called 4G technology has made it much sought after by telecommunications firms.
“To date, no bidding has ever been carried out to allocate spectrum. Ever since mobile-phone service became commercially popular, especially with the introduction of SMS (short messaging service), the radio frequencies for 2G to 3G have always been assigned to the telcos by the (NTC) commissioner,” the JFCCP study said.
Under Republic Act 7925, the commission is mandated to manage and award spectrum licenses.
The allocation is to be done through open tenders when demand for specific frequencies exceeds availability. Further, the study said “the process and procedure for the review, allocation, and assignment of spectrum is contained in NTC MC 03-03- 96. The National Radio Frequency Allocation Table is to be reviewed once every two years during the second quarter and may be revised or amended, as necessary.
It is in accordance with the International Table of Radio Frequency Allocation issued by the ITU. The review, re-allocation, and revision of allocation is done in consultation with the industry and/or affected parties to optimize spectrum use.”
The JFCCP study indicated that spectrum user fees (SUF) collected by the NTC reach only about P2.5 billion annually.
The national government’s potential to improve collection from SUF, which fully goes directly to the national treasury, will depend on its mandate to assert the value of spectrum by adopting the “use it or lose it” approach, the JFCCP study said.
The same study recognized that the most pressing issue on spectrum allocation related to SMC’s holding on to the 700 MHz band.
The JCCP study noted the lack of due process in allocating spectrum with the growing demand for broadband spectrum.
“Some telecoms stakeholders have pointed out that key spectrum bands have mostly been allocated to the large telcos without consideration for the smaller players and new entrants. PLDT has rights to 800 MHz, 900 MHz, 1800 MHz, and 2100 MHz frequency bands. Globe has licenses to 900 MHz, 1800 MHz, and 2100 MHz bands. Meanwhile, San Miguel holds most of the 700 MHz, in addition to its 800 MHz, 1800 MHz, 2300 MHz, and 2500 MHz frequency bands,” the JFCCP study said.
“The newly formed Philippine Competition Commission should prioritize studying whether the telecommunications industry is adequately competitive.
The bigger challenge, however, is for the commission to take corrective actions to increase the competitiveness of the sector, if found weak or wanting,” the study recommended.
“It should also adopt a more transparent allocation process, which includes a rationalized set of criteria for assigning spectrum, a clear mechanism for the valuation of available spectrum, and a more publicized allocation process.”