Globe happy, Smart sad over shared-frequency decision

The two leading telcos are divided about a recent NTC decision allowing carriers to share spectrum. Consumers, however, should welcome the order since the expanded networks will likely decrease congestion and lead to higher quality services

Katherine Visconti
Published 8:30 PM, October 01, 2012
Updated 8:14 PM, December 05, 2012

MANILA, Philippines - The National Telecommunications Commission (NTC) approved proposals to allow the major telecommunications firms to share mobile and broadband frequencies with other carriers.

This new decision, which is expected to decrease network congestion, should come as good news to consumers. Filipino mobile phone users have increasingly complained about service quality and a recent benchmark test showed that both telcos failed to meet the NTC's 4% standard for blocked call rates or grade of service.

“Due to the rising incidence of mobile communications complaints on blocked calls or grade of service, drop calls and signal quality… the NTC has granted the telcos’ requests,” said the NTC in a statement on Monday, October 1.

“We are actually helping all of them because, if they are allowed to co-use frequencies of other carriers, then that would redound to better quality for cellular voice, text messaging and broadband services. They would have more capacity,” NTC director Edgardo Cabarios explained to reporters.

A happy Globe Telecom Inc. welcomed the decision, while an unhappy Smart Communications Inc. promised to oppose it.

Why Globe is happy

The approval allows Ayala-led Globe and Lopez-led Bayan Telecommunications Inc. (Bayan) to share 10 megahertz (MHz) of frequencies assigned to Bayan in the following ranges: 1750-1760MHz and 1845-1855MHz.

Since Globe holds 10 MHz of its own spectrum, the company effectively doubles its frequency spectrum without spending for it.

If text, voice calls and data are like particles of water, frequency spectrum is like the pipe they rush through. Globe just added sizable new pipes to its network, which should move information more smoothly and rapidly through its network.

Globe said in an October 1 statement that the joint-use agreement "will allow it to address increasing demand for voice, SMS and mobile data services, and for Bayan to be able to offer mobile telecommunications services nationwide."

Meanwhile, the NTC decided that the telecommunication firms under the umbrella of giant Philippine Long Distance Telephone Co. (PLDT) can also use each other's spectrum.

NTC said Smart and its wholly-owned wireless broadband unit, Smart Broadband Inc. (SBI), could jointly use frequency assigned to SBI in the 800MHz range.

In addition, Smart and Sun Cellular-operator Digital Mobile Philippines Inc were permitted to use each other's spectrum, including Smart frequencies in the 800Mhz, 900 Mhz, 1800 Mhz and 2100Mhz Band and Sun frequencies in the 1800 Mhz and 2100 Mhz band.

PLDT already holds 25 megahertz of spectrum, since the NTC mandated that it give up the 10 Mhz 3G license of Connectivity Unlimited Resource Enterprise Inc (Cure) owing to monopoly concerns that accompanied its acquisition of the third largest market player in 2011.

Why Smart is angry

Smart is opposing Globe and Bayan's joint-use deal, even lashing out at its rival for entering into an 'illegal' arrangement and depriving the government of revenues that could have been derived from a fair auction of the spectrum.

According to Smart legal head Enrico L. Español, Bayan's spectrum should have been auctioned off in an open and competitive process since NTC rules mandate that spectrum not used for its specific purpose for at least a year should be recalled and resold.

The spectrum was initially awarded for mobile phone service.

“It is undeniable that Bayantel has not been using these frequencies for at least one year considering that it has not been providing any [mobile phone] service to the general public. Consequently, these unused frequencies assigned to Bayantel should be recalled by the Honorable Commission upon service of notice and hearing,” said Español in an October 1 statement.

He added that Globe's and Bayan's “joint use” arrangement will lead to “enormous loss of government revenues" that would have come out of "a competitive auction among interested bidders.”

Smart is asking the NTC to initiate a process to recall Bayan's frequencies since the Lopez-led telecommunications firm failed to use them to provide the public mobile phone service.

Legal scrutiny

For its part, Globe believes the validity of the decision will stand up to scrutiny.

Globe's legal chief Froilan M. Castelo said, “If Smart has taken that position, then it should have opposed the move of Bayan for an extension of their license to provide CMTS services last year. The NTC decision granting the motion of Bayantel was also issued last year and has become final, executory and unappealable."

He added, "Bayantel is currently under rehabilitation and the rehabilitation court has ordered the preservation of all assets and privileges of Bayantel including its spectrum. This is the reason why the NTC cannot validly recall their spectrum assets.”

NTC director Edgardo Cabarios explained that had the regulatory body recalled the CMTS frequencies of Bayan, which is undergoing rehabilitation, “we would have removed, so to speak, the very essence of its life which is its frequencies.”

For now, Castelo said Globe is "pleased" with the NTC's decision and will rely on the "validity and legality of the NTC order." - Rappler.com