PCC: Make policy changes to open telco, energy markets

TAGAYTAY, Philippines – There is no need to amend the 1987 Philippine Constitution to liberalize the country’s telecommunications and energy sectors and allow foreign players to operate as public utilities, said the Philippine Competition Commission (PCC).

PCC Commissioner Johannes Benjamin Bernabe said all that Congress has to do is to prioritize and pass amendments to the 80-year-old Commonwealth Act No. 146, also known as the Public Service Law.

Bernabe’s remarks came after President Rodrigo Duterte said last Wednesday, November 23, that foreign players should enter the telecoms and energy sectors.

Under the 1987 Philippine Constitution, only companies owned at least 60% by Philippine nationals or corporations may operate as a public utility.

But the definition of a “public utility” under the Public Service Law is not clear, according to Bernabe.

“It enumerates so many activities – ice plants, marine railways, shipyard. It hasn’t really been comprehensively reviewed and revised since the 1930s,” the PCC commissioner told reporters in a media seminar in Tagaytay City on Sunday, November 27.

“If we revise that 1930s legislation and limit, then we are effectively limiting the Constitution,” he added, saying “telecommunications should be excluded from the ‘public utility’ definition.”

Two giants ‘agree’ with policy changes

The country’s telecommunications industry is being dominated by two players: PLDT Incorporated and Globe Telecom Incorporated.

Japan-based NTT Group has been a strategic partner of PLDT since 2000, owning 20.35% of PLDT’s common shares as of end-September 2016.

Singapore-based Singtel, meanwhile, owns 20.13% of shares in Globe Telecom as of end-September 2016. (READ: Globe Telecom hikes 2016 spending to over $1B)

But even if local firms have partnered with these foreign players, most consumers still complain about “slow” and “expensive” internet services.

According to the PCC’s Bernabe, even the two telco giants think the Public Service Law must be amended.

“The rational explanation here is that they also need a lot of capital spending budget to up their game. Even the Ayalas and the MVP group, they need more budget to improve their services. This (operating telcos) needs [a] huge budget,” Bernabe said.

“That is why they are also open for telecoms to be removed [from] the Public Service Act,” he added.

For Globe Telecom chief information and technology officer Gil Genio, being a player in the country’s telco industry requires “$800 million to $1 billion a year in capital spending.”

Bernabe said he is optimistic that the amendments to the Public Service Law will be approved by next year, given Duterte’s stance to liberalize the telco and energy markets.

The President had said: “I would like just to send this strong message: It’s about time that we share the money of the entire country and to move faster, make competition open to all.”

But for ICT advocacy group Democracy.Net.PH, the bundled spectrum frequency made available by the National Telecommunications Commission is “not enough” for a 3rd major player “to operate and thrive.”

The group added that PLDT and Globe own nearly 80% of the total available and allocatable spectrum, inclusive of guard bands, according to the National Radio Frequency Allocation Table (NRFAT).

San Miguel Corporation was supposed to launch a 3rd major telco player this year, but its talks with Australia’s biggest phone and Internet provider, Telstra Corporation, collapsed after both failed to agree on an equity investment.

A couple of months after its talks with Telstra failed, San Miguel sold all of its telco assets to PLDT and Globe for P69.1 billion. 

The Court of Appeals later stopped the PCC from reviewing the San Miguel telco buyout deal. – Rappler.com