Finance chief still fighting for telco duopoly
BEN KRITZ
FINANCE Secretary Carlos “Sonny” Dominguez 3rd might not be able to stop the entry of the long-awaited third telecommunications provider for the Philippines even he certainly seems intent on not letting it happen without a struggle.
Having been thwarted in an attempt to price any prospective entrants out of the market by proposing an auction-based system for choosing the long-awaited third telco – a proposal rejected with not a little scorn by other concerned agencies and industry players – Dominguez is now arguing that a third telco is not really necessary if only the telecommunications sector would be regulated properly.
“The third telco is one way of improving [the sector]. Another way is to have a better regulatory environment and I think that is the priority rather than a third telco,” Dominguez explained during a Kapihan de Manila Bay forum last week.
Most people who are not the Finance Secretary view the entry of a third telco as a key part of the solution to a dysfunctional regulatory environment rather than as a substitute for an actual solution. That Dominguez is struggling to sell an irrational argument is obvious from the points he highlighted during his talk at the forum.
His concerns, the Finance Secretary explained, are particularly with the areas of interconnection between telecom networks, access to communications towers, so-called “dark fiber,” or the use of fiber optic networks belonging to one provider by another, and the perpetually contentious issue of broadcast frequencies. Except for the matter of the broadcast frequencies that will likely be settled in the courts, all of these issues have already largely been resolved.
Last month, the National Telecommunications Commission (NTC) ordered the two existing telcos to reduce their interconnection charges for voice calls and text messages from P2.50 per minute for calls and P0.15 per text to P0.50 and P0.05, respectively. Since there was absolutely nothing in NTC’s directive to indicate the new rates apply only to Globe and PLDT/Smart and no other service provider, there’s no reason to believe, as Dominguez tried to convince everyone he does, that “…if you get the third party here, the current guys can cripple it by putting a very high interconnection charge. So that needs to be addressed.” Perhaps someone at the NTC needs to ring up the Department of Finance and point out that it already has been. Or better yet, they can send a text message and save some taxpayer money because of the new lower rates.
Access to towers has indeed been one of the most significant obstacles to the expansion of cellular and internet services because under the existing scheme, the two telcos own all their towers. Not surprisingly, this has resulted in the Philippines having the worst tower coverage of any country in Asia. To be fair, it’s not entirely the telcos’ fault. Landowners and local government units use the situation to practice blatant extortion, making the installation of a new tower time-consuming and unreasonably expensive. By the same token, the two telcos, with their reluctance to invest any more on infrastructure than is minimally necessary, have been less than assertive in demanding that national-level agencies enforce existing regulations and protect their rights from corrupt provincials.
The Finance chief is concerned a new telco will fall into the same trap and be forced to build its own towers. That, however, will not be the case, as the Department of Information and Communications Technology (DICT) has developed a framework, which will take effect this coming year, to accredit two third-party tower operators to build a total of 50,000 new towers over the next seven years. Because all of the telcos will be obliged to use the third-party operator except in cases where the latter is unable to provide a tower in the necessary location, the entire dynamic between tower builders and rapacious local officials and property owners will change. Local profits will depend on local interests being cooperative and competing for the tower business. And as for Dominguez’ concerns over shared fiber networks, much the same model being implemented for broadcast towers could be applied in that area as well.
While Dominguez is certainly not out of line to suggest that regulation should be sustained and consistent, his implication that nothing is being done about it is inaccurate and unfair, and his constant resistance to the entry of a third telco irresponsibly overlooks one important fact: Whether he likes it or not, a third option – and preferably, a fourth, fifth, or more – for telecom services is a matter of public demand.
His role, therefore, and that of any other concerned government official or agency, is to see that the demand is met in a prudent, timely fashion, and not to ineffectually pass judgment on it.
ben.kritz@manilatimes.net
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