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Senate Commits to Reforming Dysfunctional PH Telco Sector

The Senate has approved a scathing report detailing the dysfunctional state of the Philippine telecommunications industry, laying the groundwork for the passage of a series of landmark bills aimed at drastically improving the quality of telco services while also driving down the oppressive costs shouldered by consumers.

Committee Report No. 78, prepared by the Senate Committee on Economic Affairs under the leadership of its chairman, Senator Win Gatchalian, was adopted by the Senate in unanimous fashion earlier this week.

"The approval of the telco report means only one thing: that the frustrating status quo, in which powerful telecom companies continue to provide low quality cellular, data, internet, and other services at outrageously high costs, will soon be a thing of the past," Gatchalian said.

The Gatchalian Report identifies three crucial problems which have left the telco sector in disarray for years: the weakness of the National Telecommunications Commission (NTC) as industry regulator, the lack of genuine competition, and a flawed spectrum management system.

To address the shortcomings of the NTC, Gatchalian committed to drafting legislation which would revamp the outdated body to ensure it is "up to date with the changing times" and "attuned with contemporary technologies as well as the advent of the Internet". Specifically, he mentioned that the NTC overhaul would include an expansion of the scope of its regulatory powers, the establishment of fixed tenure for its commissioners, and the grant of greater fiscal independence to insulate the body from external influences.

"The end goal of these legislative reforms, as expressed in the report, will be to empower and strengthen the NTC to enable it to create an environment of regulatory certainty and operational conditions necessary to promote the paramount welfare of consumers and encourage the continued local and international investments in the telecommunications industry," he added.

On the issue of competition, the report identifies the "monopolization" of so-called "workhorse frequencies" (used to provide essential voice call and SMS services) by GLOBE and SMART as one of the big factors hindering genuine competition in the telco industry.

"Given prevailing conditions, [a] third player will be limited to data-driven services. They will not be able to provide services for calls and texts at par with the array of services offered by the duopoly," the report stated.

Despite the adverse effects of spectrum monopolization, however, the report revealed that the failure of the NTC to properly govern publicly-owned spectrum has resulted in abuses ruinous to consumer welfare. Such abuses include the non-utilization of spectrum allocated to improve service, and private spectrum trading between telco players.

To address these issues in tandem, the report recommends to "increase competition via a more transparent system of spectrum allocation, assignment and re-farming, as well as the development, promotion, and deployment of a competitive selection process in the allocation of publicly-owned spectrum."

"The system must be improved in a manner that best serves the public interest and the promotion of greater competition in the market," the report added.

To further foster competition, the report also recommends the implementation of a Mobile Number Portability (MNP) scheme to allow consumers to easily switch between mobile service providers, thereby incentivizing improvements in service quality. Gatchalian has already filed a measure, Senate Bill No. 1237, to implement this reform.

Encouraged by the strong support expressed by his fellow senators during floor deliberations on the report, Gatchalian pledged to work double-time to draft and introduce onto the Senate floor the legislation recommended by the report.

"With the support of a united Senate eager to protect consumer welfare, I am confident that the proposed landmark bills aimed at reforming the dysfunctional state of the Philippine telecommunications industry will become law by the end of the 17th Congress," the senator said.

Source: Senate of the Philippines

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