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‘Third player’ may need 2G to compete effectively — PCC

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REUTERS

THE Philippine Competition Commission (PCC) said that the third entrant to the telecommunications industry will have to be allocated more second generation (2G) frequency over the long term to allow it to serve the 2G market.

PCC Commissioner Johannes Benjamin R. Bernabe said that reallocation of frequency will have to take into account a specific bandwidth range for 2G services in order for the so-called “third player” to reach the market of 2G users.

“There are several frequencies which are being allocated to the third player. But one thing we noticed, there is a certain bandwidth (like the 250-290 megahertz [MHz]) where there are no available frequencies,” Mr. Bernabe said in a roundtable discussion with BusinessWorld on June 1.

“Some say that it’s just 2G and if you’re given 4G and 5G you can supply 2G, but 5G and 4G are available if you have smartphones… the last statistic I saw on this is that… 40% of Filipinos still use non-smartphones, so that bandwidth is probably important for the third telco player to reach out to that 40% of the market… That has to be carefully calibrated by whoever is going to be the group of agencies which will look into the assignment of frequency for the third telco player.”

The Department of Information and Communications Technology (DICT) estimates that the 300 MHz assignable to the third player is sufficient for it to compete with PLDT, Inc and Globe Telecom, Inc.

The NTC estimates that 30.32% of available frequency is controlled by PLDT, while Globe holds around 24.9%. Some 39.35% is unassigned or subject to litigation, and another 5.41% is unallocated. Acting Secretary Eliseo M. Rio, Jr. has said that the frequencies held by Bayan Telecommunications, Inc. (Bayantel), control of which is being contested in court, might be available by the time the third player is selected since there is already an agreement to settle the issue out of court.

For long-term equitable allocation, however, the DICT may resort to re-farming of frequency, which may require legislation to head off legal action from the incumbents.

Senate Bill 1742 (“An Act Providing for the Allocation and Management of the Radio Frequency Spectrum”) proposes a process for allocating frequency, including dividing usable spectrum into blocks to ensure adequate competition, and a competitive bidding process for frequency assignment. The last time the National Telecommunications Commission (NTC) assigned frequencies it was done through a “beauty contest,” where regulators selected the proposals it deemed most advantageous.

The DICT may loosen its coverage conditions for the third player to attract more bidders.

Analysts said that the government may not strictly enforce coverage requirements given that the paid-in capital requirement will serve to filter out participants that are not financially capable.

“The DICT may become more lenient to attract more bidders,” Jervin S. de Celis, equities trader at Timson Securities Inc., said in a message.

“Generally, only a few players can realistically enter into telco in the country given huge capital spending required,” Luis A. Limlingan, head of sales at Regina Capital Development Corp. said in a message.

Other requirements include a telco track record of at least five years; a congressional franchise not related to either PLDT or Globe; and no uncontested liabilities with the NTC as of Jan. 31.

The DICT has said that the earliest period for selecting the third player is the end of August. The oversight committee is currently reviewing issues such as frequency assignments, use of unused or “dark” fiber of the National Transmission Corp. (TransCo), a common tower policy, and interconnection rates.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls. — Patrizia Paola C. Marcelo