Press Release
September 21, 2011

A Case of Illegal Trading of Radio Frequencies


I stand before you here today to call your attention and that of our regulatory agencies, particularly the National Telecommunications Commission, to the continued violation of the legislative franchise granted by Congress to a telecommunications company called ALTIMAX BROADCASTING INC. (Altimax).

Allow me to provide Your Honors with a brief factual backdrop.

Altimax was granted by the National Telecommunications Commission Provisional Authorities to install, operate and maintain a nationwide direct broadcast satellite (DBS) service and a multichannel multipoint distribution system (MMDS), both on December 29, 2000, valid until June 29, 2002. On March 18, 2003, said Provisional Authorities were extended for three (3) years up to June 29, 2005.

Republic Act No. 8607, the Act granting Altimax its franchise to construct, install, establish, operate and maintain radio and television broadcasting stations in the Philippines was approved on March 27, 1998.

R.A. No. 8607 provides for certain conditions for compliance and they are as follows:

- Commence operations within one year from the approval of its permit by the National Telecommunications Commission;
- Operate continuously for two years;
- Commence operations within three years from the effectivity of its franchise.

Note that under the law, ALL three of these conditions must be met, otherwise, the law clearly provides that Altimax's franchise is rendered revoked ipso facto, which, literally translated, means revoked "by the fact itself."

Ladies and gentlemen, to this very day, Altimax has not complied with any of these conditions. Not one. That is a fact.

In 2008, or ten (10) long years after the approval of Altimax's franchise, the NTC-NCR conducted an inspection of the facilities of Altimax and found that the facilities supposedly located in Sampaloc, Manila simply were non-existent.

But strangely, in its Orders dated 23 June 2009 and August 14, 2009, the National Telecommunications Commission even extended the Provisional Authorities of Altimax for its MMDS and DBS services, respectively, up to June 29, 2012. This is despite the clear, uncontroverted fact that Altimax has failed to roll out its MMDS and DBS services for over a decade and that the franchise of Altimax, by its very terms, had long been ipso facto revoked. How can the National Telecommunications Commission lawfully grant or extend the Provisional Authorities of an entity that legally has lost its Congressional franchise? Certainly the National Telecommunications Commission does not have the power to grant a new franchise to Altimax. Only Congress has that power.

But that is not all, Mr. President. This anomalous situation continues and in fact, has grown worse!

Apart from scoffing at the conditions for the validity of its Congressional franchise, Altimax has unilaterally leased its assigned frequencies to third parties for purposes other than those specified in its franchise. According to Altimax' audited financial statements for 2009 and 2010, it entered into a Memorandum of Agreement with a company called INNOVE COMMUNICATIONS, INC. (Innove) wherein Altimax earned between 70 and 90 Million Pesos for the years 2009 and 2010, respectively. By this illegal arrangement, Innove has already deployed over 95 transmitters nationwide for the provision of WIMAX services to Innove customers. This arrangement is a flagrant violation of the conditions of the franchise of Altimax, which specifically prohibits the assignment or lease of its rights and privileges acquired under the said franchise.

Ladies and gentlemen, by leasing its bandwidth to Innove, Altimax has arrogated unto itself the very authority vested upon the Congress of the Philippines. Binastos po ng Altimax ang buong proseso. Binastos po tayong lahat ng Altimax. Tayong lahat at ang bawat Pilipino.

By entering into an illegal arrangement with Altimax, Innove has circumvented the procedure established by the National Telecommunications Commission for the application and grant of additional radio frequencies. Furthermore, Innove has been able to use the Altimax frequencies even if such frequencies were supposedly granted to provide MMDS service - and that excludes WIMAX service.

What is worse is that Altimax, which has clearly failed to perform its franchise obligations, has been allowed to derive substantial revenues SOLELY from the illegal lease of its allocated bandwidth to Innove. It is apparent that from the beginning, Altimax never intended to carry out the purported services for which its franchise was granted by Congress. But Altimax goes about its business to this day for purposes that are clearly contrary to law. Wala na pong ibang pinagkakitaan ang Altimax maliban sa panlolokong ito. This ladies and gentlemen, is nothing but an absolute affront to this august body, to Congress and to the consuming public. Deep in your heart of hearts, each of us present here today must find it difficult to disagree.

My fellow members of the Senate, given these simple facts, the following glaring question are now before us:

1. How can we overlook the terms of the franchise of Altimax as public utility and ignore the ipso facto revocation thereof after having spent the last decade doing nothing but engaging in illegal transactions for purely private gain?

2. How can we overlook the terms of the franchise of Altimax and consider as valid its MOA with Innove, thereby countenancing these illegal transactions worth over 160 Million Pesos?

3. How can we overlook the fact that Altimax, a company which never even started to roll out its own operations, has already earned millions of pesos by essentially subletting the privileges granted through its franchise to Innove?

All of these happened and continue to subsist right under our very noses.

It behooves us, therefore, to look at the fundamental law of the land for guidance as to how to proceed in the face of this controversial and anomalous condition.

Article XII Section 11 of the 1987 Constitution states that franchises are granted under the condition that it shall be subject to amendment, alteration or repeal by the Congress when the common good so requires. No less than that constitutional mandate to protect the common good requires us today to carefully review and examine the franchise of Altimax and its compliance, or shall I say NON-COMPLIANCE with its terms. We not only have the power to do so; we are in fact compelled by our positive duty as member of this august Chamber.

Allow me to further direct your kind attention to Section 22 of the same Article XII of the 1987 Constitution, which states that acts which circumvent or negate any of the provisions of this Article shall be considered inimical to the national interest and subject to criminal and civil actions, as may be provided by law.

The fundamental law of our land and our duty as legislators call on us to act accordingly today to correct this anomaly, lest we form part of the problem. We are all witness to an outright mockery of the laws which granted the franchises of Altimax and Innove. Must we all stand here blind before these facts that have been undeniably brought forth before us? Are we, the very representatives whom our people look to for guidance, to be held complicit by omission with these corporations as they arrogantly trample upon the clear letter of the law?

The franchise of Altimax itself states that the radio spectrum is a finite resource that is a part of the national patrimony and the use thereof is a privilege conferred upon the grantee by the State and may be withdrawn anytime, after due process. It is time for us now as legislators to go beyond the formulation of policy and delve into the proper implementation of the law according to the powers and duties expressly vested upon us by the Constitution.

The violations that I have asked you all to examine with me here today are so crystal clear and unequivocal that there is no room for any interpretation other than the fact that Altimax has no valid Congressional franchise and as such should not have been granted extended Provisional Authorities by the National Telecommunications Commission, and all those who are responsible for such blatant circumvention of the laws should be immediately held accountable.

The National Telecommunications Commission must immediately act to recall the radio frequencies illegally held by Altimax and to immediately stop the illegal leasing of Altimax's allocated radio frequencies to Innove. This, the National Telecommunications Commission should do unless we allow it to continue to be a party to these irregularities.

May I end by humbly proposing that this matter be referred to the proper committee for purposes, not only of investigating in aid of legislation, but more importantly, in the exercise of our oversight functions and our duty to see to it that the laws we pass are implemented faithfully and that any violation thereof are dealt with in accordance with the laws of the land.


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