Excerpts from the Committee on Public Services hearing

Sen. Ralph Recto: Thank you for the recognition, Madam Chair, I'll be very quick. First I'd like to thank Sen. Dick Gordon for asking those questions with regards to putting up facilities and schools, because we have recommended that. So, thank you for that. And I was listening attentively to the questions and the answers given, Madam Chair.

Let me take the opportunity to ask the representative from Globe very quickly. What percent of your equipment would be Chinese equipment?

Atty. Froilan Castelo: Good morning, Senator Recto. About 80% of our equipment are Huawei.

Recto: How many percent?

Castelo: About 80%, your honor. And 20% are non-Huawei. They are Ericsson and Nokia, your honor.

Recto: [Streaming interrupted]...of what is happening now globally between the US and other Western allies as against the Chinese--or Huawei, in particular--with regards to telecommunications equipment.

Castelo: Yes we are, your honor.

Recto: And isn't it that today, this is ramping up. The issues are ramping up.

Castelo: That is correct, your honor.

Recto: Have you discussed among the board, whether or not you should be continuously using Huawei or Chinese equipment, and do you have any plan of using more Western equipment like Nokia, Ericsson, Motorola, so on and so forth?

Castelo: Yes your honor, because of these developments coming in from the US and Europe, we're coming up with a strategy for another network which is based on non-Chinese telco equipment providers.

This is especially true, because our American and other Western corporate clients are doing the same, your honor. So we are right now in the process. But we have already in place, but we are expanding it--an alternate network which we call that to provide for this.

At any rate, your honor, it is because at 5G right now, the most advanced is still Huawei, and their counterparts are about, our estimate at about 1.5 years away. So 5G is very relevant to the Philippines because it is an archipelago, and we could provide better connectivity thru wireless means, so that's where we are. And we are in agreement with Huawei with respect to the provisioning of their equipment on 5G.

But just the same, your honor, we have already assured the US gov't, and the US Embassy, for that matter, that network security is our concern. We are primarily responsible for network security and Huawei is merely an equipment provider. And we are totally responsible for it. We have Israelis, Americans network security advisers for that matter who keep on auditing our network for any lapses or leakages in terms of security, your honor.

Recto: Assuming you were to continue using Huawei equipment, will you have problems with the US government?

Castelo: We are coming up with negotiations with Huawei if there's a point that they will be totally banned in the US, there will be some compensation and replacement of equipment for that matter, your honor.

Recto: So this is a serious matter, isn't it?

Castelo: It is, your honor, it is.

Recto: And isn't it true that China purchases all its electronic chips for its equipment from US companies?

Castelo: That is correct.

Recto: And isn't it true that by October, American companies would stop selling these electronic chips to Huawei?

Castelo: That's correct, your honor.

Recto: So that's correct. And by doing so, the advantage of Huawei is then diminished.

Castelo: We were assured by Huawei, your honor, that they have a locally grown micro.... So they gave the assurance of their continued equipment (supplies) despite the ban by American government for the American companies to do contracts with Huawei and other Chinese telcos.

Recto: As promised, Madam Chair, I'll be very quick. I just took the opportunity to ask these questions in the deliberations today to better understand the situation today. You do have a trade war, you have a technology war, as well, going on between the US and China. So I just wanted to understand it and to see how our local telcos are adapting to the situation. So thank you for the opportunity, Madam Chair, thank you, Atty. Castelo.