Press Release
May 22, 2017

TELCO Sponsorship Speech
Part Two
May 22, 2017

Good afternoon, Mr. President and esteemed colleagues.

I have the honor to present Part Two of this Report, which will outline the key policy recommendations and legislative propositions based on the synthesis of our learnings from the three public hearings. It was indeed fulfilling on the part of the Committee on Economic Affairs to have been able to gain a more informed understanding of the telecommunications industry through this legislative inquiry. I had only one thing in mind when I filed Proposed Senate Resolution No. 213 - to fulfill a campaign promise that if I got elected, I would work to improve telecommunications services in the country. But this legislative inquiry made me realize that this cause is more pressing, more important, and a lot more profound, than I have imagined.

According to the 2016 World Development Report, we are in the middle of "the greatest information and communications revolution in human history."1 To describe such revolution in numbers, the World Development Report states that:

1. More than 40% of the world's population has access to the internet, with new users coming online every day.

2. Among the poorest 20% of households, nearly 7 out of 10 have a mobile phone. It observes that the poorest households are more likely to have access to mobile phones than to toilets or clean water. 2

These rapid technological changes do not merely bring more choices and greater convenience to us. They provide and expand opportunities that were previously out of reach to the poor and disadvantaged, thereby creating prosperous and inclusive societies. In Kenya, for example, the cost of sending remittances dropped by up to 90% when the M-Pesa digital payment system was introduced. On the other hand, the world's 1 billion persons with disabilities can now lead more productive lives with the help of text, voice, and video communication. For women, they can now participate more easily in the labor market as e-commerce entrepreneurs, in online work, or in business-process outsourcing. 3

Such developmental benefits derived from using these technologies have come to be known as "digital dividends". But when their aggregate impact falls short and gets unevenly distributed, they create a so-called "digital divide". We need to close this digital divide in order for everyone everywhere to get the most out of the digital revolution.4 And I hope that this is the goal that our respective legislations will be able achieve, especially in the telecommunications industry.

Please allow me then to share the following key recommendations that were culled and crafted from our three public hearings. As legislators, our individual approaches to our respective legislations may be different, but I hope that sharing these propositions will be useful in shaping, or re-shaping, our advocacies on the telecommunications industry.


The end goal of regulation should be to promote the paramount welfare of the consumer by assuring the availability of genuine options, quality services and reasonable prices. Our public hearings exposed that the National Telecommunications Commission is organizationally handicapped to fulfill this regulatory function. Due to the agency's lack of fiscal autonomy and its Commissioners' lack of security of tenure, the NTC's supposed independent cloak has always been eclipsed by an avatar of regulatory capture.

Confronted by the problem of weak regulation, the most urgent key reform is to empower and strengthen the NTC to enable it to freely create an environment of regulatory certainty and operational conditions that are necessary to promote the paramount welfare of the consumer. This specific reform necessarily requires clothing the NTC with independence by giving it fiscal autonomy, as well as giving its commissioners a fixed term of office in order to eliminate their vulnerability to all forms of pressure, harassment, or even threats of litigation.

The NTC also needs what I would loosely call as "super powers" to effectively carry out its regulatory mandate over the now very powerful players in the telecommunications industry. This would entail a review of Republic Act No. 7925 (or the "Public Telecommunications Policy Act of the Philippines"). To give an example, RA 7925 does not have a penal provision. Hence, what we use are the penal provisions under Commonwealth Act No. 146 (or the "Public Service Act") which provides under Section 21 that any violation of the terms and conditions of any certificate, orders, decisions or regulations of the NTC shall be fined by not more than P200.00 per day until the violation is corrected. This penalty is, at best, a mere token gesture for non-compliance to NTC regulations. This P200.00 per day fine under CA 146 was enacted in 1936, and has never been increased to a level considering inflation, nor adjusted to make it a real deterrent to erring telecommunications companies. It is time to give the NTC more teeth to better regulate the industry, as it is only with effective regulation that we can ensure that the profit orientation of the telcos is tempered by the welfare of the consumer.

On the issue of COMPETITION:

Based on the committee's findings, the present state of the telecommunications industry does not allow the realization of the policies and objectives of the national competition law. Last week, I explained under Part One of this Report why there is not enough spectrum left for a third player to enter and compete viably. This is due to the monopolization of the "workhorse frequencies" by Globe and Smart, leaving the hypothetical third player to be able to offer only data-driven services. It will not be able to provide services for calls and texts at par with the array of services offered by the duopoly. The Co-Use Agreement of the 700Mhz spectrum by Globe and Smart has also resulted in a "spectrum split" between the duopoly - further crowding out other viable players in the telecommunications industry.

We have recently heard a lot of noise about relaxing Constitutional restrictions to allow foreign firms to enter the telecommunications industry. The foreign telco, eyed as the third player, is seen as the magic formula that will compete against the duopoly - providing better services and offering lower rates. Unfortunately, there will be no competition until this third player - be it foreign or domestic - can be allocated enough frequencies that it can use to offer real competition and give consumers the best value for their money.

This leads us to the third issue: How can our system of SPECTRUM ALLOCATION increase competition in the telecommunications industry? The following key recommendations were given during the legislative inquiry:

We need to develop a more transparent system of spectrum allocation, assignment, reallocation and re-farming, as well as promote and implement a competitive selection process in the allocation of our publicly-owned spectrum. The allocation system must be improved in a manner that best serves the public interest and the promotion of greater competition in the market.

The current "spectrum lockout" could be remedied by spectrum re-farming or spectrum reallocation. It is the Filipino people, not the telcos, who own the spectrum as part of the national patrimony. The telcos are only licensed to use such spectrum. Sec. 4(c) of RA 7925 states that "[t]he radio frequency spectrum is a scarce public resource that shall be administered in the public interest xxx. The government shall allocate the spectrum to service providers who will use it efficiently and effectively to meet public demand for telecommunications service and may avail of new and cost effective technologies in the use of methods for its utilization." Sec. 15 of the same law also provides that "[w]here demand for specific frequencies exceeds availability, the Commission shall hold open tenders for the same and ensure wider access to this limited resource."

Despite the aforementioned provisions of law, the dismal state of the telecommunications industry has never impelled the NTC to recall a single spectrum from the telcos. The very-slow-yet-very-expensive telecommunications services that every consumer has to put up with has never motivated the NTC to recall from the duopoly those spectrum that is not being used to "efficiently and effectively meet public demand for telecommunications service."

We are thus confronted with a situation where spectrum in this country, unless "privately traded" outside of RA 7925, has been allocated to telco firms and were never recalled by the NTC or re-farmed to other entities. It is time that we impose policies setting specific durations for spectrum use, as well as clear service standards for telco firms to comply with as a condition for their continued use of the spectrum.

Mr. President, these were the key policy recommendations gathered from our legislative inquiry. There were other equally valid propositions raised in the public hearings - like number portability, open access, convergence, interconnection and cross subsidy - but we chose to concentrate on the issues which we believe need to take precedence for now.

I hope that my two-part Report on this legislative inquiry was able to convince my esteemed colleagues to legislate and bridge the digital divide in telecommunications.

Mr. President, I am respectfully recommending the adoption of the summary of our key findings and recommendations.

Thank you, Mr. President.


1 World Bank. 2016. "World Development Report 2016: Digital Dividends." Overview booklet.
2 Id. at p. 5.
3 Ibid.
4 Supra Note 1.

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