Saturday, August 6, 2016

Public Interest Groups Weigh in on Telco Deal

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Public interest groups weigh in on telco deal and calls on new government regulator to review impact on consumers. 

The biggest telecommunications acquisition in the country draws deep concern as consumer welfare and public interest groups demand transparency after the telecom duopoly sought shelter in the courts from review by the country’s independent anti-trust body. 

In a forum organized by the Foundation for Media Alternatives (FMA) and the Philippine chapter of Internet Society (ISOC PH), and hosted by the Ateneo School of Government (AsoG), groups said the National Telecommunications Commission (NTC) and the Philippine Competition Commission (PCC) should both take a closer look at the acquisition of assets involving the 700Mhz frequency band. 

ASoG Dean Ron Mendoza said there needs to be evidence-based discussions between the public and private sector to improve the competition environment in the country citing the merger as an important first-test case for the Competition Law of the country. The independent anti-trust body is currently reviewing the P69-billion sale of Vega Telecoms, San Miguel Corporation’s telecom business, to Globe Telecom and PLDT Inc. 

The two firms have brought the matter before the Court of Appeals. The appellate court’s 6 th division earlier denied Globe's petition to stop the PCC review. “We want a more competitive telecom industry so that Filipinos enjoy innovative and fast and reliable internet services at affordable prices and high network quality.” said Grace Mirandilla-Santos, an independent researcher specializing in telecommunications. 

“Counterfactual evidences exist. You can look at other countries which have the ‘big three.’ They engage in musical chairs in intense competition. When customers suffer poor service, another firm responds with more attractive plans. The dominant firm’s business strategy is to come up with better internet experience,” said Dr. Adora Navarro, a senior research fellow of the Philippine Institute for Developmental Studies. 

She added that the Vega acquisition by the two dominant players poses a risk in the industry of losing contestability or the existence of the threat of new entry. “Should the PCC review proceed, there can be two scenarios. First is the PCC revokes the deal, and then there can be two options--NTC can recall the 700 MHz [frequency band], then immediately hold an auction, or, NTC can recall the 700 MHz spectrum and consider a future auction, ideally in a not-so-remote future. The money raised can be used for public services. A second scenario is the PCC approves the deal and imposes conditions,” said Dr. Navarro. 

“The ideal scenario, at least for me, is for PCC to review the deal and approve the deal, with conditions that can ensure more genuine competition and make it easier for more players to come in. Everyone can still win,” Atty. Gigo Alampay of the TRADE Project added. 

Dr. Greg Tangonan, Director of the Ateneo Innovation Center, and Professor of Engineering and Physics, said random measurements are undertaken at the Ateneo measuring internet speed and the telcos “are not even delivering half of what they promise.” He also added that "the possibility of a 700MHz system with 90MHz bandwidth has profound implications for people's access systems design" and having "a third carrier would be better." 

Tangonan also noted “the 700 MHz band offers many more possible network configurations than just expanded rural access at a lower cost…. Other stakeholders like broadcasters have need for this spectrum to create interactive content delivery in conjunction with ISDB-T broadcast.” 

Akbayan party-list representative Tom Villarin also expressed support to the PCC review and informed the audience that he filed a resolution requesting the House of Representatives' Committee on Trade and Industry to conduct an inquiry, in aid of legislation, on whether or not the buyout would benefit the consumers. 

On the part of the PCC, Winthrop Yu, Chair of the ISOC PH, said that it has full faith and confidence that the Competition Commission can and should undertake the review in the public interest. Yu noted that, rather than mere red tape, it is precisely the mandate of the Commission under the Fair Competition Act to ensure that consumers are not at the losing end of any business transactions, especially those that directly affect their daily lives. 

“It is our right as consumers to demand improvements and fair competition, and the PCC, being the country's anti-trust agency, has a specific responsibility to uphold that view. We fully support the review,” Yu added. But even as the PCC and the courts become the main battleground at present, the forum noted how the National Telecommunications Commission (NTC) had a crucial role to play, a function that left much to be desired. FMA’s Al Alegre declared that the NTC “must be reorganized and made more independent and autonomous, to protect citizens and consumers from abuse, and prevent regulatory capture”

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