DICT aims to award 3rd telco player by September

Telco industry stakeholders have expressed their preference to the draft terms of reference (TOR) of the DICT, which uses the highest committed level of service (HCLoS) as criterion for the selection of a new major telco player, over the use of auction as a mode for the selection during a public consultation conducted by the department. (Pixabay photo)

MANILA — The Department of Information and Communications Technology (DICT) is eyeing the selection of the third major telecommunications player as early as September.

But DICT stressed that it will be selecting a firm that has the technical and financial capability to deliver high-quality of communication services to the public.

“If everything goes well, wala nang magkakaroon ng major setbacks (there are no major setbacks ahead), we can have the third telco by the end of September or early October,” DICT Acting Secretary Eliseo Rio Jr. said in an interview with reporters Friday.

“The third telco will come in a playing field where it has to compete with Globe and Smart. Globe and Smart (have) all the subscribers already kapag pasok nitong third telco (once the third telco comes in), it has to attract the subscribers of Globe and Smart. Of course, Globe and Smart will also put up their own marketing strategies and they have to retain subscribers. Ito ang magiging fight ng third telco (This is the fight where the third telco will be coming into),” he added.

Telco industry stakeholders have expressed their preference to the draft terms of reference (TOR) of the DICT, which uses the highest committed level of service (HCLoS) as criterion for the selection of a new major telco player, over the use of auction as a mode for the selection during a public consultation conducted by the department.

In an informal survey conducted among 15 interested telcos that participated in the event, 75 percent prefer the HCLoS; 17 percent have chosen the auction mode while 8 percent abstained.

The DICT likewise disclosed a survey among the general public that shows 96 percent prefer using HCLoS as basis for the selection of the third telco while 4 percent prefer auction.

The results of the study will be presented to an Oversight Committee, which consists of the DICT, the National Telecommunications Commission (NTC), Department of Finance (DOF), National Security Adviser and the Office of the Executive Secretary that will be in charge of the selection process.

“We are going to collate the results and come up with a report, which maybe I can present to the oversight committee and therefore we can now go ahead with the legal process,” according to Rio.

The DICT has released two draft guidelines on the entry of the third telco player last week. The first one seeks assignment of points to service commitments based on network coverage, spending and broadband speeds, and another one proposes a spectrum user fee auction.

Under the HCLos formula, which is being favored by the DICT, the new telco will be selected on the following criteria: 40 percent for national population coverage, 20 percent for minimum average broadband speed and 40 percent for annual capital and operating expenditure over a five year commitment period.

The guidelines using the auction mode stipulates that a bidder that will offer the highest annual capital and operating expenditure for a 5 year commitment period shall be selected as the new major telco player.

The new telco player shall be subject to the applicable spectrum user fees pursuant to prevailing rules and regulations after the said period.

The DOF prefers that the selection of the new telco player will be based on the auctioning of frequency spectrums.

Rio has opposed this mode as it will force a new player to put up a huge amount to qualify for the bidding process, which is not related to setting up telecommunication facilities and improve services.

When asked what he will do in the event Finance Secretary Carlos Dominguez III insisted on the auction, Rio said: “Secretary Dominguez can come up with his own position, but more or less as far as the DICT is concerned, we have, I think, enough data, enough encouragement to go ahead with the highest committed level of service approach.”

“In other words, I have full responsibility and therefore I have to decide that I have to go forward because I have been instructed by the President,” he added.

To qualify, a company or consortium must have a congressional franchise that is “not a related party” to the dominant players The company or members of a consortium must also have a paid-in capital of at least PHP 10 billion.

The bidders must also have experience in “provisioning, delivery and operations” of a telco service for the last five years.