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Finance Chief to DICT, don’t rush in selecting the 3rd major player in telco

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Finance Secretary Carlos G. Dominguez III cautioned the Department of Information and Communications Technology (DICT) against rushing into a decision to select the third major player in the telecommunications industry unless the proper regulatory groundwork is established.

This was also the same sentiment expressed by Dennis Anthony Uy, President and Chief Executive Officer of Converge ICT that DICT is strongly considering to be the third major player in the telecom industry in the Philippines that would compete with Globe and PLDT.

However, Uy said that the government needs to address the regulation and legislative agenda because by just having available frequency alone you cannot really compete.

Read: Converge ICT Solutions Inc. targets to be the 3rd Major Player of telco in the Philippines

The Finance Chief said, “A better regulatory environment I think is the priority rather than having a third telco. The third telco is just a means to an end”, during a forum on Wednesday.

“What the public is getting is inferior to what the public is getting elsewhere. That is the job of the regulators. Are we asking the right questions or are we rushing into something that may not help the long run because the regulatory environment is not sufficient?”

Dominguez said that the ultimate objective is “better, more affordable, faster… more access to communications. That is the goal. But If you have a third telco and the regulation is ineffective, whats the point?” he added.

The Department of Information and Communications Technology (DICT) has said that a third player will be selected before the end of the year, in time to start operations by 2019.

However, the Department of Finance (DoF) lost a standoff with the DICT after earlier insisting on largely financial criteria as the main basis for picking the third player. After industry consultations, the DICT found that stakeholders preferred to select on the basis of Highest Committed Level of Service (HCLoS), a scheme that assigns weights and awards points based on the third player’s promised investment levels, population coverage, and speeds achieved over a five-year period.

Regulatory concerns he cited include access to the government’s “dark fiber” network, the availability of frequency, a common tower policy, and interconnection rates.

Dominguez also said that an Open Signal survey that found that the Philippines had the lowest 4G availability in East Asia. It is worth to note that 93% in the Philippines still uses 3G instead of the faster 4G, and the Philippines ranks 2nd in the world for slowest 3G and 4G, respectively.

“What does that tell you? It tells me that the regulation of the telco industry, for whatever reason, is not up to par with the region. Either it’s the law or the regulators. So maybe that is one of the issues we have to assess first,” he said.

“Are you going to force the third telco to build its own towers or are you going to make it an even playing field where everybody has towers, and must be available to everybody else. I’m not saying they should be free. Rent them out, make them available,” Mr. Dominguez said.

“Is it possible for the third telco to build its own fiber optics network? Will the frequencies available to the third telco be sufficient for them to compete on a fair basis?” he added.

The selection criteria that was recently laid out in a draft Terms of Reference (ToR) requires the prospective third major player to commit to at least five Megabits per second of Internet speed and P40 billion worth of capital expenditure over five years.

Next week, another public consultation on the draft ToR is set to conduct to be followed by a meeting of the selection oversight committee composed of representatives from the DICT, DoF, the National Telecommunications Commission, the Office of the Executive Secretary and the National Security Adviser.

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