DICT eyes auction of frequencies for 3rd telco player

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The Department of Information and Communications Technology (DICT) proposes an auction of frequency spectrums under a second set of draft guidelines for the selection of the third major player in the local telecommunications industry.

In a draft memorandum released Thursday, the DICT said 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.

Participants should have a minimum bid amount of PHP 36.58 billion.

“Please note that the minimum bid amount is pegged from the Spectrum User Fees (SUFs) being paid by existing telecommunications companies and does not yet consider the inputs/recommendations of experts from International Telecommunication Union (ITU) and best practices from other countries, and hence, is in no way final. Further, while there is a minimum bid amount, in this mode of selection, there will be no cap on the bid amount as the participant who submits the highest bid shall be selected as the New Major Player,” the DICT said in an e-mailed statement to reporters.

The National Telecommunications Commission (NTC) shall create a Selection Committee consisting of four members.

Bidding participants must have a congressional franchise that is not related to any existing major telco firms, paid-up capital of at least PHP10 billion and have experience in the delivery and operations of telco services for the last five years.

A new telco player must have coverage of at least 30 percent in a year and the minimum average broadband speed shall be 10 megabits per second (Mbps).

The firm should cover at least 50 percent of the population after a five year period.

The NTC shall be awarding to the new major telco player a certificate of public convenience and necessity for 15 years. It shall be issued upon the approval of the Philippine Competition Commission, compliance of the PHP10 billion paid-up capital, approval of sale or transfer of stock by Congress and submission of performance security and business plan. .

The newer guidelines is an alternative to the earlier terms of reference dated June 26 which used the Highest Committed Level of Service (HCLoS) as basis for the selection of a new telco player.

A third telco player should have an annual capital and operating expenditures worth PHP40 billion, must have coverage of at least 30 percent of the national population and a minimum average broadband speed of 5 Mbps according to the earlier guidelines.

The criteria for the selection were set as follows: 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 latest draft of the guidelines was made in accordance with the preference of the Department of Finance (DOF) for an auction of the frequencies that will be assigned to a third telco player.

The DOF is a member of an oversight committee to assist the NTC in the formulation of the guidelines for the selection and assignment of radio frequencies for the entry of new telco player. The committee is composed of the DICT secretary as chairperson; Finance secretary as vice chairperson, Office of the Executive Secretary and the National Security Adviser.

The DICT has earlier expressed opposition to the auctioning of frequencies as this will force a new player to put up a huge amount to qualify on the bidding process which is not related to setting up telecommunication facilities and improve services.

Finance Secretary Carlos Dominguez III has said that a third telco player needs to have at least PHP 200 billion to compete with existing telco giants PLDT Inc. and Globe Telecom Inc.

The DICT is set to hold public consultation on the guidelines next week. PNA

Source: http://www.pna.gov.ph/articles/1039858