DICT to hold ‘beauty contest’ for third operator; hints at licensing fourth player

28 Nov 2017

The Philippines’ Department of Information and Communication Technology (DICT) says it intends to hold a ‘beauty contest’ style auction for the rights to become the country’s third telecoms operator to compete with de facto duopoly PLDT Inc. and Globe Telecom. Local news cites DICT secretary Eliseo Rio as saying that the agency will look to identify telecoms companies interested in becoming the third operator this year – with the selection process set to follow in 2018 – and has even hinted at the possibility of a fourth player entering the market. ‘It might be too late to select a new player before the end of this year, what could be done is to just identify them, and have the selection process by next year,’ Rio told reporters, confirming that PLDT and Globe, and their various subsidiaries will be barred from participating.

It is understood that the DICT is considering a ‘grading system’ to evaluate potential new entrants rather than a traditional auction, in which it will review bids based on ‘track record, financial capability and technical know-how’. Rio also pointed out the government’s concerns that it would be unfair to ask a third (or fourth) player to stump up all their frequency fees upfront given the historical evolution of the Philippine telecoms market. ‘Knowing that the two big telcos never underwent any auction process on the frequencies they acquired, it would be disadvantageous to require a third telco to put up up-front money to get frequencies, which the two big telcos may be able to out-bid anyway. So, it would be a beauty contest as to [which] will be able to compete the best with the two giants, for the benefit of the consumers,’ the DICT official said.

According to the Malaya newspaper, Rio declined to elaborate on the exact frequencies that the government would look to offer, although it will likely include excess frequencies surrendered by PLDT and Globe after their joint acquisition of San Miguel Corp.’s telecommunication business. In total, some 85MHz of frequencies are available in the 700MHz, 800MHz, 1800MHz, 2300MHz, 2500MHz and 2600MHz bands – albeit the big two have much bigger allocations (290MHz for PLDT, and 210MHz for Globe). Further, the DICT notes that there are still two 3G frequencies available for potential telecom players, although it estimates that a newcomer would need to invest PHP30 billion (USD596 million) in the first two years to deploy a network, and would need to build at least 2,000 to 3,000 base transceiver stations (BTS) nationwide to compete with PLDT’s over 12,000 BTS and Globe’s over 7,000.

Telecom companies Philippine Telegraph & Telephone Corp (PT&T), NOW Telecom and Converge ICT Solution have indicated interest to be the third telecom player, although the regulator the National Telecommunication Commission (NTC) has urged broadband operators to apply for a cellular mobile telephone system (CMTS) licence if they are genuinely interested in entering the mobile market. Back in 2000 there were ten licensed CMTS operators in the Philippines but after a raft of consolidations, today the market is down to two, PLDT’s Smart unit and Globe.