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DICT publishes ‘hybrid’ rules process to pick third telco

27 Jun 2018

The Department of Information and Communications Technology (DICT) yesterday (26 June) published its draft terms of reference (TOR) for the selection of the Philippines’ so-called New Major Player (NMP) to challenge PLDT Inc. and Globe Telecom, a long-time pledge of President Rodrigo Duterte. The selection process has been delayed for months – an original March 2018 deadline proved unrealistic – but DICT has finally released details on how it plans to assign valuable 3G, 4G and potential 5G mobile frequencies to allow a newcomer to challenge the status quo.

With the final content of the TOR still subject to a round of public consultations, DICT posted on its website the draft ‘Rules and Regulations on the Selection of a New Major Player in the Public Telecommunications Market’, outlining: the relevant criteria for a telco to qualify to participate in the process; the frequencies it plans to award; the scoring system the government will use to assess bid applications; other obligations that will be placed on the NMP; and details on any penalties that could come into play should it fail to comply. Described by Acting DICT Secretary Eliseo Rio as a ‘hybrid’ selection process, the TOR seemingly sets out its stall to establish high service quality and a robust financial rollout plan as core priorities. Specifically, the new draft memorandum would currently require the successful third telco to meet the following three thresholds: committing annual capital and operational expenditure of PHP40 billion (USD747 million) over a five-year period (attributed 40% ‘weightage’ in the assessment criteria); achieving 30% population coverage (also weighted at 40% in the criteria); and delivering a minimum 5Mbps average broadband speed (weighted 20%). The selection committee will use a point system based on the documents submitted by the potential players, with the memorandum circular confirming: ‘A participant’s annual point score shall be multiplied by the corresponding ‘weightages’ … reflecting the government’s policy priority of encouraging rapid network rollout and the difficulty of deploying the NMP’s networks and facilities in the shortest possible time’.

In addition, the TOR dictates that any prospective bidder have a net worth of at least PHP10 billion with a Congressional franchise to operate telecom services, while in the case of a consortium bid, Filipinos should control at least 60% and at least one of the members should be a holder of a Congressional franchise. Furthermore, prospective bidders should not be a related party to any existing telecom group and have no outstanding liabilities, it says. The National Telecommunications Commission (NTC) meanwhile, will be tasked to assign spectrum in the following frequency bands to the new player: 700MHz, 850MHz, 2100MHz, 2010MHz, 2.5GHz, 3.3GHz, 3.5GHz and 10.5GHz. Selection documents can be purchased by prospective participants from the NTC for PHP1 million.

TeleGeography notes that several companies have already expressed an interest in participating, including Philippine Telegraph and Telephone Co (PT&T), NOW Telecom, Converge ICT Solutions, Easycall Communications Philippines and a group led by the businessman Dennis Uy. In addition, the foreign telcos that have previously shown interest are China Telecom, South Korea’s LG Uplus, KDDI of Japan and Vietnam’s Viettel Group.

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