In publishing its latest draft terms of reference (TOR) for the selection of a new third telco, the Philippine Competition Commission (PCC) proposes to address a number of competition issues, including ensuring that the prospective newcomer keeps a ‘safe distance from the industry’s existing duopoly’. The new TOR published by the Department of Information and Communications Technology (DICT) on 8 August – which employs the highest committed level of service (HCLOS) as the mode of selection for the new major player (NMP) – would stipulate that the third telco should not have any merger plans or joint venture agreements with either of the dominant telco players, the PCC said.
‘In the event that the participant merges or enters into any business combination or joint venture with a Related Party to any Dominant Telecommunications Player, or otherwise acquires, directly or indirectly, or in stages at least 20% of the shares of stocks of a Related Party to any Dominant Telecommunications Player, it shall notify the PCC of the said transaction, in accordance with applicable law, rules and regulations,’ the Commission said on its inputs in the TOR for the third telco, which was released to the media yesterday (20 August).
Further, the PCC is recommending the mandatory return of unused frequency and/or spectrum in the event that the NMP becomes a Related Party to any Dominant Telecommunications Player, per its proposal. ‘Should the participant fail to use any radio frequency spectrum awarded to it beyond the timeframe stated in its rollout plan, the subject radio frequency spectrum shall automatically revert to the government,’ the PCC said. Under the draft TOR, it is understood that the NMP would be allowed a period of six months to remedy its breach or failure to comply with any of its commitments. The draft TOR also states the NMP will have to amend its articles of incorporation to prohibit it from merging or combining with or becoming a related party to any dominant telco firm, while for monitoring and performance evaluation purposes, the PCC has recommended requiring the NMP: ‘to provide the number of subscribers (disaggregated per region; per types of service; semi-annual basis); rollout of the service and or spectrum; actual usage of spectrum; geographic location for infrastructure; list of cell towers, base stations and gateway facilities; annual reports; agreements with third parties for any telco services; and co-use agreements in their quarterly reports to the NTC.’
A public hearing on the rules and regulations for the selection of the NMP is set to be conducted by the DICT on 23 August 2018.