By Lara Climaco i FilAm Star Correspondent
Filipinos can expect faster internet service at a lower cost by 2020 rather than soon because it will take at least 55 days to hurdle legal technicalities on the bidding for the third telco slot and about a year for the New Major Player (NMP) to make its presence felt in the market.
This was the timeline revealed by Department of Information and Communications Technology (DICT) Acting Sec. Eliseo Rio Jr. during a press briefing last July 20, the same day that DICT got the approval of the NMP selection Oversight Committee of its proposal to ditch the auction mode preferred by the Department of Finance (DoF) in favor of the Highest Committed Level of Service (HCLoS) method that had won the endorsement of industry players.
“DICT, my department, and sometimes me personally have been the subject of criticism on why we cannot move. Basically, we have no explanation for that except we’d just like to have a Terms of Reference (TOR) that will choose the telco that has the best technical and financial capability to be able to give competition to the incumbent telcos in order to improve telecommunication services and to bring down the cost,” Rio said during the press briefing.
Rio had earlier threatened to resign should the Oversight Committee pursue the auction mode because he truly believed it would be detrimental to the Filipino people and would eventually favor the duopoly. The DOF, on the other hand, favored the auction mode because it would generate more revenue for the Philippine government that would redound to Filipino taxpayers. But Rio has argued that the cost of the maximum bid would simply be passed onto consumers. Besides, the goal for opening the 3rd telco slot was to improve telecommunications services in the country and not necessarily to make money from auctioning off radio frequencies, the DICT head has explained.
Under the HCLoS method, the NMP would be selected based on its proposed national population coverage, 40 percent; minimum average broadband speed (MABS), 20 percent; and capital and operational expenditure, 40 percent. The bid must at least cover 30 percent of the Filipino population, provide MABS of 5 MBPS up to a maximum of 45 Mbps, and commit to spend at least PHP 40 billion. Unlike the auction mode which placed no ceiling on the bid, the HCLoS method caps the capital and operational expenditure at PHP 130 billion.
While bidding participants may submit an expenditure plan entailing more than PHP 130 billion, such will not generate any additional point to win the bid. Instead, more weight will be given to faster deployment—100 percent on Year 1, 140 percent on Year 2, 130 percent on Year 3, 70 percent on Year 4 and 60 percent on Year 5. The participant with the highest score in percentage will be selected as the provisional NMP, according to DICT’s briefing materials.
“We want this third player to have a standard that can bring our telecommunication industries at par with our neighbors. ‘Yun na lang hinahabol natin, at least nasa gitna man lang tayo, hindi nasa huli. And if Globe and Smart will not also improve their services, ang mangyayari ngayon mawawalan sila ng subscribers. So, this is now where market forces (come into play),” Rio said.
Now that the Oversight Committee has given the go-signal for the HCLoS selection method, the legal process may formally ensue. To comply with legal requirements, the draft TOR must first be published then subjected to a public hearing before the bidding can even start. By Rio’s estimation, the bidding could potentially take place before Christmas.
“More or less, (the selected NMP) can start rolling out siguro February or March next year.
And maybe they can get their first subscribers, maybe another six months from that… So, by the end of 2019, they will have substantial subscribers already,” Rio said.
This timing coincides with the scheduled completion of the Luzon Bypass Infrastructure, a high-speed internet link to be built by the Bases Conversion and Development Authority (BCDA) that would serve as landing points in the Philippines for a submarine cable system connecting the United States and Asia. DICT and BCDA entered into a landing party agreement in November last year, under which the Philippine government will receive 2 million megabits per second of bandwidth from Facebook in exchange for providing the terrestrial bypass linking Baler, Aurora and Poro Point, La Union.
DICT is coming up with a Vision 2020 to reflect new timelines regarding the NMP selection and the deployment of the National Broadband Plan, according to Rio. “Look out for Vision 2020. The DICT will bring the ICT industry to a level that the Filipino people will be proud of,” he said as the press briefing concluded last Friday.