New telco player

Something interesting is again happening in the telecommunications sector. Given the clamor for a third player in the industry controlled by PLDT Inc. and Globe Telecom, the government is emerging to take on this role.

The fine details remain to be threshed out, but what has long been clear is that the country needs a third player and the government is the only entity that can break the duopoly’s hold on the industry by providing faster and more efficient and reliable connectivity.

The conglomerate San Miguel Corp. earlier promised to launch a big telecommunications company to provide competition to the two big players.

It planned on bringing in Australia’s Telstra as foreign partner. But threats of legal suits from the existing players forced it to sell its valuable frequency holdings to PLDT and Globe for P70 billion.

The Philippines needs a third major player in the telecommunications industry because healthy competition encourages all players to offer better and more affordable services to the Filipino people, as the recently resigned Information and Communications Technology Secretary Rodolfo Salalima had noted.

What is being floated around is the use of the state-owned
National Transmission Corp. (Transco), owner of power transmission facilities that crisscross the archipelago.

The government’s National Broadband Plan (NBP), which is being fast-tracked by the Duterte administration, seeks to build this network infrastructure for the country at an estimated cost of P77-199 billion over the next three to four years.

Earlier, the Department of Information and Communications Technology (DICT) pointed out that all other countries in the region have telecommunication networks that are wholly owned, partly financed, or operated by their respective governments. It is only in the Philippines that the broadband network is constructed, owned and operated by private companies.

The NBP is the blueprint for broadband infrastructure to interconnect government offices in the country and, at the same time, enable unserved and underserved areas to gain access to the internet. The NBP will establish the broadband infrastructure from Batanes in the north to Sulu in the south to deliver reliable telecommunication services to these areas in the countryside.

The option is to build a broadband infrastructure that will be operated and managed by the government through the DICT.

This early, there could be some complications concerning the use of Transco’s assets. One is that while the transmission lines might be owned by Transco, these assets are being managed by the privately run National Grid Corporation of the Philippines (NGCP) through a concession agreement.

The NGCP’s existing transmission facilities, and in effect the quality and reliability of its current services, cannot be compromised for a proposed secondary function should Transco
diversify into telecommunications.

Indeed the government has a huge role to play in stirring competition in the telco industry. At this point, the government is the only institution with deep pockets to match the two big players’ resources. However, the Philippines has very little history of a government corporation managed more efficiently than a privately run competitor.

Returning the operations of a public service like telecommunications to the government runs the risk of bureaucratic complications that have been the very reasons for the adoption of PPPs, or public-private partnerships, during the previous administrations.

Critics constantly point to the perpetually malfunctioning MRT as a classic example of the government’s poor record as operator.

Besides, it also has to avoid the corruption controversy that hounded the Arroyo administration when it planned a similar national broadband project with a big Chinese firm.

We can only hope that the Duterte administration has learned a lesson from its predecessors on how to go about this telco venture. Consumers have been deserving better and affordable service for a long time.