Smart says proposed common tower policy violates its franchise

SMART Communications, Inc. said the proposed policy on common towers violates its legislative franchise, which gave PLDT, Inc.’s wireless unit the right to build its own telecommunications towers.

In a position paper submitted to the Department of Information and Communications Technology (DICT) on Oct. 5, Smart said the proposed memorandum circular (MC) cannot amend a legislative measure such as its franchise under Republic Act No. 10926.

“Here, the proposed MC violates Smart’s franchise. By providing that future deployment can only be performed by the independent TowerCos (tower companies), the draft MC effectively amends Smart’s franchise. This is essentially an encroachment of legislative powers. If the proposed MC is issued, the DICT and NTC (National Telecommunications Commission) would arrogate upon itself the power and authority to amend the law — a power solely vested in Congress. Unless and until repealed through the enactment of another law, the provisions of Smart’s franchise are controlling,” the company said.

Congress renewed Smart’s franchise for another 25 years in April 2017.

The DICT presented last month a draft MC, prepared by Presidential Adviser for Economic Affairs and Information Technology Communications Ramon P. Jacinto, which seeks to limit the building of telco towers to only two registered tower companies.

Smart noted that efficient tower markets should allow different ownership models, including ownership by telecommunications companies.

Citing cases in United States, Nigeria, Ghana, India, Indonesia and Germany where telcos are allowed to own towers, Smart said the government’s objectives in issuing the infrastructure sharing policy “can still be achieved even without prohibiting (telcos) from building their own towers pursuant to their franchise.”

Smart also said independent tower companies would go through the same bureaucracy that telcos do in building towers, therefore there is no guarantee that the tower companies would roll out the infrastructure at a faster pace.

“This very tedious process of securing permits is really the main culprit behind the lack of telecommunications infrastructure in the Philippines. Inasmuch as (telcos) are able and willing to expand their networks and build more cell sites, permitting issues are hampering their efforts,” it said.

At the same time, Smart said the MC provision limiting the number of tower companies to two “unfairly” excludes other companies, and leads to a duopoly. It added this may violate the Philippine Competition Act.

“Notwithstanding the existence of independent TowerCos, MNOs should still be permitted to exercise their right to build telecommunications towers in accordance with their respective franchises. Finally, the number of independent TowerCos should not be limited to two as it is anti-competitive,” the company said.

Sought for comment, DICT Acting Secretary Eliseo M. Rio, Jr. said he agrees the government cannot keep the telcos from building their own towers.

“Yes, it is in their franchise and they cannot be prevented to put up their own infra including towers. We can’t come out with a Department policy or order that we cannot implement because we can be sued in court. We will have a dialogue with the telcos on how to resolve this,” Mr. Rio said in a text message to BusinessWorld.

Mr. Rio previously said the DICT targets to finalize the tower sharing policy by November.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.