‘Third player’ criteria give equal weight to spending, coverage

THE government has released the draft terms of reference to guide the selection of the new entrant to the telecommunications industry, the so-called “third player,” in which a 40% weighting was assigned to the new company’s ability to serve a percentage of the population, with another 40% of the score to be given to the prospective third player’s capital expenditure and operating expense commitments.

The draft terms, which are subject to public consultation next week, also assign a 20% weighting to an applicant’s commitment to certain broadband speed levels, according to copy of the terms provided by the Department of Information and Communications Technology (DICT).

The terms as released split the difference between proposed selection criteria that favor spending commitments, which the Department of Finance had backed, and service commitments, which were viewed as critical for the third player’s ability to compete with the incumbents.

The draft terms also list the frequency “assignments” for the third player, around which the applicant must base its bid.

It also listed a range of “contingent” radio frequencies that may be assigned within a reasonable period, “In the event that there is a dissolution of the permanent injunction issued by the Court of Appeals in ‘ Bayan Telecommunications, Inc. vs. National Telecommunications Commission in CA- G.R. SP No. 105373.” The terms also warned that the government makes no firm commitment to “assign” the contingent frequencies to the third player, which the document calls the “New Major Player” or NMP.

The terms do not address the issue of whether the third player will need to pay for the frequency assigned to it.

According to the document, the selection committee for the third player will be chaired by a representative from the National Telecommunications Commission (NTC) and up to four other members.

The NTC is tasked with creating a Technical Working Group (TWG) and a Selection Committee Secretariat to provide technical and legal, and administrative, support to the selection committee.

Applicants will receive a maximum score of 40% for their ability to reach a segment of the population over a five-year period, subject to a minimum of 30%. For every percentage point of population coverage achieved above the floor level, up to a maximum of 70% population coverage, the applicant will be awarded 1 point each year. The minimum expected population coverage by the end of the fifth year is 50%.

A maximum weight of 20% will be given for broadband speed, subject to a minimum of 5 Megabits per second ( Mbps). For every 1 Mbps achieved over the minimum, the applicant will be awarded half a point each year.

Capital spending plans, including operational expenses, which carry a 40% weighting, are subject to a minimum of P40 billion. For every P2.25 billion over the minimum level, and up to a maximum of P130 billion, the applicant will be awarded 1 point per annum.

“A participant’s annual point score shall be multiplied by the corresponding weightages… reflecting the Government’s policy priority of encouraging rapid network roll-out and the difficulty of deploying the NMP’s networks and facilities in the shortest possible time,” according to the draft terms.

The maximum score for the first year is 100 points, with points earned in year one given a cumulative weighting of 1. The second year’s weighting is 1.4 of the first year. The third to fifth years are weighted 1.3, 0.7, and 0.6, respectively, reflecting a lower weighting for points accumulated later in the five-year period, which is known as the “commitment period.”

Bid documents will be sold for P1 million, with purchasers entitled to attend a pre-selection information session.

Participants are required to hold a Congressional telecommunications franchise that is not related to the franchises held by the two incumbents, PLDT, Inc. and Globe Telecom, Inc. and paidin capital of P10 billion, among others.

The participant is required to submit a performance security to the NTC, submit a rollout plan within 90 days of selection, submit quarterly reports, and deposit to the Land Bank of the Philippines 20% of committed expenditure within 60 days at the start of each year.

Failure to meet the conditions can result in the forfeiture of the security, a possible quo warranto proceeding, and recall of awarded frequencies. —