Dis­as­trous 3rd telco search shows need for a real PUC

Manila Times - - Business Times - Ben.kritz@mani­latimes.net

IF ever there was an ob­ject les­son about the im­por­tance of hav­ing a func­tion­ing reg­u­la­tory body for pub­lic util­i­ties, the ut­ter mess the Duterte ad­min­is­tra­tion has made of the long-awaited se­lec­tion of the coun­try’s third telecom­mu­ni­ca­tions provider has to be it.

By my count, dead­lines grumpily is­sued by Pres­i­dent Duterte for the se­lec­tion have been missed at least twice so far. The third telco was sup­posed to be in place by the end of 2017, and then when that didn’t com­mu­ni­ca­tions fre­quen­cies that no tele­com provider other than the ex­ist­ing two could have ra­tio­nally par­tic­i­pated in. When that didn’t work, the govern­ment de­vised a se­lec­tion process with oner­ous fi­nan­cial terms (brought to light by an in­junc-

one of the six cur­rent ap­pli­cants for the third telco slot), and a com­pletely ridicu­lous and al­most cer­tainly legally in­valid pro­vi­sion lim­it­ing the con­struc­tion of the 50,000-plus new cel­lu­lar tow­ers the coun­try needs to only two ap­proved third-party providers.

So here is the night­mare sce­nario: The se­lec­tion process terms are widely per­ceived to fa­vor a pre­ferred provider, which will be ei­ther Davao- based Udenna Corp., led by “friend of Duterte” Den­nis Uy, or the part­ner­ship of Min­danao- based Fil- Aus­tralian

who is a friend of whomever he thinks he needs to be to get a piece of the ac­tion. Once one of these fa­vorites takes con­trol of the third telco fre­quen­cies, the third-party tower provider plan will be struck down by the courts, as it vi­o­lates the con­gres­sional fran­chises of Globe and PLDT that stip­u­late they build their own fa­cil­i­ties.

That will leave the third telco in the po­si­tion of hav­ing to build its own cell tow­ers as well, but in spite of govern­ment rhetoric against “red tape,” the crafters of this plan care­fully avoided ad­dress­ing the run­away in­sti­tu­tional graft at the lo­cal level that makes build­ing a new tower prac­ti­cally im­pos­si­ble. Un­der ideal cir­cum­stances, it re­quires about eight months to se­cure a right of way, and then no fewer than 25 ad­di­tional per­mits (each bear­ing a hefty fee, of course) to erect a sin­gle tower, the ac­tual con­struc­tion of which only takes about four days. As a con­se­quence, the third telco can sim­ply plead the same help­less­ness to build in­fra­struc­ture as Globe and PLDT rou­tinely do, and sit on the third set of fre­quen­cies without re­ally do­ing any­thing at all.

The govern­ment gets its hard cash in ex­change for the pro­tected po­si­tion of the “third telco,” that third telco gets the valu­able com­mu­ni­ca­tions fre­quen­cies, and Globe and PLDT get to con­tinue their mar­ket dom­i­nance. Those who have the most to lose or gain from the “search for the third telco” but are de­lib­er­ately ex­cluded from hav­ing any in­put in the process — Filipino con­sumers and busi­nesses — get noth­ing but an­other busted prom­ise.

None of which would hap­pen if de­vel­op­ment and reg­u­la­tion of key pub­lic util­i­ties — telecom­mu­ni­ca­tions in this case, but the same also ap­plies to elec­tric­ity gen­er­a­tion and distri­bu­tion, wa­ter sup­ply, and per­haps even sec­tors like pub­lic trans­porta­tion – was not ex­clu­sively re­served for po­lit­i­cal

to cul­ti­vate con­flicts of in­ter­est rather than serve the pub­lic.

A real Pub­lic Util­i­ties Com­mis­sion, one that is in­de­pen­dent from the sit­ting ad­min­is­tra­tion and Congress as well as the in­dus­tries it reg­u­lates, would pre­vent the kind of trav­esty the third telco saga has be­come. Rather than dis­parate and com­pro­mised reg­u­la­tory agen­cies like the NTC, ERC and MWSS led by po­lit­i­cal ap­pointees, the PUC would pro­vide the op­por­tu­nity for de­vel­op­ment and reg­u­la­tion based on equal in­puts from all con­cerned — govern­ment, con­sumers, the busi­ness sec­tor at large, and the af­fected in­dus­tries.

There are a va­ri­ety of ways a PUC could be con­structed, but just as an ex­am­ple idea, it might have as few as seven mem­bers: One govern­ment rep­re­sen­ta­tive ap­pointed by the pres­i­dent; a con­sumer rep­re­sen­ta­tive who could even be elected to the po­si­tion; a rep­re­sen­ta­tive from the busi­ness sec­tor, per­haps cho­sen by election among the var­i­ous cham­bers of com­merce; and one rep­re­sen­ta­tive each from the elec­tric­ity, wa­ter, and tele­coms in­dus­tries (and any other in­dus­tries that might be in­cluded), suit­ably se­lected by their re­spec­tive in­dus­try as­so­ci­a­tions.

Al­though there are po­lit­i­cal risks to PUCs — noth­ing is per­fect, af­ter all — the sort of reg­u­la­tory cap­ture that re­sults in cyn­i­cal, in­tended- to- fail plans like the govern­ment’s third telco pro­gram can­not hap­pen if the PUC is prop­erly put to­gether. It is long past time for the Philip­pines to dis­card a per­spec­tive to­wards reg­u­la­tion that went out of vogue in the age of the rob­ber barons, and cre­ate its own PUC.

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