Disastrous 3rd telco search shows need for a real PUC
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.