PCC nixes two-player limit in common telco tower

The Philippine Competition Commission (PCC) is oppose to the two player limit set by the draft common tower policy, arguing that the limit would not promote competition and goes against the open access regime being pushed by the government.

In its position paper given to the Department of Information and Communications Technology, the PCC said that while it supports efforts to have a policy for the sharing of telecommunication infrastructure in the country to improve network coverage and services, it has concerns on the limit set by the draft common tower policy on the number of players in the market.

In particular, it opposes Section 1.5 of the common tower policy limiting the maximum number of common tower companies to two during the first four years of operation.

“PCC is of the view that the business of constructing towers does not require economies of scale or economies of scope to ensure financial viability. Tower companies can build individual towers and earn from the rental payments of telecommunications companies that use the tower to propagate cellular frequencies for mobile telecommunication services,” the antitrust body said.

The PCC said relevant agencies need to reassess the objective of Section 1.5 to ensure the financial viability of the common tower operators by granting them exclusive rights due to the capital-intensive nature of the business.

For the PCC, entry or potential entry of a player to the market puts competitive pressure for a business to be more efficient and better serve consumers.

“Thus, imposing an entry barrier by limiting the number of players in the market would have adverse effects on market competition,” PCC said.

The PCC also said capping the number of players in the market would not address the issue raised by mobile network operations on the duplication of network resources and multiplicity of permits resulting in slow deployment of cell sites and poor services.

“Increasing the number of tower companies in the market could mean additional network infrastructure, resulting in less data traffic congestion. The issue on the multiplicity of permits would be better addressed not by capping the number of tower companies, but by streamlining government processes in granting permits,” PCC said.

In addition, the PCC wants a clarification on the definition of a tower company under the policy since the two existing integrated telecommunications companies that build cellular towers are also the incumbent owners and operators of cellular towers.

“Having shared towers ensures access to the necessary infrastructure for mobile telecommunications services. This would level the playing field for smaller players and new entrants that do not have the capital for building a broad network of towers to effectively compete. Without such tower companies, smaller players and new entrants can only provide wireless telecommunications services if given access to the existing towers of the dominant integrated telecommunications services providers,” PCC said.

PCC said approving the draft common tower policy in its current form may raise competition concerns and be in direct contravention to the open access regime that the government wants.

“Ultimately, interconnectivity and interoperability of telecommunications network technologies which use the infrastructure built by tower companies are necessary to ensure that the common tower policy translates to better telecommunications services. A strong and effective open access regime will complement the common tower policy in achieving the greater objective,” PCC said.