By Richard Orsino
A quick search online for “Terms of Reference 3rd Telco” and more than 10 pages of related stories awaits you in many of the top news sites in the country. But what exactly is the relevance and importance of the so-called “Terms of Reference” or just simply “TOR?” Quite a lot, given that it will be the general public’s and the government’s protection, ensuring that whoever the third telco will be, the general public, the government, and the telecommunications industry as a whole, will be the assured beneficiaries.
I may not be a legal expert but I do understand the many factors stipulated in the first draft of the TOR. And despite the months-long delay of its eventual release, I do find the first draft already quite exhaustive and extensive, to say the least. The enormous expectation of the general public, not to mention, the complexity of this whole exercise, really boils down to improving the telecommunications industry for the whole country, at the soonest possible time, making the rates affordable, with faster broadband speeds, that are at par with the rest of the world, and making it realistic and enticing for the new telco player to come in, given the immense expectation for it to improve the telecommunications infrastructure, almost instantaneously.
Let’s dissect the very first TOR that the Department of Information and Communications Technology through Acting DICT Secretary Eliseo Rio has released and let’s try to analyze how the selection of the country’s third major telecommunications player is seemingly playing out.
The new telco must meet three specific criteria within the first five years of its operations. The first is it should cover at least 40 percent of the national population. Second, its minimum broadband speed should be at least 20 percent of the agreed-upon plan; and third, 40 percent of its income should be allocated for its annual capital and operational expenditures. This means that the first five years of the third telco will be crucial. To put it bluntly, the company’s overall performance will either make it a success or be a very costly investment, in its first five years of operating in the country.
The third telco player must also be able to provide the yearly minimum requirement of at least 30-percent national population coverage with a minimum broadband speed of 5 megabits per second. Nationally, the average broadband speed in the country is a paltry 2 to 3 megabits per second. The company’s capital and operational expenditures should also amount to P40 billion. Additional points will be awarded the company if it exceeds the minimum requirements, but the points will be stopped once it reaches the maximum requirements—70 percent for national population coverage; 45 Mbps average broadband speed; and P130 billion for capital and operational expenditures. The third telco will really need to prove itself on the get-go. There will practically be no honeymoon period as the industry expects no less.
Interested parties who would like to participate in the search for the third telco must likewise first secure the selection documents from the National Telecommunications Commission and this will cost them P1 million each. Only the interested parties who bear the proper documentation will be allowed to attend the pre-selection information session—with the date set by the selection committee. The draft TOR will undergo public consultations upon its release, as part of the market study, and its provisions will be modified, if and when needed.
Upon being officially chosen as the third telco, the new major player only has a total of 90 days to submit its roll-out plan to the National Telecommunications Commission. In the event of a breach of contract, the new telco player will only have six months to remedy or fix each breach. Failure to act on it will forfeit its performance security; monetary penalties will be imposed with a legal proceeding; and finally, the radio frequencies assigned to it will be recalled.
Thus, the first draft of the TOR really points out and addresses what the industry lacks and what it badly needs. It also penalizes the company if at any point in its contract it will be remiss in its agreed upon obligations and responsibilities.
At the end of the day, we are all looking forward to a better telco experience in the country and the first draft of the TOR proposed by Rio, at least from this own writer’s perspective, is a point in the right direction. The only question now is, will it get approved? Now, that is the bigger story.
Richard Orsino is a local telecommunication executive.