As Congress conducts probe, Globe hits PLDT for frequency monopoly

Despite the earlier pronouncement of Senate president Juan Ponce Enrile that the legislative department has no business interfering into the acquisition of Digitel by PLDT, members of the House of Representatives have called for a congressional inquiry into the deal.

Globe Telecom, meanwhile, lambasted PLDT for its “monopoly of the frequency highway” and warned the government of “spectrum applicants, speculators and consortia driven by ‘financial players’ who eventually sell out for business gain.”

Rep. Arturo Robes (Lone District, San Jose del Monte City), author of House Resolution 1161, asked the House Committees on Legislative Franchises and Information and Communication to look into the legality of the sale.

Robes also urged the House body chaired by Rep. Marcelino Teodoro (1st district, Marikina) to summon the officials of both companies and those who were involved in facilitating the sale.

Another House member, Rep. Bernadette Herrera-Dy (Party-list, Bagong Henerasyon), filed House Resolution 1169 urging the appropriate House committee to conduct an inquiry into the legality of the “merger” between PLDT and Digitel, which was allegedly in violation of the law granting the privilege to Digitel.

Herrera-Dy quoted Section 11 of Article XII of the Constitution, which she said mandates that “no franchise, certificate or any other form of authorization to operate a public utility shall be granted except to Filipino citizens or to corporations or associations organized under the law of the Philippines at least 60 per centum of whose capital is owned by such citizens.”

“Neither shall such franchise or right be granted except under the condition that it shall be subject to amendment, alteration or repeal by Congress when the common good requires,” Herrera-Dy said.

On December 11, 2002, President Arroyo signed Republic Act 9180 granting a franchise to Digitel to construct, install, establish, operate and maintain wire and/or wireless telecommunications systems nationwide.

“Under Section 16 of RA 9180, it provides that Digitel shall not lease, transfer, grant and usufruct of, sell nor assign its franchise, nor merge with any other corporation or entity without Congress’ prior approval,” Herrera-Dy said.

“Under Section 21 of the Act, it requires Digitel to submit an annual report to Congress regarding its compliance with the franchise’s terms and conditions and its operations within 60 days from the end of the year,” Herrera-Dy added.

PLDT acquired 3.27 billion common shares of Digitel held by JG Summit Holdings Inc., Digitel’s holding company, worth P69.2 billion. The total value of the acquisition, however, is P74 billion including shares from small shareholders which PLDT hopes to buy through a mandatory tender offer.

“The purchase is equivalent to 51.55 per cent of Digitel’s total stocks. Whereas, JG summit would be given 27.6 million PLDT common shares for 2,500 each, which is equivalent to 12.8 percent PLDT shares and entitles the latter to a board seat,” Herrera-Dy said.

“The said sale agreement between the two telecommunication companies is in violation of the conditions provided in the franchise grant given to Digitel thru RA 9180,” Herrera-Dy said.

“It is provided in the franchise law that Digitel shall have no right to sell or transfer its franchise/privilege to any person or corporation nor the controlling interest be transferred without Congress’ prior approval. Apparently, both telecommunication companies disregarded the necessary prior approval of Congress before making the deal,” she said.

“PLDT and Digitel are public utilities which involve public interest. Their franchise is not an exclusive grant of privilege, any amendments made with regard to their franchise or rights should be subject to congressional approval,” Herrera-Dy said.

According to Herrera-Dy, “the oversight power of Congress does not stop upon approval of a franchise but continues to oversee whether the franchise is compliant with the franchise agreement,” Herrera-Dy explained.

For his part, Bayan Muna representative Teddy Casiño, in a privilege speech delivered on Monday, called attention on PLDT-Digitel’s 71-percent market share.

“This abhorrence of monopolies is enshrined in the Constitution. Section 19, Art. XII of the 1987 Constitution states: ‘The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed,’” said Casiño.

The congressman added, “A deal that would reverse the policy of demonopolization (in reference to Republic Act 7925) in the telecommunications industry was certainly not contemplated by previous Congresses and should not be tolerated by the 15th Congress.”

Globe, on the other hand, said the government should ensure there is no imbalance in the distribution of frequency spectrum.

“The PLDT-Digitel deal gives PLDT and its group virtual monopoly and control of the radio frequencies which, compared to the highways, are the modes and means of transmitting voice, data and text messages,” the Ayala-owned firm said.

Citing data from NTC commissioner Gamaliel Cordoba during a recent hearings at the Senate Committee on Public Services, a combined PLDT-Digitel has a 51-percent share of 3G and CMTS (cellular mobile telecommunications systems) frequencies, while Globe has a 23-percent share.

Globe said it serves 27.3 million subscribers with only 99 MHz, while Smart and Sun will serve 60 million subscribers with 372 MHz. “This means Globe is serving 276,000 subscribers for every 1 MHz of spectrum it has while Smart and Sun will only address 161,000 subscribers for their every 1 MHz of spectrum,” the company said.

In the 3G cellular service, the ratio of PLDT to Globe’s allocation is 4.5:1, the company said.

“If PLDT-Digitel is saying they need all the frequency they have with only 60 million subscribers, Globe subscribers are also entitled to a fair share of the State’s frequencies which they should enjoy through better products using more advanced technology. Globe has only 10 MHz to serve 27 to 30 million subscribers, then PLDT should only have 23 MHz for its 60 million subscribers. PLDT should divest of its unused 22 MHz frequency they currently have,” Globe chief legal counsel Rodolfo Salalima said in the Senate hearing.

NTC’s Cordoba said the country only has 6 percent (10Mhz) 3G frequency left for allocation, which is currently under litigation.

Globe said that the assignment of radio frequencies directly relate to the ability of service providers to efficiently use this scarce resource through capital and infrastructure investments.

Posted on 08 Jun 2011 on Newsbytes.ph
Source URL: http://newsbytes.ph/2011/06/08/as-congress-conducts-probe-globe-hits-pldt-for-frequency-monopoly/