Auction mode in selecting 3rd telco to benefit duopoly —DICT’s Rio

Selecting the third telecom player based on the highest bidder to unassigned frequencies can only benefit the duopoly, Acting Information and Communications Technology Secretary Eliseo Rio Jr. reiterated on Tuesday.

Requiring the third telco player to pay billions of pesos upfront to get frequencies will prompt the winning bidder to work at recovering the cost from their customers, Rio noted.

An auction “will not benefit the Filipino people, it will only benefit the duopoly,” Rio said in a posting on Facebook.

“But, from whom shall the winning telco recover this auction expense that has nothing to do with rolling out its infrastructures and nothing to do with improving telecommunications services? From the Filipino people, of course!” Rio said.

“In effect, the Filipino people will gain nothing from the auction of frequencies for they will pay for it in the long run, as it will only be passed on to them by the winning bidder to recover the amount it paid,” he said.

The industry is considered a duopoly dominated by rivals PLDT Inc. and Globe Telecom, prompting calls by no less than President Duterte and the public at large for a third telco player to raise the quality of service while lowering the costs to consumers.

Auctioning off the unused frequencies will make telecommunications services more expensive, unlike when the frequencies are awarded to the third telco for free.

“It will just make the winning telco uncompetitive against the duopoly that never paid the Filipino people for their frequencies,” Rio said.

On Friday, stakeholders chose the highest committed level of service formula as the preferred mode of selecting the third telco player. They argued that auctioning off the unused frequencies would only add more financial burden to the company.

Finance Secretary Carlos Dominguez III backed the auction mode and labeled the highest committed level of service as “weak” as it does not ensure the third telco has financial and technical capabilities to compete long-term.

The highest committed level of service requires companies vying for the third telco slot to shell out at least P40 billion a year.
 
It also proposes a point system to measure their committed speed, coverage, and capital and operational expenditures.

The DICT is targeting to name the third telco before the end of the year with September or October as “best case scenario.” —Ted Cordero/VDS, GMA News