Points system proposed for third telco selection
Max spending commitment under draft rules: P650B over five years
THIRD telco aspirants must be prepared to spend as much as P650 billion over five years if they want to be given the chance to challenge the PLDT-Globe duopoly, new draft rules released on Tuesday showed.
Capital and operational expenditures, however, will not be the only basis for the selection of the “new major player” or NMP under the proposed terms of reference (TOR) issued by the National Telecommunications Commission (NTC).
Under a points system that will be used to determine the winner, prospective players will also have to commit to servicing a certain percentage of the national population and minimum average broadband speeds.
The parameters, Department of Information and Communications Technology officer-in-charge Eliseo Rio said in a text message, represent a “committed level of service.”
Coverage and spending have been giving the greatest weights at 40 percent each, while speed takes up the remaining 20 percent. The minimum annual commitments are 30 percent for national coverage, 5 megabits per second for speed and P40 billion for spending.
Every percentage point beyond the minimum population coverage, up to a maximum of 70 percent per year, will give the prospective NMP one point per annum. One-half points, meanwhile, will be awarded for every 1 Mbps beyond the minimum speed per year, up to 45 Mbps tops, and 1 point will be given for every P2.25 billion beyond the P40-billion spending floor, with the outlay not to exceed P130 billion per year.
Annual point scores will be multiplied by corresponding weightings, which the draft rules state are reflective of the “government’s policy priority of encouraging rapid network roll-out and the difficulty of deploying the NMP’s networks and facilities in the shortest possible time”.
Based on a provided table, prospective telcos will have to aim for a perfect score of 500 over the five-year commitment period.
The draft rules also explicitly state that the NMP should service not less than 50 percent of the national population at the end of five years.
Prospective participants were limited to domestic firms already holding a congressional franchise or a consortium with one party being a congressional franchise holder.
Capitalization should be a least P10 billion pesos and the participant, or at least one of the consortium partners, should have five years’ experience in provisioning, delivering and operating telecommunications services.
Up for grabs are frequencies in the 700 and 2100 megahertz; and 2.5, 3.3 and 3.5 gigahertz bands and provisions have also been made for the delivery of alternatives in case a court rules against the use of frequencies claimed by Bayantel.
Prospective participants will have to pay P1 million to purchase selection documents.
Two submission rounds have been set, the first involving qualification documents and a P500-million bond and the second covering the commitments proper. A final ruling will be issued by a selection committee, to be composed of a representative from the NTC and up to four members, with the assistance of a technical working group and a secretariat.
The winner will have to post a 10 percent cash bond or 30 percent surety bond based on its annual spending commitments and will be given 90 days from award notification to submit a roll-out plan.
Quarterly and yearly progress reports will be required the NMP will also be required to deposit 20 percent of its annual spending commitment with Land Bank of the Philippines each year. The funds can only be withdrawn once the telco has spent 30 percent of its pledged spending for the year.
Determination of the TOR has led to delays in the selection of the third telco, which President Rodrigo Duterte earlier said should be operational by the first quarter of 2018.
The DICT’s Rio has said that an award could be made by the third or fourth quarter.
Three consortia — Philippine Telegraph & Telephone Corp (PT&T), NOWCorp. and ICT Converge Solutions Inc. — have expressed a desire to challenge PLDT and Globe. Representatives were not immediately available for comment.
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