State think tank bats for ‘reboot’ of telco sector

May 16, 2017 at 14:39

State think tank bats for ‘reboot’ of telco sector

By Czeriza Valencia | Updated May 14, 2017 – 12:00am


MANILA, Philippines – The Philippine Institute for Development Studies (PIDS) is urging the strengthening of the country’s regulatory framework for the telecommunications industry, saying fostering competition alone is not enough to strengthen the industry.

In a new discussion paper, the state-run policy research institution said while further liberalization is essential to the advancement of the sector, reforms in the regulatory system and specific rules are needed to “reboot” the sector and make it an engine of economic development.

“A package of structural reforms is needed to improve regulatory quality and support the efficient functioning of ICT markets. While the regulatory regime (or specific rules) and the competition framework are essential elements, they will only work if an effective regulatory authority with the right mandate is in place,” said PIDS in a paper titled “Rebooting Philippine Telecommunications Through Structural Reform. “

In the course of introducing reforms, the think tank said the government and the industry must not lose sight of the goal to provide universal service and access to Filipinos under the Philippine Development Plan 2017-2022.

Using the scoring system developed by the International Telecommunications Union (ITU) Union, PIDS noted the quality of Philippine telecommunications environment is “significantly below what is considered international best practice.” Out of the highest score of 100 that “represents the best scenario,” the Philippines scored only 52.30.

The ITU Regulatory Tracker covers various elements that make up an effective regulatory environment. The scoring system reveals how far a given country is from international practice.

“Since the Philippines is currently not included in the database, we attempt to assign a score following the guidelines described in the tracker so we can better understand the country’s position, particularly in the ASEAN region.. Based on the assessment of the gaps, priorities for structural reform are identified,” PIDS said.

PIDS attributed the low score to the lack of a regulatory body that has “sufficient enforcement powers.”

It said while the National Telecommunications Commission (NTC) can revoke licenses and impose fines, the sanctions are weak. The revocation of licenses, for instance, can only happen in extreme cases and the decisions can be challenged in courts.

“On the other end are the unrealistically low fines that were set some 80 years ago,” PIDS said. “The fees that the NTC could impose are based on the Public Services Act of 1936 which sets the fine at not more than P200 per day.”

PIDS is also burdened by the cumbersome licensing process, the industry said.

Obtaining clearance to provide telecommunications service in the country is currently done at two levels: a license in the form of a franchise is first obtained from Congress and then a certificate of public convenience and necessity (CPCN) is obtained from the NTC.

“Based on international best practice however, the first step is not necessary and an unbiased and independent regulatory authority with its knowledge and tools is in the best position to determine authorizations,” PIDS said. “Congress should no longer be involved in granting franchises as the regulator should have the sole authority for licensing.”

With respect to consumer issues, the handling of consumer complaints is divided between the NTC and the Department of Trade and Industry (DTI).

“There is also no single body—a converged regulator—with authority over ICT,” PIDS said.

Should a strong regulating body be created, PIDS said this should also be given power over interconnection rates and provision of universal access to service.

“Specific areas for reform include giving the regulator the mandate over interconnection rates and universal access/service,” PIDS said. “The mandate of the regulator should eventually be expanded in line with the emergence of new services.”

Interconnection between telco firms pertain to linkages between networks. Reducing the interconnection rate can bring down the cost of services. Rates and terms are negotiated between firms.

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