Baseless and illegal

October 16, 2018
Ramon Jacinto
Ramon Jacinto

THE proposal of Presidential Adviser for ICT Ramon Jacinto to limit to two the number of independent and private companies that could be authorized to build cell site towers is baseless and illegal.

In a similar position against towercos duopoly, Globe Telecom and Smart Communications, Inc. insisted that the plan of Jacinto will violate their congressional franchise.

In their position paper regarding the DICT and NTC Draft Joint Memorandum Circular (“MC”) on the policy, rules and regulations on common and shared infrastructure in the public telecommunications market, the two telcos maintained they cannot be prohibited from constructing their own telecommunications towers.

The draft MC provides that “future deployment of all telecommunications towers shall be performed only by the TowerCos registered by the National Telecommunications Commission.”  Through this provision, Mobile Network Operators (MNOs) would no longer be able to build or construct their own telecommunications towers. They can only do so when the MNO demonstrates that the TowerCo is unable, despite request and a lapse of thirty (30) days from request, to provide the necessary facility to the MNO, in which case the MNO itself can build its own tower.

Globe and Smart further stated that the draft MC violates their franchise as they are expressly granted the right to construct telecommunications towers.

“Basic is the principle that a mere executive issuance, like a memorandum circular, cannot amend a legislative enactment, e.g. R.A. No. 10926; the former cannot purport to do more than implement the later. Memorandum circulars must always be in harmony with the law. And in case of conflict between an executive issuance and a law, the latter must prevail, the two telcos said.

Moreover, they stated that even legislated, the prohibition on future deployment would nonetheless be unconstitutional because it would violate the non-impairment of obligation of contracts clause of the constitution, which provides that no law impairing the obligation of contracts shall be passed.

“There is impairment if a subsequent law changes the terms of a contract between the parties, imposes new conditions, dispenses with those agreed upon or withdraws remedies for the enforcement of the rights of the parties.”

The right of the MNOs to construct their own towers is also necessary to address the unique requirements of their respective networks. It is also for this reason that the use of towers built by TowerCos should only be on a voluntary basis and never mandated.

The two telcos also pointed out that there is no guarantee that the independent towercos would be able to build the needed 50,000 towers in the next seven years.

“The towercos, private and independent, would still have to go through the same bureaucratic red tape from various local government units. An average of 28 permits are required to be able to construct a single cell tower. And this entire process usually takes about eight (8) months to one (1) year to accomplish. LGUs also demand unreasonable, unnecessary and arbitrary taxes, regulatory fees, and other exactions. Tower fees could reach as high as P200,000 to P250,000 annually. There is likewise no standardized tower and other fees across LGUs. Many LGUs even do not recognize the tax exemptions granted unto MNOs in their respective franchises.”

They added that the independent towercos cannot be limited to two because it is anti-competitive and is not practiced by efficient tower markets, and will violate R.A. No. 10667 and R.A. No. 7925.

“Under R.A. No. 10667 or the Philippine Competition Act, the State recognizes that the provision of equal opportunities to all promotes entrepreneurial spirit, encourages private investments, facilitates technology development and transfer and enhances resource productivity. Unencumbered market competition also serves the interest of consumers by allowing them to exercise their right of choice over goods and services offered in the market.

“But limiting the number of TowerCos to two (2) unfairly excludes other companies from playing. This ultimately leads to a duopoly resulting in inefficiencies. While R.A. 10667 seeks to create a competitive market, the proposed MC assists the towercos in unfairly obtaining market power. “

The towercos duopoly appeared baseless as Jacinto failed to lay down criteria in selecting the two independent and private companies that would be allowed to build towers in the country.

In an earlier interview, Jacinto admitted he would choose the two firms based on  gut feel.