The third telco

An item in President Duterte’s third State of the Nation Address or Sona Monday last week is of great national import. But it got eclipsed by the leadership ruckus at the House of Representatives.

It was about the third telco company the President vowed to roll out before the year ends.

It merited an editorial in one of the national broadsheets. It is a multibillion-peso project expected to bring the country’s telecommunications services to world-class level.

Telco insiders said while the President was not categorical about his statement on the matter, the project had already been approved by the inter-agency body for the third telco’s entry.

While a faction in the inter-agency group batted to auction the broadband, the proposal to award to a group who could commit the highest level of service was the favored option. It was the line taken by the Department of Information and Communications Technology.

This is how the entry of the third telco stands now, this corner was told. Any effort at reviving the auction option is in reality an act aimed at torpedoing what had been settled in the inter-agency level.

Proponents of the auction reportedly argued that it would serve more the interest of government for it would mean infusion of initial funds to the national coffers for P40 billion.

But proponents of the highest committed level of service option reportedly argued that in the long run the auction option does not assure an efficient, cost effective service to consumers.

Experts estimate that for the third telco to be truly competitive with the existing duopoly of Smart and Globe, it needs to spend something like P180 billion to as much as P220 billion in the next three to five years aside from the initial cash outlay of P40 billion, this corner learned.

Further, expert estimates have it that the total capital outlay by the third telco is almost impossible to recoup on the 10th year. This means profit can only be expected a decade after. And many in the telco industry say there’s not many with the luxury of such amount of capital, making the auction option less favorable to mobile and Internet users in the end.

But skeptics of the highest committed level of service option do not necessarily buy it as the best for mobile phone and Internet subscribers. They argue that experience showed it sounds good only when still on the negotiating table. In actual, committed highest level of service is always breached.

Citing the current state of the country’s mobile phone and Internet service, these skeptics say no one can really be sure if the highest committed level of service will truly become a reality. This corner wonders what safety nets the government has put in place to ensure the prospective third telco player will adhere to a commitment after it was officially adopted.

On another note, a good number of telco insiders believe that there’s only one entity now that has the financial muscle to undertake this gigantic project–the China telecoms company. Of course, it has to partner with a local entity for it to become the third telco player.

This corner learned that local groups had been observed to be very active in trying to clinch this multibillion-peso project. These groups were identified as from Pampanga, which happens to be the new House Speaker’s home province and another one or two from mega Manila. There is also another group from the city where the President hails.

As the saying goes, may the best entity win.