Move to retain telecom operators as utility failed – Manila bulletin


The country’s largest trading groups have strongly opposed measures to keep the telecommunications industry as a public service or subject it to minority foreign ownership, as they cited interest from SpaceX, Japanese groups KDDI and Kobashi to enter the country which could provide competition in a domestic industry which is controlled by Chinese Huawei.

This was the position of the largest business groups in the country – Federation of Chinese Philippine Chambers of Commerce and Industry, Inc., Makati Business Club, Philippine Management Association, Philippine Chamber of Commerce and Industry, Confederation of Philippine Exporters, Inc., UP School of Economics Alumni Association and Foundation for Economic Freedom as the Senate deliberates on Senate Bill 2094, which seeks to amend the Philippine Services Act.

According to business groups, some senators have recommended keeping telecommunications as a public service, meaning they will continue to be subject to the 60/40 foreign capital restriction in the 1987 Constitution, limiting investment. direct foreigners.

One of the justifications cited by some senators is the issue of national security that can arise once telecommunications are opened to foreign investors.

But business groups pointed out that China already holds control of the country’s telecommunications sector, as 80 percent of the equipment used by existing telecommunications companies uses Huawei technology.

“Therefore, we need other players to step in to provide alternative technologies and reduce our dependence on Huawei. Allowing more foreign and non-Chinese investors in the telecommunications industry will help diversify risk, ”the groups said.

They cited SpaceX in the United States as well as Japanese groups KDDI and Kobayashi, which expressed interest in investing in the Philippine market. “Passing the amendments to the Civil Service Law that liberalize the telecommunications sector will open the door for these investors and reduce our dependence on Huawei,” they added.

Additionally, attracting investors from various countries will minimize the potential risks the country may face as the United States continues to implement its Clean Network program. The program is a comprehensive United States approach to protecting the country’s assets, including citizen privacy and the most sensitive business information, from aggressive intrusions by malicious actors, they said.

Currently, the groups said, the country’s telecommunications companies are investing heavily in Chinese technology and may face risks regarding US Internet access in the future.

“We believe that the current provisions of Senate Bill 2094 are sufficient to deal with threats to national security,” the groups said. These include empowering the National Security Council to review potential investments in critical infrastructure and empowering the president to suspend or cancel any investment that threatens to undermine the country’s national security; a retrospective cap and a prospective ban on investments in critical infrastructure by public enterprises; and require potential investments to adhere to ISO information security certification as a condition for investing and operating in the country.

The businessmen also said that maintaining telecommunications as a public service would run counter to the very definition of a public service proposed in SB 2094. They explained that a primary criterion for defining the service public is the concept of natural monopoly. A natural monopoly occurs when it is more profitable for the product or service to be produced by a company, the groups pointed out.

The telecommunications industry in the Philippines cannot be called a natural monopoly as there are three major telecommunications players and several Internet service providers. These companies operate sustainably in the same service area and there is competition, they added.

Another reason cited by business groups is that the country needs to attract more companies into the telecommunications industry in order to provide the capital needed to build the infrastructure needed to bridge the digital divide.

He pointed to data from the National Economic and Development Authority, which showed that 64% of barangays in the Philippines do not have telecom power, 88% do not have free Wi-Fi zones. and 70% do not have fiber optic cable installed.

All of these affect connectivity and deepen the digital divide, including education, micro-small and medium-sized businesses and workers. These will make the country uncompetitive as the state of internet access has become a major factor in the decision of foreign investors to consider the Philippines as an investment destination.

“We need to liberalize the telecommunications sector to promote competition and provide better quality services at lower costs. SB 2094 will help achieve this goal and will greatly benefit Filipino consumers and the business community at large, ”the groups concluded.



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