Law eyed to allow foreigners to invest in broadcast, cable

Government and industry are currently working for the passage of a convergence law that would allow foreigners to invest in the broadcast and cable sectors, currently prohibited under the Constitution.

Despite the fact that there is already technical convergence being practiced in the industry, which means that the same digital network is used to transmit voice and data, most telecommunications companies which have foreign equity cannot invest in broadcast and cable.

Under Filipino laws, broadcast companies which must be 100 percent owned can invest in telecommunication companies. On the other hand, telecom companies which are subject to the 60-40 Filipino-foreign equity rule cannot invest in broadcast companies.

This is one of the reasons why the Philippine Long Distance Telephone Co., which is partly foreign-financed, cannot buy broadcast company GMA Network Inc. The purchase has to be done through a subsidiary, which in this case is e-PLDT and PLDT beneficial trust fund.

"If you want total convergence, we have a problem – the constitutional prohibition against foreign ownership of broadcast. If there will be an attempt to amend it or redefine what broadcast is, it has to be a real definition based on engineering and technical realities, and not just to circumvent the Constitution," Rodolfo Salalima, senior vice president of Globe Telecom said when asked to comment on the matter.

Salalima said the constitutional prohibition serves as deterrent for foreign investors who can only invest in the physical network but can never have a say in broadcast operations.

He said the issue is more engineering than legal. For instance, there was a bill filed in Congress that seeks to allow 30 percent foreign equity in cable. The same bill, however, defined cable as broadcast, thereby raising a constitutional question on foreign ownership in broadcast.

Transportation and Communications Undersecretary Agustin Bengzon said there is an urgent need to come up with a convergence law to solve this problem, citing the fact that telecom networks are already being used for cable and broadcast and vice-versa.