Telecom subsidy proposed for ‘missionary’ areas

Government is planning to subsidize the setting up of telecommunication facilities for so-called "missionary" or unprofitable areas and collecting more from areas that can afford to pay higher rates.

In an interview with The STAR, National Telecommunications Commission (NTC) chief Eliseo Rio said imposing higher rates for areas that can afford to pay more – such as business districts or first and second class residential areas – will allow government to subsidize part of the cost of putting up telecommunication facilities for poorer areas, especially those in remote communities.

Rio said this will be one major source of funds for the "universal access fund" which government is putting up to make sure that telecommunications will be made available and affordable to everyone.

Under the plan, telecommunication companies will first collect the additional charges from the more profitable areas, and then turn over the collection to government which will then use the amount to partly subsidize the cost of providing telephone as well as Internet access to other less profitable areas.

The universal access fund will be some sort of "levy" or charge which the telcos can pass on to consumers who can afford to pay more.

The NTC chief said the telcos have agreed in principle to the setting up of the universal access fund, but the mechanics have to be worked out.

The idea of a universal access fund is not new. Other countries like the United States have a similar fund which its government uses for cross subsidies.

The NTC is also eyeing the privatization of several government telecommunications facilities to finance the universal access fund.

Bell Telecoms chairman Edgardo Puyat-Reyes welcomed the creation of a universal access fund, saying this will help make sure that telecommunications will be made available to the whole country.

For his part, Digital Telecommunications (Digitel) senior vice president William Pamintuan said that the additional imposition is acceptable so long as it is applied to all telcos.

Rio said that before the end of the year, all municipalities will have at least one public calling office and two computers to give everyone access to the World Wide Web.

Less than 50 percent of all municipalities are being served. The telephone density in the country is only four percent, if only landlines are considered and 10 percent if cellular phones are included. In 1992, the telephone density in the Philippines was less than two percent, excluding cellular.