NTC rules to hasten compliance on telecoms rollout requirement

The National Telecommunications Commission (NTC) has come up with new rules that will hasten compliance by telecommunications companies of their commitments under the government’s service area scheme (SAS) if they install facilities in poor municipalities.

The SAS is a government program that requires companies to install a certain number of telephone lines in exchange for getting licenses to engage in the cellular mobile telephone system (CMTS) and international gateway facility (IGF) business. In the case of CMTS, the requirement is 400,000 telephone lines and for IGF, 300,000 lines.

While the NTC will no longer issue a circular to provide for the new rules, these were already contained in the extended provisional authorities (PA) issued to several telecommunications companies as well as the certificates of public convenience (CPCN) issued recently to CMTS operators Globe Telecom and Smart Communications.

In the PA extensions and CPCN which the commission issued, these companies were NTC rules also required to submit to the NTC definite plans on how they intend to cover currently unserved municipalities.

For companies that install telecommunications facilities in fifth and sixth-class municipalities, they are credited 2,000 percent or 20 times the number of households in said municipality. Under the old rules, the credit was only 10 percent.

The equivalent credit decreases as the economic status of the municipalities increases. For fourth class municipalities, the credit is 15 times while for third and second class municipalities, the companies are credited 10 times and five times, respectively.

According to NTC common carriers accreditation department (CCAD) chief Edgardo Cabarrios, the credit applies regardless of the technology used. "Whether they install telephone lines or satellite facilities, the same rule applies. We want to be technology-neutral," he said.

The SAS was aimed at improving and increasing access to telephone facilities nationwide. However, telecommunications companies chose to install the lines in first-class or highly profitable areas of the country, resulting in an oversupply in these areas. There was very low compliance in less profitable municipalities.

Many telephone companies lost money when they borrowed heavily to finance SAS compliance only to realize that there were few takers and that the cost of repaying the loans had increased due to a depreciation in the value of the peso against the dollar. One such company is Lopez-owned Bayan Telecommunications (Bayantel) which at present is still working on a debt restructuring agreement with its creditors. Bayantel officials emphasize that the company is EBITDA( earnings before interest, taxes, depreciation, and amortization) positive and that the one thing pulling it down is its huge debt repayment burden.

Cabarrios told The STAR that more than 48 percent of all municipalities in the country still do not have access to telecommunications facilities. "The NTC hopes that through this new scheme of mixing profitable with unprofitable areas and bigger equivalent lines, we can cover more unserved areas," he said.