What’s taking NTC too long?

The recently concluded World Economic Forum in Davos plus GMA’s road show in Dubai were quite successful in showcasing the Philippines as a viable investment destination, emphasizing the country’s strategic location plus its IT-proficient and English speaking workforce as only some of the reasons why the Philippines offers one of the “best values for investment in Asia.” 

Which is why it’s important more than ever not to send wrong signals that may just turn off potential investors – which the National Telecommunications Commission (NTC) is in danger of doing if it continues with its foot dragging on the issue of value added service rules. This is rather ironic considering that it is the monitoring and regulating entity of a highly dynamic technology sector like the telecoms industry. In this day and age where information can be obtained at lightning speed with a simple click of the mouse or just a few keystrokes on the computer, the NTC seems fixated with doing things at a snail’s pace.

Sometime in 2006, a complaint supposedly from a concerned citizen was filed against Spanish company ZED allegedly for breach of Philippine foreign ownership laws.  The company is a mobile content aggregator with operations across 38 countries – providing multimedia messaging, ring tones, wallpapers, and all those other fancy add-ons that many (mostly young) Filipino cellphone owners just can’t seem to do without. 

According to NTC rules, value added service and content providers are entities that have “direct relationships” with the public (or its consumers), and as such, have to be at least 60 percent Filipino owned. However, since ZED does not directly engage its consumers but only provides its services through a telecommunications company it ties up with, then it cannot be considered a public utility subject to the 60-40 foreign ownership rules of the country.

As a multinational company, Zed is mandated to follow the laws of the country where it operates – but it cannot do so if the rules and guidelines are not clear-cut. Absence of clear-cut guidelines also makes it difficult for companies like ZED to operate without being unnecessarily harassed by its competitors. It’s been one and a half year – which some say is the longest so far in NTC history – but they have yet to come out with a ruling on the issue.

I understand that aside from ZED, other companies – such as the Singapore-based Chikka and Information Gateway which is registered in the British Virgin Islands are also in the same boat, waiting to get their licenses approved. The NTC must make sure the business environment – at least for the telecoms industry that it’s supposed to oversee – remains healthy and attractive to foreign investors by ensuring a level playing field for both local and international companies. And it can start by coming up with a legal ruling on the issue concerning ZED soon.

Incidentally, ZED chairman and CEO Javier Perez Dolset was at the bilateral meeting between diplomatic and business representatives during GMA’s state visit to Spain, and was one of those invited to the gala dinner hosted by the Spanish Royal Family. At any rate, the Spanish mobile content provider had said that if it is indeed covered by the 60 to 40 rule, then it will comply. But it cannot do so unless NTC comes out with a clear and definitive ruling first.

Zed has been planning to make Manila the base of its operations for the Asian region. But then again, it won’t be surprising if it may just decide to pack up and set up its operation in investor friendly places like Hong Kong and Singapore – which could make the Philippines the big loser in the end.

I had dinner Sunday night with former Canadian Ambassador to the Philippines Robert Collette and his wife Marilyn. Robe is currently the Canadian Ambassador to Switzerland. He said that in spite of the criticisms and demonstrations against the World Economic Forum, he believes it is “the event” that is talked about all over the world and anticipated by top political and business leaders. 

One of the highlights of the Davos forum was the Gala Night last Saturday which was sponsored by Turkey. Themed “360 Degrees Turkey,” the event was fully supported by the entire Turkish business community since they saw it as an opportunity to showcase the country as a “meeting point between the east and the west, the north and the south, the cradle of civilizations,” with Istanbul as the new center of attraction in Europe.  It was a well attended affair.

Robert Collette suggested that the Philippines may want to consider sponsoring the Gala Night at the WEF some time in the future.  The cost may be a bit stiff but it is well worth it considering that this is “the event” where we can really promote Philippine businesses and the country as a whole. Ambassador Collette, who is very fond of the Philippines, says that we have all the talented performers and all the nice destinations comparable to the rest of the world, especially now with the economy doing well as it is which he gives full credit to President Arroyo. Believe it or not according to Ambassador Collette, president Arroyo’s credibility with the international business community is very high. People at the WEF were talking about her speeches.

It would be a good idea for the Philippine government to include private Philippine companies such as PLDT, San Miguel and the Ayala group to sponsor such an event. It will definitely be worth it.

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