NTC should update regulatory regime

One good reason why our investment climate is not exciting for investors is the inability of government regulators to carry out their mission with intelligence and dispatch. Take telecom for instance. It is an industry that moves fast and is a key contributor to the nation’s economy. But it is suffering the kind of third world regulatory regime that puts industry, consumers and taxpayers at a disadvantage.

To begin with, it is doubtful that the three people who run the NTC today really know what they are doing. I mean, it is doubtful that they are even conversant about the technical ramifications of the industries they are regulating. How could they? The NTC has a lawyer for a chairman, another lawyer and a mass comm. grad (who NTC folks think is a nurse) for commissioners.

I understand there is only one senior career official in NTC who really understands the technical aspects of the job. The poor salary structure of NTC is their excuse why they cannot hire more technically competent people there.

That shouldn’t be the case. NTC earns over P3 billion a year in regulatory fees but must operate out of a budget of less than P300 million. If that is the reason why we are unable to get a more intelligent regulatory regime, then the private sector is being shortchanged by government. Perhaps it is necessary to exempt the technical staff of NTC from government salary structures so that the regulatory agency can attract qualified people.

The top leadership of the NTC is next to hopeless because these positions are political giveaways. Most of the time as is the case now, the occupants of the positions from Commissioner to Deputy Commissioners are held by political protégés who are not technically competent. You would expect better from an administration that professes the Daang Matuwid. But you would be disappointed to know that it allowed a very close aide of the former First Gentleman with a pending plunder case from his Pagcor days in the past administration to continue holding the top post.

Our Telecom Laws are so outdated it isn’t funny. Technology has advanced through leaps and bounds in recent years but we are still regulating our telecom industry based on something a little more advanced than the Morse Code. I doubt if any of the commissioners can even adequately explain what convergence in the technologies of the telecom and broadcast industries is all about. And understanding convergence is key to having an intelligent regulatory regime in the industry.

Let me explain convergence by pointing out a simple example. There is a single wire that brings to my home programs from local terrestrial broadcast networks as well as foreign programs via cable television and Internet or broadband connection too. And through the Internet, I am getting an Anaheim dial tone for a VOIP subscription that makes my calls to my daughter in Southern California a local call.

The Samsung flat screen I have can be used to watch terrestrial and cable television programs as well as to surf the Internet. Yet, NTC regulates terrestrial broadcasting, cable television, broadband and telecoms services as if these services are alien from each other. These services have converged and their regulation should take that into account.

Exhibit A to prove how inadequate the present NTC is in carrying out their mandate is the delay in making decisions on two very important cases with significant business implications. The first is of course, the PLDT-Digitel buyout and the second is the final choice for the technology to be used for the digital television roll out.

Some people say that these two cases have strong political implications, suggesting that the decision is really going to be made by Malacañang. Assuming that is true, NTC would still have to provide the technical and economic basis for the decisions. I suspect NTC’s lack of technical expertise is part of the reason for the delay. That also makes them susceptible to the pitch of salesmen for competing technologies and opportunities for corruption.

Beyond these two cases however, is the reality of a telecom sector that is dramatically different from the one on which our regulatory regime is based. Spectrum is still allocated based on use, whether it is broadcast or cell phone or other uses. Convergence however is bringing broadcast and communications together and we ought to start regulating them as such.

The thing is, spectrum is of the public domain and its allocation should always be made with the highest public interest in mind. Yet, politically connected rent seeking persons buy and sell use of frequencies as if these are private property. There are those who hoard frequencies waiting for the highest bidder. NTC should be able to assure efficient use of frequencies, but that’s not happening.

Indeed, the NTC in carrying out its spectrum management duties should take into account new technologies that will allow it to manage the increasingly crowded spectrum resource in a responsible, fair and technology neutral manner. For instance, new technologies are evolving that allow the sharing of spectrum more efficiently, the leasing of unused spectrum to other parties and the auctioning of white spaces between spectrum licenses that were previously thought to be unusable.

While it may be expecting too much to have Congress update our Telecom laws quickly, there is a lot a more technically capable NTC can do to clean up the mess. The PLDT-Digitel case is a good reason to review frequency assignments in the light of technological developments since the original assignments were made.

A telecoms entity can do more with less with today’s technology. It is possible that the merger could be allowed as indeed it should be allowed as part of an enlightened policy of letting private sector entities decide their strategies. But the merged PLDT-Digitel most likely don’t need all the frequencies they now have.

In fact, Globe may also not need to get any more frequency than they already have. They just have to use what they have more efficiently. Launching digital television will also release some space in current frequency assignments. The networks can be asked to present a plan on how they will use what they have and what they cannot use could be up for reallocation too. The overarching rule should be to keep the level of competitive behavior up.

NTC must start regulating with convergence in mind. Convergence creates possibilities for industry participants to develop and deliver services across technology platforms, and for users to get access to new kinds of communication and media services.

Done correctly, regulating with convergence in mind will promote expansion of competition by allowing networks and technologies to compete with no outmoded artificial restrictions. It also reduces cost of telecoms services and fosters development of more efficient technologies and services including new ways to access the Internet.

Current separate regulations covering telecoms and broadcast operations must be reconsidered. If the cha cha constituent assembly is convened, it should remove constitutional limits to seamless regulation. Technological convergence allows mobile phones (where telecoms companies are allowed 40 percent foreign ownership) to carry video content, for example, a Pacquiao fight, but that may be interpreted as broadcasting which can only be done by a fully Filipino-owned entity. Consumers are thus deprived of something that’s technologically possible that people in other countries take for granted.

Technology is faster than regulation but convergence is already here and it must be addressed somehow. And we are only talking about regulatory structure here. We haven’t even considered economics of telecom regulation, another important aspect for intelligent regulation of the telecom industry.

Ideally, NTC should be governed by a lawyer knowledgeable of how telecom is regulated abroad and who is also familiar with technical parameters, a telecom technical person and an economist. Maybe Congress should amend the NTC Charter to specify qualifications for NTC Commissioners.

Daang Matuwid should mean that gone are the days when NTC was just an agency for rent seeking politicians and bureaucrats to accumulate wealth. NTC should mean intelligent regulation of a technologically dynamic sector for maximum public benefit.

Same same

Looks like it is the same here and elsewhere in the world in the way telecoms companies view consumers. Here’s something I picked up from the net.

What’s the difference between Telecom and Jurassic Park?

One’s a theme park where the inhabitants are trying to kill all the paying customers. The other one’s a movie.

Boo Chanco’s e-mail address is [email protected]. He is also on Twitter @boochanco