The PCCI issue: The industry’s position

The telecoms industry issued this statement on their position supporting President Arroyo’s veto of the franchise bill of the Philippine Communications Clearinghouse Inc. (PCCI):

The country’s telecommunications industry has expressed strong opposition to the proposed creation of a "monopoly backbone" that will serve as a central interconnection facility and clearinghouse for all landline, cellular, Internet, paging and truck radio companies.

The clearinghouse plan was presented by the Philippine Communications Clearinghouse Inc. (PCCI) to Malacañang before President Arroyo vetoed the granting of the congressional franchise to the newly formed firm.

The players, however, were caught unawares since they learned of PCCI’s franchise only when the issue came out in the media on July 20.

Given the PCCI’s clearinghouse plan, the carriers are alarmed and surprised why they were never notified or consulted when the bill underwent a congressional hearing.

During a media briefing, telecom executives pointed out that the proposed clearinghouse, to which all the players will be required to interconnect, is against the well-accepted practice of direct interconnection between the concerned parties.

Under existing franchises, the National Telecommunications Commission (NTC) is only empowered to order interconnection despite its status as a regulatory body. On the other hand, PCCI, which is a private company, is "authorized to connect or demand connection" of the telecoms systems of other carriers, to its network.

"The government policy is for liberalization and demonopolization, now here comes a backbone where everybody will be forced to interconnect. Why favor a private enterprise with that kind of clout? The existing law only requires a carrier to open interconnection with another. Here, it’s the reverse, they will require you to put and flow all your traffic through PCCI. You have no choice," Atty. Rodolfo Salalima, SVP for Corporate and Regulatory Affairs of Globe Telecom, said.

The industry stressed that the proposed clearinghouse is monopolistic in nature and contradictory to the government policy of demonopolization and liberalization initiated by former Presidents Corazon Aquino and Fidel Ramos and stated in Republic Act 7925 or the Public Telecommunications Policy Act and other legal issuances. It will also destroy the present interconnection regime based on free bilateral negotiations.

Moreover, the carriers pointed out that the plan to establish a clearinghouse for the telecom industry will also seriously affect and do away with the existing nationwide transmission networks, as well as the internal backbones, of the present players.

Due to the huge amount that a clearinghouse would need to be established, PCCI’s plan would, therefore, require another layer of cost that will ultimately be borne by the consumers, they added.

PCCI’s business plan calls for the formation of "a clearinghouse for the telecoms industry that would address concerns and provide solutions to issues such as interconnection and traffic management, easy customer access, seamless connectivity and other value-added services."

Such plan will make PCCI a monopoly backbone and a virtual replacement of the NTC which is the sole government agency tasked to regulate and supervise the telecoms industry.

Last April 18, President Arroyo vetoes House Bill No. 12671 entitled "An Act granting the Philippine Communications Clearinghouse Inc. a franchise to construct, install, establish, operate and maintain wire and/or wireless telecommunications, systems throughout the Philippines."

NTC Commissioner Eliseo Rio Jr. also recommended the veto in view of PCCI’s name as a "clearinghouse." The term is identical to the signs used by government to indicate authoritative approval or official sanction which is contrary to law, and can be inimical to public interest, public welfare and the integrity and security of the State, he said.

"The industry is opposed to PCCI becoming a clearinghouse because that will make it a monopoly backbone, given also the company’s expressed plan. So we express our support to the President’s veto and the NTC’s concern and recommendation for the veto," the carriers said.