Move to scrap phone rollout scheme bucked

Rep. Joseph Santiago (NPC, Catanduanes) has assailed the move to abolish the service area scheme (SAS) that requires telecommunications companies (telcos) to roll out landlines in unserved rural areas, calling it "totally unfair" to those that have complied at great expense.

The scrapping of the SAS would send the wrong signal to the telecommunications industry, warned Santiago, a former chief of the National Telecommunications Commission (NTC).

"If we do away with the SAS now without rewarding the telcos that delivered their landline commitments, and without penalizing those that failed to comply, then there is no guarantee that industry players will comply with any and all future schemes," he said.

"The NTC must demonstrate that it means business in enforcing the mandates of the law," he added.

The SAS is mandated by the Public Telecommunications Service Act and Executive Order 109 issued in 1993 by then President Fidel Ramos.

The NTC wants to abolish the SAS in favor of "an equivalent compliance scheme" for telcos that failed to deliver their landline commitments.

Under the SAS, cellular mobile telephone system (CMTS) and international gateway facility (IGF) operators are required to install 400,000 and 300,000 landlines, respectively, in unserved areas in the countryside within five years. If a telco is both a CMTS and IGF operator, it has to put up 700,000 landlines.

Santiago said sanctions on the "remiss" telcos should include fines, forfeiture of their performance bonds worth up to P500 million and denial of any application for a new service.

"Those that complied should be entitled to incentives such as additional frequencies if they are CMTS operators, and prompt approval of any application for a new service," he added.

As of end-2000, the telcos that were able to roll out the required landlines were Digital Telecommunications Phils. Inc., Globe Telecom Inc., Bayan Telecommunications Inc., Philippine Long Distance Telephone Co., Smart Communications Inc. and Pilipino Telephone Co., NTC records show.

The "remiss" telcos were Isla Communications Co. (now merged with Globe Telecom), Capitol Wireless Inc., Philippine Global Communications Inc., Eastern Telecommunications Phils. Inc., Express Telecommunications Inc. and Bell Telecommunications Phils. Inc.

"A number of those that delivered their commitments, including Piltel and BayanTel, incurred huge debts and losses since they borrowed funds to install their landlines. They definitely deserve credit and support from the NTC," Santiago said.

The NTC said it might come up with an alternative compliance scheme that would help the government achieve its desire to have a higher Internet penetration rate.

"That’s not a problem. All that the NTC has to do is draw up an entirely new scheme, with a new set of rules, incentives and disincentives. But the new scheme must be independent of the SAS, not an alternative scheme to accommodate the telcos remiss in complying with the SAS," Santiago said.