Franchise

Some things are so scarce they are eternally kept in the public sphere. These include lakes and rivers, forests and road space, also the radio spectrum.

Radio frequencies are lent out by the state by way of franchises. It is clear that franchises do not connote ownership. They are simply privileges given out by the state and returned to the public sphere when they are not productively used or when national interest requires it.

In more unenlightened times, franchises were given out as political favors or as sources of informal political income by the Congress, which nominally represented the people. Because awarding franchises was so lucrative, the congressional committee charged with awarding these things always had the most abundant membership.

In this more enlightened age, franchises are awarded out by way of transparent public bidding.

Transparent public bidding has several advantages. It removes the role played by corruption in awarding scarce public resources. It ensures that the most efficient user wins the privilege of using scarce public resource. It provides an additional source of revenue for the state that might be used for economic investments.

When a franchise awardee abuses the privilege or fails to efficiently use it, it is understood that the resource reverts to the control of the state. It should then be bid out to reflect the current market valuation of the asset.

This is the maxim under test in the case filed by PLDT contesting the “sale” of Bayantel (and its franchise) to Globe Telecoms. PLDT recently won a restraining order from the Court of Appeals against that “sale.”

Bayantel, we will recall is a failed telecoms company. Because it failed, the franchise it enjoys over a segment of the radio spectrum was not efficiently used. While everybody else, in this age of mobile devices, struggles with limited bandwidth, Bayantel’s share of the radio spectrum lies idle.

Globe, obviously, is not really buying the failed company. It is buying the franchise that is the only thing of value in that company. The question, however, is if this is the proper way to transfer a franchise.

PLDT argues that Bayantel’s failure to efficiently utilize the bandwidth apportioned it justifies return of the franchise to the state. In turn, the state should bid out that franchise to properly reflect current market valuation of the asset.

By “selling” its franchise, Bayantel appears to be peddling something it does not own. It is akin to that old joke about a man managing to sell the Jones Bridge. The state makes nothing in that private transaction. By recalling the unused franchise and putting it up for auction, the state stands to earn substantial revenue — enough to help pay down the national debt.

PLDT’s position here more closely reflects modern doctrine and practice on the matter of scarce radio frequencies.

Unconstitutional

The proposed Bangsamoro Basic Law (BBL) appears headed for rough waters.

A retired Supreme Court justice appeared before the committee of the House of Representatives deliberating the draft and argued it was patently unconstitutional. The justice is a respected constitutionalist and his views will likely resonate in the Supreme Court when the constitutionality of this proposed law is questioned.

Last week, the Association of Generals and Flag Officers (AGFO) presented a position paper before the same hearing on House Bill 4994 also arguing against the BBL. The position paper was prepared by retired colonel Cesar Pobre and adopted by the AGFO as its own position.

This is significant. In our practice, military officers in active service are not allowed to articulate their views on national policy debates. Instead, it is the association of retired senior officers that exercises the freedom to articulate political opinion and policy preferences.

The AGFO paper begins with the observation that nowhere in the MILF-GRP agreement is there a renunciation by the MILF of its separatist goal. Neither does the rebel group explicitly acknowledge the Philippine Constitution.

The paper finds it rather disturbing that throughout the Comprehensive Agreement on the Bangsamoro (CAB), there is continuous repetition of the phrase “the Philippine government and the Bangsamoro government.” The phrase appears to suggest equal rank.  That concern is not relieved by the ambiguous phrase “asymmetric” to describe the relationship between the national government and the autonomous unit.

The use of the phrases “aspiration for self-governance” and “chart their (Bangsamoro) political future,” taken together, suggest that independence remains the end-state of this process. “Self-determination” is another vague phrase, even as this was a sticking point in the previous MOA-AD that was shot down by the Supreme Court.

The provisions for the envisioned autonomous government having the powers to appoint officials previously appointed by the President of the Republic appears to diminish the powers of the Chief Executive. That, in itself, violates the Constitution.

The agreement appears to vest on the MILF the right to represent and act in the name of all the various stakeholders in the region, including the datus, the ulamas and the indigenous people very likely violates democratic principle. The provision that areas may accede to the autonomous government simply by a petition of only 10% of the population of an area is obviously questionable, connoting as it does tyranny of a minority.

Understandably, the retired officers are disturbed by the vague provisions for decommissioning of armed units after the BBL is passed. There is no timetable for doing so. Instead, it appears the MILF forces will be constituted into a regional police force, with all their armaments. That police force does not appear to be subordinate to the PNP. This has to be an anomalous arrangement.