talk third telco to me

Manila, 9 November—The government has named a group helmed by a Duterte campaign donor and China as the country’s provisional third telco player.

The provisional third telco player is Mislatel Consortium, which is made up of Dennis Uy’s Udenna Corp. and Chelsea Logistics Holdings Corp., Chinese state-run China Telecom Corporation Limited, and the Mindanao Islamic Telephone Corporation, Inc. (Mislatel).

A Davao-based businessman, Uy was Duterte’s top donor in the 2016 presidential elections. As early as December last year, the President has also already expressed his support for China Telecom.

Right from the start, this group was a shoo-in for the much-coveted New Major Player position. But as the NTC and DICT went about the selection process, other “players” started talking about throwing their hat in the ring as well.

Perhaps the most promising entrant was the partnership of Converge ICT and KT Corp., the largest telecommunication company in South Korea. Also owned by a Dennis Uy—albeit a Pampanga-based one—Converge ICT’s participation in the New Major Player game was announced by the DICT just last month.

Considering Converge’s five-year, $13-billion aggressive fiber rollout plan, and the fact that South Korea’s internet speeds are among the best in the world, people naturally got excited about this partnership. Could this be The One that ends the PLDT-Globe duopoly that has been in place for decades?

Another entrant that people talked about was Streamtech Systems Technologies, Inc., which is owned by real estate magnate and former senator Manny Villar. Talk got really loud especially after the President gave Streamtech a telco franchise also last month. With a Villar at the helm of the Department of Public Works and Highways, and with millions of Filipinos already living inside Villar villages especially South of Metro Manila, it’s not that hard to imagine how easy rolling out a telco service could be for this group.

Another third telco aspirant was NOW Telecom, whose road to the New Major Player position has been much more fraught, after suing the NTC last month over issues in the terms of reference for the selection process. NOW said the TOR had insertions that were not taken up in public hearings, and these included the P700-million participation security, the P14-to-24-billion performance security and the non-refundable appeal fee worth P10 million, which NOW labeled ‘money-making’ schemes.

However, these groups eventually backed out of the race. Why? Streamtech, which backed out a couple of days ahead of D-Day, said it was opting to focus instead on their internal expansion programs and strategies.

On the other hand, Converge said in a statement released on D-Day itself that while the industry outlook was “financially viable,” conditions for its participation were “commercially unviable.”

As for NOW, the Manila Regional Trial Court junked its application for a TRO on the bidding process. On the day of the bidding itself, NOW’s lawyers advised against submitting the bid documents because of their pending case against the NTC.

In the end, it was down to Uy and Mislatel, Chavit Singson’s Sear Telecom made up of the Luis Chavit Singson (LCS) Group and Mindanao-based internet provider TierOne Communications, and Philippine Telegraph and Telephone (PT&T) Corp.

But as it would later turn out, only Uy’s Mislatel was qualified to bid, after the other two were disqualified. NTC said Chavit’s group lacked participation security, while PT&T was disqualified by the selection committee for not having a certification of technical capability.

Both Chavit’s group and PT&T have filed their respective appeals at the NTC.

In the meantime, Mislatel was named ‘provisional’ third telco for submitting a bid that had a score of 456 out of a possible 500 points.

Here’s how they got to that:

In effect, to win the bidding, Mislatel promised the following on their FIRST year:

  • 37% coverage

  • Speed of 27 Mbps

  • Capital expenditures of P150 billion

Their five-year plan also stipulates that by Year 2 they shall have covered 51% of the country (cities and municipalities? population?), and achieved 55 Mbps speeds (average? minimum? maximum?). They also plan to spend P27 billion every year from Year 2 to Year 5.

Even former NEDA head Winnie Monsod has her doubts: If it has taken the current players decades to achieve 70% coverage, how is Mislatel planning to fulfill their coverage target for Year 1? For context, cell site expansion has been largely hampered by red tape—this was among the issues raised at the PH Telecom Summit under then DICT Head Rodolfo Salalima.

However, if all of a sudden securing permits for cell sites no longer takes the usual 68 days for the New Major Player, then by all means I hope everyone can start rolling out at the same fast pace.

Also, a note about speeds: It is always useful to remember that speed is a function of both network and device. There is always that crucial part of the entire mobile internet experience that the network ultimately cannot control—the device owned by the customer herself. This is why it is important to also put some effort in making affordable LTE smartphones more available to consumers, and to migrate those using 3G to LTE SIMs and phones. After all, the easy access to Samsung’s latest smartphones contributes greatly to South Korea’s amazing speeds.

A note on global speeds: For information on the latest mobile speeds for the Philippines, I monitor OpenSignal’s reports on the Philippines, which come out twice a year. OpenSignal has a per operator breakdown.

On the other hand, Ookla’s global speedtest index monitors both Fixed and Mobile speeds for PH and updates monthly, albeit without operator breakdown. Their report with a per operator breakdown is the Speedtest Awards, which covers two quarters.

Anyway, everything else considered, perhaps it is to Mislatel’s advantage that they’re rolling out straight to LTE—this means they don’t have to worry about migrating legacy customers, because their experience with the New Major Player is already LTE at the outset.

In the end, it is up to NTC to take Mislatel to task, should it proceed to become the New Major Player formally. Ideally, promises like this should not be taken lightly, and they should be monitored every step of the way.

Now, if only this administration has been good at keeping its promises…