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Palace: Duterte asked China to enter PHL's telecoms industry

President Rodrigo Duterte has offered historic rival China the opportunity to enter the Philippine telecommunications industry and break a longstanding duopoly that has frustrated consumers for years.

Presidential spokesperson Harry Roque said in a briefing on Monday the President offered China a slot as third telecommunications company in the country during a bilateral meeting with Chinese Premier Li Keqiang last week.

"During the bilateral talks between President Duterte and the Chinese Premier, President Duterte offered to the People’s Republic of China the privilege to operate the third telecoms carrier in the country," he said.

Data and voice services in the country rank among Asia-Pacific’s slowest and most intermittent, and Duterte last year warned providers PLDT Inc. and Globe Telecom Inc. to shape up or face new competition, according to a separate report by Reuters.

"I repeat, the announcement is that duopoly, that telecom’s duopoly is about to end with the entry of the Facebook subsidiary as well as the offer by the President of the People’s Republic of China to operate the third telecoms carrier," Roque said.

"The Philippine President is so serious about this that he has instructed that all applications be filed and acted upon directly by the Office of the Executive Secretary," he added.

Roque said the participation of China in the Philippine telecom industry would heed the Constitution provisions on foreign investments.

The Palace official did not specify any company lined up from China. China’s foreign ministry did not immediately respond to a request for comment.

Chinese telecoms equipment maker ZTE Corp. won a $330 million contract from the Philippine government to set up a broadband network linking state agencies in 2007, but the deal was scrapped that year over allegations of corruption.

Salalima and conflict of interest

Breaking the telecoms duopoly should have been done sooner, but former Department of Information and Communications Technology Secretary Rodolfo Salalima did not act right away.

He said the Philippine government's signing with a Facebook affiliate for the project “Luzon Bypass” of the Pacific Light Cable Network could have been made earlier.

It could have been signed as early as December 2016, he said.

"It was not signed by the former secretary of the DICT. And this was one of the areas pinpointed by Cabinet investigators as an area of conflict of interest for the former secretary of DICT," he said.

Salalima was a schoolmate of Duterte, and was appointed last year by the President as the first secretary of the newly-formed Department of Information and Communications Technology.

The new department was tasked to formulate and implement policies in developing the ICT sector.

Salalima was Globe Telecoms’ senior vice president for Corporate and Regulatory Affairs until he retired in 2008.

"It was further reported by the special investigating committee that the former DICT Secretary likewise may have prevented the earlier breakup of the duopoly by delaying the use of satellites as viable option," he added.

With such developments underway, "consumers can now look forward to better telecommunications, not just in terms of cellular technology but also in terms of internet speed as well as access," Roque noted.

It was high time a third player entered the market to boost competition, said Pierre Galla, co-founder of ICT advocacy group Democracy.Net.PH, according to Reuters.

“There will, of course, be concerns, but these concerns we will identify and raise once we know what sort of telco is coming in,” Galla told Reuters.

Warm ties with China

Ties with China have warmed under Duterte, who has put aside disputes with Beijing, looking to it to play a key role in building and funding urgently needed infrastructure.

Duterte recognized that China had the money and technology to make a difference in the Philippines, Roque said.

“Consider also the proximity and the fact that we want to avail of as much as economic advantage that we could, arising from the renewed friendly ties with China,” he added.

PLDT and Globe have been accused of stifling competition and of failing to make necessary upgrades, accusations both have rejected. PLDT says it welcomes the competition.

Last year, they joined forces to buy prized mobile spectrum for $1.5 billion from a potential rival, San Miguel Corp., to kickstart telecom upgrades, widen coverage and boost internet speeds. Critics say services are still lacking, however.

This year, content delivery network service provider Akamai Intelligent Platform ranked the Philippines lowest among Asia-Pacific countries for its average internet connection speeds.

Opening up the telecoms sector is complex, however, as foreign ownership in domestic telecoms firms is limited to just 40 percent, a disincentive to investment in a fast-growing market of more than 100 million people. —With Reuters/ALG/VDS, GMA News