DON'T BE HOPEFUL ON THIRD TELCO

By Philip M. Lustre Jr.

DON’T be too hopeful. The third telco after the PLDT Group and Globe Telecom may still emerge, but it would be a little late. Or it may not emerge at all. Reasons for the delay of non-appearance: novel coronavirus pandemic and changes in U.S. policies.

The planned July 1, 2021 start of commercial operations of Dito Telecommunity Corporation remains a plan. Many variables, foreseen and unforeseen , would come to play to hinder its target date of commercial operations. The pandemic has affected China, Dito’s main source of technological knowhow and raw materials, including the rolling stocks for its construction and infrastructure works.

The pandemic has triggered delays and postponement of the delivery of the inputs for Dito’s infrastructure, according to Adel Tamano, chief administrative officer. Affected largely are the construction and infrastructure works in Metro Manila and the rest of Luzon, Tamano said, adding that health and safety issues linger on its workforce because of the pandemic.

Although Dito has claimed its rollout was continuing amid the pandemic, Tamano indicated the third telco firm could have difficulties to meet the technical launch by July this year, where the firm could provide services to 37 percent of the population with a minimum average speed of 27 megabits per second during its first year of operations.

According to its terms of reference with the government, Dito has promised to provide by the end of its fifth year telecommunications coverage to 84 percent of the country’s population at a minimum average speed of at least 55 mbps.

The technical launch differs from the rollout of commercial services to subscribers, which could come as early as July 21, 2021, Tamano said. Metro Manila and urban areas in Luzon are key markets to ensure Dito meets its population coverage targets.

“Let me assure the public that we are very much aware of the pressing need for world class connectivity that Filipinos truly deserve which this global pandemic has made even more evident,” Tamano said.

DICT Undersecretary Eliseo Rio Jr. said Dito Telecom might not invoke force majeure, or protection due to unforeseen events like the COVID-19 pandemic, should it miss its rollout targets. Press reports said the bidding terms of reference allow a grace period in case of a delay in rollout. Section 14 of the terms of reference allows the telecom firm two grace periods of six months each within the five-year commitment period.

The government would not grant special extensions to its rollout commitments despite the COVID-19 crisis that keeps on disrupting the global supply chain. Rio said. Dito could not seek reprieve by invoking force majeure, or protection due to unforeseen events such as the pandemic, because this was not included in the terms of reference.

Dito, backed by China Telecom and the group of Davao City-based businessman Dennis A. Uy, is to hold its technical launch by July. Its failure to meet its commitments would allow the national government to seize its P25.7-billion performance bond and recall assigned radio frequencies. The terms of reference, however, allow a grace period in case of a delay in its rollout, but not it in schedule to go into commercial operations.

“If they, for example, miss the July deadline but were able to comply six months later, they will be allowed to continue, but that would be their strike one,” Rio said in a press conference. “If that happens again within the five-year period, that would be their strike two. But strike three, they are out,” he added.

Dito Telecom won the bid to launch a nationwide telecommunications service to challenge PLDT Group and Globe Telecom. Its license to operate was given on July 8, 2019 in an event that outlined rollout milestones including its technical launch by July 2020.

It’s dubious if Dito Telecom was  “on track” to meet its commitments amid disruptions caused by the pandemic and the two-month Luzon lockdown. Still, Dito Telecom has not asked telco regulators for some leniency amid the health crisis as their July “technical launch” nears. “This means they are on track even with this emergency situation that we’re having now,” Rio said.

Dito Telecom was reported to have started searching for “alternative sources” of technology and raw materials to start their operations after its deliveries from China got stuck. The firm did not explain any details for alternative sources of technology.

This is not the issue that confronts Dito Telecom. Policy issues in the United States could strike Dito Telecom adversely affecting its planned commercial operations next year. Dito Telecom would have a hard time operating here thin the country once the China Telecom is banned in the US since there will be a problem in the interconnection in cyberspace.

Several US Departments had encouraged the Federal Communications Commission (FCC) to revoke China Telecom (Americas) Corp’s authorization to provide  international telecommunications services to and from the US. “This recommendation reflects the substantial and unacceptable national security and law enforcement risks associated with China Telecom’s continued access to US telecommunications infrastructure,” said the group of departments, which include State, Justice, Defense, Homeland Security, and Commerce, in a statement, along with the United States Trade Representative, in a statement regarding the filling at the FCC recently.

The call is in the midst of the continuous scrutiny being done by FCC to China Telecom in an investigation that was started last year. The US subsidiary of the Chinese state-owned telecommunications company holds the license to grant service in the US since 2007. The FCC united to vote May of last year to deny the request of another state-owned Chinese telecommunications company, the Mother mobile, to grant service in the US.

According to FCC chairman Ajit Pai, the commission was able to determine following the vote that China Mobile was controlled by the Chinese government. It was mentioned in a statement that there could be danger in the possibility of the Chinese government using the approval of the FCC to conduct espionage or spying against the US government.

The telecommunications companies of China are thoroughly being scrutinized  by the US. Just last year, lawmakers urged FCC to review China Telecom and the other Chinese telecommunication company, the China Unicom. Also last year, the Trump administration placed Huawei Technologies – the Chinese telecoms company that is the global leader in next-generation 5G technology, on an “entity list” and barred it from buying critical components from its American suppliers.

The US has also urged other governments around the world to exclude Huawei from developing their 5G infrastructure, citing national security risks. In a recent filing, the departments contended that the Chinese government has “ultimate ownership and control” of China Telecom and the company’s US operations.

Such ownership might allow Chinese government entities “to engage in malicious cyber activity enabling economic espionage and disruption and misrouting of US communications” and “provide opportunities for increased Chinese government-sponsored economic espionage,” according to the filing. 

The departments also contended in their filing that China Telecom had made inaccurate statements about where its US records were stored, and that it had made inaccurate statements to US customers about its cybersecurity and privacy practices that may fall short of complying with US law.