IS THERE A BASIS TO GIVE PLDT, GLOBE ASSETS TO 3RD TELCO?

By Philip M. Lustre Jr.

IT was not an attempt of a shakedown to milk the two telecommunications conglomerates – Globe Telecom and PLDT Group - of their resources. In his State of the Nation Address on Monday afternoon, Rodrigo Duterte said he wanted the expropriation early next year of their assets ostensibly to be given to his Chinese friends, who are having a hard time to putting up Dito Telecommunity, the third telco to compete against the two giant telcos.

Camouflaging his intention of their expropriation by saying “the people wanted improvement of the services” of the two telecommunications giants, Duterte appeared bent to deliver the coup de grace in 2021 by strongly hinting to Congress that it would play a role in the enactment of a major legislation that could lead to their expropriation.

Two questions: What is current situation of the third telco to warrant the expropriation of Globe and PLDT assets? Is there a basis – legal or otherwise - to give PLDT, Globe assets to the incoming third telco - Dito Telecommunity?

Expropriation is defined as the act of a government to claim privately owned property against the wishes of the owners, ostensibly to be used for the benefit of the general public.

On the first question, Dito Telecom is currently behind schedule on the rollout of its infrastructure. It is near to impossible to meet its obligations, commitments, and requirements specified in its Certificate of Public Convenience and Necessity (CPCN), which serves as the contract between the government and the telecom firm.

Addressing a Senate public hearing on July 1, Adel Tamano, chief administrative officer, said Dito Telecom was having a hard time fulfilling the terms and conditions specified in its CPCN. Tamano cited the adverse effects of the pandemic caused by the novel coronavirus for Dito Telecom’s inability to meet its commitments in the CPCN. He blamed the delay to movement restrictions caused by strict lockdown measures from mid-March until the end of May 2020.

“The COVID-19 and lockdowns prevented us from our full rollout. With the subsequent easing of different lockdown situations, we are doing our best to get back on track,” Tamano said. Also, the pandemic has affected China, which is Dito Telecom’s main source of technological knowhow and raw materials, including the rolling stocks for its construction and infrastructure works.

Under its CPCN, Dito Telecom’s “technical launch” was scheduled on July 7 this year, but it has to be postponed in November this year. No date has been fixed.

The CPCN requires Dito Telecom to build initially at least 1,300 cell towers nationwide and provide digital service at a speed of 27 Mbp. According to Tamano, Dito Telecom has built 300 cell towers, or a backlog of 1,000 cell sites.

Tamano has promised to speed up the construction of the backlog, but he did not give any assurance of its compliance by November. The original plan was to build at least 1,600 cell towers by July, but this was lowered to 1,300. Overall, Dito Telecom has planned to build 2,000 cell towers by end-2020.

If Dito could build the promised cell sites and provide telecommunications services to at least a third of the country, it is scheduled to provide partial commercial operations by March next year and full commercial operations by July 1, 2021, or the first year of its operations.

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

Then 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 Telecom 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 Telecom, backed by China Telecom and the group of Davao City-based businessman Dennis A. Uy, is to hold its twice postponed technical launch by November. 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 in the schedule to go into commercial operations.

It’s dubious if Dito Telecom was “on track” to meet its commitments amid disruptions caused by the pandemic and the three-month Luzon lockdown. It 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.

It appears acquisition of existing telecommunications infrastructures and other assets is the most plausible option. The acquisition of Globe and PLDT assets would enable Dito Telecom to meet its obligations under its CPCN.

This is not the only 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 in 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 in May 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.

Concerning the second question if expropriation of Globe and PLDT assets has legal basis, the big answer is none. The 1987 Constitution allows expopriation of private landholdings and ill-gotten assets, but is quiet on private assets to be given to another private entity, specifically a favored one.

The Constitution allows expropriation proceedings on landholdings for public use under its power of eminent domain. In fact, RA 10729, or the Right of Way Act, has been enacted during the incumbency of Benigno Aquino III mainly to hasten construction of road projects and other infrastructures.

But it could not be used to acquire private assets to be given to a favored third party. Expropriation proceedings for PLDT and Globe Telecom assets could not be invoked because they have been rightfully acquired and do not in any way constitute ill-gotten wealth.

Acquiring their assets mainly because they have failed to provide “adequate services” is a weak argument and does not rest on solid legal, albeit moral, grounds. Duterte does not possess the legal trumpcard to proceed with what he had announced in his SONA. They could be regarded as ramblings of a confused mind that has gone berserk.

Acquiring PLDT and Globe Telecom assets to be given to the favored Dito Telecom is a highly politicized move that would only destroy the reputation of the Philippines in global business. It constitutes a barrier to entry; it would discourage potential investors to enter because the country’s rules on investments do not appear sound, fair, and impartial.

At best, Duterte could only allow the entire processes to unfold without fear or favor. If Dito Telecom could not meet its commitments and obligations, the national government should acquire the P25.7 billion which the third telco has earlier posted as performance bond.

Shortcutting the entire system to give a free ride to his Chinese friends would not work. It would certainly bring disrepute to the Philippines. It would only damage its reputation in the international community.

ABS-CBN NOT NEW TO MEDIUM MIGRATION

By Philip M. Lustre Jr.

THE ongoing migration of ABS-CBN programs to the digital platform is not a new phenomenon for the broadcast network. Way back in the mid-1960s, ABS-CBN transferred a number of its highly rated radio-based programs to television, which was then a rising medium in the country.

At that time, few households had TV sets. The transfer of those popular programs triggered brisk sales of TV sets in major cities to enable household members to watch TV programs and get free entertainment.

Among the popular radio-based programs that migrated to TV were "Tawag ng Tanghalan," the much acclaimed weekly nationwide amateur singing contest, "Buhay Artista," the sitcom program that featured the pair of notable comedians - Dolphy and Panchito, and Tang-Tarang-Tang, the sitcom that highlighted equally comedians Pugo and Bentot.

Despite the migration of these popular, highly rated programs to TV, radio has remained until now a popular medium. TV and radio have learned to co-exist as major components of the broadcast media. Print media and broadcast media constitute the traditional media.

Can ABS-CBN replicate what it did in the 1960s?

There are several factors to consider. The use of digital platform for commercial purposes is relatively new in the Philippines. Online media is largely confined to the so-called millennials (15-40 age bracket). The older population have remained stuck in the traditional media.

The national household 2019 survey of the Department of Information and Communications Technology (DICT) says 82 percent of all households nationwide have TV sets and 18 percent have Internet access. But 48 percent of the population have electronic gadgets – cell phones, tablets, desktop PCs, and the like.

But the current situation, where the pandemic is demanding less physical contact, could be a factor for a sudden rise in Internet connections for most households. Distance learning, where students would have to stay at home while receiving instructions from their teachers based elsewhere, could lead to increased purchases of electronic gadgets.

Moreover, the adoption of "work at home" for many workers could mean more Internet connections and electronic gadgets for use, making digital technology accessible to ordinary workers.

This is the challenge for the ABS-CBN. Its top honchos have rightly seen the rise of digital platform as the appropriate competitor of traditional media. The digital platform has come of age in the country. The challenge is to tap its commercial side.

Incidentally, the use of digital technology is not subject to any franchise, unlike broadcast media, which uses air waves, an integral part of the national patrimony.

Hence, the non-renewal of its franchise could be the proverbial blessing in disguise that could bring greater success for ABS-CBN.

The lawmakers in Congress did not see the current technological advances. They were too consumed by a combination of greed, hatred, ignorance and subservience to the mad man from the South. 

MORAL HIGH GROUND

By Philip M. Lustre Jr.

CHOOSING the moral high ground instead of yielding to the lawmakers’ insatiable greed is proving to be the right course of action for the Lopez family. Their policy of complete reticence and total avoidance of any conversation, negotiation, and bargaining is reaping largely unseen but tangible dividends for the Lopezes.

When the government through Rodrigo Duterte, Alan Peter Cayetano, and the screaming trio of Rodante Marcoleta, Michael Defensor, and Crispin Remulla had applied pressures to negate efforts to enact the proposed franchise extension of ABS-CBN, the Lopezes had simply clamped down and avoided any talk or negotiation for a quid pro quo.

The lawmakers had salivated for grease money from the Lopezes, expecting they would earn a windfall from the franchise extension and ensure reelection in 2022. Bribery is their language in extending legislative favors to some vested interest. Until the last minute, they were hoping cash would freely flow from the Lopezes. But this family know their lessons – past and present, as they opted to exercise moral scruples instead.

While they are admittedly ruthless in the conduct of their businesses, they are not wild and careless. Although they are astute and could be compromising at times, they stick to fundamentals – which is doing business with a modicum of ethical standards.

Meanwhile, the lawmakers would have to wait for the promised “projects” by their captain – Polong Duterte. Will Polong deliver those projects, where they could skim millions of pesos to fund their reelection bids in 2022? That is everybody’s guess.

The government is definitely bankrupt. It has incurred enormous debts because of the ill-fated 100-day lockdown. It has to resort to deficit spending. The national government has incurred outstanding debts of P1.509 trillion for the first five months of 2020, data from the Bureau of Treasury show.

This amount is larger than the programmed borrowings of P1.4 trillion for the entire 2020. Taxes and other revenues are insufficient to support the 2020 national budget of P4.2 trillion. Hence, the national government has to resort to deficit spending, where a big part of the national budget has to be supported by domestic and foreign borrowings.

The overall debt of the national government has reached P8.9 trillion by end-May. This is projected to reach P9.7 trillion by end-2020, the economic managers have earlier indicated. Who knows it could reach P12 trillion by the end of Duterte’s term of office on June 30, 2022? This P12 trillion benchmark is double the almost P6.0 trillion, the amount when the Duterte took office on June 30, 2016. 

Obviously, the current leadership, or ruling clique, which is disparagingly referred as the “Inferior Davao,” does not understand fiscal discipline. It has spent without much accomplishments to show for the P275 billion, which Congress has allocated under the newly expired BAHO Law to meet the pandemic caused by the China-Duterte Virus.

It did not resort to mass testing and contact tracing. It did not have programs, plans, targets, and objectives. The number of infected persons continues to rise after the 100-day lockdown.

Incidentally, the P1.509 trillion in borrowings from local and foreign sources the Duterte administration has incurred for the first five months of 2020 is much bigger than the overall borrowings of the Noynoy Aquino administration for the period 2010-2016.

Noynoy Aquino, during his entire six-year term, had contracted a total of P1.366 trillion, data of the Bureau of Treasury show. His tenure of office could be heralded as an era of fiscal discipline. He left office in 2016 with the national government in sound financial position because of its enormous savings.

Duterte has the reason to justify the huge borrowing for the first five months, citing the pandemic. But the difference remains mind-boggling by all standards because Duterte does not have much to show achievements for the heavy borrowings. He could not even explain how the resources were spent. His once a week public appearance does not lead to any clear-cut explanation of whatever expenditures his administration did.

Going back to the Lopez family, this economic family does not have to close shop for the next two years. Its game plan is to wait for a new government, possibly a friendlier one, to seek a new franchise in 2022.

Still, the Lopezes have the elbow room – or ultimate flexibility – to reinvent and reengineer the TV giant to new directions. The franchise expiration could be the legitimate reason to shed excess fat like the expensive contract stars and unwanted pro-Duterte commentators.

Also, the Lopezes could use ABS-CBN for the mass migration of Filipino audience to the digital platform. As the TV giant exploits the use of digital technology for its programming, the Lopezes could discover new but untapped income streams to make its digital operations viable – or even profitable ultimately.

Meanwhile, Duterte would be reduced to a fumbling clown, who would keep parroting used and worn-out lines straight from the Ferdinand Marcos playbook. The Lopezes are oligarchs... yak... yak... yak... Who would believe him? Who’s the loser? 

COUNTERREVOLUTION AND TERRORISM IN THE PHILIPPINES

By Philip M. Lustre Jr.

WHEN he took his oath four years ago as 17th president of the Philippines, Rodrigo Duterte has launched a bloody war against illegal drugs that has later transformed into a counterrevolution against the historic 1986 EDSA People Power Revolution mainly to overthrow the liberal democratic government it has restored.

The 1986 EDSA Revolution ousted dictator Ferdinand Marcos, dismantled the dictatorship that bled the country, and sent into exile the Marcoses and cronies who raided the national coffers. Corazon Aquino, leader of the democratic forces that destroyed the Marcos kleptocracy, worked for the 1987 Constitution and restored the constitutional democratic government to replace the dictatorship.

The Duterte presidency, in its first act of a burgeoning counterrevolution, has allied with two political families: the Marcoses and the Arroyos to form MAD (Marcos-Arroyo-Duterte axis). Mr. Duterte is uncomfortable with the 1986 EDSA Revolution and its 2001 sequel, the so-called “EDSA 2,” where the Armed Forces of the Philippines withdrew support from President Joseph Estrada, forcing him to resign and leave Malacanang.

Mr. Duterte’s agenda has been to prove the two revolutions have failed to uplift the country and the overthrow of the constitutional government by what could be regarded a self-coup and its replacement by a populist, albeit authoritarian, regime could save the country. He wants to stage his own revolution to overthrow the constitutional system that has put him in power.

His agenda includes a pivot of its foreign policy to discard the U.S., the nation's traditional ally, and embrace China to the extreme to yield a part of its territory to Chinese military and soften its political victory in the United Nations Convention of the Law of the Seas. He has allowed China to take a foothold in power distribution and telecommunications.

Mr. Duterte’s counterrevolution has led to the murder of over 30,000 smalltime drug peddlers, users, and supporters, but not bigtime druglords, in a bloody crackdown against illegal drugs. Since 2016, his counterrevolution has expanded to include assaults on democratic institutions - Supreme Court, Commission on Human Rights, Commission on Elections, Office of the Ombudsman, among others. His counterrevolution weakens democratic traditions - adherence to human rights, rule of law, and due process.

Mr. Duterte and his minions have surreptitiously conspired to jail Senator Leila de Lima on trumped up charges, remove Ma. Lourdes Sereno as Chief Justice of the Supreme Court on the bases of unconstitutional means, and convict journalist Maria Ressa of cyberlibel charges. They have intimidated state critics, marginalizing them to the sidelines.

Overall, the political objective is to reinstall a new dictatorship, enabling Mr. Duterte, or any of his handpicked successor - Ferdinand “BongBong” Marcos Jr., a recent survivor of Covid-19, flunkey Christopher Go, now a senator, or daughter Sara Duterte, mayor of Davao City - to rule beyond end of his term in 2022. It remains a big political issue on how they could prolong their stay in power since Mr. Duterte’s state of health is uncertain because of several ailments.

The coalition of authoritarian forces led by Mr. Duterte and composed of the Marcoses, Arroyos, and other key political families have tried but failed to pursue their counterrevolution through two political routes: declaring  a revolutionary government, or RevGov, to jettison the 1987 Constitution; or amending the Constitution by shifting to the federal government to replace the current unitary government. The proposed shift to federal form contained a transitory provision that would make Mr. Duterte a virtual dictator for at least ten years.

His plan to establish RevGov did not gain steam as many sectors turned wary of his plan to discard the 1987 Constitution, which serves as anchor of the thirty-two years of restored democracy. The democratic ideals and traditions embodied in the 1987 Constitution have tied his hands, frustrating his attempts to cut corners. Moreover, his RevGov did not generate support because it was perceived to have largely arbitrary and whimsical.

His proposed RevGov did not gain ground, as major sectors, including the dominant Roman Catholic Church and even the Minority Church, the defense and military establishment, and the business sector have sent cold signals, rejecting his RevGov in favor of the restored democracy. His plan to shift to a federal government fell flat on his face, as lawmakers did not appear enthusiastic to amend the Constitution with Mr. Duterte as the virtual dictator in the envisioned ten-year transition to a federal state from the current unitary government. There was hardly popular support.

Two conflicting themes dominate the Philippine postwar political experience: democracy and authoritarianism. This dichotomy of political themes is evident over the past seven decades. Pro-democracy forces want the democratic institutions and structures to thrive and the democratic processes to flourish. They believe in pluralism, where various belief systems, world views, and advocacy have spaces for coexistence and growth.

Pro-democracy forces are represented by middle elements that supported two people power revolutions (EDSA 1 and EDSA 2), political parties and organizations adhering to rule of law, and institutions like Majority Church, or the Roman Catholic Church, and Minority Church, or Christian and non-Christian denominations, their clergy, and various Church-based organizations. They are dubbed as the “Yellow Forces” since they helped to catapult Corazon and Benigno Aquino III into the presidency.

The authoritarian forces live in the past, as shown by persistence to revise history to erase the dictatorial rule of Marcos and his ilk and its ill effects, treat the two people power uprisings (EDSA 1 and EDSA 2) as historical flukes, and re-impose the failed authoritarian system. The modern-day populism appears to be their ideological anchor.

Mr. Duterte’s remarks, showing a heavy tilt towards suspension of the privilege of the writ of habeas corpus, declaration of martial law – either in Mindanao or nationwide, and the establishment of RevGov, have fanned widespread anxiety and fear on a return of authoritarianism. Defense Secretary Delfin Lorenzana had indicated the Armed Forces of the Philippines would not support his RevGov, showing contempt of the officers' corps on this concept.

Although Philippine postwar liberal democratic system was put in place in 1946, Ferdinand Marcos, elected popularly in 1965 and reelected in 1969, touched the nerve of history by declaring martial law on September 21, 1972, plunging the country in a political experiment on “constitutional authoritarianism” or dictatorship. He was to step down on December 30, 1973, but he prolonged his stay in power by 12 years when he took advantage of a loophole in the 1935 Constitution.

By a stroke of a pen, Marcos write finis to the country’s democratic traditions and destroyed its democratic structures. He abolished Congress, closed mass media outfits, arrested and jailed without charges tens of thousands of journalists, activists, labor and peasant leaders, religious workers, and opposition stalwarts. He invoked the national security doctrine for martial rule, saying he wanted “to save” the country from the “conspiracy of the oligarchs and the communist rebels.”

After declaring Martial Law in 1972, Marcos ruled for another 13 years, but brought the following: first, centralized corruption, where he earned under-the-table commissions from big ticket state projects and deposited proceeds in foreign banks; second, crony capitalism, where his cronies cornered fat state projects, formed agricultural monopolies, and grabbed monopoly contracts in the services sector; and third, wanton human rights violations, where tens of thousands of anti-Marcos elements were arrested and imprisoned without charges, tortured, and summarily executed, and disappeared involuntarily without trace.

In 1986, the Filipino people, in their exercise of sovereign power, kicked the Marcoses out of Malacanang, toppled his dictatorship, and sent them to a five-year exile in the U.S. But it happened not without leaving a country destroyed by kleptocracy, or the use of political power to plunder and accumulate ill-gotten wealth estimated at between $5 billion to $10 billion.

Despite his frustrating overtures to declare a revolutionary government or shift to federal form of government, Mr. Duterte has signed on July 3 into law the controversial anti-terrorism bill, sowing fears of a crackdown in the democratic forces. He signed it, even as the Philippines breached the 40,000 level for Covid-19 cases and recorded the highest single-day total of 1,531 new cases. From all indications, the Republic Act No 11479, or the Anti-Terrorism, is the fitting alternative to Mr. Duterte’s earlier failure to stage his counterrevolution.

The new anti-terrorism law replaces the Human Security Act of 2007 which, according to legal luminaries, was largely unused because of the heavy fines provided against law enforcers, who violated its safeguards. It adopts a policy against terrorism and seeks to defend the country against it. It defines terrorism, penalizes acts of terrorism and proposals to commit it, and other activity like terrorist training, funding and recruitment activities and membership in terrorist organizations. It covers foreign terrorist activities that have links to the Philippines.

RA 11479 creates an Anti-Terrorism Council composed of officials of the Executive Department, the job of whom is to oversee its implementation. It provides an elaborate system of surveillance including wiretapping by State agents of suspected terrorists upon directive or permission from the Anti-Terrorism Council with the approval of the Court of Appeals, for a period of 60 days extendable for another 30 days. It allows arrests without judicial warrants and detention without filing of charges in court for a period of 14 days that could be extended by another 10 days. It removes heavy fines on law enforcers if they transgress the law’s safeguards and instead provides for imprisonment of up to 12 years.

According to retired Supreme Court Justice Adolf Azcuna, the new law is under heavy scrutiny and criticisms because the definition of terrorism is vague and too broad so it violates the right of an accused to be informed of the nature of the charges against him or her; Also, it violates the provision of the Constitution that says that no warrant of arrest shall issue except upon probable cause to be determined by a judge, Azcuna said.

Furthermore, Azcuna said it allows arbitrary detentions without charges for an unreasonable length of time in violation of a person’s fundamental right and grants the State law enforcers the right to determine that something is terrorism and one is guilty of it without ones being heard thus violating the fundamental requirement of due process. It makes peaceful assembly and protest to criticize government a dangerous activity that could easily be deemed as constituting terrorism by State agents acting without the safeguard of requiring court authority;

“Granted that there is a need for an honest to goodness Anti-Terrorism Law, one should be adopted after broad consultation with all affected sectors, unlike this law which was hastily passed by both House of Representatives and the Senate, Azcuna said.

He said: “The law is liable to be weaponized and used to suppress legitimate criticism and put a chilling effect on peaceful dissent, a necessary ingredient of a democratic society. The law is a divisive one that detracts from the unity needed now to fight the pressing specter of the pandemic while saving our economy and ensuring the people’s survival.”

Truly, evolving counterrevolution could be gleaned from the new law, even as its proponents could not defend it adequately.