KPA seeks to improve internet access by easing regulations and allowing more entrants into the data transmission industry.
The Department of Information and Communications Technology (DICT) said it is now drafting the implementing rules and regulations (IRR) for KPA, with Information and Communications Technology Secretary Henry Rhoel Aguda inviting major telco players to provide input on the IRR, which could be released as soon as 30 days or 90 days maximum after it lapsed.
Digital colonialism
The Philippine Communications and Telecommunications Operators (PCTO) has acknowledged the fact that the Philippines is the only country in the world that requires a legislative franchise to operate as a telecom, and as such, they do not oppose removing this requirement.
However, they have called for equal rules for both old and new players to avoid having an asymmetrical regulatory environment.
The PCTO also pointed out that it creates a clear bias for satellite-based services, which implicitly cater to foreign players over smaller local players, as the technology is inherently specialized and expensive (case in point: Starlink).
The telco giants have also been asking for the bill to be returned, stating that it needs further study and revision, with PLDT Inc. (TEL) even saying that they may mount a court challenge if KPA becomes law.
Converge ICT Solutions Inc. (CNVRG), on the other hand, has been more open to encouraging more industry participants and enhancing connectivity and services nationwide.
All players, however, emphasize that a well-crafted IRR is crucial to ensure fair competition, service quality, and consumer data protection.
The bigger the debt, the harder they fall
The two telco giants, Globe Telecom Inc. (GLO) and PLDT Inc. (TEL), could face higher risk because of their heavy debt-funded capital expenditure (CAPEX) investments, leaving them with less flexibility to respond to new entrants offering cheaper services.
TEL and GLO have already been suffering from heightening competition against CNVRG (fiber) and DITO Telecommunity Corp. (DITO) in mobile, with more competitors—especially foreign players—on the way who are not limited to mobile and fiber but also data centers.
With KPA lowering the barriers of entry for new players, there is a probability of further intensification of the ongoing price war within the industry.
Earning more than just good karma from sharing
Section 16, Infrastructure Sharing and Co-location, states that those with existing infrastructure must allow new players to connect to their network (cannot refuse) in exchange for a fee, which amounts to renting or leasing it out.
The infrastructure sharing could apply to last-mile infrastructure like fiber ports and cell towers.
The two telco giants have sold off most of their cell towers, so they have missed out on the opportunity to earn lease income from infrastructure they built at significant cost.
This is a bigger opportunity cost and risk for GLO given its mobile-heavy revenue stream.
On the other hand, this could actually unlock value for CNVRG, given their fiber port utilization of 35.9 percent, which gives them excess capacity for infrastructure sharing.
They would also see lower churn since the connection would remain active even if individual consumers disconnect from the service provider, meaning CNVRG is still paid regardless.
TEL, with a 57 percent port utilization, is also expected to benefit from this but, like GLO, faces the same risks in the mobile segment.
With experts providing pros and cons about the regulatory oversight and implications, one thing is clear: consumers are the real winners here, and the effects will be felt as soon as the IRR is released.
As it stands, CNVRG stands to benefit rather than suffer from the passing of KPA, given its financial and operational capability to weather the fresh challenges facing the industry.
Meanwhile, GLO and TEL are likely to bear the brunt of tighter competition.
Only time will tell if CNVRG will seize the opportunity and if GLO and TEL will successfully navigate the risks.
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