AN ACT TO PROMOTE AND GOVERN THE DEVELOPMENT OF PHILIPPINE TELECOMMUNICATIONS AND THE DELIVERY OF PUBLIC TELECOMMUNICATIONS SERVICES

Case Overview and Summary

Summary of Republic Act No. 7925 (Public Telecommunications Policy Act of the Philippines)

Scope and Definitions (Section 3)
- Defines key terms such as telecommunications, public telecommunications entity, broadcasting, franchise, local exchange operator, inter-exchange carrier, international carrier, value-added service provider, public toll calling station, mobile radio telephone system, and interconnection.

National Policy and Objectives (Section 4)
- Declares telecommunications as essential for economic development, integrity, and security of the Philippines.
- Outlines policies for developing and administering telecommunications services, including:
• Maintaining a viable, efficient, reliable, and universal telecommunications infrastructure.
• Prioritizing expansion of basic services to unserved and underserved areas at affordable rates. (Section 4b)
• Efficient allocation and utilization of radio frequency spectrum. (Section 4c)
• Fair, just, and reasonable rates and tariff charges. (Section 4d)
• Promoting private sector participation and a healthy competitive environment. (Sections 4e, 4f)
• Fair and reasonable interconnection of facilities. (Section 4g)
• Assisting Philippine international carriers in establishing international interconnections. (Section 4h)
• Transparent and fair regulation through an administrative process. (Section 4i)
• Separating telecommunications and broadcasting franchises. (Section 4j)
• Encouraging wide public ownership of telecommunications entities. (Section 4k)
• Promoting a domestic telecommunications manufacturing industry. (Section 4l)
• Developing human resources skills and capabilities. (Section 4m)

Responsibilities of National Telecommunications Commission (Section 5)
- Serves as the principal administrator of the Act.
- Responsible for:
• Facilitating entry of qualified service providers and adopting pricing policies to encourage service in unserved and underserved areas. (Section 5a)
• Ensuring quality, safety, reliability, security, compatibility, and interoperability of telecommunications facilities and services. (Section 5b)
• Mandating fair and reasonable interconnection of facilities and reasonable interconnection charges. (Section 5c)
• Fostering fair and efficient market conduct and protecting entities from unfair trade practices. (Section 5d)
• Promoting consumer welfare and facilitating access to telecommunications services. (Section 5e)
• Protecting consumers against misuse of monopoly or quasi-monopolistic powers. (Section 5f)
• Imposing fees and charges to cover reasonable costs and expenses for regulation and supervision. (Section 5g)

Responsibilities of Department of Transportation and Communications (Section 6)
- Develops and maintains a long-term strategic national development plan for telecommunications.
- Coordinates research and development activities in telecommunications.
- Represents and promotes Philippine interests in international telecommunications bodies and negotiations.
- Operates a national consultative forum to facilitate interaction among stakeholders in the telecommunications industry.

Categories of Telecommunications Entities (Section 7)
- Telecommunications entities can operate in one or more categories covered by their franchise.

Local Exchange Operator (Section 8)
- Provides universal basic telephone service to subscribers within a reasonable period and at prescribed standards and tariffs. (Section 8a)
- Protected from uncompensated bypass or overlapping operations, except when unable to provide required interconnection arrangements. (Section 8b)
- Has the first option to provide pay telephone services or public calling stations in its network area. (Section 8c)
- Entitled to a fair and equitable revenue sharing arrangement with interconnecting carriers. (Section 8d)

Inter-Exchange Carrier (Section 9)
- At least two inter-exchange carriers shall be authorized where economically viable. (Section 9)
- Obligations include:
• Interconnecting with other networks and local exchange carriers within a reasonable time and under fair and reasonable charges. (Section 9a)
• Establishing and operating its own tandem switching facilities for international calls. (Section 9b)

International Carrier (Section 10)
- Only entities providing local exchange services and demonstrating technical and financial capability can operate as international carriers.
- Must establish firm correspondent or interconnection relationships with major overseas carriers within one year. (Section 10)
- Must comply with obligations to provide local exchange service in unserved or underserved areas within three years, or allow an affiliate to assume the obligation. (Section 10)
- Failure to comply with these obligations can result in cancellation of authority to operate as an international carrier. (Section 10)

Value-Added Service Provider (VAS) (Section 11)
- VAS providers not putting up their own network need not secure a franchise.
- Allowed to offer services and lease or rent necessary equipment and facilities.
- Telecommunications entities providing VAS must:
• Secure prior approval from the Commission to ensure no cross-subsidization from utility operations. (Section 11a)
• Not discriminate against other VAS providers in rates or deny equitable access to facilities. (Section 11b)
• Maintain separate books of accounts for VAS. (Section 11c)

Mobile Radio Services (Section 12)
- More than one provider of mobile radio services, separate from the local exchange carrier, may operate in a local telephone exchange area with prior authority from the Commission.
- Must comply with conditions imposed on VAS and norms on radio frequency spectrum utilization.
- Must comply with obligations to provide local exchange service in unserved and underserved areas within three years. (Section 12)
- Failure to comply can result in cancellation of authority to operate a mobile radio telephone system. (Section 12)

Radio Paging Services (Section 13)
- Duly enfranchised radio paging services involving voice or data messages shall be allowed to compete freely in rates, number of operators, or operating modalities, subject to norms on radio frequency spectrum utilization.

Customer Premises Equipment (Section 14)
- Telecommunications subscribers are allowed to use type-approved terminal equipment within their premises.

Radio Frequency Spectrum (Section 15)
- Radio frequency spectrum allocation and assignment are subject to periodic review and reasonable spectrum user fees.
- Open tenders shall be held where demand for specific frequencies exceeds availability.

Franchise, Rates, and Revenue Determination (Sections 16-19)
- A franchise is required to commence or conduct the business of a public telecommunications entity. (Section 16)
- The Commission may impose conditions on the Certificate of Public Convenience and Necessity (CPCN), including duration, termination, equipment standards, rates, or service. (Section 16)
- CPCN shall be valid for at least five years but not longer than the franchise term. (Section 16)
- Expansion, financing, and upgrading of networks and services do not require Commission approval under certain conditions. (Section 16)
- The Commission shall establish fair and reasonable rates and tariffs to ensure economic viability and fair return on investments. (Section 17)
- The Commission may exempt services with sufficient competition from rate or tariff regulations but retains residual powers to regulate in cases of ruinous competition, monopoly, cartel, or distorted rates. (Section 17)
- Access charge/revenue sharing arrangements between interconnecting carriers shall be negotiated between parties and submitted to the Commission for approval if parties fail to agree. (Section 18)
- The Commission shall ensure equity, reciprocity, and fairness in approving interconnection rates, considering costs, cross-subsidy for local exchange carriers, and rate of return parity. (Section 18)
- Telecommunications entities shall set up a uniform system of accounts as a basis for establishing rates and tariffs, with separate books for each service category. (Section 19)

Rights of Telecommunications Users (Section 20)
- End-users have the right to:
• Non-discriminatory, reliable, and standards-conforming utility service. (Section 20a)
• First single-line or party-line telephone connection within two months of application or three months after targeted service commencement, whichever is later. (Section 20b)
• Regular, timely, and accurate billing, courteous and efficient service, and thorough and prompt investigation of complaints. (Sections 20c, 20d)

Telecommunications Development (Sections 21-23)
- Telecommunications entities with regulated services shall make a bona fide public offering of at least 30% of common stocks within five years of effectivity or first commercial operations. (Section 21)
- The Department shall privatize all government-owned telecommunications facilities for public use within three years, through public bidding unless otherwise authorized by law. (Section 22)
- Any advantage, favor, privilege, exemption, or immunity granted under existing or future franchises shall automatically become part of previously granted telecommunications franchises, except for provisions concerning territory, lifespan, or type of service. (Section 23)

Transitory Provisions (Section 24)
- Deregulated telecommunications services operating at the effectivity of the Act may continue to have rates and tariffs approved by the Commission until the end of the calendar year.
- Existing franchises not operating or without pending applications at the effectivity of the Act are deemed revoked.
- Existing interconnection agreements shall remain in force, but parties shall review and amend the access charging/revenue sharing formula within six months to comply with Section 18 guidelines.

Separability Clause (Section 25)
- Any portion or provision declared unconstitutional or invalid shall not nullify other portions or provisions that can still subsist and be given effect.

Repealing Clause (Section 26)
- All laws, ordinances, rules, regulations, and other issuances or parts thereof inconsistent with this Act are repealed or modified accordingly.

Effectivity Clause (Section 27)
- This Act shall take effect fifteen (15) days from the date of its publication in at least two newspapers of general circulation.