Wednesday, January 18, 2012

EXPOSE: Altimax-Globe/Innove deal is anomalous

by Bayan Muna Rep. Teddy Casiño
Privilege Speech delivered on January 18, 2012

Mr. Speaker, my dear colleagues.

I rise to avail of the privilege hour to discuss the blatant violations of a franchise granted by this august body to a broadcasting company and to call for our immediate action against those involved.

Mr. Speaker, for the past month, we have been at loggerheads with the National Telecommunications Commission (NTC) and the giant telecommunications monopolies on the matter of text messaging rates. In particular, we have decried how the telcos, with absolute impunity, have defied an order from the NTC to lower the interconnection fees charged on texting by 20 centavos per message. To date, more than a month after it was issued, the NTC circular continues to be ignored by the telcos.

More distressing is the fact that the NTC has, as it has done many times in the past, failed to uphold the interest of the consumers and failed to stand by its actions against the monopolies, merely kowtowing to the profiteering ways of the giant telcos. 

Apparently, the interconnection fees is just the tip of the iceberg. I have recently stumbled upon a controversy that involves not only the NTC’s failure to protect the national interest or the telcos’ audacity in flagrantly violating the terms of their franchises but also reveals how the NTC and telcos’ are conniving to undermine the authority and integrity of Congress itself. Magkakutsaba ang NTC at telcos sa paglabag sa ating mga batas.

I refer, Mr. Speaker, to the 25-year franchise granted one Altimax Broadcasting Co. Inc. 

In March 27, 1998, Republic Act No. 8607 was enacted granting Altimax a 25-year franchise to construct and operate radio and television stations in the country. Under the franchise, Altimax was supposed to comply with three things:

Commence operations within one year from the approval of its permit from the NTC;
Operate continuously for two years; and
Commence operations within three years from the effectivity of the franchise.

Failure to meet any of these three conditions would mean the ipso fact revocation of the franchise.

Hindi po ako abogado, Mr. Speaker, kayat hinanap ko po ang salitang ipso facto sa diksyunaryo. Ang sabi doon, “by the very fact or act”. Ibig sabihin, kung hindi nasunod ang kundisyon, tanggal ang prankisa, wala nang tsetseburetse. Failure to comply with these conditions automatically revokes the franchise. Thus, any action to render the franchise revoked proceeding from the failure to comply with the conditions is merely ministerial.

Ano po ang nangyari sa franchise ng Altimax?

Altimax was able to get its provisional authority to operate from the NTC on Dec. 29, 2000. The NTC gave the company two and a half years, or until June 29, 2002, to roll out its Multichanel Multipoint Distribution System (MMDS) and Direct Broadcast Satellite (DBS) services. 

Ano po itong MMDS at DBS? Simple lang ho. Ang MMDS ay wireless cable TV. Ang DBS ay satellite cable TV. MMDS uses microwave equipment to transmit its signals to subscribers while DBS uses satellite equipment.

Samakatuwid, nabigyan ng provisional authority ng NTC ang Altimax. Two and a half years later, nothing happened. Nothing was built. Altimax failed to operate both its MMDS and DBS stations in the period it was allowed to do so by the NTC. 

More importantly, Altimax failed to comply with the conditions set by Congress for its franchise – that it is supposed to operate three years after getting the franchise, or by March 2001. Thus, the franchise should have been deemed revoked at that moment, ipso facto. 

Pero ano ang ginawa ng NTC?

Binigyan ng three-year extension ang Altimax – o hanggang June 29, 2005 – para maitayo ang kanyang mga broadcasting stations. 

Question, did NTC have the authority to allow Altimax to operate when failure to comply with the conditions of RA 8607 already deemed the franchise ipso facto revoked? I believe not, Mr. Speaker. What NTC should have done was order Altimax to apply for a new franchise. Instead, they gave Altimax three more years to comply with its commitments.

But it did not end there, Mr. Speaker.

Fast forward three years later, dumating na ang pangalawang deadline ng Altimax, June 2005, pero wala pa rin kahit na isang TV o radio station na maipakita ang kumpanya. Samakatuwid Mr. Speaker, anim na taon na ang ibinigay ng NTC para mag-operate ang Altimax, bokya pa rin. Kung congressional franchise naman ang pagbabatayan, dobol bokya kasi kung ipso facto revoked na dapat matapos ang tatlong taong walang maipakita, eh mas ipso facto revoked pa dapat makaraan ang pitong taon.

Siguro naman, sa nangyaring ito, dapat alisan na ng prankisa ang Altimax. Sobra na yun kung bibigyan pa ng ektensyon, di ba?

Well, sa simula ay hindi nga binigyan ng extension ang Altimax. On Sept. 19, 2007, the NTC denied Altimax’s motion for extension of its provisional authority to operate. There were two main grounds: (1) despite given six years, it failed to roll out its network nor had it even applied for a permit to operate; and (2) the frequencies assigned to Altimax, being unused for a long time, had already been assigned for the broadband wireless networks. Ibinigay na ho sa iba yung frequencies nila.

In addition to these glaring violations of NTC permits and its congressional franchise, the NTC in 2008 discovered that the Altimax facilities supposedly located in Sampaloc, Manila; Olongapo City; and Subic, Zambales were non-existent nor operational. Samakatuwid, isang malaking drawing pala itong kumpanya ng Altimax.

Pero hindi natinag ang mga may-ari ng Altimax. Nag motion for reconsideration pa rin sila sa NTC. Natulog ang kaso ng dalawang taon. And then, to everyone's surprise,  on June 23 and August 14, 2009, the NTC came out with back to back orders reversing itself and granting Altimax ANOTHER 3-year extension for its MMDS and DBS networks. It also assigned a new set of frequencies to Altimax.

How can this be? Precisely my question, Mr. Speaker.

Ano ba ito? Anong milagro ang nangyari? How can an obviously fictitious broadcasting company flagrantly violate its franchise and its provisional authorities for six years, SIX YEARS, and yet be allowed by the NTC to still operate another three years? Masyado naman silang sinusuwerte!

Sinong malakas ang pumasok sa eksena na hindi matanggihan ng NTC? Eh sino pa bang lalakas sa NTC kundi ang mga telco?

True enough, it was the entry of Globe Telecom, through its subsidiary Innove Communications Inc., that turned everything on its head. Pumasok po ang Globe-Innove sa Altimax, at biglang umikot ang mundo sa NTC.

Upon learning that Globe had entered the picture as a partner of Altimax, contolling something like one-third of the company, the NTC suddenly reversed its earlier ruling, saying: “As stated by the Applicant, the new management of Altimax will bring in the needed financial backing, experience, technology and synergy that will enable Altimax to provide DBSS, MMDS and all other hybrid and affiliated services.”

But exactly what was Globe bringing to Altimax? Was Globe buying Altimax? Would Altimax now be able to build its TV and radio network?

The picture became crystal clear on October 1, 2009, when Altimax entered into a memorandum of agreement with Innove on the “co-use” of its frequencies and broadcast equipment for the roll-out of Innove’s broadband wireless service. Simply put, Altimax would lease out to Globe its frequencies. Thus from Oct. 1, 2009 to Dec. 31, 2010, telco giant Globe-Innove paid P160M to radio and TV broadcasting company Altimax for the lease of its frequencies. In other words, from a broadcasting company, Altimax became a sub-leaser of radio frequencies to Globe.

In the first place, can broadcast company Altimax lease its frequencies to telecommunications company Globe?

Section 12 of Altimax’s franchise is clear, and may I read:

“The grantee shall not lease, transfer, grant the usufruct of, sell nor assign this franchise or the rights and privileges acquired thereunder to any person, firm, company, corporation or other commercial or legal entity… without prior approval of the Congress of the Philippines.”

When Altimax was given its franchise and later its provisional authorities, it was for operating radio and TV stations, not for leasing frequencies and bandwith to a telco. Only the NTC, not Altimax, has the authority to allow telcos to lease frequencies from radio or TV stations. Neither Altimax nor Globe-Innove can undermine this power of the NTC through a MOA between them.

The effect of this is that Altimax is being rewarded, instead of being punished, for failing to roll-out its promised network. Meanwhile, Globe-Innove gets to illegally hog and use frequencies reserved for radio and TV.

Not only that. Globe is cheating the government of millions in spectrum users fees when it leases from Altimax radio broadcasting frequencies at a cost much much lower than what it would have to pay if it paid the proper fees for broadband frequencies, not to mention the additional profits that it makes from Altimax itself, of which it owns something like a third. At the minimum, the P160M that Globe paid Altimax should have went to the government in the form of users fees for these frequencies.

Mr. Speaker, my colleagues, we can not tolerate such shenanigans. I smell big money. I smell a crooked deal. I smell corruption. And right smack in the middle is Globe Telecom, that owns and uses Altimax, and crooked officials of the NTC.

I therefore urge Congress to investigate this matter immediately. We simply cannot allow such a circumvention and abuse of the franchises we have granted both to Globe Telecom and Altimax. At the very least, this act requires Globe to pay the right fees and charges to the government, plus penalties. Second, the agreement entered into by Globe with Altimax should be scrapped. And third, Altimax's franchise should be immediately revoked.

It's time we rein in the unliprofits of the telcos. 

Thank you Mr. Speaker, my dear colleagues.#

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