SPECTRUM MANAGEMENT POLICIES

UNCLAS SECTION 01 OF 03 MANILA 000144

SIPDIS

USDOC FOR NTIA
STATE FOR EB/CIP/MA

E.O. 12958: N/A
TAGS: ECPS EINV ETRD ECIN RP
SUBJECT: SPECTRUM MANAGEMENT POLICIES

REF: STATE 22577


1. Summary. This cable outlines responses by GRP National
Telecom Commission to reftel questionnaire on spectrum
management. End summary.


POST RESPONSE TO RADIO FREQUENCY SPECTRUM SURVEY


A. Which organizations are involved in spectrum management
in your country? To whom are they responsible - executive
branch, legislative branch, military - or are they
autonomous?

The National Telecommunications Commission (NTC) is
responsible for spectrum management in the RP. The NTC is
administratively attached to the Department of
Transportation and Communication (DOTC),but it takes policy
direction from the Commission on Information and
Communication Technology (CICT),which is under the Office
of the President. There is a bill that would create a
separate Department of Information and Communications
Technology (ICT),but Congressional hearings have not yet
been held to move it forward.


B. Assignment Process: Please describe the mechanism(s)
your country uses to assign spectrum (for example, auctions,
lotteries, comparative hearings). To what services and / or
bands are such mechanisms applied?

The NTC manages a formal application process for frequency
allocation. According to RP law (Republic Act 7925 passed
in March 1995),there are two basic principles used to
determine allocation. First, allocations are to be awarded
to the best-qualified applicants. Second, an open tender
bidding process is required for cases in which demand for
specific frequencies exceeds availability. Applicant
qualifications are evaluated according to a pre-determined
set of criteria, which considers possession of a legislative
franchise, track record, existing infrastructure, financial
stability and the absence of outstanding financial
obligations to the NTC. This allocation process applies to
all services and bands.

A recent bidding process for third generation (3G)
allocations demonstrates this process. The NTC determined
that five International Telecommunications Union (ITU)
identified frequency bands were available for allocation.
Nine companies applied for qualification as 3G service
providers. However only four applicants were deemed to be
qualified based on a set of criteria published on the NTC's
website www.ntc.gov.ph (ref Memorandum Circular 07-08-2005),
and therefore the allocations were awarded to those four
companies with the first option to choose a frequency band
granted to the most qualified candidate. The NTC
disqualified one applicant because of an outstanding debt to
the NTC. If more than five applicants had established
satisfactory qualifications then an open tender bidding
process would have ensued.


C. Licensing Regime: Please describe your spectrum-
licensing regime. Are licenses awarded for the provision of
a specific service, or a specified technology standard? Are
the licenses subject to renewal?

Licenses are awarded based on the specific service
requested. The GRP maintains a "technology-neutral"
position with regard to licensing; companies may use any
chosen technology. A license is valid for 3 years and can
be renewed for continued use. The renewal process is less
rigorous than the initial assignment process. There is a
registration license fee that ranges from $8 - $18 per year.


D. Licensee Privileges: What flexibility do licensees have
(e.g. , secondary markets) to transfer their spectrum rights
to other parties? May licensees aggregate licenses or
subdivide them? May licensees make all or part of their
spectrum available to other entities based on geography of
time? May licensees accept payment in exchange for
spectrum access?

Transfers:
It is possible to transfer spectrum rights to other parties.
However any such transfer requires NTC approval. The
transferee is required to demonstrate qualifications which
meet the NTC's allocation criteria.

Aggregation:
Licensees may aggregate licenses and several telecom
companies have done so following mergers. The Commission
must approve all requests for aggregation. (Note: RP law
does not include anti-trust legislation. There is no
mechanism to address monopolistic threats, which may arise
from aggregation. End Note.)

Sub-division:
Licensees may sub-divide licenses. However the beneficiary
of any such sub-division is required to demonstrate
qualifications which meet the NTC's allocation criteria.
Licensees may choose to make all or part of the spectrum
available to other entities through transfer or subdivision.

Compensation for 3rd Party Access Arrangements:
Licensees cannot accept payment in exchange for spectrum
access. The GRP considers the radio frequency spectrum to
be a public resource rather than a commodity.

Other Considerations: Re-Allocation of Spectrum Assignments
The GRP reserves the right to re-allocate existing spectrum
assignments as necessary. A public hearing is held prior to
re-allocation. New assignees are expected to reach an
agreement with legacy licensees or "tenants" on the channel
with compensation at the expense of the new entrant. For
example, negotiations may lead to an agreement to carry the
tenant on the assignee's network, a buy-out of the current
tenant or compensation for infrastructure investments.
Disputes may be raised with the NTC for consideration.
(Comment: There seems to be little structure around this
negotiation. The government does not get involved unless
the affected parties cannot reach an agreement privately.
This uncertainty may hinder efficient use of the spectrum.
End Comment.)


E. Spectrum Fees: What type of fees are imposed on
spectrum users? How are fees calculated? Which, if any,
spectrum users are exempt from fees?

Edgardo Cabarios, Director or of the NTC's Common Carrier
Department indicated that the RP was the first country to
assign spectrum user fees to all services and all users in

1996. Spectrum fees had been an important source of revenue
for the DOTC, contributing about 500 million pesos to the
National coffers in 2005. The NTC expects to generate about
900 million pesos in spectrum user fees in 2006.

According to RP law, "spectrum user fees shall be applied
uniformly and without discrimination to all users under the
same classification / category. Services which cater to
emergency situations as may be determined by government,
national disasters, public safety and national security
shall be exempt from the payment of spectrum user fees." A
committee appointed by the Commission makes recommendations
on the fee schedule. The schedule is then discussed at a
public hearing before the Commission approves the final
schedule of spectrum user fees. Maritime, military and
broadcasting groups are exempt from fees. Maritime and
military groups have compelling safety and security needs
with regards to the spectrum and the broadcasting groups are
exempted based on freedom of the press.

Cabarios described three criteria which are considered when
determining fees: 1) "sale-ability" of the frequency, 2)
bandwidth requirements and 3) geographic considerations -
fees are decreased for service delivery in rural areas to
attract companies to underserved markets.

In a recent allocation for 3G-radio bandwidth, spectrum fees
were tied to the number of subscribers. A base price of
$1.2M (for 10 MHz) was established to accommodate up to 4
million users. An additional spectrum user fee of $26k will
be assessed for each additional group of 100,000 users over
the 4 million-user threshold.


F. Treatment of Government versus Commercial Users: Are
government or other non-commercial users subject to the same
or different rules as commercial users with respect to
questions 1-5 above? If yes, please describe.

The same process rules are applied to both Government and
Commercial Users.


G. Other Incentives: Please describe what other means (not
already identified) are used to encourage more efficient use
of spectrum through market-based incentives or other
mechanisms.

In 2000, the GRP implemented an initiative to improve
spectrum efficiency by assigning fees according to bandwidth
requirements. Fees were previously levied according to the
number of mobile stations maintained by the licensee.
Companies have the option to use and pay for a wider
bandwidth in order to reduce the need to build and install
new stations. (Note: If the bandwidth were thin, there
would be a need to invest in more stations to widen coverage
for a particular service. End Note.)
Also, the GRP monitors the use of spectrum allocations. The
GRP reserves the right to recall and re-allocate unused
channels.


H. Government Spectrum: If not already addressed above, do
the provisions identified above (market-based assignment
mechanisms, secondary markets, fees) apply to the management
of spectrum used by government agencies or other non-profit
entities? Please describe and identify any lessons learned.

Addressed above.


I. In -Country Contacts and Studies: Please provide
several in-country contacts that are willing to discuss
these issued in more detail with us. For each of these
contacts, supply his or her name, title, organization,
postal address, email address, telephone and fax numbers.
Also, please provide all publicly available spectrum studies
of market-based economic mechanisms (such as incentives).

Contacts:

Edgardo V. Cabarios
Director
Common Carrier Department - National Telecommunications
Commission
BIR Road, East Triangle, Diliman, Quezon City
ccad@ntc.gov.ph
Tel. 63-2-9244026
Fax 63-2-9217128


Precy Demition
Spectrum Management Division - National Telecommunications
Commission
BIR Road, East Triangle, Diliman, Quezon City


JONES