Coverage of telecommunications systems
- The franchise authorizes wire and/or wireless telecommunications systems, including mobile, cellular, paging, fiber optic, MMDS, LMDS, satellite transmit and receive systems, switches, and related value-added services.
- Value-added services include transmission of voice, data, facsimile, control signs, audio and video, information services, and other telecommunications technologies available or made available through future technological advances.
- The franchise also authorizes the grantee to construct, acquire, lease, and operate or manage transmitting and receiving stations, lines, cables, or systems that are convenient or essential to carry out the franchise purpose.
Manner of operation; interference limits
- The grantee must construct and operate its stations and facilities to result in minimum interference on wavelengths or frequencies of existing stations or other stations that may be established by law.
- Operations must not diminish the grantee’s own right to use selected wavelengths or frequencies.
- Operations must maximize rendition of the grantee’s services and/or availability while maintaining quality of transmission and reception.
NTC authority; permits and spectrum use
- The grantee must secure from the National Telecommunications Commission (NTC) a certificate of public convenience and necessity or the appropriate permits and licenses for construction, installation, and operation.
- The NTC may impose conditions related to construction, operation, maintenance, or service level.
- The NTC regulates construction and operation of the grantee’s telecommunications systems.
- The grantee must not use any frequency in radio spectrum without authorization from the NTC.
- The certificate must state the areas covered and the date the grantee shall commence the service.
- The NTC must not unreasonably withhold or delay authority, permits, or licenses.
Public interference protections; ethics duty
- The grantee must conform to the ethics of honest enterprise.
- The grantee must not use stations or facilities for obscene or indecent transmission or for dissemination of deliberately false information or willful misrepresentation.
- The grantee must not assist in subversive or treasonable acts.
Universal service; basic/enhanced telephone
- The grantee must provide basic or enhanced telephone service in any municipality in the Philippines where it has an approved certificate for a local exchange service.
- Service must be provided without discrimination among applicants, in the order of the date of applications, up to the limit of the capacity of the local telephone exchange.
- If demand exceeds exchange capacity, the grantee must increase capacity to meet demand.
- If the total demand to be satisfied by expansion is less than the smallest viable local exchange available in the market as determined by the NTC, the grantee is not obliged to furnish the service unless the applicant pays the actual expenses for the installation of the telecommunication apparatus necessary for such service.
- In that case, the NTC may extend the time within which the grantee must furnish the service.
Continuous operation and technological updates
- The grantee must operate and maintain its stations, lines, cables, systems, and equipment for transmission and reception of messages, signals, and pulses in a satisfactory manner at all times.
- The grantee must modify, improve, or change its systems and equipment as far as economical and practicable to keep abreast with science and technology advances.
Rates and unbundling rules
- Charges and rates for telecommunications services are subject to approval of the NTC (or its legal successor), except rates and charges for services later declared or considered nonregulated services.
- Rates may be flat, measured, or varied.
- Regulated rates must be unbundled, separable, and distinct among services offered.
- Regulated services must be determined so they do not subsidize unregulated ones.
Government takeover; spectrum as patrimony
- The President of the Philippines may, in times of war, rebellion, public peril, calamity, emergency, disaster, or disturbance of peace and order, temporarily take over and operate the grantee’s stations, transmitters, facilities, or equipment.
- The President may temporarily suspend operation of any grantee station, transmitter, facility, or equipment for public safety, security, and public welfare.
- The President may authorize any government agency to temporarily use and operate the same facilities and equipment.
- Such use or operation must be under due compensation to the grantee for the period of government use.
- The radio spectrum is a finite resource part of national patrimony, and use is a privilege conferred by the State that may be withdrawn anytime after due process.
Franchise term; ipso facto revocation triggers
- The franchise runs for twenty-five (25) years from the date of effectivity of the Act, unless sooner revoked or cancelled.
- The franchise is deemed ipso facto revoked if any of the following conditions occur:
- Failure to commence operations within three (3) years from NTC approval of the operating permit or provisional authority.
- Failure to operate continuously for two (2) years.
- Failure to commence operations within five (5) years from the effectivity of the Act.
Acceptance requirement; void if not accepted
- The grantee must give written acceptance of the franchise within sixty (60) days from the Act’s effectivity.
- Upon giving acceptance, the grantee may exercise the privileges granted.
- Nonacceptance renders the franchise void.
Bond; cancellation or forfeiture and revocation
- The grantee must file a bond issued in favor of the NTC to guarantee compliance with and fulfillment of franchise conditions.
- If, after five (5) years from NTC approval of the grantee’s permit, the grantee has fulfilled the conditions, the bond is cancelled by the NTC.
- Otherwise, the bond is forfeited in favor of the government and the franchise is deemed ipso facto revoked.
Right of interconnection
- The grantee may connect or demand connection of its telecommunications systems to other duly authorized telecommunications systems in the Philippines.
- Interconnection is for providing extended and improved telecommunications services to the public.
- Interconnection terms and conditions are mutually agreed by the parties.
- Interconnection arrangements are subject to review or modification by the NTC.
DPWH ingress and egress for facilities
- With prior approval of the Department of Public Works and Highways (DPWH), the grantee may excavate or lay conduits in public places, highways, streets, lanes, alleys, avenues, sidewalks, or bridges in provinces, cities, and/or municipalities for erecting and maintaining poles or supports and for laying and maintaining underground wires, cables, or conductors.
- Any disturbed, altered, or changed public place or infrastructure must be repaired and replaced in a workmanlike manner by the grantee under DPWH standards.
- After ten (10) days notice, if the grantee fails, refuses, or neglects to repair or replace, the DPWH may repair and place the affected infrastructure in good condition at double expense, charged against the grantee.
Tax, gross receipts, and record-keeping
- The grantee must pay all taxes, duties, fees, and other impositions under the National Internal Revenue Code (NIRC) of 1997, as amended, and other applicable laws.
- No tax exemptions, incentives, or privileges granted under any relevant law are repealed by the Act.
- Rights, privileges, benefits, and exemptions accorded to existing and future telecommunications franchises are extended to the grantee.
- The grantee must file its income tax return with the city or province where its facility is located and pay the income tax due to the Commissioner of Internal Revenue or duly authorized representatives under the NIRC.
- The return is subject to audit by the Bureau of Internal Revenue.
- The grantee must keep a separate account of gross receipts and furnish a copy to the Commission on Audit (COA) and the National Treasury not later than the thirty-first (31st) day of January of each year for the preceding twelve (12) months.
- The grantee’s books and accounts must always be open to inspection by the Commissioner on Audit or duly authorized representatives.
- The grantee must submit to the COA two (2) copies of quarterly reports on gross receipts, net profits, and the general condition of the business.
Government warranty on accidents and injuries
- The grantee must hold the national, provincial, city, and municipal governments harmless from all claims, accounts, demands, or actions arising from accidents or injuries—whether to property or persons—caused by the construction or operation of the grantee’s stations, transmitters, facilities, and equipment.
Limits on transfer of franchise and control
- The grantee must not lease, transfer, grant usufruct of, sell, or assign the franchise or the rights and privileges acquired under it to any person, firm, company, corporation, or other commercial or legal entity.
- The grantee must not merge with another corporation or entity.
- The grantee must not allow the transfer of controlling interest, whether as a whole or in parts and whether simultaneously or contemporaneously, to any such person or entity.
- Such prohibitions require prior approval of the Congress of the Philippines.
- Any person or entity to which the franchise is sold, transferred, or assigned is subject to the same conditions, terms, restrictions, and limitations of the Act.
Dispersal of ownership requirement
- The grantee must offer at least thirty percentum (30%) of its outstanding capital stock (or a higher percentage required by later law) in any securities exchange in the Philippines within five (5) years from commencement of operations.
- Noncompliance renders the franchise ipso facto revoked.
Equality clause for telecom franchises
- Any advantage, favor, privilege, exemption, or immunity granted under existing franchises, or later granted, becomes part of previously granted telecommunications franchises and must be accorded immediately and unconditionally to the grantee of such franchises.
- This equality rule does not apply to or affect provisions of telecommunications franchises on territory covered, life span, or type of service authorized.
Separability; amendment, alteration, repeal
- If any section or provision is held invalid, the remaining provisions not affected remain valid.
- The franchise is subject to amendment, alteration, or repeal by the Congress of the Philippines when the public interest requires.
- The franchise is not interpreted as an exclusive grant of the privileges provided.
Reporting obligation to Congress
- The grantee must submit an annual report to the Congress of the Philippines on compliance with franchise terms and conditions and on operations within sixty (60) days from the end of every year.
Renewal term; continuous operation revocation
- The franchise term granted under Republic Act No. 808, as amended is renewed/extended for another twenty-five (25) years from the date of its expiration.
- The renewed franchise is deemed ipso facto revoked if the grantee fails to operate continuously for two (2) years.
Effectivity and publication rule
- The Act takes effect fifteen (15) days from publication upon the initiative of the grantee in at least two (2) newspapers of general circulation in the Philippines.
- The Act lapsed into law on OCT 03 2002 without the signature of the President, in accordance with Article VI, Section 27 (1) of the Constitution.
Legislative history; approval lapse
- The Act was approved in Congress with Senate approval and House passage.
- The Act originated in the House of Representatives and was finally passed by the House of Representatives and the Senate on July 24, 2002 and May 28, 2002, respectively.