Law Summary
Operation Requirements and Interference Minimization
- The grantee must operate stations minimizing interference with wavelengths/frequencies of existing or future stations.
- The operation must not diminish the grantee’s rights to selected frequencies nor the quality of transmission or reception.
Regulation by National Telecommunications Commission (NTC)
- The grantee must secure a certificate of public convenience and permits from the NTC before operating.
- The NTC has authority to impose conditions on construction, operation, maintenance, and service levels.
- The grantee cannot use any frequency without NTC authorization.
- The NTC shall not unreasonably withhold or delay granting permissions.
- Certificates specify service areas and commencement dates.
Ethical and Public Responsibility
- The grantee must adhere to honest enterprise ethics.
- Use of stations for obscene, indecent content, false information, willful misrepresentation, or aiding subversive acts is prohibited.
Government’s Special Rights
- The President may temporarily take over or suspend operation of stations during war, rebellion, calamity, or emergency for public safety, security, and welfare.
- Compensation to the grantee is required during government operation.
- The radio spectrum is a national patrimony; franchise use is a privilege subject to withdrawal after due process.
Rate Regulation
- Charges and rates for telecommunications services are subject to NTC approval, except for non-regulated services.
- Rates must be unbundled and distinct among services, preventing cross-subsidization from regulated to unregulated services.
Franchise Duration and Conditions for Revocation
- The franchise term is 25 years from effectivity unless revoked.
- Ipso facto revocation occurs if the grantee fails to: commence operations within one year of NTC permit approval; operate continuously for two years; commence operations within three years of the Act's effectivity.
Acceptance and Enforcement
- Grantee must accept the franchise in writing within 60 days; failure to accept renders the franchise void.
Bond Requirement
- The grantee must file a bond with the NTC, amount determined by the Commission.
- Bond guarantees fulfillment of franchise conditions.
- Bond is cancelled after three years if conditions are fulfilled; otherwise, it is forfeited and franchise revoked.
Right of Interconnection
- The grantee can connect its system to other authorized telecommunications systems.
- Interconnection terms are subject to mutual agreement and NTC review/modification.
Tax Obligations
- The grantee pays the same real estate, building, and personal property taxes as others.
- Additionally, a franchise tax of 3% of gross receipts from franchised business must be paid.
- Income taxes remain applicable as per existing laws.
- Tax returns are filed with and audited by the Bureau of Internal Revenue.
Warranty to Government
- The grantee indemnifies the national, provincial, and municipal governments from claims arising from accidents or injuries related to station construction or operation.
Restrictions on Franchise Transfer
- Leasing, transferring, selling, assigning, or merging the franchise or controlling interest requires prior Congressional approval.
- New owners/assignees are bound by the same franchise conditions.
Ownership Dispersal Requirement
- The grantee must offer at least 30% of its outstanding capital stock on Philippine securities exchange within five years from commencing operations.
- Failure to comply results in ipso facto revocation of the franchise.
Equality Clause
- Any more favorable terms granted in future telecommunications franchises must automatically apply to this grantee.
Separability Clause
- Invalidity of any provision does not affect the validity of other provisions.
Amendability and Nonexclusivity
- Congress can amend, alter, or repeal the franchise for public interest.
- The franchise is non-exclusive.
Annual Report Requirement
- The grantee must submit an annual report to Congress within 60 days after year-end on compliance and operations.
Effectivity
- The Act takes effect 15 days after publication in two newspapers of general circulation.