Franchise for Avocado Broadband Telecoms, Inc.

Authorized operation and facility standards

Section 2 requires the grantee to construct and operate stations or facilities so that they result in only the minimum interference on the wavelengths or frequencies of existing stations or other stations established by law.
Section 2 requires the operation to not diminish the grantee’s own privilege to use its assigned wavelengths or frequencies.
Section 2 requires transmission or reception quality to maximize the grantee’s service rendition and/or availability.
Section 5 requires the grantee to operate and maintain all stations, lines, cables, systems, and equipment for transmitting and receiving messages, signals, and pulses in a satisfactory manner at all times.
Section 5 requires the grantee, as far as economical and practicable, to modify, improve, or change equipment and systems to keep abreast with advances in science and technology.

NTC permits, frequency use, and regulation

Section 3 requires the grantee to 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 of its telecommunications systems/facilities.
Section 3 empowers the NTC, when issuing the certificate, to impose conditions relative to construction, operation, maintenance, or service level.
Section 3 authorizes the NTC to regulate construction and operation of the grantee’s telecommunications systems.
Section 3 prohibits the grantee from using any frequency in the radio spectrum without NTC authorization.
Section 3 requires the certificate to state the areas covered and the date the grantee shall commence the service.
Section 3 directs that the NTC shall not unreasonably withhold or delay the grant of authority, permit, or license.

DPWH/LGU excavation and restoration rules

Section 4 authorizes the grantee, its successors or assignees, with prior approval of the Department of Public Works and Highways (DPWH) or the concerned local government unit (LGU), to make excavations or lay conduits in public places to erect or maintain poles or supports and lay or maintain underground wires, cables, or other conductors.
Section 4 covers excavations in public places, roads, highways, streets, lanes, alleys, avenues, sidewalks, or bridges of the provinces, cities, and/or municipalities.
Section 4 requires disturbed, altered, or changed public places or infrastructure to be repaired and replaced in a workmanlike manner by the grantee according to DPWH or LGU standards.
Section 4 provides that after the grantee receives a ten (10)-day notice, if the grantee fails, refuses, or neglects to repair or replace, the DPWH or LGU may repair and place the area in good order and condition at double expense charged against the grantee.

Public responsibility, service duty, and conduct

Section 5 requires the grantee to conform to the ethics of honest enterprise and prohibits using stations or facilities for obscene or indecent transmission, dissemination of deliberately false information, willful misrepresentation, or assisting in subversive or treasonable acts.
Section 5 requires the grantee to provide basic or enhanced telephone service in any city and/or municipality in the Philippines where it has an approved Certificate of Public Convenience and Necessity for local exchange service.
Section 5 mandates service without discrimination to any applicant, in the order of the date of applications, up to the limit of the capacity of the local telephone exchange.
Section 5 requires that if demand increases beyond capacity, the grantee must increase capacity to meet such demand.
Section 5 provides that when total demand for 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 service unless the applicant defrays the actual expenses for installation of necessary telecommunications apparatus.
Section 5 authorizes the NTC to extend the time within which the grantee must furnish service in the case where the applicant defrays actual installation expenses.

Rates, unbundling, and subsidies

Section 6 requires the charges and rates for telecommunications services to receive NTC approval, except rates and charges for services that may hereafter be declared or considered as nonregulated services.
Section 6 covers both flat rates and measured rates (and variations thereof).
Section 6 requires rates to be unbundled, separable, and distinct among services offered.
Section 6 requires rate determination so that regulated services do not subsidize unregulated ones.

Government emergency use and spectrum principle

Section 7 reserves to the President of the Philippines special rights in times of war, rebellion, public peril, calamity, emergency, disaster, or disturbance of peace and order to:
- temporarily take over and operate the grantee’s stations, transmitters, facilities, or equipment;
- temporarily suspend operation of any such stations, transmitters, facilities, or equipment for public safety, security, and public welfare; or
- authorize temporary use and operation by any government agency upon due compensation to the grantee during the authorized period.
Section 7 states that the radio spectrum is a finite resource part of the national patrimony and that use is a privilege conferred by the State that may be withdrawn any time after due process.

Term, acceptance, bond, and continuity

Section 8 provides that the franchise is effective for twenty-five (25) years from the date of the effectivity of the Act unless sooner cancelled.
Section 8 provides that the franchise is ipso facto revoked if the grantee fails to comply with any of the following:
- commence operations within one (1) year from approval of its operating permit by the NTC;
- commence operations within three (3) years from the effectivity of the Act; and
- operate continuously for two (2) years.
Section 9 requires acceptance of the franchise in writing to Congress of the Philippines, through the Committee on Legislative Franchises of the House of Representatives and the Committee on Public Services of the Senate, within sixty (60) days from effectivity of the Act.
Section 9 provides that upon written acceptance, the grantee may exercise franchise privileges, and nonacceptance renders the franchise void.
Section 10 requires the grantee to file a bond with the NTC in an amount determined by the NTC to guarantee compliance and fulfillment of conditions of the franchise.
Section 10 provides that if after three (3) years from the approval of its permit by the NTC, conditions are fulfilled, the bond shall be cancelled; otherwise, the bond is forfeited in favor of the government and the franchise ipso facto revoked.

Interconnection, records, and audit access

Section 11 authorizes the grantee to connect or demand connection of its telecommunications systems with other duly authorized telecommunications systems in the Philippines to provide extended and improved telecommunications services to the public.
Section 11 requires that interconnection terms and conditions be mutually agreed upon and be subject to review and modification by the NTC.
Section 12 requires the grantee, its successors or assignees, to keep a separate account of gross receipts, and to furnish the Commission on Audit (COA) and the National Treasury a copy of the account not later than the thirty-first (31st) day of January of each year for the preceding twelve (12) months.
Section 13 requires the grantee’s books and accounts to be open to inspection by the COA and its duly authorized representatives.
Section 13 requires submission to the COA of two (2) copies of quarterly reports on gross receipts, net profits, and the general condition of the business.

Government protection from claims

Section 14 requires the grantee to hold the national, provincial, city, and municipal governments of the Philippines free from all claims, accounts, demands, or actions arising out of accidents or injuries (to property or persons) caused by construction or operation of its stations, transmitters, facilities, and equipment.

Transfer restrictions and reporting to Congress

Section 15 prohibits the grantee from selling, leasing, transferring, granting usufruct of, or assigning the franchise or rights and privileges acquired thereunder, from merging with another corporation or entity, and from transferring controlling interest (whether as a whole or in parts and whether simultaneously or contemporaneously) without prior approval of Congress.
Section 15 requires Congress be informed within sixty (60) days after completion of any sale, lease, transfer, grant of usufruct, assignment, merger, or transfer of controlling interest.
Section 15 provides that failure to report the change of ownership to Congress within the required period renders the franchise ipso facto revoked.
Section 15 provides that any person or entity receiving the franchise by sale, transfer, or assignment is subject to the same conditions, terms, restrictions, and limitations in the Act.

Dispersal of ownership to Filipinos

Section 16 requires the grantee to offer Filipino citizens at least thirty percent (30%) (or a higher percentage that may be provided by law) of its outstanding capital stock in a securities exchange in the Philippines within five (5) years from commencement of operations.
Section 16 provides an alternative in cases where public offering of shares is not applicable: cooperatives operating public utilities must be established.
Section 16 provides that noncompliance with the public offering or cooperative requirement renders the franchise ipso facto revoked.

Annual reporting and NTC clearance effect

Section 17 requires the grantee to submit an annual report to Congress, through the Committee on Legislative Franchises of the House and the Committee on Public Services of the Senate, on compliance with franchise terms and conditions and on operations.
Section 17 requires the annual report to be submitted on or before April 30 of every year during the franchise term.
Section 17 requires a reportorial compliance certificate issued by Congress before any application for permit or certificate is accepted by the NTC.

Penalty for late annual reporting

Section 18 provides that failure to submit the required annual report to Congress is penalized with a fine of five hundred pesos (P500.00) per working day of noncompliance.
Section 18 directs that the NTC collects the fine from the delinquent franchise grantee separate from reportorial penalties imposed by the NTC.

Equality with future franchise benefits

Section 19 requires that any advantage, favor, privilege, exemption, or immunity granted under other existing franchises, or which may be granted in the future upon prior review and approval of Congress, becomes part of this franchise and must be accorded to the grantee immediately and unconditionally.
Section 19 limits the equality clause so it does not apply to or affect franchise provisions concerning territory covered, life span, or type of service authorized.

Separability and congressional amendment

Section 20 provides that if any section or provision is held invalid, the remaining sections or provisions not affected remain valid.
Section 21 makes the franchise subject to amendment, alteration, or repeal by Congress when public interest requires.
Section 21 provides that the franchise is not to be interpreted as an exclusive grant of the privileges provided.

Effectivity and publication rule

Section 22 provides that the Act takes effect fifteen (15) days after its publication in at least two (2) newspapers of general circulation.
The Act is approved on July 21, 2016 and lapsed into law on JUL 21 2016 without the signature of the President, in accordance with Article VI, Section 27 (1) of the Constitution.