Franchise for Click Communications Inc.

Coverage and franchise scope

The franchise covers constructing, establishing, installing, maintaining, leasing, operating, and managing telecommunications systems throughout the Philippines and between the Philippines and other countries and territories (Section 1).
The franchise covers wire and/or wireless telecommunications systems including mobile, cellular, paging, multi-channel distribution systems (MMDS), local multi-point distribution systems (LMDS), satellite transmit and receive systems, switches, and value-added services (Section 1).
The franchise includes services such as transmission of voice, data, facsimile, control signs, audio and video, information and service bureau, and other telecommunications systems technologies available now or later through technological advances (Section 1).
The franchise authorizes constructing, acquiring, leasing, and operating or managing transmitting and receiving stations, lines, cables, or systems that are convenient or essential to carry out the franchise purpose (Section 1).

Operating standards and interference limits

Stations and facilities must be constructed and operated in a manner that results at most in minimum interference on the wavelengths or frequencies of existing stations or other stations established by law (Section 2).
The grantee must not diminish its own right to use its selected wavelengths or frequencies and must maintain the quality of transmission or reception to maximize rendition and availability of its services (Section 2).
The grantee must operate and maintain all stations, lines, cables, systems, and equipment for transmission and reception of messages, signals, and pulses in a satisfactory manner at all times (Section 5).
The grantee must modify, improve, or change stations, lines, systems, and equipment as far as economical and practicable to keep abreast with advances in science and technology (Section 5).

Regulatory approvals and NTC control

The grantee must secure from the National Telecommunications Commission (NTC) a certificate of public convenience and necessity or the appropriate permits and licenses for location, construction, installation, and operation (Section 3).
In issuing the certificate, the NTC may impose conditions relating to construction, operation, maintenance, or service level; it also regulates the construction and operation of the telecommunications systems (Section 3).
The grantee may not use any frequency in the radio spectrum without authorization from the NTC (Section 3).
The NTC must state the areas covered and the date the grantee shall commence service in the certificate (Section 3).
The NTC must not unreasonably withhold or delay the grant of authority, permits, or licenses (Section 3).

Public responsibility and service obligations

The grantee must conform to the ethics of honest enterprise and must not use stations for obscene or indecent transmission or for dissemination of deliberately false information or willful misrepresentation, or assist in subversive or treasonable acts (Section 5).
The grantee must provide basic or enhanced telephone service in any municipality in the Philippines where it has an approved certificate for establishing, operating, and maintaining a local exchange service (Section 5).
Telephone service must be provided without discrimination to applicants in the order of the date of their applications, up to the limit of the capacity of the local telephone exchange (Section 5).
If demand increases beyond exchange capacity, the grantee must increase capacity to meet demand (Section 5).
If 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 such service unless the applicant defrays the actual expenses for installation of necessary telecommunications apparatus (Section 5).
Where the applicant defrays installation expenses, the NTC may extend the time within which the grantee must furnish the service (Section 5).

Rates, interconnection, and network links

Charges and rates for telecommunications services (except rates/charges later declared or considered nonregulated) must be approved by the NTC or its legal successor (Section 6).
The grantee’s rates must be unbundled, separable, and distinct among the services offered.
Rates must be determined so that regulated services do not subsidize the unregulated ones (Section 6).
The grantee is authorized to connect or demand connection of its telecommunications systems to any other duly authorized telecommunications systems in the Philippines to provide extended and improved services to the public (Section 11).
Interconnection must be under terms and conditions mutually agreed upon by the parties, and is subject to review or modification by the NTC (Section 11).

Use of public places and repairs

The grantee may, with prior approval of the Department of Public Works and Highways (DPWH), make excavations or lay conduits in public places, highways, streets, lanes, alleys, avenues, sidewalks, or bridges of provinces, cities, and/or municipalities to erect and maintain poles or other supports and to lay and maintain underground wires or conductors (Section 4).
Any disturbed, altered, or changed public place, highway, street, lane, alley, avenue, sidewalk, or bridge must be repaired and replaced in a workmanlike manner by the grantee in accordance with DPWH standards (Section 4).
After ten (10) days’ notice from the authority, if the grantee fails, refuses, or neglects to repair or replace, the DPWH may repair and place the disturbed part in good order at double expense, to be charged against the grantee and its successors or assigns (Section 4).

Government special rights and radio spectrum principle

The President 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 (Section 7).
The President may also temporarily suspend operation of any station, transmitter, facility, or equipment in the interest of public safety, security, and public welfare, or authorize temporary use and operation by any government agency (Section 7).
The government must pay the grantee due compensation for the use of stations, transmitters, facilities, or equipment during the period of such operation (Section 7).
The radio spectrum is declared a finite resource part of the national patrimony, and its use is a privilege conferred by the State that may be withdrawn anytime after due process (Section 7).

Duration, acceptance, bond, and forfeiture

The franchise term is twenty-five (25) years from the date of effectivity of the Act unless sooner revoked or cancelled (Section 8).
The franchise is deemed ipso facto revoked if the grantee fails to comply with any of the following conditions (Section 8):
- Commence operations within three (3) years from the approval of its operating permit or provisional authority by the NTC.
- Operate continuously for two (2) years.
- Commence operations within five (5) years from the effectivity of the Act.
The grantee must give written acceptance of the franchise within sixty (60) days from the Act’s effectivity (Section 9).
After written acceptance, the grantee must exercise the privileges granted; nonacceptance renders the franchise void (Section 9).
The grantee must file a bond issued in favor of the NTC to guarantee compliance with and fulfillment of franchise conditions, with the NTC determining the bond amount (Section 10).
If, after five (5) years from approval of the grantee’s permit by the Commission, the grantee has fulfilled the conditions, the bond is cancelled by the NTC (Section 10).
Otherwise, the bond is forfeited in favor of the government and the franchise is ipso facto revoked (Section 10).

Taxes, reporting, accounts, inspections

The grantee is subject to payment of taxes under the National Internal Revenue Code (NIRC) of 1997, as amended, and other applicable laws (Section 12).
The Act preserves any specific tax exemptions, incentives, or privileges granted under relevant law (Section 12).
Existing and future telecommunications rights, privileges, benefits, and exemptions are extended to the grantee (Section 12).
The grantee must file tax returns with, and pay taxes due to, the Commissioner of Internal Revenue or duly authorized representatives in accordance with the NIRC, and the returns are subject to audit by the Bureau of Internal Revenue (Section 12).
The grantee must keep a separate account of gross receipts and must furnish a copy to the Commission on Audit (COA) and the National Treasury not later than January 31 of each year for the preceding twelve (12) months (Section 13).
The grantee must keep books and accounts open to inspection by the COA Commissioner or authorized representatives (Section 14).
The grantee must submit to COA two (2) copies of quarterly reports on gross receipts, net profits, and the general condition of the business (Section 14).
The grantee must submit an annual report to the Congress of the Philippines on compliance with the franchise terms and conditions and on operations within sixty (60) days from the end of every year (Section 21).

Liability protection for governments

The grantee must hold the national, provincial, city, and municipal governments harmless from claims, accounts, demands, or actions arising from accidents or injuries to property or persons caused by construction or operation of the grantee’s stations, transmitters, facilities, or equipment (Section 15).

Transfer restrictions and ownership dispersal

The grantee must not lease, transfer, grant usufruct of, sell, or assign the franchise or the rights and privileges acquired thereunder to any person, firm, company, corporation, or other commercial or legal entity, nor merge with any other corporation or entity, nor transfer controlling interest (whether wholly or in parts) without prior approval of the Congress of the Philippines (Section 16).
Any person or entity to which the franchise is sold, transferred, or assigned must be subject to the same conditions, terms, restrictions, and limitations of the Act (Section 16).
To encourage public participation in public utilities, the grantee must offer at least thirty percent (30%) of its outstanding capital stock (or a higher percentage if later required by law) in a securities exchange in the Philippines within five (5) years from commencement of operations (Section 17).
Noncompliance with the ownership dispersal requirement renders the franchise ipso facto revoked (Section 17).

Equality, amendment, and separability

Any advantage, favor, privilege, exemption, or immunity granted under existing franchises or later granted to other telecommunications franchises becomes part of previously granted telecommunications franchises and must be accorded immediately and unconditionally to the grantees of such franchises (Section 18).
The equality clause does not apply to or affect provisions concerning territory covered by the franchise, the franchise life span, or the type of service authorized (Section 18).
If any section or provision is held invalid, the remaining sections and provisions remain valid (Section 19).
Congress may amend, alter, or repeal the franchise when public interest requires, and the franchise must not be interpreted as an exclusive grant of the privileges provided (Section 20).

Constraining offenses and operational ethics

The franchise imposes restrictions on communications content and conduct: the grantee must not transmit obscene or indecent content, disseminate deliberately false information, or willfully misrepresent, and must not assist in subversive or treasonable acts (Section 5).

Interplay with legislative reporting and timeframe

The grantee must comply with congressional reporting by submitting its annual report within sixty (60) days from the end of every year (Section 21).