Operation of Stations and Interference
- Stations must be operated to cause only minimum interference to existing or lawful stations.
- The grantee retains the right to use its selected wavelengths or frequencies without quality diminution.
Regulation by the National Telecommunications Commission (NTC)
- Grantee must secure a certificate of public convenience and other necessary permits from the NTC.
- The NTC can impose conditions on construction, operation, maintenance, and service levels.
- No frequency use without NTC authorization.
- Certificates specify service areas and commencement date.
- NTC shall not unreasonably withhold permits or licenses.
Obligations and Public Service Responsibilities
- Grantee must adhere to ethics and avoid obscene, indecent, false, or subversive transmissions.
- Must provide basic or enhanced telephone service without discrimination, in order of applications, within exchange capacity.
- Expansion of capacity required to meet increased demand, subject to economic viability.
- Stations, lines, cables, systems, and equipment must be maintained satisfactorily and updated with technological advances.
Rates and Charges
- Charges for services, except non-regulated ones, are subject to NTC approval.
- Rates must be unbundled, separable, and should prevent regulated services from subsidizing unregulated services.
Government's Special Rights
- The President may temporarily take over, operate, suspend, or authorize governmental use of facilities during emergencies with compensation.
- Radio spectrum is a national patrimony; usage granted as a privilege and may be withdrawn with due process.
Franchise Term and Revocation Conditions
- Franchise term of 25 years unless earlier revoked or cancelled.
- Ipso facto revocation if grantee fails to commence operations within 3 years of permit approval or 5 years of effectivity, or fails to operate continuously for 2 years.
Acceptance and Compliance
- Grantee must accept franchise in writing within 60 days from effectivity.
- Failure to accept renders franchise void.
Bond Requirement
- Grantee must file a compliance bond with the NTC.
- Bond amount determined by the NTC to guarantee franchise conditions.
- Cancellation of bond after 5 years of compliance; forfeiture and revocation if not fulfilled.
Interconnection Rights
- Grantee may connect or demand connection to other authorized telecommunications systems.
- Interconnection terms subject to mutual agreement and NTC review/modification.
Taxation
- Grantee liable for taxes on real estate, buildings, personal property, and telecommunication business.
- Must pay either VAT or a franchise tax rate (3% or as prescribed), whichever is higher.
- Income tax liability continues under existing law unless amended.
- Tax returns filed with and subject to audit by the Bureau of Internal Revenue.
Accounting and Reporting
- Maintain separate accounts of gross receipts.
- Annual submission of gross receipts to Commission on Audit and National Treasury by January 31 each year.
- Books open to inspection by Commission on Audit.
- Quarterly submission of reports on gross receipts, net profits, and business condition.
Indemnity to Government
- Grantee holds national and local governments harmless from claims arising from accidents or injuries related to operations.
Restrictions on Transfer and Ownership
- Franchise or rights may not be leased, transferred, assigned, sold, merged, or have controlling interest transferred without Congressional approval.
- Any such party assumes all franchise conditions and restrictions.
Public Ownership Requirement
- Grantee must offer at least 30% of outstanding capital stock for public trading in Philippine securities exchange within 5 years of operations.
- Failure to comply leads to automatic revocation of the franchise.
Separability Clause
- Invalidity of any provision does not affect the validity of other provisions.
Amendment and Non-Exclusivity
- Congress may amend, alter, or repeal the franchise as public interest requires.
- Franchise is not exclusive.
Reportorial Requirements
- Annual report to Congress on compliance and operations due within 60 days after year-end.
Effectivity
- Act takes effect 15 days after publication in two newspapers of general circulation.
- Approved by lapse into law without Presidential signature.