OP EXECUTIVE ORDER NO. 109

Law Summary

Introduction

Executive Order No. 109 was issued on July 12, 1993, under the administration of President Fidel V. Ramos. The order establishes a policy framework aimed at enhancing the provision of local exchange carrier (LEC) services across the Philippines, with specific focus on achieving universal access to telecommunications.

Purpose and Context

Objective: To promote universal access to basic telecommunications services, particularly in unserved and underserved areas.
Background: Recognizes the profitability of the telecommunications sector, primarily from toll services, and the necessity for cost-based pricing to subsidize local exchange services.

Definition of Terms

Basic Telecommunications Service: Includes local exchange telephone service and telegraph service without additional features.
Cost-based Pricing: A pricing method where charges are based on actual service costs plus a fixed markup.
Local Exchange Carrier Service: Telecommunications service provided in a specific geographic area to individual subscribers.
Value-based Pricing: Charges based on service value rather than just costs.
Universal Access: Availability of affordable and reliable telecommunications in both urban and rural areas.

Policy Goals

General Policy: Aims to democratize ownership and operation of telecommunications services.
Cross-Subsidy: Local exchange services will be subsidized by profits from other telecommunications services until universal access is achieved.

Service Requirements

Service Packaging (Section 5):
- International gateway operators must provide local exchange service in underserved areas within three years.
- Minimum requirement: 300 local exchange lines per international switch.
- At least one rural exchange line for every ten urban lines.
- Establishment of public calling offices at the barangay level will be credited towards service obligations.

Subsidiary Restrictions

Section 6: Subsidiaries of public telecommunications carriers with international gateways cannot operate another gateway if they meet certain criteria regarding shared personnel and financial interests.

Additional Service Provisions

Cellular Mobile Telephone System (Section 7): Operators may provide Cellular Mobile Telephone Services as a subsidy for local exchange services.
Non-Basic Services (Section 8): Providers of non-basic services must also comply with local exchange service obligations.

Duration and Compliance

Obligation Duration (Section 9): Compliance with local exchange service requirements remains in effect as long as the operators hold their service authorizations.
Transitory Provisions (Section 15): Existing providers have five years to comply with local exchange service requirements.

Application Processes

Pending Applications (Section 16): Providers with pending applications for various telecommunications services are not required to revise their applications but must submit local exchange service applications within three months upon receiving their provisional authority.

Implementing and Reporting Requirements

Implementation (Section 13): The National Telecommunications Commission (NTC) must issue guidelines within 30 days.
Financial Reporting (Section 12): Telecommunications providers must explicitly report internal subsidy flows.

Compliance and Penalties

Violations (Section 14): Violations of this Executive Order are subject to penalties as stipulated in Executive Order No. 59 (1993).

Repealing and Effectivity

Repealing Clause (Section 17): Any inconsistent orders or issuances are repealed or amended.
Effectivity (Section 18): The order takes effect immediately upon adoption.

Key Takeaways

EO 109 establishes a framework for improving local exchange services and promoting universal access to telecommunications in the Philippines.
Key elements include definitions of services, obligations for telecom operators, cross-subsidization requirements, and the need for compliance with NTC guidelines.
A focus on equitable service distribution, particularly in underserved areas, is central to this policy initiative.