Operational standards and interference limits
- The grantee must construct and operate its stations or facilities in a manner that results in only the minimum interference on the wavelengths or frequencies of existing stations or stations that may be established by law.
- The grantee’s operational approach must not diminish its own right to use its selected wavelengths or frequencies.
- The grantee must ensure the quality of transmission or reception maximizes the rendition of its services and/or their availability.
- The stations or facilities must be operated and maintained in a satisfactory manner at all times.
- The grantee must, as far as economical and practicable, modify, improve, or change its stations, lines, cables, systems, and equipment to keep abreast with advances in science and technology.
NTC regulatory authority and spectrum authorization
- The grantee must secure from the National Telecommunications Commission (NTC) a Certificate of Public Convenience and Necessity or the appropriate permits and licenses for the construction, installation, and operation of its telecommunications systems/facilities.
- The NTC may impose conditions regarding the construction, operation, maintenance, or service level of the telecommunications system when issuing the certificate.
- The NTC has authority to regulate the construction and operation of the grantee’s telecommunications systems.
- The grantee must not use any frequency in the radio spectrum without authorization from the NTC.
- The certificate must state the areas covered and the date the grantee shall commence the service.
- The NTC must not unreasonably withhold or delay the grant of authority, permits, or licenses.
Public interest obligations and service duties
- The grantee must conform to the ethics of honest enterprise.
- The grantee must not use its stations/facilities for obscene or indecent transmission or for dissemination of deliberately false information or willful misrepresentation.
- The grantee must not assist in subversive or treasonable acts.
- Where the grantee has an approved Certificate of Public Convenience and Necessity for a local exchange service, it must provide basic or enhanced telephone service in any city and/or municipality without discrimination among applicants, in the order of their application dates, up to the limit of the capacity of its local telephone exchange.
- If demand increases beyond exchange capacity, the grantee must increase capacity to meet such demand.
- If the expansion demand is less than the smallest viable local exchange available in the market as determined by the NTC, the grantee is not obliged to furnish the service unless the applicant defrays the actual expenses for the installation of the telecommunications apparatus necessary for the service; the NTC may extend the time for furnishing the service in such case.
Excavation, DPWH/local approval, and restoration costs
- For erecting and maintaining poles or other supports and for laying and maintaining underground wires, cables, or other conductors, the grantee (and its successors or assigns) may, with prior approval of the Department of Public Works and Highways (DPWH) or the local government unit concerned, make excavations or lay conduits in public places, highways, streets, lanes, alleys, avenues, sidewalks, or bridges within the relevant province, cities, and/or municipalities.
- Any public place, highway, street, lane, alley, avenue, sidewalk, or bridge disturbed due to erection or underground laying must be repaired and replaced in a workmanlike manner in accordance with DPWH or local government unit standards.
- If, after ten (10) days from notice by the authority, the grantee (or its successors or assigns) fails or refuses to repair or replace, the DPWH or the local government unit concerned may repair and replace the disturbed area and charge the costs at double expense against the grantee (and its successors or assigns).
Service rates and regulatory approval
- The grantee’s charges and rates for telecommunications services are subject to approval of the NTC (or its legal successor), except for rates and charges for those later declared or considered nonregulated services.
- The approved rates include flat rates or measured rates (and variations thereof).
- Rates must be unbundled, separable, and distinct among offered services.
- Regulated services must be determined so that they do not subsidize unregulated ones.
Interconnection rights and government priority
- The grantee may connect or demand connection of its telecommunications systems to other telecommunications systems installed, operated, and maintained by any other duly authorized person or entity in the Philippines to provide extended and improved telecommunications services to the public.
- Interconnection must be under mutually agreed terms and conditions between the parties.
- NTC may review and modify the terms and conditions of interconnection.
- Section 7 reserves a special right to the President of the Philippines 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; or
- temporarily suspend operations 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 for such use during the period of operation.
- Such presidential actions must be made upon due compensation to the grantee.
- The radio spectrum is a finite resource part of the national patrimony; use is a privilege conferred by the State and may be withdrawn any time after due process.
Franchise term, cancellation triggers, and acceptance
- The franchise is effective for twenty-five (25) years from the date of effectivity of this Act, unless sooner cancelled.
- The franchise is ipso facto revoked if the grantee fails to operate continuously for two (2) years.
- Written acceptance must be submitted to the 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 the effectivity of this Act.
- Upon acceptance, the grantee must exercise the privileges granted by the Act.
- Nonacceptance renders the franchise void.
Financial records, auditing access, and reports
- The grantee (and its successors or assigns) must keep a separate account of gross receipts of the business transacted.
- The grantee must furnish a copy of the gross receipts account to the Commission on Audit (COA) and the National Treasury no later than the thirty-first (31st) day of January of each year for the preceding twelve (12) months.
- The grantee’s books and accounts must always be open to inspection by the COA and its duly authorized representatives.
- The grantee must submit to the COA two (2) copies of quarterly reports on gross receipts, net profits, and the general condition of the business.
- The grantee must submit an annual report to Congress through the Committee on Legislative Franchises of the House of Representatives and the Committee on Public Services of the Senate on compliance with the franchise terms and conditions and on its operations on or before April 30 of every year during the term of the franchise.
- The reportorial compliance certificate issued by Congress is required before any NTC application for permit or certificate is accepted.
Liability, prohibited transfers, and ownership rules
- The grantee must hold the national, provincial, city, and municipal governments of the Philippines free from all claims, accounts, demands, or actions arising from accidents or injuries (to property or persons) caused by the construction or operation of its stations, transmitters, facilities, and equipment.
- The grantee must not sell, lease, transfer, grant usufruct of, or assign the franchise or rights and privileges acquired thereunder, or merge with another corporation/entity, or transfer the controlling interest (whether as a whole or in parts, and whether simultaneously or contemporaneously) to any person or entity without prior approval of Congress.
- The prohibition on transfer/assignment does not apply when the franchise is sold/transferred/assigned to a subsidiary or affiliate of the grantee and at least sixty percent (60%) of the outstanding capital stock entitled to vote of such subsidiary or affiliate is owned and held by Filipino citizens.
- Congress must be informed of any sale, lease, transfer, usufruct grant, or assignment, or of any merger or transfer of controlling interest, within sixty (60) days after completion of the transaction.
- Failure to report to Congress such change of ownership results in ipso facto revocation.
- Any transferee under the franchise must be subject to the same conditions, terms, restrictions, and limitations of the Act.
- A subsidiary or affiliate is a person that, upon the effectivity of the Act, directly or indirectly through one (1) or more intermediary corporations owns more than thirty percent (30%) of the outstanding capital stock of the grantee.
- The grantee must offer Filipino citizens at least thirty percent (30%) (or a higher percentage later required by law) of its outstanding capital stock in any securities exchange in the Philippines within five (5) years from the commencement of its operations.
- When public offer of shares is not applicable, establishment of cooperatives operating public utilities must be implemented.
- Noncompliance with the required public participation arrangements results in ipso facto revocation.
Penalties, equality clause, and severability
- Failure to submit the required annual report to Congress subjects the grantee to a fine of five hundred pesos (P500.00) per working day of noncompliance.
- The NTC collects the fine from the delinquent franchise grantee, separate from reportorial penalties the NTC may impose.
- Section 18 grants an equality clause: any advantage, favor, privilege, exemption, or immunity granted under other existing franchises, or later granted under other franchises upon prior review and approval of Congress, becomes part of this franchise and must be accorded immediately and unconditionally to the grantee.
- The equality clause does not affect telecommunications franchises’ provisions on territory covered, life span, or type of service authorized.
- If any section or provision of the Act is held invalid, the other provisions not affected remain valid under the separability rule.
- The franchise is subject to amendment, alteration, or repeal by Congress of the Philippines when the public interest so requires and is not an exclusive grant of the privilege.
Publication and effectivity
- Republic Act No. 10792 takes effect fifteen (15) days after its publication in at least two (2) newspapers of general circulation.
- The Act is approved on May 10, 2016.
- The franchise renewal is effective for twenty-five (25) years from the date of effectivity of the Act, unless sooner cancelled, and may be revoked ipso facto for failure to operate continuously for two (2) years.
- The Act is approved for legislative effect after acceptance is filed in writing within sixty (60) days from effectivity, with nonacceptance rendering the franchise void.