Solid Broadband Corp. Telecom Franchise

Franchise Nature and Authorized Network Services

Section 1 grants Solid Broadband Corporation (and its successors or assigns) a franchise, subject to the Constitution and applicable laws, to construct, install, establish, lease, operate and maintain broadband telecommunications networks and wire and/or wireless telecommunications systems for commercial purposes and in the public interest.
Section 1 authorizes operation throughout the Philippines for public domestic and international communications.
Section 1 authorizes, among others: local exchange service or public switched telephone network, public-calling offices, inter-exchange carrier service, and value-added services.
Section 1 authorizes services including domestic and international mobile cellular and personal communications services, international gateway facility, radio paging and radio messaging services, mobile data and trunked radio services, and integrated electronic information and computer services.
Section 1 authorizes internet gateway and exchange and internet protocol services, as well as wired and/or fixed wireless broadband multimedia networks and services.
Section 1 authorizes associate ground terminal and orbital outer space equipment, facilities, and stations for domestic, intra-regional and international satellite communications, including equipment/facilities/terminal stations for receiving and up-linking messages from any point within and outside the Philippines to satellites in orbit, and down-linking messages from such satellites to any point within and outside the Philippines.

Technical Operation Standards and Interference Limits

Section 2 requires the grantee’s stations or facilities to be constructed and operated so that they will, at most, result in minimum interference on the wavelengths or frequencies of existing stations or other stations established by law.
Section 2 allows the grantee to use its selected wavelengths or frequencies and to maintain the quality of transmission or reception for maximizing rendition and/or availability of the grantee’s services.
Section 2 ties the standard directly to operational design and frequency/wavelength usage to protect other lawful radio operations.

NTC Authority, Permits, Frequencies, and Service Areas

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 telecommunications systems/facilities.
Section 3 empowers the NTC to impose conditions related to construction, operation, maintenance, or service level of the telecommunications system.
Section 3 grants authority to 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 service.
Section 3 directs that the NTC shall not unreasonably withhold or delay the grant of authority, permits, or licenses.

Public Rights on Poles, Conduits, and Repairs

Section 4 makes it lawful, with prior approval of the Department of Public Works and Highways (DPWH), for the grantee (and successors/assigns) to make excavations or lay conduits in public places for erecting and maintaining poles or other supports and for laying/maintaining underground wires/cables/conductors.
Section 4 covers public places including provinces, cities and/or municipalities, and includes highways, streets, lanes, alleys, avenues, sidewalks or bridges.
Section 4 requires disturbed/altered/changed public infrastructure by the grantee to be repaired and replaced in a workmanlike manner in accordance with DPWH standards.
Section 4 allows a ten (10) days notice mechanism: if the grantee fails to repair/replace after such notice, DPWH may repair and place the area in good order and condition at double expense charged against the grantee.

Public Responsibility, Service Availability, and Conduct

Section 5 requires the grantee to conform to the ethics of honest enterprise.
Section 5 prohibits the grantee from using its stations/facilities for obscene or indecent transmission, for dissemination of deliberately false information, or for willful misrepresentation, and from assisting in subversive or treasonable acts.
Section 5 requires the grantee to provide basic or enhanced telephone service in any municipality in the Philippines where it has an approved NTC certificate for establishment/operation/maintenance of a local exchange service, without discrimination to any applicant.
Section 5 requires service in the order of the date of applications, up to the capacity of the local telephone exchange.
Section 5 requires the grantee to increase capacity to meet demand if demand increases beyond capacity.
Section 5 allows a capacity-limitation exception: if total demand to be satisfied by 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 the telecommunication apparatus necessary; in that case, the NTC may extend the time within which the grantee shall furnish service.
Section 5 requires the grantee to operate and maintain stations, lines, cables, systems, and equipment for satisfactory transmission and reception at all times, and to modify/improve/change them as far as economical and practicable to keep abreast with advances in science and technology.

Regulated Rates and Unbundling Rule

Section 6 provides that the grantee’s charges and rates for telecommunications services are subject to NTC approval (or its legal successor) for services not later declared/considered as non-regulated services.
Section 6 requires NTC-regulated rates to apply to flat rates or measured rates (and variations).
Section 6 mandates unbundling, separability, and distinctness among the services offered.
Section 6 requires rate determination so that regulated services do not subsidize unregulated ones.

Government Rights and Radio Spectrum as Patrimony

Section 7 reserves to the President of the Philippines a special right, 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/equipment;
- temporarily suspend any station/transmitter/facility/equipment in the interest of public safety, security, and public welfare; or
- authorize temporary use and operation by any government agency.
Section 7 requires due compensation to the grantee for use of stations/transmitters/facilities/equipment during the period of such government operation or use.
Section 7 states that the radio spectrum is a finite resource part of the national patrimony and that the grantee’s use is a privilege conferred by the State that may be withdrawn anytime, after due process.

Franchise Term, Revocation Conditions, and Operations Timelines

Section 8 establishes the franchise term as twenty-five (25) years from the date of effectivity of the Act, unless sooner revoked or cancelled.
Section 8 provides that the franchise is ipso facto revoked if the grantee fails to comply with these conditions:
- Commence operations within three (3) years from the approval of its operating permit or provincial authority by the NTC;
- Operate continuously for two (2) years; and
- The franchise’s effectivity: Commence operations within five (5) years from the effectivity of this Act.

Acceptance, Voidness, and Bond Compliance

Section 9 requires written acceptance of the franchise within sixty (60) days from the Act’s effectivity.
Section 9 provides that upon giving acceptance, the grantee must exercise the privileges granted by the Act.
Section 9 provides that nonacceptance renders the franchise void.
Section 10 requires the grantee to file a bond issued in favor of the NTC to guarantee compliance with and fulfillment of franchise conditions.
Section 10 provides that if, after five (5) years from approval of the grantee’s permit by the Commission, the grantee has fulfilled the conditions, the bond shall be cancelled by the Commission.
Section 10 provides that if conditions are not fulfilled, the bond shall be forfeited in favor of the government and the franchise is ipso facto revoked.

Interconnection Authorization and NTC Review

Section 11 authorizes the grantee to connect or demand connection of its telecommunications systems to other telecommunications systems installed, maintained, and operated by other duly authorized persons or entities in the Philippines.
Section 11 limits interconnection purpose to providing extended and improved telecommunications services to the public.
Section 11 provides that connection terms and conditions are mutually agreed upon by the parties concerned.
Section 11 subjects such terms and conditions to review or modification by the Commission.

Tax, Returns, Audit, and COA/NT Reports

Section 12 makes the grantee (and successors/assigns) subject to payment of all taxes, duties, fees or charges, and other impositions under the National Internal Revenue Code (NIRC) of 1997, as amended, and other applicable laws.
Section 12 preserves existing tax exemptions, incentives, or privileges granted under relevant law, stating that nothing shall repeal them.
Section 12 extends to the grantee the rights, privileges, benefits, and exemptions accorded to existing and future telecommunications franchises.
Section 12 requires the grantee to file tax returns with the city or province where its facility is located and pay taxes due to the Commissioner of Internal Revenue or duly authorized representatives in accordance with the NIRC.
Section 12 provides that the return shall be subject to audit by the Bureau of Internal Revenue.
Section 13 requires the grantee to keep a separate account of gross receipts and to furnish the Commission on Audit (COA) and the National Treasury a copy of such account not later than the thirty-first (31st) day of January of each year for the preceding twelve (12) months.
Section 14 requires that the grantee’s books and accounts are always open to inspection of the COA Commissioner or authorized representatives.
Section 14 requires submission to COA of two (2) copies of quarterly reports on gross receipts, net profits, and the general condition of the business.

Government Indemnity for Accidents and Injuries

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

Assignment Restrictions and Congressional Approval

Section 16 prohibits the grantee from leasing, transferring, granting usufruct of, selling, or assigning this franchise or its rights and privileges to any person, firm, company, corporation, or other commercial or legal entity.
Section 16 prohibits merger with any other corporation or entity.
Section 16 prohibits transferring the controlling interest of the grantee, whether as a whole or in parts and whether simultaneously or contemporaneously, to any such person/entity without prior approval of the Congress of the Philippines.
Section 16 provides that any person/entity to which the franchise is sold, transferred, or assigned must be subject to the same conditions, terms, restrictions and limitations of the Act.

Dispersal of Ownership Requirement

Section 17 requires the grantee, in accordance with the constitutional policy to encourage public participation in public utilities, to offer at least thirty per centum (30%) of its outstanding capital stock (or a higher percentage later required by law) in any securities exchange in the Philippines.
Section 17 requires the offering to be made within five (5) years from the commencement of its operations.
Section 17 provides that noncompliance renders the franchise ipso facto revoked.

Equality Clause for Telecommunications Franchises

Section 18 requires any advantage, favor, privilege, exemption, or immunity granted under existing franchises or may later be granted to ipso facto become part of previously granted telecommunications franchises.
Section 18 requires such benefit to be accorded to the grantees immediately and unconditionally.
Section 18 limits the effect by stating that the equality clause does not apply to or affect franchise provisions concerning territory covered, life span of the franchise, or the type of service authorized.

Separability and Amendment/Nonexclusivity

Section 19 provides that if any section or provision of the Act is held invalid, the remaining unaffected provisions remain valid.
Section 20 makes the franchise subject to amendment, alteration, or repeal by Congress whenever the public interest so requires.
Section 20 provides that the franchise is not interpreted as an exclusive grant of the privileges provided.

Annual Report to Congress

Section 21 requires the grantee to submit an annual report to the Congress of the Philippines on compliance with franchise terms and conditions and on its operations.
Section 21 requires submission within sixty (60) days from the end of every year.

Effectivity Mechanism

Section 22 provides that the Act takes effect fifteen (15) days from its publication in at least two (2) newspapers of general circulation in the Philippines, upon the initiative of the grantee.

Legislative Passage and Constitutional Effect

The Act originated in the House of Representatives, was finally passed by the House on February 6, 2001, and was finally passed by the Senate on February 5, 2001.
The Act lapsed into law on APR 15, 2001 pursuant to Article VI, Section 27 (1) of the Constitution.