Streamtech Telecom Franchise Law

NTC authority and compliance requirements

Section 3 requires the grantee to secure from the National Telecommunications Commission (NTC) a Certificate of Public Convenience and Necessity and the appropriate permits and licenses for construction, installation, and operation.
Section 3 grants the NTC authority, in issuing the certificate, to impose conditions related to construction, operation, maintenance, or service level of the telecommunications systems.
Section 3 empowers the NTC to regulate the 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 provides that the certificate must state the areas covered and the date the grantee shall commence the service.
Section 3 directs that the NTC shall not unreasonably withhold or delay the grant of the required authority, permit, or license.

Technical operation limits and interference

Section 2 requires the grantee’s stations or facilities to be constructed and operated to result in at most the minimum interference on the wavelengths or frequencies of existing stations or other stations established by law.
Section 2 preserves the grantee’s right to use its assigned wavelengths or frequencies and to achieve maximum rendition of services and/or availability by maintaining or optimizing the quality of transmission or reception on those frequencies.
Section 2 mandates that operation must comply with these minimum-interference standards without diminishing the grantee’s own privilege to use its assigned spectrum or frequencies.

Public works for poles and underground conduits

Section 4 authorizes the grantee, its successors, or assignees to make excavations or lay conduits in public places, roads, highways, streets, lanes, alleys, avenues, sidewalks, or bridges of the province, cities and/or municipalities for erecting and maintaining poles or other supports and for laying and maintaining underground wires, cables, or other conductors, subject to prior approval of the Department of Public Works and Highways (DPWH) and the concerned local government unit (LGU).
Section 4 requires the grantee to repair and replace any disturbed, altered, or changed public property in a workmanlike manner in accordance with DPWH or LGU standards.
Section 4 provides that after the grantee receives a ten (10)-day notice from the authority and fails to repair or replace, the DPWH or the LGU may repair and place the property in good order and condition and charge the grantee.
Section 4 states that if the grantee fails to repair or replace after notice, the grantee is chargeable at double the amount of the costs and expenses incurred for repair or replacement.

Public interest obligations and service upgrades

Section 5 requires the grantee to conform to the ethics of honest enterprise.
Section 5 prohibits the grantee from using its stations or facilities for obscene or indecent transmission.
Section 5 prohibits the grantee from disseminating deliberately false information or willful misrepresentation, and from assisting in subversive or treasonable acts.
Section 5 requires the grantee to operate and maintain its stations, lines, cables, systems, and equipment for transmission and reception of messages, signals, and pulses in a satisfactory manner at all times, and to modify, improve, or change such facilities, as far as economical and practicable, to keep abreast with advances in science and technology.
Section 5 requires the grantee to improve and extend services to areas not served and to hazard- and typhoon-prone areas determined by the National Disaster Risk Reduction and Management Council in coordination with the NTC.
Section 5 requires the grantee to improve and upgrade equipment, facilities, and services to ensure effective compliance with the objectives of Republic Act No. 10639, the “Free Mobile Disaster Alerts Act.”

Service rates and regulation of charges

Section 6 provides that charges and rates for the grantee’s telecommunications services are subject to NTC approval.
Section 6 applies to service charges and rates including flat rates, measured rates, or variation thereof.
Section 6 states the requirement covers all services except those that may hereafter be declared or considered nonregulated services.
Section 6 makes NTC approval a condition for regulation of the grantee’s telecommunications service rates.

Term, conditions for commencement/continuity, and revocation

Section 8 establishes that the franchise has a term of twenty-five (25) years from the date of effectivity of the Act unless sooner cancelled.
Section 8 provides that the franchise is ipso facto revoked if the grantee fails to comply with any of the following conditions:
- Section 8(a): fail to commence operations within one (1) year from the approval of its operating permit by the NTC.
- Section 8(b): fail to commence operations within three (3) years from the effectivity of the Act.
- Section 8(c): fail to operate continuously for two (2) years.
Section 8 requires strict compliance with the commencement and continuity conditions to avoid automatic revocation.

Employment opportunity commitments

Section 9 requires the grantee to create employment opportunities and to allow on-the-job trainings in its franchise operation.
Section 9 requires that priority be accorded to residents in areas where any of its offices is located.
Section 9 requires compliance with applicable labor standards and allowance entitlement under existing labor laws, rules and regulations, and similar issuances.
Section 9 requires that employment opportunities created be reflected in the General Information Sheet (GIS) submitted to the Securities and Exchange Commission (SEC) annually.

Tax regime and filing with BIR

Section 10 makes the grantee, its successors, or assignees liable to pay the same taxes on real estate, buildings, and personal property (exclusive of the franchise) as other persons or corporations required by law to pay such taxes.
Section 10 grants exemption from customs duties, tariffs, and other taxes for radio telecommunications and electronic communications equipment, machinery, and spare parts needed in connection with the business of the grantee.
Section 10 imposes value-added tax on all gross receipts of the business transacted in the Philippines under the franchise in lieu of any and all taxes of any kind, nature, or description levied, established, or collected by any authority, including city, municipal, provincial, or national.
Section 10 exempts the grantee expressly from those other taxes effective from the date of the effectivity of this Act.
Section 10 requires continued liability for income taxes payable under Title II of the National Internal Revenue Code pursuant to Section 2 of Executive Order No. 72, unless that executive order is amended or repealed; if amended or repealed, the amendment or repeal applies.
Section 10 requires the grantee to file its tax return with and pay the tax to the Commissioner of Internal Revenue or duly authorized representative in accordance with the National Internal Revenue Code.
Section 10 states that the return is subject to audit by the Bureau of Internal Revenue.

Performance bond and consequences

Section 11 requires the grantee to file a bond with the NTC in an amount that the NTC determines to guarantee compliance with and fulfillment of franchise conditions.
Section 11 provides that if the grantee has fulfilled the bond conditions after three (3) years from the approval of its permit by the NTC, the bond shall be released by the NTC.
Section 11 provides that if the grantee does not fulfill the bond conditions, the bond is forfeited in favor of the government and the franchise is ipso facto revoked.

Interconnection, MNP, transfer limits

Section 12 authorizes the grantee to 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 for extended and improved telecommunications services to the public.
Section 12 requires interconnection to be under mutually agreed terms and conditions between the parties, subject to review and modification by the NTC.
Section 14 requires the grantee to provide mobile number portability (MNP).
Section 14 requires the grantee to interconnect directly or indirectly with the infrastructure, facilities, systems, or equipment of other telecommunications franchise grantees.
Section 14 prohibits the grantee from installing network features, functions, or capabilities that impede the implementation of a nationwide MNP system.
Section 14 directs that the NTC shall issue rules and regulations for MNP, with effectivity commencing upon applicability with other telecommunications franchise grantees.
Section 15 prohibits the grantee from selling, leasing, transferring, granting the usufruct of, or assigning the franchise or the rights and privileges acquired thereunder, and from merging with another corporation or entity, and from transferring the controlling interest of the grantee (whether as a whole or in part, and whether simultaneously or contemporaneously) to any person or entity without prior approval of Congress and compliance with legal requirements in other statutes.
Section 15 provides that any person or entity to which the franchise is sold, transferred, or assigned is subject to the same conditions, terms, restrictions, and limitations of the Act.

Public participation, government protections, reports

Section 16 requires the grantee to offer Filipino citizens at least thirty percent (30%) (or a higher percentage that may later be provided by law) of its outstanding capital stock in any securities exchange in the Philippines within five (5) years from the commencement of its operations.
Section 16 provides that where public offer of shares is not applicable, the grantee must apply other methods of encouraging public participation by citizens and corporations operating public utilities as allowed by law.
Section 16 states that noncompliance with the public participation requirement results in ipso facto revocation of the franchise.
Section 13 requires the grantee to hold national, provincial, city, and municipal governments free from claims, liabilities, demands, or actions arising from accidents causing injury to persons or damage to property during construction or operation of the grantee’s stations, transmitters, facilities, or equipment.
Section 17 requires the grantee to 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 franchise terms and conditions and on its operations.
Section 17 mandates annual submission on or before April 30 of every year during the term of the franchise.
Section 17 requires a reportorial compliance certificate issued by Congress before any application for permit or certificate is accepted by the NTC.
Section 18 penalizes failure to submit the annual report with a fine of PHP 1,000,000.00 per working day of noncompliance.

Fines, NTC collection, and equality clause

Section 18 provides that fine effectivity begins upon applicability with other telecommunications franchise grantees.
Section 18 provides interim liability of PHP 500.00 per working day of noncompliance.
Section 18 directs that the NTC collects the fine from the delinquent franchise grantee separately from reportorial penalties imposed by the NTC.
Section 18 states that the fine collected by the NTC is remitted to the National Treasury.
Section 19 grants an equality clause: any advantage, favor, privilege, exemption, or immunity granted under existing franchises, or granted in the future upon prior review and approval by Congress, becomes part of this franchise and must be accorded to the grantee immediately and unconditionally.
Section 19 limits the equality clause by stating it does not apply to or affect telecommunications franchise provisions concerning territory covered, life span, or type of service authorized by the franchise.

Government reserved rights and radio spectrum withdrawal

Section 7 states that the radio spectrum is a finite resource part of the national patrimony, and use is a privilege conferred by the State that may be withdrawn by the State any time after due process.
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 suspend the operation of any station, transmitter, facility, or equipment in the interest of public safety, security, and public welfare; or
- temporarily authorize use and operation by any government agency upon due compensation to the grantee during the period of such operation.

Repeals, separability, amendment, and effectivity

Section 20 makes the franchise subject to amendment, alteration, or repeal by Congress when the public interest requires.
Section 20 provides that the franchise is not an exclusive grant of the privilege.
Section 21 provides a separability rule: if any section or provision is held invalid, all other provisions not affected remain valid.
Section 22 includes a repealing clause: all laws, decrees, executive orders, rules and regulations, or any part or provision inconsistent with the Act are repealed, amended, or modified accordingly.
Section 23 provides effectivity fifteen (15) days after publication in the Official Gazette or in a newspaper of general circulation.

Issuance details and franchise identity

Republic Act No. 11089 is titled “AN ACT GRANTING STREAMTECH SYSTEMS TECHNOLOGIES INC. A FRANCHISE TO CONSTRUCT, INSTALL, ESTABLISH, OPERATE AND MAINTAIN TELECOMMUNICATIONS SYSTEMS THROUGHOUT THE PHILIPPINES.”
The Act is dated October 18, 2018 and is signed/approved by RODRIGO ROA DUTERTE, President of the Philippines.
The Act’s approval appears as OCT 18 2018.
The Act’s Senate and House passage is dated August 29, 2018 (House of Representatives) and August 15, 2018 (Senate).