Trade Secretary: Up to a year before new telco enters

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This article has been updated to include statements from legislators.

Metro Manila (CNN Philippines, November 21) — It may take up to a year before the country can expect a new telecommunications provider to break the duopoly, Trade Secretary Ramon Lopez said Tuesday.

"[It] might take time — six months to one year before companies do really come in and submit proposals, study the market, do the feasibility," Lopez told CNN Philippines' The Source.

"I'm sure China will take that opportunity and really make a proposal... They have many companies who would be eligible, who have the financial muscle," he added.

Malacanang Palace said on Monday that President Rodrigo Duterte offered China a chance to supply a new telecom provider. Duterte made the offer during his bilateral talks with Chinese Premier Li Keqiang here after the ASEAN Summit, Presidential Spokesperson Harry Roque said.

"The telecoms duopoly is about to end, with the entry of a Facebook subsidiary as well as the offer by the President to the People's Republic of China to operate the third telecoms carrier," Roque added.

Related: New telecom providers to come to PH - Roque

The market in the Philippines has been dominated by two players — Globe Telecom Inc. and PLDT Inc. The country has one of the slowest Internet speeds in the world.

On November 16, the Philippine government also partnered with an affiliate of social networking giant Facebook for an additional Internet backbone known as the Luzon Bypass Infrastructure. The Luzon Bypass will provide additional 2 terabyte bandwidth — equivalent to what is provided by Globe Telecom and PLDT, Roque said.

Lopez added Duterte considered the entry of a third player in the telecoms industry a priority, since proposals are to be facilitated directly to the presidential Office of the Executive Secretary.

"He's very serious about it, na sa office niya i-submit yung proposal [as the proposals have to be submitted to his office]," he said.

Senate President Koko Pimentel welcomed a new telco provider, saying competition was "the only way to force the two major local telco companies to improve their services."

"A third telecommunications firm is exactly what our country needs to end a telco duopoly mired in mediocrity; a situation that has allowed them to hold the Filipino consumer hostage to poor communications and data services," he said in a statement on Tuesday.

Senate Public Services Committee Chair Grace Poe welcomed the development, but pointed out there were legal hindrances to having a foreign provider.

"Healthy competition could lead to better services for the consumers. However, our current laws would not allow this," Poe said in a statement.

Article XII, Section 11 of the 1987 Constitution limits foreign ownership in public utilities "to their proportionate share in its capital" and mandates that "executive and managing officers of such [a] corporation or association must be citizens of the Philippines."

This ban has been taken to include telecommunication services.

Poe is championing Senate Bill 1441, or the amended Public Service Act, which seeks to confine public utilities to public electricity, and water works, and sewerage systems.

Opposition senator Bam Aquino said he was glad the President recognized the problem, but hopes the competitors are not limited to Chinese options alone.

"Nakatagpo tayo ng interes mula sa mga kumpanyang galing Japan at Korea na gustong pumasok sa ating industriya ng telco," said Aquino, a member of the Senate Public Services Committee.

[Translation: We found interest from Japanese and Korean companies to get into our telco industry.]

More deals with China

A potential telecommunications deal with China is one of the highlights of the the Duterte-Li bilateral meeting held November 15. One of the deals covers the development of industrial parks, which Lopez said was already being studied by China.

"They are identifying nine areas already, in Luzon, in Mindanao, karamihan [most] in the Davao Oriental, Occidental area for industrial park development," he said.

The Philippines' Intellectual Property Office (IPO) and China's State Intellectual Property on Cooperation also signed a memorandum of agreement in protecting, utilizing, managing, and enforcing intellectual property through joint cooperation.

Twelve other agreements on climate change, defense, youth cooperation, and drug rehabilitation, among others were also signed during the meeting.

Related: China to donate P1-B for Marawi rehab, signs 14 deals with PH

The Trade Secretary also welcomed the United States' openness to discussing a potential free trade agreement (FTA), saying it could create as many as 4.5 million jobs.

Related: U.S. open to free trade agreement with PH

"The FTA will result in more investments coming to the Philippines, more jobs, and yung objective ni President Duterte [na] poverty alleviation, trabaho negosyo ang kailangan (in President Duterte's objective of poverty alleviation, work and business is necessary)," said Lopez.

The country has an existing Trade and Investment Framework Agreement with the U.S., which is a requirement for countries working towards an FTA.

The Philippines is eyeing ventures with India for the production of generic medicines. India is considered a key player in the production of generic drugs which are more affordable than brand-name drugs.

"India is known for... their pharmaceutical industry so we invited them to set up their factories here and help us in the provision of cheaper medicines, especially to our kababayans [countrymen]," said Lopez.

CNN Philippines digital producer Yvette Morales contributed to this report.