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NOTICE

24 September 2004

DRAFT OF THE PROPOSED MEMORANDUM CIRCULAR


ON THE RULES AND REGULATIONS ON THE ALLOCATION AND
ASSIGNMENT OF 3G RADIO FREQUENCY BANDS

As part of the process of public consultation, the National Telecommunications


Commission posts at its website Draft of the proposed Memorandum Circular on the
Rules and Regulations on the Allocation and Assignment of 3G Radio Frequency Bands
for comments/inputs from industry players and other interested parties.
Comments/inputs received will be taken into consideration by the Commission, together
with other internal papers/documents/studies at NTCs possession, in drafting,
conducting public hearings on, and the issuance of Rules and Regulations on the
Allocation and Assignment of 3G Radio Frequency Bands.
Comments from industry stakeholders and other interested parties should be sent on or
before 15 October 2004 to: Director, CCAD, NTC copy furnished all Commissioners.
All comments/inputs by the submitting party at the time of submission, will be made
publicly available at the NTC and shall be posted on the NTC website (www.ntc.gov.ph).

RONALD OLIVAR SOLIS


Commissioner

MEMORANDUM CIRCULAR
No. ______________________
SUBJECT:

RULES AND REGULATIONS ON THE ALLOCATION AND ASSIGNMENT


OF 3G RADIO FREQUENCY BANDS

Pursuant to RA7925 (Public Telecommunications Policy Act), Act3846, as amended (Radio


Control Law), and EO546 serie s of 1979, the following rules and regulations on the allocation
and assignment of Third Generation Mobile Telecommunications system (3G) radio frequency
bands are hereby promulgated.
SECTION 1.

ALLOCATION OF RADIO FREQUENCY BANDS FOR 3G


The following radio frequency bands are allocated for 3G networks:
Band A :

1920 1935MHz/2110 2125MHz

Band B :

1935 1950MHz/2125 2140MHz

Band C :

1950 1965MHz/2140 2155MHz

Band D :

1885 1900MHz/1965 1980MHz

Band E :

2010 2025MHz

The allocation will allow the entry of three (3) WCDMA players, one (1)
CDMA2000 player and one (1) TDD player, maximize the allocation of the 3G
bandwidths to all 3 existing technologies, ensure compliance with the
requirement of technology neutrality and foster more effective competition
through the reduction of the probability of formation of cartels.
SECTION 2.

ASSIGNMENT OF 3G RADIO FREQUENCY BANDS AND TRANSFER OF


AFFECTED USERS
The 3G radio frequency bands allocated under this Circular shall be assigned to
public telecommunications entities which possess all of the qualifications
prescribed herein.
The guidelines provided in Section 603 of Memorandum Circular No. 03-03-96
shall apply for the transfer of the affected duly authorized users of the herein
allocated 3G radio frequency bands.

SECTION 3.

QUALIFICATIONS OF PUBLIC TELECOMMUNICATIONS ENTITIES


To qualify for the assignment of 3G radio frequency bands allocated under this
Circular, public telecommunications entities shall possess the following
minimum qualif ications:
a. Holder of a valid Congressional franchise;

b. For new public telecommunications entities, the minimum paid-up capital


stock shall be PhP100 million;
c. For existing authorized public telecommunications entities, debt to equity
ratio shall be 70:30 with total investments in 3G networks of at least PhP400
million already included in the calculation of the debt to equity ratio;
d. No outstanding unpaid supervision and regulations fees, spectrum user fees,
radio station license fees, permit fees and all other fees imposed by the
National Telecommunications Commission (Commission) pursuant to law,
rules and regulations; and
e. Must have application for authority to install, operate and maintain 3G
networks and facilities and offer 3G services heard and formal offer of
evidence accepted. This process shall be completed within sixty (60) days
from the effectivity of this Circular.
Applicants for the assignment of the radio frequency bands for Second
Generation Mobile Telecommunications System (2G) (public mobile
telecommunications system or PMTS) networks shall be considered as applicants
for the assignment of the allocated 3G radio frequency bands, provided that they
accordingly amend their pending applications to conform with the requirements
of this Circular; provided further, that they meet the minimum qualifications
prescribed in Section 3 (a) to (d) and shall undergo a quasi-judicial process
submitting thereto, updated legal, technical and financial evidence, as may be
necessary, and other documents in support of their application. The process to
include the hearings and acceptance of the formal offer of evidence shall be
completed within sixty (60) days from effectivity of this Circular.
Entities with more than 50% of common stocks owned by the same person or
group of persons shall be considered as associated applicants, at the time of
application, and such entities shall be allowed to elect one of them to proceed in
the filing of application before the Commission.
Entities with applications for the assignment of the 3G radio frequency bands
may form a consortium. A consortium formed must provide the details of all its
members, including the details of their ownership and control structure.
f.

Must submit a written undertaking that it shall interconnect with all 3G


networks, cellular mobile telephone networks, local exchange networks and
all other public networks pursuant to existing laws, rules and regulations on
mandatory interconnection.

g.

Must submit a written undertaking that is shall allow the sharing of its
network and facilities with other 3G players in areas where demand does not
allow more than one (1) 3G network.

h. Must submit written undertaking that it shall negotiate roaming agreements


with other 3G networks or existing duly authorized CMTS service providers.

SECTION 4.

i.

Must submit a written undertaking that it shall abide by the terms and
conditions set by the Commission in cases where its negotiations for
interconnection, sharing of networks and facilities and/or roaming fail to
reach agreements within ninety (90) days from date of the start of
negotiations for the same.

j.

Must submit a 5-year roll-out plan to cover at least 80% of the provincial
capital towns/cities and 80% of the chartered cities.

DETERMINATION OF QUALIFIED APPLICANTS


The Commission shall, not later than ninety (90) days from the effectivity of this
Circular evaluate all applications for the assignment of the 3G radio frequency
bands. After evaluation, the Commission shall determine the qualified applicants.
Within ten (10) days after the determination of the qualified applicants, the
Commission shall send notices of the results of the evaluation to all applicants.

SECTION 5.

PERFORMANCE BONDS
All applicants for the 3G service shall post performance bond equivalent to
PHP300M. The performance bond shall be submitted to the Commission not later
than sixty (60) days from the effectivity of this Circular.

SECTION 6.

UPFRONT PAYMENT
If the number of qualified applicants does not exceed the allocated 3G radio
frequency bands, each qualified applicant shall make an upfront payment of
PhP450 million.
Where the number of qualified applicants exceeds the allocated 3G frequency
bands, the Commission shall conduct bidding to determine who among the
qualified applicants shall be assigned the 3G frequency bands. The bid floor price
shall be PhP450 million.
The upfront payment shall be paid not later than thirty (30) days from the date
the 3G radio frequencies are assigned.
Where an assignee of the herein allocated 3G radio frequency bands fails to pay
the aforesaid amount within the prescribed period, he shall be declared in default
and the 3G radio frequency assignment voided and reverted back to the
Commission. The bid security bond and/or the performance bond shall be
forfeited in favor of the Commission.

SECTION 7.

SPECTRUM USER FEES


The spectrum user fees (SUF) for the allocated 3G radio frequency bands shall be
PhP100M for each band. The first SUF shall be paid not later than twelve (12)
months from the date of payment of the upfront payment as provided in Section 6
hereof. A surcharge of 25% shall be imposed if the amount is not paid within the
prescribed period. Additional 1% per month surcharge shall be imposed if the
SUF remain unpaid.

An additional SUF of PhP2M shall be imposed on each qualified and authorized


3G network operator for every 100,000 additional subscribers/users in excess of
the first 4 million subscribers/users.
SECTION 8.

OBLIGATIONS OF THE QUALIFIED APPLICANT ASSIGNEES


The qualified applicant assignees shall comply with the following obligations:
a. remit to the Commission the upfront payment within the specified period;
b. pay the annual spectrum user fees prescribed in Sec. 6 hereof.
c. increase the paid capital to PhP400 million not later than thirty (30) days from
date of assignment of 3G radio frequencies (for new public
telecommunications entities);
d. begin the installation and construction of the 3G network and facilities not
later than 18 months from date of award;
e. start commercial operation not later than thirty (30) months from date of
award;
f.

cover at least 80% of the provincial capital cities and towns and 80% of the
chartered cities within five (5) years from date of award;

g. strictly comply with the prescribed service performance standards;


h. interconnect with all 3G networks, cellular mobile telephone networks, local
exchange networks and all other public networks pursuant to existing laws,
rules and regulations on mandatory interconnection;
i.

share its 3G network and facilities with other 3G players in areas where
demand does not allow more than one 3G network at mutually agreed prices
or at prices set by the Commission;

All assignees of 3G radio frequencies shall within one hundred twenty (120) days
from date of assignment of the 3G radio frequencies shall jointly submit to the
Commission list of areas where sharing of networks and facilities shall be
implemented including the pricing for the use of the networks and facilities.
j.

negotiate roaming agreements with other 3G networks and existing duly


authorized CMTS service providers;

Where parties fail to enter into a mutual agreement within ninety (90) days from
the start of commercial operations of the 3G operators, the Commission shall
prescribe the terms and conditions for roaming. The terms and conditions for
roaming prescribed by the Commission shall only be effective for a period not
exceeding three (3) years.

k. implement number portability, at its own cost, from the commencement of


commercial operation; and
l.
SECTION 9.

comply with all relevant laws, rules and regulations.

SANCTIONS
3G network operators shall at all times be updated in the payment of the annual
SUF. Failure to settle outstanding SUF within the specifie d period shall be
ground for the recall of the assigned 3G radio frequency bands.
The failure of 3G network operators to fail to comply with any of the obligations
specified in Section 8 hereof shall be a cause for the cancellation of their
authority to provide 3G services.

SECTION 10. FINAL PROVISION


Any circular, order, memoranda or parts thereof inconsistent herewith are
deemed repealed or amended accordingly.
This Circular shall take effect fifteen (15) days after publication in a newspaper
of general circulation and three (3) certified true copies are furnished the UP Law
Center.
Quezon City, Phlippines _________________________.
RONALD OLIVAR SOLIS
Commissioner

KATHLEEN G. HECETA
Deputy Commissioner

JORGE V. SARMIENTO
Deputy Commissioner