PLDT raises constitutional issues with NTC VoIP draft rules

By Erwin Lemuel Oliva, INQ7.net

THE NATIONAL Telecommunications Commission (NTC) draft rules on voice over Internet Protocol may be "unconstitutional," the Philippine Long Distance Telephone Co. (PLDT) said on Monday.

VoIP routes phone calls through the Internet instead of through traditional public switched telephone networks. Its lower cost has made it a popular alternative to traditional voice calls.

According to Rogelio Quevedo, PLDT’s head of regulatory affairs, the current draft rules go against provisions of the Philippine Constitution that limit the operation of public utilities to Filipino nationals.

He cited section 11, article 12 of the Constitution, which states: "no franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens..."

As public utilities offering basic telecom services, telecommunications companies are required to abide by this nationality requirement, Quevedo said.

Last month, the NTC issued its draft rules that defined VoIP as a valued-added service (VAS), which would effectively allow even entities without congressional franchises to offer the service. The classification has put local Internet service providers and traditional telecommunications companies at loggerheads.

Quevedo said that NTC's rules "might unwittingly allow the entry of foreign players by circumventing the constitutional provision which limits the operation of public utilities to Filipino citizens or corporations at least 60-percent owned by Filipinos."

The PLDT lawyer believes that there is still confusion over what VoIP actually is. "The NTC draft considers VoIP a value-added service. But VoIP is more correctly seen as a technology that allows operators to deliver various services, including a basic telecommunications service like voice. Just like different cellular technologies like GSM, CDMA or analog technologies like TACS can deliver various services including voice. The confusion stems from the fact that VoIP is being interchanged with the Internet.

"What matters is that under our Constitution, only Filipino nationals and corporations at least 60-percent owned by Filipinos granted a congressional franchise can provide basic telecommunications services like voice," he stressed.

By proposing that any person or entity can provide VoIP to the public for a fee provided only that they register with the commission, the NTC draft rules would likely contravene both the Constitution and the Public Telecommunications Policy Act of the Philippines, the PLDT lawyer said.

Under the Act, only entities granted a franchise by Congress can offer voice telecommunications services.

Prior to the new rules, VoIP was classified a voice service, making companies that provided it commercially subject to the Act’s provisions (though companies were permitted to make use of VoIP for private networks).

The new NTC draft rules identify the parties allowed to offer VoIP services, as well as standard agreements between telecommunications carriers and ISPs on service performance standards, interconnection charges, access costs, and consumer security and privacy.

The NTC has scheduled a public hearing on its VoIP draft rules on May 3