Merger of 2 US satellite TV giants to boost RP’s BPO sector

By Mary Ann Ll. Reyes
The Philippine Star

The merger of DirecTV Group Inc. and EchoStar Communications Corp. – the two dominant direct broadcast satellite (DBS) subscription TV providers in the US – would give the Philippines’ business process outsourcing (BPO) industry a big boost, Catanduanes Rep. Joseph Santiago said.

Santiago, a former chief of the National Telecommunications Commission, made the statement a day after Citigroup Inc. boldly predicted that rivals DirecTV and EchoStar would soon merge, and that the union could result in annual operating cost-savings of up to $3 billion for the surviving entity.

In 2003, Englewood, Colorado-based EchoStar attempted but failed to acquire El Segundo, California-based DirecTV because of anti-trust issues.

Both DirecTV and EchoStar, with almost 28 million in combined subscribers, have already relegated some of their call center operations to more cost-effective outsourcing specialists in the Philippines.

DirecTV subscribers are serviced in part by ClientLogic Philippines Inc. call centers in Pasig City and Baguio City. EchoStar subscribers are serviced in part by Parlance Systems Inc.’s call center in Makati City.

In March, shortly after the merger of ATT Inc. and BellSouth Corp., Santiago had said the ongoing consolidation of US telecommunication and pay-TV service providers would lead to more customer care and technical support call center jobs being offshored to the Philippines.

Large business combinations create redundant back-office functions and provide the surviving entities the opportunity to outsource thousands of non-core, information technology-enabled service jobs to lower-cost locations such as the Philippines, according to Santiago, House transportation and communications committee vice chairman.

The country’s booming call centers are expected to have 300,000 seats, fully employ 506,500 Filipinos and produce up to $7.3 billion in annual revenues by 2010, according to the Contact Center Association of the Philippines.

With 15.5 million subscribers, DirecTV is the largest DBS subscription TV provider in the US. Controlled by media mogul Rupert Murdoch’s News Corp., DirecTV has a market capitalization of $21.5 billion. It posted $13.4 billion in 2005 revenues.

EchoStar is the second largest, with 12.3 million subscribers. The company has a market capitalization of $14.7 billion. It reported $8.7 billion in 2005 revenues.

EchoStar is currently working out a three-way joint venture with Philippine Long Distance Telephone Co. and GV Broadcasting System Inc. for the launch of a new DBS service in the Philippines by yearend.

Broadcast firm asks RTC to nullify NTC rule on radio band reallocation

By Mary Ann Ll. Reyes
The Philippine Star

A local broadcasting company has asked the Quezon City Regional Trial Court to declare null and void a memorandum circular issued by the National Telecommunications Commission (NTC) reallocating certain radio bands for the use of the broadband wireless sector.

Altimax Broadcasting Co. in a complaint filed with the RTC, said NTC Memorandum Circular 06-08-2005, issued Aug. 6, 2005 which reallocated certain radio bands, including the frequency range of from 2596 up to 2644 megahertz, for "broadband wireless access for fixed, nomadic, and mobile networks," is unconstitutional as it deprives broadcasting companies, including Altimax of the right to use their frequencies, without due process.

"The frequency allocation of Altimax cannot be withdrawn or reallocated to another entity without giving Altimax the opportunity to be heard,’ the company said.

Altimax was issued by the NTC a provisional authority to install, operate, and maintain a multipoint multichannel distribution system (MMDS) and interactive services throughout the Philippines using analog and digital technology. The company was assigned the frequency range of from 2596 up to 2644 Mhz.

The company pointed out that recalling the radio frequency assigned to it is tantamount to depriving it of property without due process.

Altimax said it has invested more than P40 million in equipment and technical studies, which investments are now in danger of going to waste should the circular be implemented. "This will be true not only for Altimax but will be replicated for the other affected companies in the broadcasting industry. Unless enjoined, the implementation of this circular will wreak havoc on, will disrupt and will be an injustice to the entire broadcasting industry," Altimax said.

The company also accused the NTC of acting beyond its authority in issuing the assailed circular, as it pointed out that Republic Act 7925 or the Public Telecommunications Act which MC 06-08-2005 purports to implement, does not apply to broadcasting companies.

It said RA 7925 applies only to public telecommunications entities and did not delegate any quasi-legislative power to the NTC which would authorize the latter to reallocate the frequencies previously assigned to broadcasting companies like Altimax. "Furthermore, where a power has been delegated to make legislative rules within a plainly limited sphere, any rule adopted which exceeds this sphere is invalid," Altimax stressed.

But even if RA 7925 applies to broadcasting companies, the company noted that said law still does not authorize the commission to reallocate radio frequencies.

Altimax said the law is clear that the duty of the NTC to periodically "review the radio frequency spectrum and assignment" is connected to its obligation to hold open tenders for the same and ensure wider access to this limited resource" when the "demand for specific frequencies exceeds availability."

"The assailed circular does not even mention anything about demand exceeding availability for a particular frequency, nor of holding an open tender for particular radio frequencies," it added.

In its complaint, Altimax emphasized that the law cannot be broadened by a mere administrative issuance, such that if the implementing rules and regulations are in excess of the rule-making authority of the NTC, they are without binding effect upon the courts.

NTC prepares rules on digital TV

By Mary Ann Ll. Reyes
The Philippine Star

The National Telecommunications Commission (NTC) is preparing a set of rules that will govern the introduction of digital television (DTV) service in the country.

Interest in offering DTV service is fast gaining ground. ABS-CBN Broadcasting has officially informed the NTC of its intention to convert its DWWX-TV station in Metro Manila from analog to digital service. The conversion will start with the migration from the current analog service, during which time ABS-CBN will operate both analog and digital services concurrently, until such that time that the NTC mandates the termination of all analog broadcasts.

The Lopez-owned network has also requested the NTC to allow it to conduct test broadcasts for a digital TV-terrestrial (DT-T) service at selected sites, preferably at the Channel 51 frequency; to conduct trials in stages to validate propagation, set-top boxes, and market conditions and acceptance; allow ABS-CBN to import transmitters and antennas on-loan from suppliers.

ABS-CBN technical service head Ruben Jimenez, in a letter to NTC commissioner Ronald Solis, said the company anticipates that technological advances will soon warrant operations in DTV service.

There are also reports that Associated Broadcasting Corp. (ABC-5) owned by businessman Antonio "Tonyboy" Cojuangco is also interested in offering digital TV.

Solis said conversion from analog to digital will allow content providers, such as broadcast stations, to offer their programs to mobile phone subscribers, which the latter can view in real time.

The guidelines governing digital TV, Solis explained, would include mobile TV and IPTV (Internet TV). The Philippine Long Distance Telephone Co. (PLDT) earlier expressed interest in offering IPTV service, that would allow the company to go into "triple play" or the convergence of voice, video, and data in a single platform.

The NTC is currently conducting consultations with experts regarding digital TV and has formed a technical working group. "We have asked Samsung of Korea, which has adopted the US standard ATSC, to make a presentation to us," Solis said.

Other available standards in the market for digital TV are the more widely-used European standard DVV which is adopted in European countries and most of Southeast Asia, the Japanese standard used in Japan, and the Chinese standard used in China. Singapore, Hong Kong and Malaysia use DVV.

Since transmitting programs digitally would involve the use of another frequency, Solis said broadcasting companies that wish to offer the digital TV service will have to secure authority and frequency from the NTC.

According to the US Federal Communications Commission (FCC), DTV is a new broadcasting technology that will transform television viewing experience. DTV enables broadcasters to offer television with movie-quality picture and sound. It can also offer multiple programming choices and interactive capabilities.

The FCC noted that TV broadcasting companies worldwide are switching to DTV since this broadcast technology is more flexible and efficient than today’s more widespread broadcast technology, which is called "analog."

For example, rather than being limited to providing one analog programming signal, a broadcaster will be able to provide a sharp "high definition" (HDTV) program or multiple "standard definition" digital programs simultaneously. Providing several program streams using the digital spectrum is called "multicasting." The number of programs a station can send using the digital spectrum depends on the level of picture detail, also known as "resolution," desired in each programming stream. DTV can provide picture resolution, interactive video, and data services that easily surpass the capabilities of "analog" technology.