DOJ opinion allowing 100% foreign ownership of VAS providers hit

Business Mirror

Posted at Feb 04 2009 11:21 PM | Updated as of Feb 05 2009 07:21 AM

A telecommunications industry consumer advocate group scored the Department of Justice (DOJ) on Tuesday for coming out with a legal opinion clearing the way for the National Telecommunications Commission (NTC) to open the mobile telephone content market to 100-percent foreign owned companies.

Anthony Ian “Tonyo” Cruz, president of TXT POWER, said the DOJ opinion was highly questionable since it had ignored entirely the Constitutional prohibition against foreign control of a vital industry. Cruz assailed the NTC for making a policy that would surrender control of content in mobile telecommunications to foreigners.

“They [NTC and DOJ officials] have ignored a provision in the Constitution that foreigners should not have total control of an essential industry or utility like telecommunications,” Cruz said.

“Filipino companies should have priority in the development of the mobile telephone content industry. It’s a sunshine industry that, if 100-percent foreign ownership were allowed, would be dominated by foreigners instead of Filipinos,” Cruz said.

He issued the statement in reaction to a legal opinion issued by Justice Secretary Raul Gonzalez declaring that value-added service (VAS) providers, or companies that provide content in mobile telephone telecommunications need not follow the 60-percent Filipino ownership requirement for public utilities.

The DOJ said VAS providers, which mainly supply ring tones, picture messages and other add-on mobile telephone content such as electronic games, are not considered public-utility companies under the law and by existing jurisprudence.

The opinion said a VAS provider will only become a public utility if it holds itself out to whoever may wish to avail of its services.”

“On the other hand, a VAS provider cannot be regarded as a public utility if it extends its services to a particular telecommunications company covered by a private contract, which owns and operates the transmission, switching and distribution facilities and, as such, is the public utility contemplated under the Constitution,” the opinion said.

“Therefore, the nationality requirement imposed by the Constitution will only apply to the first but not to the second situation,” it added.

The DOJ issued the legal opinion upon the request of the NTC as to whether the 60-percent Filipino ownership requirement in the Constitution applied to VAS providers.

It will be recalled that two lawmakers had already warned the NTC against hastily allowing the entry of 100-percent foreign-owned mobile phone content providers.

Party-list Rep. Teodoro Casiño of Bayan Muna and Liberal Party Rep. Rozzano Rufino Biazon of Muntinlupa said the NTC should carefully study its plan to allow the entry of foreign content providers from the point of view of the Constitution.

Casiño said the Charter provides that media companies should be 100-percent owned and run by Filipinos, while public utilities such as telecommunications firms are allowed to be owned by foreigners up to a maximum of 40 percent.

For his part, Biazon said the NTC plan could have implications on national security.