PLDT, Globe clash over Bonifacio Global City service arrangements

By Mary Ann Ll. Reyes, The Philippine Star

Posted at Jul 22 2011 07:10 AM | Updated as of Jul 22 2011 03:12 PM

MANILA, Philippines - Philippine Long Distance Telephone Co. (PLDT) said yesterday that rival Globe Telecom’s rehashed attacks against PLDT with respect to the exclusivity arrangement in Bonifacio Global City (BGC) just shows Globe is grasping at straws, knowing fully well that it does not have any lawful objection to PLDT’s acquisition of Digital Telecommunicatiobs Phils. Inc. (Digitel).

This, as Globe questioned PLDT “for again baring its monopolistic arrogance when it tried to bar” the entry of Globe services from BGC.

“Globe’s attacks against PLDT’s subsidiary, Bonifacio Communications Corp. (BCC) which owns, installs and operates the communications infrastructure in BGC, is another attempt by Globe to divert attention from its own illegal activities,” PLDT spokesperson Ramon Isberto said.

“What is striking is that up to now, Globe has failed to answer the issue of its own monopolistic activities in Ayala Malls which are owned by its parent company. It has been pointed out many times that no other carrier, expect for Globe/Innove, can provide telecommunications services in Ayala Malls. This is a matter that the government should look into, or else a dubious “double standard” will be allowed to prevail that undoubtedly curtails free competition,” he said.

But Globe chief legal counsel Rodolfo Salalima pointed out that PLDT used an agreement it had with Fort Bonifacio Development Corp. (FBDC), overseer of the master planning for BGC, back in 2002 that it would be the area’s exclusive telecommunications and data provider in exchange for the company purchasing a 75% stake in BGC, a firm mandated to provide telecommunications infrastructure and related services within BGC.

PLDT’s affiliate, Metro Pacific Corp., also owned a stake in Bonifacio Land Development Corp., the holding company for BGC, which it subsequently sold in 2003.

However, Isberto pointed out that BCC’s exclusivity in providing the communications infrastructure in BGC is very different from Globe’s exclusivity that disallows telecommunications entities from serving customers in the Ayala Malls.

“Unlike Globe, BCC is not a telecoms carrier, it is not engaged in telecommunications services; it only provides infrastructure such as the conduits where fiber optic cables pass through. What Globe conveniently omits in its tirade against PLDT is that Globe, a company that presents itself as an advocate of best business practices, side-stepped legal processes and unlawfully damaged and severed BCC’s conduit in BGC without BCC’s consent, without any court order, and without any notice whatsoever,” Isberto said.

Globe and Innove merely appropriated for themselves the infrastructure installed by BCC so that they could use the same for the cables of Innove to run through into private property, he said. It was precisely this unlawful and malicious act of Globe and Innove that prompted BCC to sue the executives and key officers of Globe/Innove criminally before the Office of the City Prosecutor of Taguig. While this case remains pending before the prosecutor’s office, BCC is confident that the prosecutor’s office will see that Globe and Innove’s officers clearly committed criminal acts that warrant their prosecution in court, Isberto added.

“What is peculiar in this case is that the exclusivity of BCC in the BGC was granted under a private contract with FBDC even before the Ayalas gained control over FBDC,” he said. “It was only after the Ayala Group took the helm of FBDC that it unilaterally declared that the exclusivity granted to BCC was illegal and justified taking the law into their own hands by illegally damaging and severing BCC’s conduits in BGC without BCC’s consent.

As for the other cases involving PLDT and BCC, on one hand, and Globe and Innove, on the other, these are pending in various courts and PLDT/BCC are determined to defend their rights under their private contracts in the BGC,he said.

Globe brought the case before the National Telecommunications Commission (NTC) as it could not set up its own IT hub in what is now its parent company’s territory because of the exclusivity arrangement that PLDT and Smart had made for BGC, Globe officials noted. The NTC released Memorandum Circular (MC) 05-05-2002, which stated that information technology/business process outsourcing (IT/BPO) hubs such as BGC and Eastwood in Quezon City are designated telco-free zones. In these free zones, any duly-enfranchised public telecommunications company can set up and provide high-speed information networks. The NTC Memorandum Circular was also backed by a subsequent legal opinion from the Department of Justice.

PLDT sued the NTC and Globe before the Quezon City Regional Trial Court, on the argument that “exclusivity is an industry practice and is not an abnormality.” Both the NTC and the QC RTC ruled against PLDT, with the former pointing to it as a grave violation of its mandate to promote non-discriminatory universal access to telecommunications facilities. Just the same, PLDT still elevated the case to the Court of Appeals in January 2011.

On April 25, 2011, Globe, through unit Innove Communications, filed its comment on the case filed by PLDT that seeks to ban all Globe services from BGC before the Court of Appeals’ Tenth Division. In its comment, Globe argued that it is in the public’s best interest that open access and free competition among telcos be allowed at the BGC. It asked the Appellate Court to dismiss PLDT’s case for lack of merit.

Salalima added that PLDT’s intransigence in this BGC entry barrier case and in other issues like the excessive holdings in frequencies and the refusal to interconnect faces an uphill climb. “There is a growing broad sectoral appeal for compliance with the Constitutional provision shunning monopolies that are a threat to public interest and free competition. Consumer groups and various people organizations are calling for a new anti-trust bill to add more teeth to the enforcement of Constitutional provisions against monopolies and cartels,” Globe said in a statement.

Globe had called on regulators to arrest the impact of the impending merger of PLDT and Digitel, which could turn into a virtual telco monopoly when it eventually controls 70% of the market and more than majority of spectrum frequencies assigned by the NTC.