Extending the net: Boosting internet access in Philippines

In the undisputed text messaging capital of the world, cellphone users in the Philippines exchange SMS messages more frequently than any other people on earth; at the last count averaging 600 text messages each per month.

Perhaps understandably, fast and reliable internet access struggles to keep pace given such voracious demand across the vast archipelago of 7,600 or so islands spanning roughly 300,000 square kilometres.

But the government is rising to the challenge, presenting an enticing market for investors.

This article outlines the legal and regulatory scenario in a technology, media and telecommunications (TMT) sector undergoing rapid development.

Development plan

The National Economic and Development Authority’s Philippine Development Plan (PDP) for 2023 to 2028 declares the government’s objective to increase internet speed, coverage and network in the Philippines. It aims to achieve this by:

Expanding accessibility and deployment of fibre optic cables, broadband and a 5G network. Immediate priority is focused on fast speed, high density of IT-BPM workers, clustering of tourism and retail facilities, activities, ports, airports, transport terminals, logistics facilities and creative industries; and
Building and operating broadband facilities to offer internet services in underserved and unserved areas, including the use of direct access to all satellite systems – whether fixed, mobile, international or domestic – to connect local businesses and tourism sites with their developing markets and build resilience.

Liberalisation

The telecoms industry was previously highly regulated, with telecoms services – including internet provision – classified as a public utility.

Prospective telecoms entities needed: (1) to secure a legislative franchise from the Philippine Congress and a Certificate of Public Convenience and Necessity from the National Telecommunications Commission (NTC); and (2) be at least a 60% Filipino-owned and controlled corporation.

Now, under Republic Act No. 11659, amending Commonwealth Act No. 146 (Amended Public Service Act), entities authorised to provide internet services are no longer limited to being enfranchised 60% Filipino-owned
and controlled.

Under the present legal framework, a commercial and private sector internet service provider (ISP) may be registered with the NTC as value-added service (VAS) providers, as long as they rely on the service network of an enfranchised telecoms entity as their underlying transmission medium for providing internet services.

Since these VAS providers are not treated as telecoms entities under the Amended Public Service Act, this amendment opens the market to more ISPs and investors in the Philippines.

Satellite internet

RA No. 10929 expands the concept of an ISP to include an entity that acquires and utilises internet connectivity directly from satellites and other emerging technologies.

Regulated by the Department of Information and Communications Technology (DICT), these satellite service providers/operators (SSPOs) are defined as “providers or operators of satellite systems, whether fixed or mobile, international or domestic, that are duly authorised to engage in the provision of satellite communications services under the laws of their respective countries of domicile”.

The DICT has also clarified that SSPOs can also do business as VAS providers (including the provision of internet services as an ISP) subject to compliance with the relevant requirements as a registered VAS provider with the NTC (DICT Circular No. 2, series of 2021).

Meanwhile, the Philippine Space Agency (PhilSA) and the Department of Science and Technology (DOST) have also taken the lead in exploring new technologies.

In 2021, PhilSA, the DOST and DICT partnered non-geostationary orbit Satellite Internet Operators (SIOs) to launch the Introducing Non-Geostationary Satellite Constellations Test Deployments to Improve Internet Service (INCENTIVISE) project, distributing satellite internet kits to geographically isolated and disadvantaged areas in remote regions in the Philippines.

Data centres

Under the latest legal framework, investors can set up telco-neutral data centres – namely, data centres not principally affiliated with any of the enfranchised telecoms entities – and are given more leeway to expand their business.

For instance, when a data centre operator secures a certificate of registration as a VAS provider, it is authorised to provide co-location services, cross-connect services, business-to-business (B2B) interconnectivity and internet access services through the data centre.

This opens the door to potential clients in need of multiple data centre services who are no longer limited to availing of services offered by traditional, established telecoms entities.

Potential clients can secure internet services while at the same time co-locating in these telco-neutral data centres. This equips investors with innovative technologies for efficient data centre capacity and operations.

Common tower policy

Institutionalising the common tower policy for independent tower companies (ITCs) was also made possible by RA No. 10929 and the Amended Public Service Act.

These laws exclude the operation of passive telecommunications tower infrastructure (PTTIs) – namely, all types of outdoor non-electronic telecoms infrastructure or civil works – from the definition of telecoms.

Since the operation of PTTIs by ITCs is not considered “telecommunications”, then (similar to ISPs and outside of registration with the DICT) these ITCs do not need to be 60% Filipino-owned and controlled and required to have a legislative franchise.

DICT Circular No. 008, series of 2020, permitted ITCs to allow multiple mobile network operators to co-locate, mount or install their respective equipment for rendering ITC services. This amended the prior regime where PTTIs were operated only by enfranchised telecoms entities.

The DICT has also made it mandatory that all ITC installations shall be co-located in shared PTTIs unless there is meritorious grounds to permit otherwise (DICT Circular No. 008, series of 2020, title III, sec 11(d)).

Safeguarding e-commerce

RA No. 10175, or the Cybercrime Prevention Act of 2012, recognises the vital role of information and communications industries. It defines and penalises several cybercrime offences which affect, among others, the confidentiality, integrity and availability of computer data and systems.

The law also provides that other crimes defined in other penal laws shall be penalised with a higher penalty when committed with the use of computer systems.

To strengthen law enforcement officers, the National Bureau of Investigation (NBI) and Philippine National Police (PNP) are authorised to apply for the following types of cyber warrants with the applicable regional trial court:

1. Warrant to disclose computer data;
2. Warrant to intercept computer data;
3. Warrant to search, seize and examine computer data; and
4. Warrant to examine computer data.

The service provider is obliged to maintain the integrity of traffic data and subscriber information relating to ICT services that they provide.

The data shall be preserved for a minimum period of six months from the date of the transaction. Content data shall be similarly preserved for six months from the date of receipt of the order from law enforcement authorities requiring its preservation.

To protect those engaged in e-commerce, RA No. 11967 – known as the Internet Transactions Act – was passed in 2023, granting the Department of Trade and Industry regulatory jurisdiction as to the use of the internet for conducting e-commerce by e-marketplaces, online merchants, e-retailers, digital platforms and third-party platforms.

The outlook

The TMT sector is undergoing rapid development from an industrial and commercial perspective. This will be enticing for new investors, both from within and outside the Philippines.

Philippine laws and regulations are keeping abreast with these changes.

There is a continuing drive to ensure that the legal framework for TMTs is able to address these new advancements in technology, while at the same time ensuring protection of customers in the Philippines.