EXECUTIVE ORDER NO. 109
POLICY TO IMPROVE THE PROVISION OF LOCAL EXCHANGE CARRIER
SERVICE
WHEREAS, local
exchange service is fundamental to the goal of providing universal access to
basic and other telecommunications services;
WHEREAS, during
the development phase, cost-based pricing of services such as national and
international long distance and other telecommunication services may be
employed to generate funds which may then be used to subsidize the local
exchange service;
WHEREAS, while the
telecommunications sector as a whole is profitable, the profits mainly come
from the toll services particularly from the international long distance
service; and
WHEREAS, there is
a need to promulgate new policy directives to meet the targets of Government
thru the National Telecommunications Development Plan (NTDP) of the Department
of Transportation and Communications (DOTC), specifically: (1) to ensure the
orderly development of the telecommunications sector through the provision of
service to all areas of the country; (2) to satisfy the unserviced demand for
telephones; and (3) to provide healthy competition among authorized service
providers.
NOW,
THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philippines, by
virtue of the powers vested in me by law, do hereby order:
Sec.
1. Definition of Terms. The following definitions shall apply within the
context of this policy:
(a)
Basic Telecommunications Service - refers to local exchange residence and
business telephone service and telegraph service without additional features;
(b)
Cost-based pricing - refers to a system of pricing in which the actual cost of
providing service establishes the basic charge to which a fixed mark-up is
added to collect a standard charge to all users without discrimination;
(c)
Local Exchange Carrier Service - refers to a telecommunications service,
primarily but not limited to voice-to-voice service, within a contiguous
geographic area furnished to individual subscribers under a common local
exchange rate schedule;
(d)
Value-based pricing - also known as value of service pricing refers to a system
of pricing where cost of service establishes the minimum charge and a variable
mark-up is added to collect revenue from those who value the service more
highly; and
(e)
Universal Access - refers to the availability of reliable and affordable
telecommunications service in both urban and rural areas of the country.
Sec.
2. Objective. The objective of this policy is to improve the provision of local
exchange service in unserved and underserved areas as defined by the National
Telecommunications Commission (NTC), thus promoting universal access to basic
telecommunications service.
Sec.
3. General Policy. The Government shall pursue the policy of democratization in
the ownership and operation of telecommunication facilities and services.
Sec.
4. Cross-Subsidy. Until universal access to basic telecommunications service is
achieved, and such service is priced to reflect actual costs, local exchange
service shall continue to be cross-subsidized by other telecommunications
services within the same company.
Sec.
5. Service Packaging. Authorized international gateway operators shall be
required to provide local exchange service in unserved and underserved areas,
including Metro Manila, within three (3) years from the grant of an authority
from the NTC, under the following guidelines:
(a)
Authorized gateway operators shall provide a minimum of three hundred (300)
local exchange lines per international switch termination;
(b)
At least one (1) rural exchange line shall be provided for every ten (10) urban
local exchange lines installed;
(c)
The establishment of public Calling Offices at the rural barangay level shall
be given an appropriate credit by the NTC towards the obligation to provide
local exchange service. The above figures are derived from the following
factors: number of exchange lines, number of international switch terminations,
traffic, grade of service and demand;
(d)
No permit for an international gateway facility shall be granted an applicant
unless there is a clear showing that it can establish the necessary foreign
correspondenceships; and
(e)
Carriers already providing local exchange service in accordance with Section
5(a), (b) and (c) shall be authorized to operate an international gateway
subject to applicable laws.
Sec.
6. Subsidiary. The subsidiaries of a public telecommunications carrier
operating an authorized international gateway shall not be allowed to operate
another gateway in accordance with Executive Order No. 59 (1993).
For
this purpose, a telecommunications company shall be considered as a subsidiary
if any or all of the following conditions exists:
(a)
The two companies share the services of key operating and management personnel;
(b)
The shareholdings of one company, together with the shareholdings of its
stockholders, in the other company aggregate more than fifty percent (50%) of
the outstanding capital stock of the latter company; or
(c)
One company and its stockholders have a combined exposure in the other company
in the form of loans, advances, or asset-lease equivalent to more than fifty
percent (50%) of the capital accounts of the other company.
Sec.
7. Cellular Mobile Telephone System. Authorized international gateway operators
may also be authorized to provide Cellular Mobile Telephone System (CMTS)
service and other non-basic telecommunications services which are possible
sources of subsidy for local exchange carrier service.
Sec.
8. Non-Basic Services. Authorized providers of other non-basic
telecommunications services which are possible sources of subsidy shall be
required to provide local exchange carrier service in accordance with
guidelines, rules and regulations prescribed by the NTC.
Sec.
9. Duration of Services. The obligation to provide local exchange carrier
service remain in force for as long as the service providers described in
Section 5, 7 and 8 hold their authorizations to provide their respective
non-basic services.
Sec.
10. Other Requirements. The foregoing provisions shall be without prejudice to
the other requirements for the grant of franchises and Certificates of Public
Convenience and Necessity.
Sec.
11. Interconnection Requirement. All telecommunications service networks shall
be interconnected in a non-discriminatory manner in accordance with Executive
Order No. 59 (1993) and its implementing guidelines.
Sec.
12. Financial Reporting Requirements. The internal subsidy flows shall be made
explicit in the financial reporting system of the telecommunications service
providers.
Sec.
13. Policy Implementation. The NTC is hereby directed to promulgate the
guidelines, rules and regulations to implement this Executive Order within
thirty (30) days from the effective date of this Executive Order.
Sec.
14. Violations. Any violation of this Executive Order shall be subject to the
same penalties provided for in Section 13 of Executive Order No. 59 (1993).
Sec.
15. Transitory Provisions. Existing telecommunications service providers
described in Section 5, 7 and 8 shall have a period of five (5) years to comply
with the above requirements to provide local exchange service.
Sec.
16. Pending Applications. Telecommunications service providers with existing
and pending applications for International Gateway Facility, Cellular Mobile Telephone
System (CMTS) and other Value Added Services (VAS) providers need not revise
their applications with the NTC. However, upon issuance of the Provisional
Authority or CPCN, as the case may be, they shall be given a period of three
(3) months within which to submit and file the necessary applications for local
exchange service in accordance with provisions hereof.
Sec.
17. Repealing Clause. All executive orders, administrative orders and other
executive issuances inconsistent herewith are hereby repealed, modified or
amended accordingly.
Sec.
18. Effectivity. This Executive Order shall take effect immediately.
DONE
in the City of Manila, this 12th day of July in the year of Our Lord, Nineteen
Hundred and Ninety-Three.