The Philippines government’s Telecommunications Office (Telof) is looking to set up its own international gateway facility (IGF) so that it could retain its phone subscribers in the provinces and save up to two million pesos (US$35,715) a month in interconnection charges.
A top Telof official said the initiative is the only option left to the government to prevent a further decline in its telephone subscriber base, mostly in the Visayas and Mindanao regions, and to be able to pay off its 118-million pesos debt to dominant private carrier Philippine Long Distance Telephone Company (PLDT), including 21 million pesos in penalties.
This debt represents the interconnection charges Telof has failed to pay PLDT since 1994. Because of this debt, PLDT has been blocking calls originating from Telof’s network that seek to pass through PLDT’s landline network.
Telof, established as early as 1947, operates what used to be the largest telecommunications backbone in the country. However, a significant part of its network has gradually been bought by private carriers starting in 1997. The Gokongwei-owned carrier, Digital Telecommunications Inc (Digitel), for example, bought most of Telof’s network in Luzon. At present, Telof still runs an extensive telephone network in the Visayas and Mindanao regions, where it has about 27,000 subscribers.
Elberto Emphasis, Department of Transportation and Communications (DOTC) assistant secretary and Telof commissioner, said they plan to begin setting up the IGF by January or February next year and finish the project in two to three months. By having its own IGF, Telof can save as much as two million pesos in interconnection charges that it currently pays to private IGF providers whenever a call passes through an IGF provider’s network such as international long distance calls made to or by a Telof subscriber.
“The most immediate turnaround strategy that we can do is to acquire our own IGF because that would free us from paying up to two million pesos in interconnection charges and allow us to get a share of the international toll traffic business,” said Emphasis, who also sits as one of four deputy commissioners of the newly-formed Commission on Information and Communications Technology (CICT).
Formerly an agency attached to the DOTC, Telof has been transferred under the wings of the CICT along with the National Computer Center (NCC) and the Philippine Postal Office (PhilPost).
Telof has been losing customers because of its interconnection woes with PLDT as well as the proliferation of cellular phones. Setting up its own cellular network is not part of Telof’s plans, Emphasis said, but improving its bottom line and recovering from its losses is a priority of the agency.
Telof serves mainly far-flung barangays and communities in the Visayas and Mindanao as well as remote areas in Luzon. These are areas where private carriers have shied away from because they feel they cannot generate enough revenues to sustain their business there.
Emphasis clarified that Telof has never intended to compete with private carriers. Telof, he emphasized, provides services mostly in areas where private carriers are not present.
He explained that part of the mandate of Telof is to develop the markets in these unserved areas so that private carriers may eventually come in and provide their services. Telof’s network is always up for sale if a private carrier is interested, he said.
Emphasis admitted though that Telof’s facilities are mostly outdated. He pointed out, however, that a few are at par with the equipment of private carriers. But whatever the state of its facilities is, he said it is the mandate of the government agency to provide telecommunications services to every part of the country. Telof has 153 million pesos in collectibles, including bad debts of its subscribers. If it can save the two-million pesos interconnection charge it regularly pays to private carriers and generate some revenues from its international toll traffic, Telof will be able to reverse its fortunes, said Emphasis.
To set up the IGF, the government will need at least 20 million pesos in capital. Since there is no available budget for the project, Emphasis said they are working on a deal with international service providers who will set up the IGF for Telof in exchange for a possible toll-sharing or time-sharing arrangement. If this pushes through, Telof will no longer need to put out any cash for the project.
Telof is eyeing Cebu City as the location of its IGF because of the proximity of the city to Telof’s main networks in the Visayas and Mindanao.
“The establishment of the IGF will determine to a large extent the success of the transition of Telof as part of the new CICT,” said Emphasis.
The agerncy’s main function under the CICT is to provide the physical backbone of the nationwide e-government services project. It intends to electronically hook up every barangay in the country, over 3,000 in all, by providing telecommunications and Internet connectivity to each one.
Part of this initiative is the setting up of community e-centers in every barangay. These e-centers are envisioned to become remote e-government hubs where government services can be accessed through the Internet.
The CICT has, so far, deployed five pilot e-centers. There are two in Bukidnon, two in Bohol and one in Quezon City. Another 111 e-centers are expected to be set up by next year, the bulk of which will be set up in barangays in the Visayas and Mindanao.