EXECUTIVE ORDER NO. 109
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:
Section 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 Sec. 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 Sec. 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 Sec. 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.
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Since 19.07.98.