Ra 7925

REPUBLIC ACT No. 7925

AN ACT TO PROMOTE AND GOVERN THE DEVELOPMENT OF PHILIPPINE
TELECOMMUNICATIONS AND THE DELIVERY OF PUBLIC TELECOMMUNICATIONS
SERVICES

ARTICLE I
GENERAL PROVISIONS

Section 1. Short Title. - This Act shall be known as the "Public Telecommunications Policy Act of the
Philippines."

Section 2. Scope and Application. - This Act shall apply to all public telecommunications entities in
the Philippines.

Section 3. Definitions and Interpretations. - For purposes of this Act, the following terms shall be
used:

(a) Telecommunications - any process which enables a telecommunications entity to relay
and receive voice, data, electronic messages, written or printed matter, fixed or moving
pictures, words, music or visible or audible signals or any control signals of any design and
for any purpose by wire, radio or other electromagnetic, spectral, optical or technological
means.

(b) Public telecommunications entity - any person, firm, partnership or corporation,
government or private, engaged in the provision of telecommunications services to the public
for compensation.

(c) Broadcasting - an undertaking the object of which is to transmit over-the-air commercial
radio or television messages for reception of a broad audience in a geographic area.

(d) Franchise - a privilege conferred upon a telecommunications entity by congress,
authorizing that entity to engage in a certain type of telecommunications service.

(e) Local exchange operator - an entity providing transmission and switching of
telecommunications services, primarily but not limited to voice-to-voice service, in a
geographic area anywhere in the Philippines.

(f) Inter-exchange carrier - an entity, sometimes referred to as carrier's carrier or national
backbone network operator, authorized to install, own and operate facilities which connect
local exchanges within the Philippines and to engage in the business of inter-exchange
national long distance services.

(g) International carrier - an entity primarily engaged in the business of providing
transmission and switching of any telecommunications service between the Philippines and
any other point of the world to which it has an existing correspondent or prospective
interconnection agreements.

(h) Value-added service provider (VAS) - an entity which, relying on the transmission,
switching and local distribution facilities of the local exchange and inter-exchange operators,

and overseas carriers, offers enhanced services beyond those ordinarily provided for by
such carriers.

(i) Public toll calling station - a non-exclusive facility at which the public may, by the payment
of appropriate fees, place as well as receive telephone calls and/or telegrams or other
messages.

(j) Mobile radio telephone system - a wide area mobile radio telephone system with its own
switch, base stations and transmission facilities capable of providing high capacity mobile
telecommunications by utilizing radio frequencies.

(k) Interconnection - the linkage, by wire, radio, satellite or other means, of two or more
existing telecommunications carriers or operators with one another for the purpose of
allowing or enabling the subscribers of one carrier or operator to access or reach the
subscribers of the other carriers or operators.

ARTICLE II
POLICY AND OBJECTIVES

Section 4. Declaration of National Policy. - Telecommunications is essential to the economic
development, integrity and security of the Philippines, and as such shall be developed and
administered as to safeguard, enrich and strength the economic, cultural, social and political fabric of
the Philippines. The growth and development of telecommunications services shall be pursued in
accordance with the following policies:

(a) A fundamental objective of government is to develop and maintain a viable, efficient,
reliable and universal telecommunication infrastructure using the best available and
affordable technologies, as a vital tool to nation building and development;

(b) The expansion of the telecommunications network shall give priority to improving and
extending basic services to areas not yet served. For this purpose, government shall
promote a fair, efficient and responsive market to stimulate the growth and development of
the telecommunications facilities and services, with emphasis on the accessibility by persons
to basic services in unserved and underserved areas at affordable rates;

(c) The radio frequency spectrum is a scarce public resource that shall be administered in
the public interest and in accordance with international agreements and conventions to
which the Philippines is a party and granted to the best qualified. The government shall
allocate the spectrum to service providers who will use it efficiently and effectively to meet
public demand for telecommunications service and may avail of new and cost effective
technologies in the use of methods for its utilization;

(d) Rates and tariff charges shall be fair, just and reasonable and for this purpose, the
regulatory body shall develop tariff structures based on socioeconomic factors and on
financial, technical and commercial criteria as measures to ensure a fair rate of return and as
a tool to ensure economic and social development;

(e) Public telecommunications services shall be provided by private enterprises. The private
sector shall be the engine of rapid and efficient growth in the telecommunications industry;

(f) A healthy competitive environment shall be fostered, one in which telecommunications
carriers are free to make business decisions and to interact with one another in providing
telecommunications services, with the end in view of encouraging their financial viability
while maintaining affordable rates;

(g) A fair and reasonable interconnection of facilities of authorized public network operators
and other providers of telecommunications services is necessary in order to achieve a viable,
efficient, reliable and universal telecommunications services;

(h) The government shall give all the assistance and encouragement to Philippine
international carriers in order to establish interconnection with other countries so as to
provide access to international communications highways on a competitive basis;

(i) For efficiency, practicability, and convenience, but with due regard to the observance of
due process at all times, regulation of telecommunications entities shall rely principally on an
administrative process that is stable, transparent and fair, giving due emphasis to technical,
legal, economic and financial considerations;

(j) No single franchise shall authorize an entity to engage in both telecommunications and
broadcasting, either through the airwaves or by cable;

(k) Ownership of public telecommunications entities to as wide a number of people as
possible, preferably to its customers, in order to encourage efficiency and public
accountability and to tap personal savings shall be encouraged;

(l) The development of a domestic telecommunications manufacturing industry to meet the
needs of the Philippines and to take advantage of export opportunities shall be promoted
without preventing, deterring or hampering the goal of full universal service; and

(m) Human resources skills and capabilities must be harnessed and improved to sustain the
growth and the development of telecommunications under a fast changing
telecommunications environment.

ARTICLE III
ADMINISTRATION

Section 5. Responsibilities of the National Telecommunications Commission. - The National
Telecommunications Commission (Commission) shall be the principal administrator of this Act and
as such shall take the necessary measures to implement the policies and objectives set forth in this
Act. Accordingly, in addition to its existing functions, the Commission shall be responsible for the
following:
Lawphil&159;

(a) Adopt an administrative process which would facilitate the entry of qualified service
providers and adopt a pricing policy which would generate sufficient returns to encourage
them to provide basic telecommunications services in unserved and underserved areas;

(b) Ensure quality, safety, reliability, security, compatibility and inter-operability of
telecommunications facilities and services in conformity with standards and specifications set
by international radio and telecommunications organizations to which the Philippines is a
signatory;

(c) Mandate a fair and reasonable interconnection of facilities of authorized public network
operators and other providers of telecommunications services through appropriate modalities
of interconnection and at a reasonable and fair level of charges, which make provision for
the cross subsidy to unprofitable local exchange service areas so as to promote telephone
density and provide the most extensive access to basic telecommunications services
available at affordable rates to the public;

(d) Foster fair and efficient market conduct through, but not limited to, the protection of
telecommunications entities from unfair trade practices of other carriers;

(e) Promote consumers welfare by facilitating access to telecommunications services whose
infrastructure and network must be geared towards the needs of individual and business
users;

(f) Protect consumers against misuse of a telecommunications entity's monopoly or quasi-
monopolistic powers by, but not limited to, the investigation of complaints and exacting
compliance with service standards from such entity; and

(g) In the exercise of its regulatory powers, continue to impose such fees and charges as
may be necessary to cover reasonable costs and expenses for the regulation and
supervision of the operations of telecommunications entities.

Section 6. Responsibilities of and Limitations to Department Powers. - The Department of
Transportation and Communications (Department) shall not exercise any power which will tend to
influence or effect a review or a modification of the Commission's quasi-judicial functions.

In coordination with the Commission, however, the Department shall, in accordance with the policies
enunciated in this Act, be responsible for:

(a) the development and maintenance of a long-term strategic national development plan for
telecommunications to serve as a guide to the industry and potential investors as well as to
the Commission;

(b) the coordination of research and development activities in government with the work of
other institutions in the field of telecommunications;

(c) the representation and promotion of Philippine interests in international bodies, and the
negotiation of the nation's rights and obligations in international telecommunications matters;
and

(d) the operation of a national consultative forum to facilitate interaction amongst the
telecommunications industries, user groups, academic and research institutions in the airing
and resolution of important issues in the field of communications.

ARTICLE IV
TELECOMMUNICATIONS ENTITIES

Section 7. Categories of Telecommunications Entities. - A telecommunications entity shall be
authorized to operate in one or more of the telecommunications categories mentioned in this Act
provided each category is covered by its franchise.

Section 8. Local Exchange Operator. - A local exchange operator shall:

(a) provide universal basic telephone service to all subscribers who applied for such service,
within a reasonable period and at such standards as may be prescribed by the Commission
and at such tariff as to sufficiently give it a fair return on its investments.

(b) be protected from uncompensated bypass or overlapping operations of other
telecommunications entities in need of physical links or connections to its customers in the
area except when it is unable to provide, within a reasonable period of time and at desired
standard, the interconnection arrangements required by such entities.

(c) have the first option to provide pay telephone services or public calling stations in the
area covered by its network.

(d) be entitled to a fair and equitable revenue sharing arrangement with the inter-exchange
carrier or such other carriers connected to its basic network.

Section 9. Inter-Exchange Carrier. - The number of entities allowed to provide inter-exchange
national long distance services may be limited, but as a matter of policy, where it is economically
viable, at least two (2) carriers, shall be authorized: Provided, however, That a local exchange
carrier shall not be restricted from operating its own inter-exchange carrier service if its viability is
dependent thereto. Such inter-exchange carrier shall have the following obligations:

(a) It shall interconnect with other networks in the same category and with local exchange
carriers or other telecommunications entities, upon application and within a reasonable time
period, and under fair and reasonable level charges, in order that domestic and international
long distance services are made possible; and

(b) It shall have the right to establish and operate its own tandem switching facilities to which
international calls or overseas carriers have to course their messages or signals.

Section 10. International Carrier. - Only entities which will provide local exchange services and can
demonstrably show technical and financial capability to install and operate an international gateway
facility shall be allowed to operate as an international carrier.

The entity so allowed shall be required to produce a firm correspondent or interconnection
relationships with major overseas telecommunications authorities or carriers within one (1) year from
the grant of the authority.

The international carrier shall also comply with its obligations to provide the local exchange service
in unserved or underserved areas within three (3) years from the grant of the authority as required
by existing regulations: Provided, however, That said carrier shall be deemed to have complied with
the said obligation in the event it allows an affiliate thereof to assume such obligation and who
complies therewith.

Failure to comply with the above obligations shall be a cause to cancel its authority or permit to
operate as an international carrier.

Section 11. Value-added Service Provider. - Provided that it does not put up its own network, a VAS
provider need not secure a franchise. A VAS provider shall be allowed to competitively offer its
services and/or expertise, and lease or rent telecommunications equipment and facilities necessary

to provide such specialized services, in the domestic and/or international market in accordance with
network compatibility.

Telecommunications entities may provide VAS, subject to the additional requirements that:

(a) prior approval of the Commission is secured to ensure that such VAS offerings are not
cross-subsidized from the proceeds of their utility operations;

(b) other providers of VAS are not discriminated against in rates nor denied equitable access
to their facilities; and

(c) separate books of accounts are maintained for the VAS.

Section 12. Mobile Radio Services. - In a local telephone exchange area, more than one duly
enfranchised provider of mobile radio services, distinct and separate from the local exchange carrier,
may be allowed to operate. However, such entities shall secure prior authority from the Commission
and, in addition, comply with the conditions imposed on VAS and with the norms on radio frequency
spectrum utilization.

The operator of a mobile radio telephone system shall comply with its obligations to provide local
exchange service in unserved and underserved areas in accordance with existing regulations.
Failure to comply with this obligation within (3) years from the grant of the authority shall be a cause
to cancel its authority or permit to operate a mobile radio telephone system.lawphil&159;

Section 13. Radio Paging Services. - Duly enfranchised radio paging services involving either voice
or data messages, shall be allowed to compete freely in rates, number of operators, or variety of
operating modalities, subject only to the norms on radio frequency spectrum utilization.

ARTICLE V
OTHER SERVICES AND FACILITIES

Section 14. Customer Premises Equipment. - Telecommunications subscribers shall be allowed to
use within their premises terminal equipment, such as telephone, PABX, facsimile, data, record,
message and other special purpose or multi-function telecommunication terminal equipment
intended for such connection: Provided, That the equipment is type-approved by the Commission.

Section 15. Radio Frequency Spectrum. - The radio frequency spectrum allocation and assignment
shall be subject to periodic review. The use thereof shall be subject to reasonable spectrum user
fees. Where demand for specific frequencies exceed availability, the Commission shall hold open
tenders for the same and ensure wider access to this limited resource.

ARTICLE VI
FRANCHISE, RATES AND REVENUE DETERMINATION

Section 16. Franchise. - No person shall commence or conduct the business of being a public
telecommunications entity without first obtaining a franchise.

The Commission, in granting a Certificate of Public Convenience and Necessity (CPCN), may
impose such conditions as to duration and termination of the privilege, concession, or standard or
technical aspects of the equipment, rates, or service, not contrary to the terms of the franchise. In no
case, however, shall the CPCN be shorter than five (5) years, nor longer than the life of the

franchise. A CPCN expiring at the same time as the franchise shall be deemed to have been
renewed for the same term if the franchise itself is also renewed or extended.

Expansion and financing of networks and services, utilizing equipment compatible with or
homologous to existing or previously approved plant and facilities, in order to service additional
demand in the same areas where the previously approved network and services have been
installed, shall not require any approval by the Commission.

The upgrading of existing plant and network facilities including the financing thereof, for the purpose
of retiring or replacing obsolete or outmoded equipment with state of the art equipment and
technology in order to improve the quality or grade of service being rendered to the public within the
same areas covered by the existing plant and facilities previously approved, shall likewise not
require the approval of the Commission.

The Commission, however, shall not grant a subsequent CPCN for another segment of service or
extend the area service coverage of an entity which has failed to satisfactorily comply with its
commitments to the Commission to provide a particular service in the original area coverage under
an earlier authorization.

Section 17. Rates and Tariffs. - The Commission shall establish rates and tariffs which are fair and
reasonable and which provide for the economic viability of telecommunications entities and a fair
return on their investments considering the prevailing cost of capital in the domestic and international
markets.

The Commission shall exempt any specific telecommunications service from its rate or tariff
regulations if the service has sufficient competition to ensure fair and reasonable rates or tariffs. The
Commission shall, however, retain its residual powers to regulate rates or tariffs when ruinous
competition results or when a monopoly or a cartel or combination in restraint of free competition
exists and the rates or tariffs are distorted or unable to function freely and the public is adversely
affected. In such cases, the Commission shall either establish a floor or ceiling on the rates or tariffs.

Section 18. Access Charge/Revenue Sharing. - The access charge/revenue sharing arrangements
between all interconnecting carriers shall be negotiated between the parties and the agreement
between the parties shall be submitted to the Commission. In the event the parties fail to agree
thereon within a reasonable period of time, the dispute shall be submitted to the Commission for
resolution.

In adopting or approving an access charge formula or revenue sharing agreement between two or
more carriers, particularly, but not limited to a local exchange, interconnecting with a mobile radio,
interexchange long distance carrier, or international carrier, the commission shall ensure equity,
reciprocity and fairness among the parties concerned. In so approving the rates for interconnection
between the telecommunications carriers, the Commission shall take into consideration the costs of
the facilities needed to complete the interconnection, the need to provide the cross-subsidy to local
exchange carriers to enable them to fulfill the primary national objective of increasing telephone
density in the country and assure a rate of return on the local exchange network investment that is at
parity with those earned by other segments of the telecommunications industry: Provided, That
international carriers and mobile radio operators which are mandated to provide local exchange
services, shall not be exempt from the requirement to provide the cross-subsidy when they
interconnect with the local exchanges of other carriers: Provided, further, That the local exchanges
which they will additionally operate, shall equally be entitled to the cross-subsidy from other
international carriers, mobile radio operators, or inter-exchange carriers interconnecting with them.

Section 19. Uniform System of Accounts. - The Commission shall require telecommunications
entities to set up a uniform system of accounts which shall be one of the bases in establishing rates
and tariffs. Where a single entity spans more than one category of telecommunications service, a
separate book of accounts shall be maintained for each category or specialized classification.

ARTICLE VII
RIGHTS OF TELECOMMUNICATIONS USERS

Section 20. Rights of End-Users. - The user of telecommunications service shall have the following
basic rights:

(a) Entitlement of utility service which is non-discriminatory, reliable and conforming with
minimum standards set by the Commission;

(b) Right to be given the first single-line telephone connection or the first party-line
connection within two (2) months of application for service, against deposit; or within three
(3) months after targeted commencement of service in the barangay concerned per the
original schedule of service expansion approved by the Commission, whichever deadline
comes later;

(c) Regular, timely and accurate billing, courteous and efficient service at utility business
offices and by utility company personnel; and

(d) Thorough and prompt investigation of, and action upon complaints. The utility shall
endeavor to allow complaints to be received over the telephone and shall keep a record of all
written or phoned-in complaints. lawphil©alf

ARTICLE VIII
TELECOMMUNICATIONS DEVELOPMENT

Section 21. Public Ownership. - In compliance with the Constitutional mandate to democratize
ownership of public utilities, all telecommunications entities with regulated types of services shall
make a bona fide public offering through the stock exchanges of at least thirty percent (30%) of its
aggregate common stocks within a period of five (5) years from effectivity of this Act or the entity's
first start of commercial operations, whichever date is later. The public offering shall comply with the
rules and regulations of the Securities and Exchange Commission.

Section 22. Privatization of Existing Facilities. - The Department shall, within three (3) years from
effectivity of this Act, privatize all telecommunications facilities currently owned and/or operated by
the government for public use, plus those facilities currently being planned under various bilateral
funding arrangements. Unless otherwise authorized by law, privatization of telecommunications
facilities as well as construction of telephone infrastructure shall be made through public bidding.

Section 23. Equality of Treatment in the Telecommunications Industry. - Any advantage, favor,
privilege, exemption, or immunity granted under existing franchises, or may hereafter be granted,
shall ipso facto become part of previously granted telecommunications franchises and shall be
accorded immediately and unconditionally to the grantees of such franchises: Provided, however,
That the foregoing shall neither apply to nor affect provisions of telecommunications franchises
concerning territory covered by the franchise, the life span of the franchise, or the type of service
authorized by the franchise.

ARTICLE IX
FINAL PROVISIONS

Section 24. Transitory Provision. - All telecommunications services deregulated hereby and which
are operating at the effectivity of this Act, may continue to have their rates and tariffs approved by
the Commission until the end of the calendar year of the effectivity of this Act.

Existing franchises that are not operating or without pending applications for certificates of public
convenience at the time of effectivity of this Act are deemed revoked.

All interconnection agreements previously entered into between telecommunications carriers shall
remain in full force and effect but the parties shall, within six (6) months from the effectivity of this
Act, review their access charging/revenue sharing formula and submit to the Commission an
amendment thereof, if necessary, in order to comply with the guidelines on the access
charging/revenue sharing formula contained in Section 18 of this Act.

Section 25. Separability Clause. - Any portion or provisions of this Act that may be declared
unconstitutional or invalid shall not have the effect of nullifying other portions or provisions hereof as
long as such remaining portions or provisions can still subsist and be given effect in their entirety.

Section 26. Repealing Clause. - All laws, ordinances, rules, regulations, and other issuances or
parts thereof, which are inconsistent with this Act are hereby repealed or modified accordingly.

Section 27. Effectivity Clause. - This Act shall take effect fifteen (15) days from the date of its
publication in at least two (2) newspapers of general circulation.

Approved: March 1, 1995

The Lawphil Project - Arellano Law Foundation

Ra 7925

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Ra 7925