Press – Page 7 – Infrawatch PH

Auction for third telco prejudicial to public interest

Jul 1, 2018

Ahead of this week’s public consultations on the new rules governing the entry of third telco, an infrastructure-oriented think-tank has labeled the recently issued auction guidelines as ‘prejudicial to public interest and reeks of regulatory capture.’

“The auction mode for the entry of the third telco player smacks of a patent policy confusion on what the entry of the third telco is all about. The auction as proposed is not a bidding for the highest amount of investment commitment but a bidding for the highest amount of spectrum user fees to be paid to the government. We are utterly confused on what government really wants: to improve the level of telco services or to simply raise funds?”

This was the statement of Terry Ridon, convenor of Infrawatch PH, and former member of the congressional committees on legislatives franchises and information communications technology.

Ridon said an auction based on spectrum user fees does not address the concern of the Department of Finance ‘to ensure that its entry will result to rendering of better services to the consumers at the lowest possible cost.’

“We probably should ask the President: can we actually break the telco duopoly by raising funds through spectrum user fees, or by getting the best and highest investment commitment from competing bidders.

Ridon said insisting on an auction for spectrum user fees exhibits regulatory capture as it seems not to advance public’s interest for lower costs and better services.

“We are conveniently forgetting that the highest bidder for the spectrum user fees will ultimately charge this premium to the public, resulting only in either higher service costs or poor quality services,” Ridon said.

Ridon also supported the view of DICT secretary Eliseo Rio Jr. that subjecting the entry of the new major player to an auction is ‘patently anticompetitive.’

Previously Rio said that the auction is anti-competitive because the incumbent telcos never bought their frequencies from the government.

The DICT secretary also said it will put a big burden on a new player by (forcing it to) put up a huge amount up front that has nothing to do with putting up an infrastructure and improving telecommunications services.

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No to pass-on taxes in water rate hike

Jun 25, 2018

“The main question in the new rate rebasing proposal is whether the new MWSS leadership will allow its concessionaires’ corporate income taxes to be passed on to water consumers. These pass-on taxes should not form part of the rate rebasing computation at the very outset. We will oppose such inclusions during the public consultations.”

This was the statement of Terry Ridon, convenor of InfrawatchPH and former urban poor chief of President Rodrigo Duterte.

Non-inclusion matter of public interest

A concession agreement signed by MWSS with its concessionaires Maynilad Water Services Inc. and Manila Water Co. allows for a rate rebasing every five years. Adjustments are based on the performance, expenses, earnings, unrecovered investments and service improvement plans of the water concessionaires.

“As the bearer of public interest in the rate adjustment negotiations with concessionaires Maynilad and Manila Water, nothing prevents government from insisting that pass-on taxes should form no part of their rate rebasing proposals,”said Ridon, who was also a member of the legislative franchises committee in the 16th Congress.

Ridon said the non-inclusion of pass-on taxes will benefit the public amid the inflationary pressures experienced by Metro Manila residents at the moment.

“The proposed P8-P12 per cubic meter water rate increase coupled by rising food and commodity prices will be too much to bear for Metro Manila consumers at this point.”
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Palace should state policy on Income tax recovery by water firms

“The MWSS leadership should also retain the policy of barring the recovery of income tax payments as recoverable expenditures, as these are not recoverable business taxes under the Concession Agreement.”

Ridon said the matter of income tax recovery has been the subject of contrasting arbitral rulings favoring Maynilad but not Manila Water.

“The President should once and for all make a clear policy statement on whether he thinks it is fair and just for the consuming public to be doubly bear the costs of water and rightly withheld corporate income taxes.”

Ridon said this double cost burden to the consuming public has no place in the Duterte government.