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NEWS UPDATES Asean Affairs        28  February 2011

Philippine telecoms seek broadband perks

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Philippine telecom companies want tax incentives and lower regulatory fees to speed the development of broadband Internet, particularly in rural areas.

Globe Telecom Inc. said an additional incentive by way of lower administrative fees from the National Telecommunications Commission (NTC) and tax incentives from the Board of Investments will hasten the development of broadband in the country.

Under the 2011 initial draft of the Investment Priorities Plan (IPP), the telecom sector is not entitled to any income tax holiday.

Globe also wants to cut spectrum users fees (SUF) paid to NTC. ”SUF while providing government with much needed funds does not necessarily get used for telecom infrastructure development,” the telco said.

It said companies can put more investments into building broadband networks if the SUF were reduced as an incentive to providing the service in rural areas.

William Pamintuan, senior vice president for legal affairs of Digital Telecommunications Philippines Inc. said governments in developed countries like Singapore and Korea provide subsidies to expand broadband infrastructure.

Roy Ibay, Smart Communications Inc. head of regulatory affairs, said the government should revive the tax incentives given to telcos when they expand. He said local ordinances, new taxes and regulatory fees as well as the expensive frequencies and equipments hamper industry expansion.

The executive said the industry will propose the inclusion of incentives in the Philippine Digital Strategy (PDS) 2010 to 2016 of the Commission on Information and Communications Technology.

Ibay said broadband Internet penetration in the country is “very low,” adding that every 10 percent increase in penetration translates to an increase in gross domestic product (GDP) of one to two percent. GDP is the amount of final goods and services produced in the country.

Gamaliel Cordoba, NTC chief, however said the agency’s SUF is not “too high” for the industry, while the existing administrative fees were rendered “obsolete” 10 years ago.

NTC is drafting a proposal to raise the administrative fees by at least 20 percent to increase its revenues. The regulator expects an additional P50 million for the 20 percent hike in administrative fees.

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