Failing Cybersecurity Test To Cost Mislatel P26B

Provisional third telco player Mislatel Consortium—an alliance between President Duterte’s ally Dennis A. Uy and Chinese state-owned China Telecom Corp. Ltd.—may lose P25.7 billion at the minimum should it fail to deliver on its commitments or if it is found to have caused cyber security breaches that infringe on national security or sovereignty, a Cabinet official said.

Acting Secretary Eliseo M. Rio of the Department of Information and Communications Technology (DICT) said Mislatel, should it officially bag the third telco spot, will be wasting time and money if it breaches—in any way—its contract with the government.

“We have a provision in the terms of reference that the new major player must affirm or certify that their network will never be a source of threat to our national security. If it becomes so, then their performance bond will be confiscated,” Rio said via phone.

He explained that, based on Mislatel’s commitments, it will have to shell out roughly P25.7 billion—or 10 percent of its total capital and operational expenditures through its five-year debut—if it fails to do so.

“The third telco player, just like incumbents, has to get a third-party cyber security expert for their cyber security audit. These experts will inform the government of the ingress and egress of data, so that will take care of our cyber security,” he said.

Rio was responding to online reports that China Telecom has been found to have breached cyber security protocols—in these cases, digital hijacks—in different territories, such as Canada and South Korea.

Performance, too

Aside from allaying fears of a national security breach through the digital space, Rio noted that the government will give close attention to the performance of the future third telco player to ensure that it is delivering on its committed levels of service.

In Mislatel’s case, it committed to initially cover 37 percent of the whole Philippines with a minimum Internet speed of 27 Mbps through a P150-billion capital and operational expenditures budget.

Based on the terms of reference for the third telco selection, companies must exceed the following minimum levels of service for the first year: 10 percent of the population, 5 Mbps speed and a P40-billion capital.

Mislatel’s five-year commitment entails P257 billion in total money spent, which should provide for an 84-percent coverage with a minimum Internet speed of 55 Mbps.

“If they did not perform what they committed, they will lose at least P25.7 billion from their performance bond, not to mention that we will confiscate the permits, frequencies and licenses issued to the third telco,” Rio said.

The government is awarding the third telco license together with a swathe of frequencies amounting to total of 225 megahertz of spectrum.

The winning bidder, however, has six months to remedy its failure to deliver its commitments.

Only one left standing

Mislatel was the only bidder from a group of three contenders that successfully hurdled the third telco selection. The other two—Sear Telecommunications Inc. of politician Luis Chavit C. Singson, and Philippine Telegraph and Telephone Corp.—were disqualified from the process, after submitting incomplete bid documents.

At the end of a long and arduous proceedings on November 7, Mislatel was provisionally named third telco player.

The two other groups have formally submitted their motions for reconsideration, with Singson’s consortium claiming that Mislatel’s bid is illegal because TierOne Communications International Inc., through Digiphil Technology Inc., has an existing exclusive agreement with Mislatel.

Mislatel’s counsel disputed this. “The simple fact is that Mislatel has no contract with TierOne. What Mislatel had was a terminated contract with a company called Digiphil that was meant for small projects, like very small aperture terminal technology,” John D. Coluso, the legal counsel of Mislatel, said on Sunday.

Based on documents sent by Mislatel to the media, its contract with Digiphil was terminated on October 8.  Despite the opposition, Rio said his group is confident that it can officially name the third telco player by this month.

“The selection committee has about a week to come up with a final decision,” he said.

The new major player is expected to break the so-called telco duopoly, Smart Communications Inc. and Globe Telecom Inc.

Rio noted that the government need not demand the same levels of service from the incumbent telcos, as the third player is setting the new standard for telecommunications services and prices in the Philippines.

“We will not be requiring Globe and Smart to do this, because they will be forced to up their game. Mislatel offered 55 Mbps minimum speed—that’s Singapore standard already—by the second year, and we also expect them to offer services at more affordable prices,” he said.

Average mobile Internet speed in the Philippines settled at 13.83 Mbps in end-September, ranking 99 out of 190 territories surveyed by Ookla. The global average in the same period is at 23.64 Mbps.

“If the incumbents will not follow the standard of the new player, they will lose their customers. Globe and Smart will be forced to improve their services, else, if they don’t do anything, the third player can be the dominant player in two to three years,” Rio explained. – Business Mirror