Mislatel’s franchise shaky and vulnerable to attacks, says Drilon

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Sen. Franklin M. Drilon has warned against rushing the selection of third telco player, citing the National Telecommunication Commission (NTC)’s apparent failure to exercise due diligence in choosing Mindanao Islamic Telephone Co. (Mislatel), whose franchise, he said, was “ipso facto” revoked for failure to comply with the terms and conditions of its franchise.

Sen. Franklin Drilon (left) is pictured with Senators Grace Poe and Antonio Trillanes during last week’s Senate hearing

“I think the entire country, including the Senate, really sees the need for a third telco player, because our Internet and communication services are probably one of the poorest in the world,” Drilon said in an interview with ANC’s Headstart.

Drilon said the country needs a stable franchise for the third major telco and the award “should be able to stand on solid ground” in order to provide stability in efforts to speed up Internet access in the country.

“We do not want the award to be vulnerable to attacks because we want a stable foundation upon which the award is based. We must put everything on solid ground so that we can continue to expect good and stable service,” he said.

Otherwise, he warned, the government is bound to commit error and “we will be back to where we are today with no third telco.”

“The franchise of Mislatel,” according to Drilon, “is vulnerable to attacks and stands on shaky ground. “This is because Mislatel’s franchise, he reiterated, is “ipso facto” revoked due to a number of violations.

First, the franchisee itself admitted that the company never operated since its franchise was granted in 1998 through Republic Act 8627. This clearly violates Section 7 of the law granting the Mislatel franchise, which provides that the franchise shall be deemed ipso facto revoked, in the event the franchisee fails to commence operations within one year from approval; operate continuously for 2 years; or commence operations within 3 years from effectivity.

The senator also cited Mislatel’s failure to seek Congress’ approval when it sold majority of its shares in 2015, a clear violation of its franchise, which requires Congressional approval for transfer of controlling interest.

“The grant of the license is questionable because of these issues. Can you imagine, you have a new franchise who is supposed to provide us with a stable Internet connection and the franchise itself is not stable?” Drilon said.

The minority leader also questioned why Mislatel was picked by NTC given that its franchise will expire in four years or in 2023, and considering that the deliverables of a third telco player will extend beyond 2023.

“In our effort to hurry up, we disregarded a number of basic bidding considerations — including doing a due diligence on Mislatel. ‘Haste makes waste,'” Drilon said.

Drilon also dismissed Department of Information Technology (DICT) acting secretary Eliseo Rio’s claim that a case must be filed against Mislatel before its franchise can be revoked.

The former justice secretary said that the circumstances in PLDT v. NTC and Cellcom Inc. case, being cited by Mislatel lawyers and Rio, were different from the Mislatel case.

“The case cited is not applicable in Mislatel’s case because in that case, the grantee did not admit that it committed a breach of its franchise. In fact, there was a question of fact whether or not the grantee operated or used the franchise granted. In this case, Mislatel’s president Nicanor Escalante, explicitly admitted on record that Mislatel has never operated, which is a violation of their franchise.

Moreover, the franchise law in the PLDT case simply states that failure to operate shall render the franchise void. The Mislatel franchise, on the other hand, states that the franchise shall be “ipso facto” or automatically revoked for failure to operate.

Hence, Drilon said “there is no need for current Congress to revoke because the franchise has already been automatically revoked by operation of law.”

Lastly, Drilon said the power of Congress to grant or withdraw franchise cannot be reviewed by the Supreme Court, as it is a political act of Congress.

“Not every act of Congress is subject to the review of the SC. We granted the franchise; it’s a political act. Nobody could have compelled us to grant the franchise and therefore, concomitant to that power to grant the franchise is the power to withdraw,” Drilon concluded.

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