Philippines gives China-backed telecom firm green light to build cell towers on military bases


A debate over national security has reopened in the Philippines after the country’...

A debate over national security has reopened in the Philippines after the country’s defence chief revealed he had signed a contract allowing a mobile phone network powered by a Chinese state telecoms giant to install communications equipment on army bases.

The Philippine military made a preliminary agreement last year with Dito Telecommunity, a consortium formerly known as Mislatel that is part-owned by China Telecom, to install cell site towers at its camps.

Defence Secretary Delfin Lorenzana told lawmakers at a budget hearing last Tuesday that he had waited to sign off on the deal so that it could be reviewed by the opposition, “but they came out with nothing … no complaint or recommendations on the contract. It was returned to us”.

He said it was only “fair” to allow Dito to build the cell towers as it is “providing telco services in the provinces where most of our camps are” and wanted to place them inside military facilities “for security and protection”.

Military officials pointed out last year that Globe Telecom and PLDT – the Philippines’ two other major telecoms providers which use equipment from embattled Chinese tech firm Huawei – had already built cell towers in the camps and Dito would only be allowed to build its infrastructure in the same places. Privately owned telecoms companies have been allowed to place cell towers in Philippine military camps for protection against communist insurgents since the mid-1990s, when the industry was first opened up to private players.

Chinese state-owned China Telecom holds a 40 per cent stake in Dito Telecommunity, which is controlled by Filipino-Chinese tycoon Dennis Uy – known to be a close associate of Philippine President Rodrigo Duterte.

Military spokesman Major General Edgard Arevalo said on Friday that the military had assessed the risk of security breaches from the cell towers to be low. Responding to concerns that Dito in particular was a threat because of its partial Chinese ownership, the company’s Chief Administrative Officer Adel Tamano said it guaranteed that “its devices, equipment, and structures shall not be used to obtain classified information from the Armed Forces”.

But critics echoed US concerns, as laid out in the Trump administration’s “Clean Network” programme, about the supposed security risks of infrastructure built by Chinese entities. Negative public sentiment towards China has also been fuelled by Manila’s ongoing tensions with Beijing in the disputed South China Sea. An online petition calling on authorities to stop Dito from operating commercially was launched on Wednesday and has since garnered almost 1,500 signatures.

Eliseo Rio, a former Information and Communications Technology Secretary who oversaw Dito’s bid to become the Philippines’ third major telecoms provider in 2018, played down the security concerns and reiterated Lorenzana’s stance on market fairness.

“The equipment of Globe and PLDT’s towers inside military camps are mostly Chinese made similar to Dito. No sensitive, confidential or secret communication is ever sent by the military through the cell towers of the telcos, whether located inside camps or outside,” he told South China Morning Post. Upon taking power in 2016, Duterte threatened to shut down the telecoms duopoly operated by PLDT and Globe after the country was found to have some of the slowest download speeds in Asia. If the two did not improve, Duterte said he would “go to China and open [the telco sector] for competition”.

Two years later, in November 2018, Dito won its bid to become the country’s third major telecoms player after two other contenders were deemed to have incomplete documents. It presented an ambitious 257 billion peso (US$5.29 billion) plan to deliver speeds of at least 55 Mbps to 80 per cent of the population by the end of its five-year commitment in July 2024 – on par with the government’s demands during the auction for an operating licence.

But despite receiving its licence last July, and administrative chief Tamano’s assurances that it would “for sure” have subscribers this year, Dito has yet to launch any of its services. He says the firm has been held back by the lockdowns instituted in the wake of the coronavirus pandemic. In its most recent announcement, the launch date for services was pushed back to next March.

Dito has already missed a July 8 deadline for a technical audit as part of its five-year commitment with the government. Under its contract, it was supposed to deliver minimum internet speeds of 27 Mbps to at least 37 per cent of the country one year after its licence was granted.

Tamano said earlier that Dito would need at least 1,300 cell tower sites to deliver such a service, but at that time it only had about 300 that were operational. The company has since requested a six-month postponement for the technical audit.

Philippine President Rodrigo Duterte (left) and Defence Secretary Delfin Lorenzana. Photo: Reuters
Philippine President Rodrigo Duterte (left) and Defence Secretary Delfin Lorenzana. Photo: Reuters

If the company misses its provisional deadlines three times during the five-year period, it would have to forfeit the 25.7 billion-peso performance bond it paid to the government.

Rio, the former communications secretary, said Dito’s very existence had improved the service Filipinos received from telcos. “The level of service of Globe and PLDT have greatly improved since Dito was named as the third major telco player,” he said.

Last year, PLDT and Globe spent a record 78 billion pesos and 63 billion pesos, respectively, building more cell towers for their 4G networks. Average download speeds in the country now stand at 8.3 Mbps, according to the latest data from OpenSignal, although this compares poorly to other countries in the region such as Singapore, where average mobile download speeds are about 40mbps

Grace Mirandilla-Santos, an independent ICT researcher in Manila, said that although “the threat of viable competition can shape the behaviour of existing market players”, more telecoms companies should be invited to push these improvements further.

“Lower barriers to entry and provide consumers with more choices, and watch how providers improve their services to compete for market share,” she said.

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