Spectrum is the service delivery platform for telecommunications.

• Dictionary definition: A frequency of electromagnetic radiation in the range at which radio signals are transmitted, ranging from approximately 3 kilohertz to 300 gigahertz.

• Contextual definition: Akin to real estate or commercial space for telecommunications, spectrum represents the means or tools by which a public telecommunications entity (PTE) delivers services to a finite number of subscribers. More/less “real estate” serves more/less subscribers; more/less “commercial space” means more/less services deliverable.

It is a scarce public resource enshrined in law.

The radio frequency spectrum is a scarce public resource that shall be administered in the public interest and in accordance with international agreements and conventions to which the Philippines is a party and granted to the best qualified. The government shall allocate the spectrum to service providers who will use it efficiently and effectively to meet public demand for telecommunications service and may avail of new cost effective technologies in the use of methods for its utilization. – Republic Act 7925, Article II, Section 4(c)

The radio frequency allocation and assignment shall be subject to periodic review. The use thereof shall be subject to reasonable spectrum user fees. Where demand for specific frequencies exceed availability, the Commission shall hold open tenders for the same and ensure wider access to this limited resource. – Republic Act 7925, Article V, Section 15

The consolidation of PLDT/Smart and Digitel/Sun will result in an lopsided imbalance of spectrum allocation in their favor.

155 MHz vs 85 MHz 1.82 : 1 Ratio

155 MHz vs 85 MHz 1.82 : 1 Ratio

All other usable spectrum resources considered, including bands in the 3400 MHz and 5400 MHz ranges, the gap widens further.

Spectrum Band Smart + Sun Globe

850 MHz 10 MHz None

900 MHz 7.5 MHz 17.5 MHz

800 MHz 37.5 MHz 12.5 MHz

2100 MHz 35 MHz 10 MHz

2300 MHz 30 MHz None

2500 MHz 35 MHz 45 MHz

3400 MHz 94 MHz 14 MHz

5400 MHz 123 MHz None

TOTAL 372 MHz 99 MHz

3.76 : 1 Ratio3.76 : 1 Ratio

Globe serves 26.5M subscribers with only 99 MHz while Smart + Sun shall effectively serve 60M subscribers with 372MHz.

Therefore, Globe serves 268K subscribers with every 1 MHz of spectrum whereas Smart + Sun will only address 161K subscribers with every 1 MHz of spectrum.

Theoretically, Smart + Sun should NOT be assigned more than 224 MHz of spectrum (vs 372 MHz post-consolidation) to cater to 60M subscribers.

In the end, however, the ratio of spectrum to subscribers is hardly as important as the equitable distribution of a scarce public resource in the name of fair competition.

• While there are nuances to the “efficient” utilization of spectrum –• Subscriber usage profiles (e.g. data-savvy users tend to take up more bandwidth);• Richer services (e.g. video streaming requires more bandwidth);• Service quality levels ( e.g. “budget” quality calls possible with less bandwidth) –

• Between two players seteris paribus, it costs less to serve the same number of subscribers with more spectrum from an investment-to-capacity perspective.

• Ultimately, using the real estate or commercial space analogy, the player with more land does not have to build as tall a structure to serve the same number of people as the player with less land (and is compelled to go “high rise” at more cost).

• With more spectrum simply, PLDT-Digitel will be able to serve more customers and deliver more services than Globe.