In keeping with the directives from the DOTC, Lichauco also issued the first authorizations for video satellite transmissions, opened up paging system to more players, and liberalized cable TV. With liberalization came new firms eager to get into the booming telecommunications market, and so were queuing at the NTC for licenses to operate. PLDT was also becoming increasingly testy about the situation. Lichauco says that she got bribe offers from several telecommunications firms in exchange for favorable treatment. She turned them down, thereby sending the message that she was not for sale. "The NTC chairmanship is a very powerful position, especially when you are demonopolizing and liberalizing," she says. "The opportunities for graft are there. These companies come to you or innuendoes are made through people close to you." But PLDT, she says, did not even dare to make an offer," as she had made her position on the monopoly clear. She did, however, get death and rape threats. At one time, an anonymous letter reached her desk. It came with a piece of snot and the message that if she did not stop, even her doughtier would be raped. "I wasn't scared," she recounts, "but when it involved my daughter, it was terrible." In addition, a white paper allegedly distributed by PLDT's media machine and revealing the supposedly scandalous details of her private life was circulated to officials and the press. Her phone was also tapped, a discovery she made when two men came to her office to debug it. Until now, she does not know who put the bugs there. "We were starting to do critical maneuvers to demonopolize and liberalize," she surmises. "Maybe they wanted to know what was really on my mind. " Lichauco's tenure at the NTC overlapped with that of Oscar Orbos, who was named DOTC secretary in 1990. Orbos approved a new telecommunications development program that took a more aggressive stance toward deregulation and interconnection. Then a 40~year~old lawyer with an economics background who had been elected to Congress, Orbos was the kind of populist, modernizing politician who rose to prominence in the post~Marcos era. Popular with the press and credited with resolving Metro Manila's public transport crisis, he was riding high on his success and boasted about changing the "framework and ground rules" for telecommunications. He talked about realigning the terms of interconnection between PLDT and smaller telephone companies. He lasted only some months at DOTC, however, as he was soon taken in as Aquino's executive secretary. There was also not much he could do to compel PLDT to shape up. The 1989 coup attempt had dampened investor confidence in the Philippines, and potential PLDT rivals were thinking twice about putting their money in the country. In public, Orbos lambasted PLDT for dragging its feet on its expansion program and on interconnection with rival firms. The company's main preoccupation in the meantime was acquiring an expanded franchise. The game was now in Congress, mandated by the Constitution as the sole franchise-giving body.

CONGRESS WAS AND WILL LIKELY ALWAYS BE A MICROCOSM OF the Filipino political class. It is made up of competing power blocs, representatives of various vested interest, activist types, some genuinely independent minds, and a few truly looney ones. Whatever the case, congressman and senators always play up to the gallery and be counted on to settle for what is politically expedient. In 1989, Congress began hearing PLDT's application for a "superfranchise" that would extend its existing franchise to 2028 and give it a bigger scope of operations, including mobile, wired or wireless telecommunications systems, as well as voice, data, and video transmissions. The bill was authored by Laguna Rep. Joaquin Chipeco and co-authored by 24 congressman, all of them top leaders of the House. Newspaper reports claimed that it was actually drafted by one of the presidential relatives in Congress and the franchise committee was pressured to act favorably on the bill. It was approved in record time at the committee level on June 7, 1989, the last day of the second regular session and less than six months after the bill was first filed. When the session resumed, the bill was given priority status in the plenary deliberations by House Majority Floorleader Francisco Sumulong, Aquino's uncle. The chamber approved the bill on final reading in April 1990, with a vote of 125 for and only two against. Earlier, Peping Cojuangco had asked the House to delete a provision in the bill giving the Lopez-owned ABS-CBN Broadcasting Corp. a franchise which would have allowed it to operate a telephone system as well. "Peping wanted to exclude voice from the all-purpose franchise," one congressman told BusinessWorld. The transmission of voice messages was PLDT's domain. The franchise deliberation once again focused public attention on PLDT. Congressmen anxious to score media points hit out at the company, although in the end they voted to extend and extend its franchise. Solicitor General Francisco Chavez, who had a penchant for playing up to the gallery, filed a suit in a Makati trial court to cancel PLDT's franchise on the ground that the majority of its voting stock was held by foreigners. The lawsuit did not prosper. At the Senate, where there were no Cojuangco relatives, the bill was shepherded by Senator John "Sonny" H. Osmena who, during his two terms as head of the committee on public services, consistently acted in PLDT's favor. The senator speeded up the deliberations on the company's franchise. Osmena also sat on a bill that would have given the NTC the powers to order compulsory interconnection. In addition, he delayed the approval of the franchise application of a rival company, Digital Telecommunications Philippines, Inc.(Digitel). While it took PLDT some two years to obtain its "superfranchise," Digitel had to wait six years and a change in government before it obtained congressional approval. Owned by the same interest behind PLDT's great rival ETPI, Digitel won the bid to operate the government telephone system in Luzon, which was being privatized by the DOTC. Digitel offered P40 billion compared to PLDT's P7.46 billion. When Digitel was awarded the contract in September 1991, PLDT questioned it in the media, arguing that the high bid price would be passed on to the consumers. It had an ally in the new DOTC chief, Nicomedes Prado, who refused to accept Digitel's bid because the company did not yet have a franchise. Yet, at that time, PLDT subsidiary Filphone was operating the same DOTC facilities in Northern Luzon even without a franchise. The bidding rules allowed companies without franchises to make an offer. Despite this inconsistency, Prado was backed by Justice Undersecretary Silvestre Bello III, who wrote a legal opinion voiding the bidding, and Aquino's executive secretary Franklin Drilon. Digitel had to go to the Supreme Court to stay Prado's order for a rebidding from which it would have been disqualified. It was clear that PLDT wanted to checkmate the Digetel's attempts to set up a national network independent of the dominant carrier. Small as it was, Digital, backed by cable and wireless, was one of the few firms with capability to provide credible competition to PLDT. Acquiring a 30-year lease of the DOTC run phone system in 27 Luzon provinces would have allowed Digetel to expand its reach. PLDT preempted its rival in the following ways: By blocking its franchise, preventing it from leasing the government phone networks, and setting up phone systems in the some of the same areas that would have been awarded Digitel. In early 1992, PLDT applied for World Bank Funding to set phone lines to service industrial estates in Laguna, Cavite, and Tarlac, including the Luisita Industrial Park owned by the branch of the Cojuangco family to which the President belonged. The finance department and the Monetary Board supported the loan application and promised that the government would guarantee it. Digitel balked; these industrial parks were the same ones it wanted to service. "This is very, very unfair," its president, Eduardo Villanueva, could only complain to the press. It seem that there was little the company could do but wait a new government to come to power.

AFTER HE WAS SWORN AS PRESIDENT ON JUNE 30, 1992 Fidel V. Ramos initially focused on the power crisis. The country was then paralyzed by power outages that lasted as long as 12 hours daily, so the government directed its energies toward energy. Telecommunications was an obvious as well, but only a confluence of factors made it the feasible target of an administration eager to make it mark. First, there was the President himself. A civil engineer by training, Ramos found it easy enough to understand the problem of infrastructure bottlenecks. Unlike Aquino, who was surrounded by her large landowning clan and their cronies, Ramos at the onset of his presidency had a degree of independence from traditional vested interests. He owed his victory not so much to big business or the landed elite but largely to the mobilization of the government machinery and its resources for its campaign. Although he had the likes of Ramon del Rosario and Emilio "Lito" Osmena of the true blue oligarchy on his campaign staff and later in his cabinet, Ramos was most comfortable with the old boy network he had in the military, a squad of retired generals whose loyalties did not belong to any particular clan or class. Later on, as the realities of governing impinged on the new administration, Ramos would lose this independence and become increasingly reliant on the politicians in Congress and the big business groups that supported and profited from his "Philippines 2000" program. Then there were the President's men. Foremost among them was Almonte, the former general with a background in intelligence and a propensity for political theory. He filled the vacuum that was Ramos' program of governance, drafting the President's early speeches and providing the inputs for a strategy for economic growth and reform that would propel the Philippines to NIC (newly industrializing country) status. Almonte was obsessed with the oligarchy and was convinced that the root of the country's problems lay in "the predatory rent-seeking elite "that dominated "not through its possession of capital or skill at entrepreneurship, its industry or its superior intelligence but through its monopoly of political power. "Almonte's solution was to use market forces to "level the playing field." He had an ally in Antonio Carpio, a corporate lawyer who was a member of the Ramos campaign team and was named presidential legal adviser in 1992,at the age of 42.In the course of his law practice, Carpio had seen client's business suffer from the lack of telephones. Like many who had a brush with student activism in the 1970's, he found Almonte's anti-oligarchy position enticing. Moreover, one of his law partners, F. Arthur Villaraza, had lawyered from Raymond Moreno, a controversial businessman who was involved in setting up telecommunications company, and Alfonso Yuchengco, the major PLDT stockholder eased out by the Cojuangco's. Carpio's law firm therefore had the technical and legal expertise for the kind of moves that the Ramos government would make in 1993.Together,Almonte the ideologue and Carpio the legal the legal whiz were a formidable team. It helped that PLDT was, in one sense, an easy target. It was an unpopular monopoly and the government had substantial shares in it. In addition, Carpio's legal team found out that it was possible to enforce compulsory interconnection and open up the industry simply by issuing executive orders. This meant that the government did not have to pass a law through congress were, during the Aquino period, PLDT had been able to mobilize allies. There was also now a powerful constituency for telecommunications reform. It was not only the public or the Business community that had been clamoring for phones. In October 1992,the World Bank released its often quoted report on the bottlenecks to Philippine economic growth, and telecommunications was at the top of the list. A month later, on a visit to Manila, Singapore's Lee Kwan Yew uttered the famous one-liner that really got to Ramos. "Ninety-nine percent of Pilipino's are waiting for a telephone and the other one percent for a dial tone." The die was cast for PLDT.A consummate conspirator, Almonte put together a core group to strategize. Those called into the strategy meetings included cosmetics executive Antonio Abaya, who had been active in the Ramos campaign; Serafin Talisayon, a former UP professor who was in Almonte's research team: Carpio's law partner Villaraza: and Anthony Abad, a young lawyer attached to Villaraza's office. The fact that Cojuangco was making inroads into a rival group vying for Ramos's attention reinforced the Almonte group's siege mentality. The rival faction included Defense Secretary de Villa and others who were active in the election campaign. The strategy involved a pincer movement converging on the enemy. On one flank was the government. On the other was mobilization of business and popular support for demonopolization. The moves began in January 1993,with Magtanggol Gunigundo, the new PCGG chairman who was recommended by Almonte, asserting the commission's control over PLDT. The first, PCGG put Gunigundo and businessman Mario Jalandoni on the PLDT board. Then the PCGG began a review of PLDT transactions from 1986 to see whether any of them were disadvantageous to the government. It also hinted about naming a third person to the company's board. In February 1993, Ramos issued executive order 59 mandating compulsory interconnection and empowering the NTC to set the term of interconnection in case the parties could not agree. A new NTC chief was named, replacing the outgoing commissioner. Mariano Benidicto II, who had been appointed by Aquino's executive secretary Drilon. During his tenure the, Benedicto was known for making decisions in PLDT's favor. His last act was to grant a license to the Pilipino Telephone Corp. (Piltel), a wholly owned PLDT subsidiary, which wanted to open an international gateway in Cebu City. With a new administration in place, Piltel's licensed was revoked. AT the DOTC, a new secretary dropped all objections to Digetel's wining bid. ETPI's fortunes were now being reversed. Ramos named Luis Sison, his campaign supporter and author of the 1986 PCGG report that exposed PLDT's ownership structure, the new vice chairman of the ETPI board. At that time, ETPI was reeling from an August 1992 Supreme Court decision that ruled in favor of PLDT by saying that ETPI's franchise was saying data, not voice, transmission. This ruling meant that the company could not operate an international gateway, which it had been granted by the NTC in 1989. But in January 1993, the press reported a study by an American style expert who had opined that the ruling was actually written by PLDT's lawyer. The report caused the resignation just days later of Supreme Court Justice Hugo Gutierrez, who had claimed authorship of the decision. It also prompted a reconsideration of the ruling, which was reversed by the Court several months later. Meanwhile, in the house, where Ramos's party now had the majority, the administration's allies started making privilege speeches alleging assorted malfeasance, including the charge that PLDT had never paid the government any dividends on the latter's shares in the company. The house committee on legislative franchises began investigating this issue in March 1993. At the same time, congressmen filled bills banning monopolies and prescribing penalties for violation of the interconnection order. On February 17,1994, Congress finally gave Digitel its long delayed franchise. While Ramos's allies in government were busy, Abad and Abaya were clandestinely working elsewhere. "Part of the strategy was to get popular support," recounts Abad, who was then drawing his salary from Villaraza's law firm even if his work centered on helping to crack the PLDT monopoly. "I had to meet with a lot of NGO's to try and harness some kind of support, to get them to rally, to sign petitions and to be the front runners in the movement for demonopolization. We formed a group called "MorePhones." Headed by Helen Mendoza, a retired UP professor who had a long history of fighting PLDT behind her, MorePhones took on a high media profile. It raised issues that were popular with the public: bad service, insufficient phones, overbilling, the disenfranchisement of subscribers who were also PLDT's stockholders. "We were dealing with the people who had a lot of distrust for government," says Abad. "But it had a bandwagon effect. In the end, I was never really asked why I was doing this. I was also careful not to draw too much attention to myself. I was usually in the background providing technical and legal inputs." They also provided the funds, Recalls Abad: "Tony Abaya was releasing money for the NGO campaign, for having lunches at Sulo Hotel, press conferences, transportation. But we were really right as far as cash was concerned." Altogether, Abad estimated that the campaign, which lasted about three months, cost less than P1 million. Some of the money was provided by business supporters, including Yuchenco, the PLDT chairman who had cast his lot with the government. Part of it was also on the services of PR agent Dante Ang, who was hired by Villaraza to feed anti-PLDT releases to the press. In addition. Ric Manapat, a former activist who made a name for himself by researching on Marcos cronies, was taking in to write Wrong Number, a pamphlet that contains a compendium of PLDT's sins. The recipe for conspiracy and popular mobilization was vintage Almonte, the Edsa veteran to whom February 1986 - with its combination of military plot and popular uprising-provided the repertoire for successful action. Almonte has drawn from this repertoire and use it in other areas which the Ramos government succeeded in deregulating, like banking and shipping. It was less successful, however, with the movement to allow Ramos a second term. PLDT was on its own well-funded blitz. One report said that the company hired six publicists, who work with PLDT's formidable in-house media machine and the Cojuangco-owned Manila Chronicle, to counter the government offensive. When the independent BusinessWorld began publishing anti-PLDT reports, the company threatened to withdraw advertising from the paper.

To some extent, PLDT was successful in propagating the line that the Almonte-Carpio group was intent on taking over the company so they could place their own cronies there. PLDT hit Ramos for being anti-business and for being at the mercy of shadowy advisers. PLDT also called in its allies in government. At the House, Rep. Jerome Paras, head of the committee on transportation and communication, abruptly put a stop to hearing on PLDT's unpaid dividends to government. The crucial pressure point, however, was Malacanang. Almonte and Carpio's influence had to be neutralized. The president had to be convinced that he was getting bad advice. The enigmatic Ramos, as usual, kept his cards to close to his chest. The core group was not sure how he would eventually decide. The key battle was the assertion of the government's voting rights, which means six seats on the PLDT board. It could also have meant the ouster of Tony Boy Cojuangco from the PLDT presidency. By the time the PLDT stockholders' meeting took place on April 21,1993,it was a done deal. The days before, there was a series of meetings between government and PLDT representatives, including, on occasion, Cojuangco himself. "In the end, the compromise was Tony Boy will remain president," Carpio recalls. "But there was an understanding that one, he would not oppose new players: two, all pending opposition in the NTC would be withdrawn; and three, everybody would be allowed to interconnect with PLDT. The first two were done. The third was complied with on paper." "There was one moment when we thought they would bring us to a stalemate," recalls Carpio. "There was the possibility that the President might be convinced that it was not worth it, that it would not succeed, or he might start to believe that it really was a power grab by us." Ramos was aware of all the details of the negotiations. To Carpio and Almonte, it was crucial to have a majority in the board because even with the executive orders mandating interconnection and opening up the industry, PLDT could still bar the entry of new players by filing charges in court. When the government insisted on this point, the battle shifted to whether Cojuangco would retain the presidency. In the end, thanks to the intercession of Tony Boy's friends, Ramos decided hat he should stay. It was also agreed that the government nominees would be subject to PLDT's approval. In July 1993,Ramos issued Executive Order 109, which allowed mew companies to invest in profitable international gateways and mobile phone systems as long as they installed a certain number of landlines. The idea was that profits from overseas calls and cellular phones would be used to set up more costly, and less profitable, local telephone exchanges. This order virtually opened up the telecommunications industry to all comers. The effect was electric: dozens of wannabe providers came knocking on the government's door. For the next two years, until Cojuangco had proven his unquestionable loyalty to the administration, his hold on PLDT was tenuous. Carpio was dangling the possibility of setting up a new company, to be partly financed by PLDT, which would implement the expansion program that PLDT had stalled. Gunigundo, meanwhile, pressed on with the PCGG investigations. Eventually, like the popular protests that dogged PLDT in 1993, these efforts lost steam. Toward the end of Ramos's term, Tony Boy's control over PLDT was no longer in doubt. The terms of engagement with Malacanang had been worked out. In 1997, as preparations for the next elections were taking place, PLDT vice chairman Jose de Jesus, once a member of the Aquino Cabinet, was seconded to the campaign staff of Renato de Villa,who seemed for a time to be the Ramos favorite. De Villa had also come to Tony Boy's rescue in April 1993, when he needed it the most.

AFTER MALACANANG,THE FOCUS SHIFTED TO CONGRESS. In 1994, deliberations on a new telecommunications act began. This was going to be the first major law governing telecommunications since 1928,when Commonwealth Act 146 or the Public Service Act was passed. A telecommunications bill was filed in the first post-Marcos Congress, but it never got very far and the reforms it wanted to enact not as dramatic as those initiated by the Ramos administration. Legislators soon realized they were being preempted by Malacanang. PLDT was fortunate because in both Houses its friends headed the committees deliberating on the bill: Paras in the Lower House and Osmena in the Senate. The law that was ultimately passed, Republic Act 7925,essentially formalized the deregulation measures implemented by the DOTC and the NTC since 1987 and the executive orders that Ramos issued in 1993.Given the dramatic improvements in telecommunications since these orders, Congress could hardly reverse the situation. By putting all these in a law, however, RA 7925 provided a stable legal and regulatory framework that would allow the telecommunications industry to modernize and expand. There would no longer be room for questioning the liberalization measures as these were already written into the law. PLDT, however, managed to lobby for last-minute insertions in the law that allowed it to keep some of its privileges and reverse some provisions of the Ramos orders. By the time Congress was debating the telecommunications bill, the NTC had already divided the country into service areas and given out licenses to companies, which were each assigned to provide the phones in designated area. The service area scheme, as it was called, meant that each firm had to install 400,000 land lines in exchange for a license to operate a cellular phone system, and 300,000 lines for permission to set up an international gateway. Companies were also assigned a mix of profitable(e.g. Makati) and unprofitable(e.g. the Cordillera) areas in which to install their landlines, and five years to complete heir land lines years to complete their commitments. So when Congress was deliberating, all these transactions had already been made. Senators Ernesto Maceda and Sonny Osmena, both in the opposition, were understandably livid as they had been left out of the deal making. But it was not too late. Thanks to Osmeña, RA 7925 reduced the "rollout" period to three years, making it more difficult for the new players to raise capital and meet their commitments. It also meant that they ran the risk of putting in land lines even before there as a demand for them, especially in the poorer, far-flung areas. "That provision I claim fill responsibility for," admits Osmeña. "It's three-year time bomb." He put it in, he says, after the NTC gave a fledgling company, Islacom, a license that covered the entire Visayas. Islacom was initially a joint venture between a branch of an old business family, the Delgados, and Shinawatra, a Thai telecommunications company. The Delgados had been friends with the Osmeñas for three generations. Sonny and his siblings grew up with Islacom CEO Ricardo "Ricky" Delgado, who remains a close family friend. But Sonny had doubts whether Delgado, whose main business was cargo forwarding, had he financial and technical capacity to provide telephones for such a huge area. Moreover, Osmeña wondered why none of the other companies had a contiguous area all to themselves; all the others, including big players like the Lopezes and the Ayalas, had to operate in geographically dispersed sites. He suspected something was afoot, and that his brother and archrival Lito, Ramos's defeated vice-presidential candidate and chief fund-raiser of the Lakas party, had something to do with it. The reason for Sonny Osmeña's suspicions was that then DOTC chief, Cebu businessman Jesus Garcia, mowed his appointment to Lito Osmeña. The Garcia's were longtime political and business allies of the Osmeñas in Cebu and seemed quite content to play second fiddle to their high-profile partners. Garcia appointed another Cebuano, Simeon Kintanar, as NTC chief. Kintanar, too, was associated with Lito: he worked for Cebu provincial government when the latter was governor. As DOTC secretary, Garcia soon acquired reputation as Osmeña's hatchetman. Several times on the senate floor in 1994, Maceda denounced the department under Garcia's leadership as a "flagship of corruption." Quoting unnamed industry sources and losing bidders, he alleged that when a telecommunications company was awarded an international gateway, "the commission or kickback that was requested was at least P50 million." It has not been possible to confirm this charge, and Maceda provided no proof except what he had been told. Both Garcia and Lito Osmeña have publicly denied the allegations. But Sonny Osmeña claims thawhen he confronted Ricky Delgado about this supposed "entrance fee," the latter confessed. "He hedged and hedged," recalls Osmeña, but in the end admitted that he gave in to Lito's request for a contribution. "Lito said it's supposed to be for party funds," Delgado supposedly told Sonny. "We had to call our foreign partners and tell them about this. We called Bangkok, and Bangkok said, we understand, that's the name of the game." Delgado, however, denies this conversation ever took place. He says that he was "an unwitting victim" of sibling rivalry and that Islacom went into the Visayas because no other phone company was interested in investing there. Everyone else, he claims, was focused on Metro Manila where the demand for the phones was highest. Islacom opted to give up Metro Manila in exchange for a license to operate in the Visayas. The transaction was a legitimate one, says Delgado, who denies having been asked for or giving a donation to Lakas. A ranking DOTC official, however, was not surprised to hear Sonny Osmeña's allegation. The official recounted attending a meeting called by Garcia at the department's conference room early on in the latter's tenure as DOTC chief. "These carriers and contractors have to be tapped for the campaign chest of the party," Garcia supposedly told the gathering of DOTC officials and industry representatives. One official present in that meeting reported this to the president, but nothing happened. There were other incidents. At about the same time, Telstra, an Australian telecommunication firm, backed out of its plan to invest in the Lopez-owned Bayantel. The reason was that the company "had to contend with false costs which involved the provision of money bags to commissioners who would decide on the project proposal." At least that was what Charles Zoi, a Telstra executive, told a meeting of APEC senior officials in the Gold Coast in Australia in September 1996. Marlene Agmara-Tucker, the Philippine charge in Canberra, reported this to the Department of Foreign Affairs in a letter dated September 9, 1996. It was known at that time that Lito Osmeña, as Lakas treasurer, was collecting funds for the party from businessmen. He was also in charge of investing those funds. His enemies suspect that Lito kept some of the collections for himself as well. Certainly, his brother Sonny thinks he did. So when Congress was deliberating on telecommunications bill, Sonny decided he should throw a monkey wrench at some of his brother's fund sources. These included the new telecommunications companies; hence, the provision shortening the rollout period, to make it difficult for Lito's friend, like Islacom, to comply with the requirements. "I put provision I when Islacom got their license," admits Sonny. Whatever the case, this provision benefited PLDT, with whom Sonny was sympathetic. "I make no bones about it, I am monopolist." he says. "I fell that bigness provides certain advantages, although unfortunately, PLDT brought it upon themselves. If they had provided better service, there would have been no clamor for deregulation." But PLDT critics like Chito Kintanar of the Ateneo-based Center for Telecommunications Studies claim that Sonny Osmeña's relations with the company involved more than philosophical affinity. When the bill was being discussed at the conference committee level, Sonny Osmeña inserted another provision. He wanted interconnection agreements to be negotiated among the parties concerned rather than mandated by the NTC. "Basically, that was PLDT's suggestion," he admits. "PLDT was afraid they were not going to be fairly treated if NTC was going to dictate the terms. And also, I will go on record with all candor, that was the product of the rivalry between me and my brother. Since my brother controlled NTC and DOTC, Tony Boy Cojuangco, through his lawyers, told me, "You know, Senator, if you allow NTC to dictate interconnection rates then it will give your brother leverage to raise money." In other words, the more power, the more discretion to NTC, the more opportunities you're putting in their hands to tell companies to come across. That provisions was intended to deprive NTC, ergo Lito Osmeña, of the power to put a price on what NTC's decision should be." While Ramos's Executive Order 59 set the rules for interconnection and penalties for noncompliance, RA 7925 took the regulator out of the negotiation process, leaving companies to reach a consensus among themselves. The success of deregulation hinges on interconnection. With nine companies installing land lines in 11 service areas, each firm will have to forge agreements with the other eight so that its client can make and receive calls from the subscribers of other phone companies. Critics have accused PLDT of deliberately delaying interconnection, although PLDT claims that it is trying its best to accommodate all comers. RA 7925 actually gave PLDT the freedom to drag its feet, to the detriment of its competitors. It negotiated for the months on Bayantel's petition to interconnect. In the meantime, PLDT installed phones in Quezon City, Bayantel's service area where there was a big, unmet demand for lines. As interconnection was stalled, many customers decided to hook up to PLDT instead. "This negotiation by exhaustion is in favor of the incumbent," says an executive of a rival telecommunications firm. All in all, these two provisions "reinforced the control of PLDT over the industry," says Johnson Chua, an economist at the University of Asia and the Pacific. "If you read the fine print, it's still skewed in PLDT's favor. You could see that PLDT didn't want the government to participate in regulation." In the end, it would seem that changes in state policy succeeded in opening the playing field but not in leveling it. This is because PLDT blocked regulation that would chip at its monopoly advantages, particularly its possession of the country's only telecommunications backbone. Moreover, PLDT reaps the many benefits that come with sheer size and the sheer length of time it has been in the industry. Realizing that competition can be profitable, it has stopped pouring most of its energies into barring the entry of rivals. Instead the company is delaying interconnection and aggressively expanding into choice sections of the market. To its own surprise, PLDT has benefited from what vice president Samson calls the "unexpected and unanticipated benefits" of deregulation: cheaper equipment, more attractive lending rates, and a steep rise in revenues from the use by other firms of its backbone. "Always, between the regulator and the market, the market is infinitely more efficient, ferocious, unbribable," says Samson. The market, however, has not been completely set free. "Unite markets cannot free themselves," explains UP professor Mendoza. "It usually takes state action by way of policy changes to open up a monopolized sector. And it takes continuos state regulation to maintain market freedom in liberalized economic sectors."

ANY ASSESSMENT OF THE RAMOS ADMINISTRATION WILL LIST the opening up of the telecommunication industry as one of its major achievements. There is reason to crow about this: by the end of 1997, the Philippines had close to four million telephone lines, compared to only about 500,000 in 1992, the start of Ramos presidency. Telephone density was four lines per 100 people, when it had been only 1.17 five years before. PLDT alone installed nearly 1.2 million new lines in four years, much more than it had in the previous 65 years of its existence. From engineering point of view, the deregulation of the industry was a success. But liberalization has not yet nurtured new entrepreneurial talents apart from the same entrenched elites whose business enterprises have been blessed for decades by privileged access to government. This is partly because the capital requirements to set up a new telecommunications venture are too hefty for newer entrepreneurs. Older companies also have the advantage not only of financial clout, but also of connections with foreign partners and overseas banks. Not surprisingly, the companies that have entered telecommunications, gone into joint ventures with foreign firms and been awarded service areas include the Ayalas of Globe Communications, the Lopezes of Bayantel and the Delgados of Islacom, all of whom have been in business for at least three generations. These are the very oligarchs that Almonte has been railing against. ETPI and Philcom were crony firms that had been taken over by the government, while Piltel is essentially PLDT. The Santiagos of Philippine Telegraph & Telephone Co. (PT&T) have been in telecommunications since the 1960's. The Gokongweis, who bought into Digitel in 1994, have been involved in business in Cebu since the prewar period and are now among the top business families in the country. Smart Telecommunications, meanwhile, was set up by the Metro Pacific conglomerate, which has gained a reputation for its closeness to the Ramos administration. Unless the government is able to acquire the competence to establish and maintains a truly free market, PLDT's dominance cannot be challenged and newer entrepreneurs cannot establish a foothold in telecommunications. Even as the NTC's budget has been nearly quadrupled since 1992, it is still not the strong regulator it should be. Commissioner Kintanar should be credited for presiding over the liberalization of the industry, but his putative association with Lito Osmena and his political ambitions are cause for discomfort. On the Senate floor, the NTC has also been accused of receiving bribes in exchange for the facilitation of permits and licenses. Kintanar admitted that there were offers but "what I can say is I have never bribed." In January 1998, Kintanar was asked to resign by then DOTC Secretary Arturo Enrile. The reason, DOTC insiders say, was that he was favoring certain companies over others and there were suspicions that the NTC chief was using his position to bolster his chances at winning a congressional seat in Cebu in the May 1998 elections. By then, Kintanar had also lost his patron as Lito Osmena had fallen out of grace with the ruling party. Paradoxically, even as the market plays a larger role in a liberalized regime, there is a need for a tougher and more autonomous regulator that will impose the rules of the game without fear or favor. Because monopoly was the result of skewed state policy, only a strong regulator independent of vested interests can set things right. The NTC has to have more clout than it currently wields to be able to play this role. It also needs more sophisticated technical skills to keep up with an industry with such fast-paced innovation. Eventually, its focus must shift from the number of phone lines to the quality of service, and it must be able to protect consumers against unreasonable rate increases. The NTC should, most of all, be autonomous of Malacanang and protected from the pressures of patronage politics. In telecommunications as elsewhere, it is a case of something old, something new. There has been positive change, but as this chapter has shown, there is also the persistence of tradition. On one hand, there is the resilience of elite families like the Cojuangcos, who remain the proud stewards of a corporate jewel whose real ownership will likely not be resolved anytime soon. There is also the endurance of the kind of rent-seeking behavior that has enriched and empowered such families. On the other hand, PLDT has been compelled to shape up and to certain extent, acknowledge the logic of the market and the power of public pressure. For better and for worse, there are the other consequences of competition: more efficient and expanded services for consumers, and for bureaucrats and politicians, more diversified opportunities for deal making. Definitely, it is better than monopoly. But in the long run there is no guarantee that market forces will prevail over politics. In the coming years, the telecommunications industry will be a test case of whether a tradition of spoils and patronage can be overcome. This remains the crucial question, even when there is a dial tone. -------------------------------------------------------------------------------- [1] *These were the Filipino Telephone Corporation, acquired in 1975, which operated 6,000 telephone exchanges in Luzon, General Santos, and Palawan; the Pineda Telephone Company, bought in 1976, which was a telephone service provider in Tarlac; the Belle Telephone System in Roxas City, purchased in 1977; the Manang Telephone Company in Cadiz City, acquired in 1978; and the Filipino Telephone Company, operating in Cavite and Pampanga, which was sold in 1980. [2] *ETPI was originally owned by Cable & Wireless, but with the eminent expiration of the party agreement, it was forced to sell 60 percent of the company to a group of businessmen led by Manuel Nieto and Jose Africa who were favored by Marcos. In 1982, Ramon Cojuangco set his sights on ETPI's profitable submarine cable network by proposing a scheme that would enable PLDT to gradually purchase the system and to reduce from 63 percent to zero ETPI's share of the revenues from calls passing through that system. But ETPI president Nieto raised a howl in a letter he wrote to Marcos. In response, Marcos signed the letter with a note on the margin that said the status quo should remain. The letter was given to PLDT, so for many years afterward, there were no more incursions on ETPI's turf. For more details of the ETPI~PLDT rivalry, see Joel Gaborni, "Tracing the PLDT-Eastern Conflier," The Manila Chronicle, April 25, 1989. p.17.