City Position on VOIP Inspection

24 March 2006

Ms. Jocelyn D. Collins

Department Manager

Department of Telecommunications

Common Carriers Authorization Division

Bldg. 244, Waterfront Road

Subic Bay Freeport Zone

Dear Ms. Collins:

This has reference to your letter dated March 8, 2006 for question or comments regarding a National Telecommunications Commission (NTC) memorandum on VOIP regulation implementation.

As with our previous telephone conversations, let me reiterate the City’s comments on the said NTC memorandum. While the City recognizes the need to regulate Internet entities and the proliferation of VOIP services by unauthorized providers, we find the said NTC memorandum vague, even as we suggest that a law on VOIP must be enacted to address the same.

Further, it was mentioned in your letter that as per your Memorandum of Agreement with NTC and by virtue of Republic Act No. 7227, you are to regulate public and private telecommunications facilities, networks, system, and services operating within the Freeport Zone, City of Olongapo and the Municipality of Subic. To comment on the import of said letter, may we bring to your attention the then President Fidel Ramos’ Executive Order Nos. 97 and 97-A delineating the metes and bounds of the Freeport, and so stating therein that tax and duty incentives only apply in the fenced or secured area, thus –

“Section 1. On Import Taxes and Duties -- Tax and duty-free importations shall apply only to raw materials, capital goods and equipment brought in by business enterprises into the SSEZ. Except for these items, importations of other goods into the SSEZ, whether by business enterprises or resident individuals, are subject to taxes and duties under relevant Philippine laws.

“The exportation or removal of tax and duty-free goods from the territory of the SSEZ to other parts of the Philippine territory shall be subject to duties and taxes under relevant Philippine laws.

“Section 2. On All Other Taxes. -- In lieu of all local and national taxes (except import taxes and duties), all business enterprises in the SSEZ shall be required to pay the tax specified in Section 12(c) of R.A. No. 7227.” (EO 97)

EO 97-A further specifies the area within which the tax-and-duty-free privilege is operative, viz.:

“Section 1.1. The Secured Area consisting of the presently fenced-in former Subic Naval Base shall be the only completely tax and duty-free area in the SSEFPZ [Subic Special Economic and Free Port Zone]. Business enterprises and individuals (Filipinos and foreigners) residing within the Secured Area are free to import raw materials, capital goods, equipment, and consumer items tax and duty-free. Consumption items, however, must be consumed within the Secured Area. Removal of raw materials, capital goods, equipment and consumer items out of the Secured Area for sale to non-SSEFPZ registered enterprises shall be subject to the usual taxes and duties, except as may be provided herein”

This has been upheld in the case of Tiu vs .Court of Appeals [GR No. 127410], to wit --

From the above provisions of the law, it can easily be deduced that the real concern of RA 7227 is to convert the lands formerly occupied by the US military bases into economic or industrial areas. In furtherance of such objective, Congress deemed it necessary to extend economic incentives to attract and encourage investors, both local and foreign. Among such enticements are:^[i][11] (1) a separate customs territory within the zone, (2) tax-and-duty-free importations, (3) restructured income tax rates on business enterprises within the zone, (4) no foreign exchange control, (5) liberalized regulations on banking and finance, and (6) the grant of resident status to certain investors and of working visas to certain foreign executives and workers.

On the said MOA between SBMA and NTC, suffice it to state that the City is not bound by it being not privy or a non-party to the agreement.

The City commends you for your effort to enforce strictly regulating measures pertaining to the matter. However, the City invokes its right to regulate all business or establishment within its territorial jurisdiction. It is only imperative that we protect the City’s and its investors’ best interests. This does not include, however, protection from illegal acts and/ or fraudulent business set-ups.

With this, we move that you refrain from implementing the VOIP regulation in the City of Olongapo until all legal impediments are addressed and properly threshed out.

Thank you very much.

Very truly yours,

EDWIN J. PIANO

City Councilor

Chairman, Olongapo City Telecom Board

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Arroyo orders setting up of call center school

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Arroyo orders setting up of call center school
By Lira Dalangin-Fernandez
INQ7.net

PRESIDENT Gloria Macapagal-Arroyo has ordered government’s manpower development authority to set up a school for call center services.

In her brief message at the inauguration of the new call center facility of Sutherland Global Services at the Export-Import Plaza in Makati City Monday morning, Arroyo also asked the Technical Education and Skills Development Authority (TESDA) to provide a scholarship program for 100,000 young Filipinos.

Arroyo said the school for call centers would ensure that investors had access to a steady and adequate pool of trained workers.? TESDA chairman Augusto Syjuco Jr. said the President has increased the agency's 50-million-peso budget to 500 million pesos to ensure adequate funding for call center programs.??Call centers are among the country's growth industries. From 2,000 employees in 2001, the outsourcing industry now employs 125,000 Filipinos.

The government expects job generation in call centers to reach two million by 2010

PC-based phone makes use of traditional phone cards

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By melvin g. calimag, Manila Bulletin

A cheaper alternative, although not necessarily better in quality, in making voice calls was unveiled recently by the Internet arm of mobile phone carrier Globe Telecom.

The new product solution, called the GlobeQuest Web Phone, is said to be the country’s first PC-based VoIP (Voice over Internet Protocol) service that utilizes traditional prepaid cards.

To avail of the service, a PC user, preferably with a broadband connection, must go to the GlobeQuest website (www.globequest.com.ph) and click the Web phone icon to launch the service.

Only those with a Globe1 prepaid cards can make calls on the Web phone. It may take a while, however, for a user to get acquainted with the voice quality and sometimes extended time for the phone to be connected.

But the good side of using the service, according to GlobeQuest officials, is that it allows the user to save as much as 78 percent in international calls.

Also, it can be used to call a landline and mobile anywhere in the country and abroad at a lesser rate.

As a way of emphasizing its point, calls using the Web phone to the top ten most popular foreign destinations – Australia, Canada, China, Hong Kong, Malaysia, Singapore, South Korea, Taiwan, Thailand, and USA – are charged for only P4.50 or 086 per minute as compared to the traditional IDD rate of 40.

Jesus Romero, head of GlobeQuest, said companies which require constant communication with business associates in the said countries can gain substantial savings if they use the Web phone.

Reaching a mobile phone subscriber, whether Globe subscriber or not, using the new service only costs P4.50 per minute as compared to P6.50 per minute for mobile-originating calls.

The executive said the PC-based phone is a "unique" in the sense that although the underlying technology behind the service is VoIP, the business model employs the use of widely circulated prepaid cards.

The Web phone, the company added, is also targeted towards road warriors who often have to work and call using their laptops and PDAs (personal digital assistants).

Romero said that while other popular Web-based programs such as instant messengers provide PC-to-PC international calls, he said these are only available to subscribers who must be logged simultaneously.

RP Internet café business in dire straits

By Alexander Villafania
INQ7.net

All is not well for owners of smaller Internet cafés, largely due to skyrocketing maintenance costs and illegal Internet cafes without proper business permits.

Internet Café Association of the Philippines (ICAP) Vice President Mario P. Muñoz said in an interview that there had been a significant number of closures of Internet cafes in the last four months as economic environments make it more difficult for owners to maintain their businesses.

ICAP, which was formed in 2004, already has about 1,100 members nationwide. Muñoz said that 200 of their members have already closed their shops

“Surprisingly, the extensive raids by the National Bureau of Investigation last year against Internet owners using illegal software weren’t the reasons why these companies closed down,” he observed. “It was because they were already losing money from high maintenance cost.”

The cost of electricity was an important reason, but implementation of the extended value added tax, putting a 12 percent surcharge on all services and purchases, also took its toll on the profits of smaller Internet cafés.

Muñoz added that the business permit fee for an Internet café has also increased from 8,000 pesos two years ago to 17,000 pesos last year.

Low quality computer parts shared the blame. Muñoz explained that some PC parts, particularly expensive video cards, had to be replaced every six to eight months just to accommodate new computer games.

“We used to maintain a computer for up to three years. Now you’ll have to replace a whole PC in just over a year,” Muñoz said.

The cost of software is another major factor in high maintenance cost. A company has to spend over 80,000 pesos to use licensed operating system for 20 computers.

Meanwhile illegal computer shops are undermining the business for legitimate Internet cafes. Most of illegal shops do not have business permits, are using pirated operating systems and personal DSL subscription plans instead of the Internet business packages.

“Whereas a legitimate computer shop has to pay 6,000 pesos per month for a business DSL subscription, illegal shops pay only 1,000 pesos,” Muñoz pointed out. There are already 7,000 legitimate Internet cafes in the country, with an additional estimated 2,000 illegal ones.

“The government should do something to curb the proliferation of illegal shops while helping legitimate ones to improve their business. It’s already hard enough for smaller shop owners to maintain their business and you have illegal shops that take away their business,” he stressed.