MEMORANDUM CIRCULAR No.: 8-9-95
SUBJECT: Implementing Rules and Regulations for Republic Act No. 7925
Re: An Act to Promote and Govern the Development of Philippine Telecommunications
and the Delivery of Public Telecommunications Services.
[ REPUBLIC ACT NO. 7925 ]
For the purpose of an effective and smooth implementation of RA7925,
the National Telecommunications Commission, an attached agency of the
Department of Transportation and Communications (DOTC) and the principal
administrator of RA7925 Public Telecommunications Policy Act of 1995),
hereby promulgates the hereunder Implementing Rules and Regulations.
Nothing in this Circular, however, shall be constructed as delimiting
the power OF DOTC to monitor the implementation of this Act in accordance
with it mandate to achieve its responsibility for the development and
maintenance of a long term strategic national development plan for telecommunications.
001 DEFINITION OF TERMS
- Access Charge - refers to a remuneration paid to a carrier by the
interconnecting carriers for accessing the facilities of such carrier
which is needed by the interconnecting carriers for the origination
and/or termination of all types of traffic derived from the interconnection.
- Actual Cost Approach - refers to an approach in traffic settlement
whereby the cost is allocated using a methodology which most appropriately
reflects actual cost of the services.
- Cross Subsidy Approach - refers to an approach whereby a LE operator
is entitled to some subsidy in the revenue settlement to earn a rate
of return on its local exchange network investments that shall be at
parity with those earned by other segments of the telecommunications
- Interconnection Charge - refers to the sum of the access charge plus
- Basic Telephone Service - refers to the local exchange telephone
service for residence and business establishments.
- Universal Access - refers to the availability of reliable and affordable
telecommunications service both urban and rural areas of the country.
- Local Exchange Area - refers to a defined geographic area authorized
by the National Telecommunications Commission to a local exchange operator.
- Bypass - refers to a situation where an entity other than a local
exchange service operator provides long distance service by establishing
direct access to a person/entity, customer or end-user within the authorized
local exchange service area of a duly authorized local exchange operator.
- PSTN - refers to a public switched telephone network
- Pay Telephone Services (PTS) - sometimes referred to as a public
calling station, refers to a facility where the public may, by payment
of appropriate and duly approved fees, place as well as receive local
or long distance telephone calls or other switched telephone messages.
- Certificate of Public Convenience and Necessity (CPCN) - refers to
a grant consistent with the telecommunications policies and objectives
to a qualified applicant, after due notice and hearing, of a final authority
to own, operate and maintain a public telecommunications facility/service
by the National Telecommunications Commission.
- Provisional Authority (PA) - refers to an authority, for a limited
period, granted to a qualified applicant to operate and maintain a public
telecommunications facility/service by the Commission, pending the grant
of the CPCN.
- Commission - refers to the National Telecommunications Commission.
- Network - refers to a set of nodes and links that provides connections
between two or more defined points to accommodate telecommunication
- Enhanced Service - refers to a service which adds a feature or value
not ordinarily provided by a public telecommunications entity such as
format, media conversion, encryption, enhanced security features, computer
processing, and the like; provided that in the provision of the enhanced
service, no law, rule, regulation or international convention on telecommunications
is circumvented or violated.
- Working main lines - refer to the subscribed main telephone lines.
- PTE - refers to public telecommunications entity as defined in RA7925.
- Philippine Best Practice - refers to the experience of two or three
LE service operators in the context of the three (3) Philippine markets
which are most economically efficient in a specific accounting category
as determined by the National Telecommunications Commission. The specific
accounting category need not be sourced from the same LE service operator.
100 LOCAL EXCHANGE (LE) SERVICES
- The LE operator shall provide universal basic telephone service capable
of accessing local, national, international and other networks without
discrimination to all applicants for such service within its defined
authorized service area/s and within the schedule duly approved by the
- The LE operator shall comply with the service performance and technical
standards specified under MC 10-17-90 and MC 10-16-90 respectively and
other standards hereafter prescribed by the Commission.
- Public telecommunications entities shall not be allowed to expand
or extend long distance service directly to a person/entity, customer
or end-user within the authorized local exchange service area of a duly
authorized LE service operator except in the following cases:
- when the authorized LE operator is unable to provide service
within the following response time:
- Two hundred forty (240) days on the first year of the effectivity
of this Circular.
- Sixty (60) days on the second year of the effectivity of
- Ten (10) working days thereafter.
and at standards prescribed by the Commission provided that the
bypassing carrier has no unserved obligation in its assigned service
- when the authorized LE operator is unable to provide within ninety
(90) days from date agreement at prescribed standards the required
- when the authorized LE operator is compensated in the amount
agreed by the parties. In case parties cannot reach an agreement,
the matter can be brought to the Commission for final action pursuant
to Rule 510. In cases when there are more than one (1) authorized
LE operators in one defined geographic area, the compensation shall
be divided in proportion - to the number of working telephone lines
of each of the authorized LE operators. The determination of the
number of working lines shall be conducted quarterly.
In any of the above exceptions, the PTE shall secure prior approval
from the Commission through an administrative procedure to provide
direct connection to the subscribers/customers/end-users.
- A duly enfranchised entity may be authorized by the Commission, after
due notice and hearing, to install, operate and maintain a local exchange
network and provide local exchange service in the same local exchange
area where an existing authorized local exchange operator fail to satisfy
the demand for local exchange service. The demand for local exchange
service is considered satisfied when 90% of all applications for local
exchange service within the last three (3) months are served within
ten (10) working days from date of application.
- The provisions on bypass shall only apply to public switched telephone
- Authorized LE operators shall have the first option to provide pay
telephone services in the defined geographic area covered by its network.
Other enfranchised telecommunications entities may be authorized to
provide public calling stations or pay telephone stations in a given
local exchange service area served by an authorized LE service operator
after due notice and hearing and upon determination of public need.
- Authorized LE operators shall be entitled to fair and equitable revenue
sharing arrangement pursuant to Rule 520.
- The LE operator shall use any cost effective technology in fulfilling
its responsibility of providing universal basic telephone service. The
LE operator shall endeavor to use state of the art technology.
200 INTEREXCHANGE CARRIER (IXC) AND INTERNATIONAL CARRIER (IC) SERVICES
210 INTEREXCHANGE CARRIER (IXC) SERVICES
- The IXCs shall interconnect with other IXCs and with local exchange
carriers or other telecommunications entities on a non-discriminatory
manner. The interconnection shall be effected pursuant to Rule 510.
- The interconnect charges shall be pursuant to Rule 520
- The IXCs shall comply with the service performance and technical
standards specified under MCIO-17-90 and MCIO-16-90 respectively and
other standards hereafter prescribed by the Commission.
220 INTERNATIONAL CARRIER (IC) SERVICES
- The relevant provisions of the Implementing Guidelines on E0109 under
NTC MC 11-9-93 series of 1993 are hereby adopted.
- Failure on the part of the IC or its affiliate company to install
at least 300,000 local exchange lines and additional 300 local exchange
lines per one international switch termination in excess of 1,000 international
switch terminations and provide local exchange service within three
(3) years from date of authority to provide local exchange service shall
be cause for the cancellation of the authority to install, operate and
maintain facilities and offer international carrier services in accordance
with due process.
300 MOBILE RADIO SERVICES (MRS)
301 CELLULAR MOBILE TELEPHONE SYSTEM
- The Rules and Regulations on Cellular Mobile Telephone System (CMTS)
Operations under NTC MC 20-12-92 are hereby adopted.
- The implementation of the roll-out plans for local exchange service
for all authorized nationwide and regional CMTS operators shall be reduced
from five (5) to three (3) years.
- An authorized regional or nationwide CMTS operator shall be considered
to have complied with Rule 310 (b) if the conditions specified in Article
11 Section 5 of the Implementing Guidelines on E0109 under NTC MC 11-9-
93 series of 1993 are met.
- An authorized CMTS operator shall comply with Article II Sections
7 and 8 of NTC MC 11-9-93 series of 1993.
- Subscribers to the CMTS subscribers.
- Failure on the part of the CMTS operator to install 400,000 local
exchange lines and provide local exchange service within three (3) years
from date of authority to provide local exchange service shall be a
cause for the cancellation of the authority to install, operate and
maintain cellular mobile telephone system and offer CMTS service in
accordance with due process.
320 PUBLIC REPEATER NETWORK (PRN) SERVICES
- The Rules and Regulations on Public Repeater Network Services under
NTC MC 10-18-90 series of 1990 are hereby adopted.
- The service rates for public repeater network services shall be deregulated
- At least thirty (30) days before any change, increase or decrease,
in service rates, after the deregulation, are implemented, authorized
PRN service providers shall publish in a newspaper of general circulation
the changes in the service rates and inform all affected subscribers
of said change.
- Authorized PRN service providers shall inform the Commission in writing
of any increase or decrease in service rates at least (7) days prior
to the implementation of said changes in the service rates.
400 RADIO PAGING AND VALUE ADDED SERVICES
410 RADIO PAGING SERVICE (RPS)
- Subject to availability of radio frequencies and prior to actual
operation, a duly enfranchised radio paging entity shall register with
the Commission and apply for the appropriate radio frequencies to be
used in its operation.
- The application for registration shall include documents showing,
among others, system configuration, mode of operation, radio frequencies
required for efficient operation, method of charging rates, etc. The
application shall be acted upon by the Commission within sixty (60)
days from date of application.
- All radio paging service providers shall the relevant service performance
and standards prescribed by the Commission.
- Effective immediately, all radio paging service providers with assigned
radio frequencies, shall be allowed to compete freely in their. rates
without prior approval from the Commission.
- At least fifteen (15) days prior to the implementation of any change,
increase or decrease, in service rates, the radio paging service providers
shall publish in a newspaper of general circulation such change in the
service rates and shall inform all affected subscribers.
- All radio paging service providers shall inform the Commission in
writing of any change in their services rates at least seven (7) days
before said changes are implemented.
- Subject to the availability of radio frequencies, a duly enfranchised
radio paging entity may be allocated and assigned radio frequencies
required for the efficient conduct of their operations upon application
and clearance from interference to other authorized existing networks.
- Authorized radio paging services providers who intend o expand their
facilities and/or offer other radio paging services including international
radio paging service shall submit to the Commission at least thirty
(30) days prior to the commencement of the planned expansion in facilities
and/or services covered by the proposed expansion, projected investments
and list of capital equipment required. Approval by the Commission shall
not be required.
420 VALUE ADDED SERVICES (VAS)
- A non-PTE VAS provider shall not be required to secure a franchise
- A non-PTE VAS provider can utilize its own equipment capable only
of routing, storing and forwarding messages in whatever format for the
purpose of providing enhanced or augmented telecommunications services.
It shall not put up its own network. It shall use the transmission network,
toll or local distribution, of the authorized PTES.
- The provision of VAS shall not in any way affect the cross subsidy
to the local exchange network by the international and national toll
services and CMTS service.
- Entities intending to provide value added services only shall submit
to the commission application for registration for approval. The application
form shall include documents showing, among others, system configuration,
mode of operation, method of charging rates, lease agreement with the
- The application for registration shall be acted upon by the Commission
through an administrative process within thirty (30) days from date
- PTEs intending to provide value added services are required to secure
through an administrative process.
- VAS providers shall comply strictly with the service performance
and other standards prescribed commission.
500 INTERCONNECTION AND ACCESS CHARGES
- Interconnection under NTC MC 9-7-93 series of 1993 are hereby adopted
except Section 22.5.
- When one party to an interconnection agreement requires additional
interconnecting trunks and the other party cannot provide, the former
shall either advance the payment or furnish the equipment, accessories
and materials necessary subject to repayment in whatever manner agreeable
to the parties.
- To the maximum practical extent, the Commission encourages the use
of co-location of and shared facilities between carriers when such configuration
shall best serve public interest.
- The parties to an interconnection agreement shall route the calls
to the nearest point of interconnection. In case the shortest route
is congested, the call may be routed to other points of interconnection
subject to network configuration. The rate shall be based on the lowest
520 ACCESS CHARGES
- Until the local exchange service is priced reflecting actual costs,
the local exchange service shall be cross- subsidized by other telecommunications
- The allocation of the local exchange carrier costs to all interconnect
services including those offered by the same company operating the LE
service shall be based on actual cost of interconnection.
- The subsidy needed by the LE service operator to earn a rate of return
at' parity with the other segments of telecommunications industry shall
be charged against the international and domestic toll and CMTS interconnect
- The Cost Manual shall follow the accounting structure based on the
applicable provisions of US Federal Communications Commission (FCC)
Part 36 as modified to conform with the provisions of this Circular.
- Provision for doubtful accounts (as used in general accounting) shall
not be included in the costs.
- Only taxes actually incurred shall be included in the costs.
- The access charge shall be negotiated by the interconnecting parties.
In the event the parties cannot arrive at an agreement, either or both
parties can bring the matter before the Commission for final action
pursuant to NTCMC 9-7-93.
- Interconnecting parties shall strictly adhere to the herein prescribed
- The cost manual shall be submitted to the Commission not later than
31st of July of each year for approval. In approving the cost manual,
the Commission shall consider efficiency and the "Philippine Best
- The interconnection between CMTS and local exchange network for purposes
of calculating the access charge shall be considered domestic toll interconnect.
- Reappraisal of plant and facilities in service shall be duly approved
by the Commission after due notice and hearing.
- Actual costs and all accounting charges for provisioning of services
and interconnection shall be non-discriminatory, transparent, de-averaged
by time of day and unbundled, and subject to review by the Commission.
- Interconnection charges shall be composed of the access charge and
the subsidy. For the purpose of calculating the subsidy, the local exchange
networks shall be classified into three (3), to wit: Metro Manila, Highly
Urbanized Cities as defined by law and Others.
- Interconnection charges shall accrue only on completed calls.
- A LE service provider operating other telecommunications services
shall separate the cost at discrete and recognizable point(s) of demarcation
for each of the services it offers to determine the cost of the local
- Direct assignment of costs of each service category when possible
will be made.
- Actual costs basis of separation which gives consideration to relative
usage/circuit occupancy of services for traffic related costs shall
- Cost of customer billing of toll services shall be allocated fully
to the local exchange service.
- Cost of marketing and advertising shall not be allocated to the local
ALLOCATION OF COSTS
- The local exchange service costs shall be shared by the interconnect
services as follows:
- - The cost allocated/charged to the local exchange service shall
be equivalent to the local exchange service gross revenue plus the
revenues derived from the interconnection services other than international
and domestic toll and CMTS.
- - The cost allocated/charged to the interconnection services other
than domestic and international toll and CMTS shall be based on
the actual cost of interconnection.
- - The cost allocated/charged to the international and domestic
toll and CMTS interconnect services shall be divided into two components,
to wit: access charge and subsidy. The access charge shall be based
on the actual cost of interconnection while the subsidy shall be
equal to the revenue required by the LE operator to earn rate of
return at parity with those earned by other segments of the telecommunications
- - Interconnection services shall also include all telecommunications
services offered by the PTE interconnected to the local exchange
network operated by the same PTE.
INTERCONNECTION OF LOCAL EXCHANGE NETWORKS
- There shall be no access charges to be paid by either party in the
interconnection of local exchange networks operating in a given local
exchange service area if the monthly local exchange service rate is
fixed and that the local exchange service operators do not discriminate
applicants for local exchange service.
- In the event that in any given local exchange service area there
are a mixture of fixed and measured rates, the local exchange service
operators thereat shall negotiate for the access charges. In the event
that the parties cannot agree, the matter may be brought to the Commission
for final action pursuant to MC 9-7-93.
- In the negotiation between the LE service operators, the cost of investment
shall be considered.
600 RADIO SPECTRUM
- The radio spectrum allocation and assignment shall be subject to review
in the interest of public service and in order to keep pace with the
development in the wireless technology with the end in view of insuring
wider access to the limited radio spectrum and the use of cost effective
- The Commission shall create a Radio Frequency Consultative Committee
(RFCC) composed of one (1) representative each from PAPTELCO, PETEF,
KBP, IC, CMTS Operators, TELEBAP, Public Repeater Network Service Operators,
Radio Paging Service Operators, Radio Dealers Group, TUG Phil, two (2)
from DOTC and f our (4) from the Commission one each from RRLD, CCAD,
BSD and FMD to be chaired by the Chief, FMD.
- The RFCC shall recommend to the Commission guidelines that will cover
the following concerns within thirty (30) days from the.effectivity
of this Circular:
- - the procedure on how to undertake the review and allocation
of the radio spectrum taking into consideration the need to provide
universal access to basic telephone service.
- - the transfer of all authorized and existing users in the band
allocated pursuant to Rule 600 (a) to other bands of radio frequencies.
- - how the cost of the transfer of the authorized and existing
users to other frequency bands shall be shared by the new assignees.
- - the manner of calculating the cost of the transfer
- - the procedure on how to calculate the reasonable spectrum users
fees and the amount to be paid for the use of the spectrum.
- - the determination of situations where the demand for a particular
radio frequency band exceeds availability and the manner by which
spectrum shall be bided out in case the demand for a specific band
of radio frequencies exceeds availability.
700 RATES AND TARIFF
- The Commission shall reestablish rates and tariff setting procedures
in order to arrive at rates and tariffs which are fair and reasonable
and which provide for the economic viability of telecommunications entities
and a fair return on investments considering the prevailing cost of
capital in the domestic and international markets.
- The Commission may after consultation with the industry and the users
deregulate the rates for specific telecommunications services if there
is sufficient competition to ensure fair and reasonable rates and tariff.
However, in determining whether or not service rates for a specific
telecommunications service is to be deregulated, the Commission shall
take into consideration the need to cross-subsidize the local exchange
service until such time that the local exchange service is priced to
reflect actual cost.
- Promotional or special rates lower than the duly approved rates f
or a period not exceeding f if teen (15) days shall not require approval
by the Commission. The PTE offering the promotional or special rates
shall inform the Commission in writing at least two (2) days prior to
the implementation of said promotion. The total period for promotional
or special rates for one calendar year shall not exceed 30 days.
- Promotional or special rates lower than the duly approved rates for
a period exceeding fifteen (15) days shall be considered reduction in
rates. After the period of promotional or special rates, the PTE shall
charge the duly approved rates.
- Reduction in rates shall be acted upon by the Commission through
an administrative process involving the mere submission of documentation
in support thereof. The Commission shall act on all applications for
rates reduction within seven (7) working days from date of application.
- Any increase in service rates shall be filed in a separate application
and shall undergo quasi-judicial proceedings.
- The Commission may grant provisional authority (PA) to charge increase
in service rates immediately upon filing and compliance with jurisdictional
requirements of publication and notice to affected parties provided
that all documents required to justify the increase is submitted and
that a formal hearing must be held within thirty (30) days from the
grant of the PA.
- All entities operating telecommunications services with deregulated
rates shall submit to the Commission monthly list of their service rates
showing increases or decreases.
- In approving rates, the Commission shall consider the subsidy paid
to the LE service operators by the operators of CMTS, national and international
800 CONSUMERS AND END USERS, AND EXPANSION AND/OR MODERNIZATION OF
RIGHTS AND RESPONSIBILITIES
- Customers or end-users shall be provided with telecommunications
services strictly within prescribed service performance standards.
- Applicants for basic telephone service shall be served on a first
come first served basis. Provided, that an applicant without any telephone
service as yet, shall have the priority over applicants with existing
- Applications for residential or business telephone service shall
be treated equally. Priority shall be given to the provision of basic
telephone service to those performing security, safety and emergency
functions, e.g., hospitals, military, police and fire departments.
- Customer or end-user shall be responsible for all calls originating
and terminating in his own terminal equipment. All calls originating
and terminating in his own terminal equipment shall be billed against
said terminal equipment. If the bill is contested by the customer or
end-user, the demanding carrier shall provide all information necessary
to establish when, where and to whom the calls were made.
- Monthly billings shall be received by the customer or end user within
fifteen (15) days after the billing cycle.
- Billings for services rendered other than the local telephone service
shall be served to the Customer or end-user within one hundred eighty
(180) days from the date the alleged services were delivered. Failure
on the part of the PTE to serve the bill within the specified period,
said PTE shall be subject to sanctions pursuant to law, rules and regulations.
- The customer or end-user may participate in the monitoring of the
compliance by the PTEs of the prescribed standards and of the approved
roll-out plans. The customers or end-users cannot interfere with the
arbitration or litigation of complaints filed before the Commission
if not directly involved.
- If a subscriber for telephone service requires ten (10) or more lines
he/she is encouraged to use private branch exchanges (PBX) or key telephone
- The PTEs shall inform all its subscribers of the person or office
and the telephone numbers within its organization where its subscribers
can file or phone in their complaints and act on all complaints received
in whatever form and manner from its subscribers within thirty (30)
days from receipt of the complaint. The office and the telephone numbers
where the customers where the customers or end-users can file or phone
in their complaints must be printed in the monthly bills sent to the
customers or end-users.
- Complainants who are not satisfied with the action of the PTE may
bring the matter to the Commission.
- Complaints received by the Commission shall be acted upon within
thirty (30) days from receipt. Within fifteen (15) days from receipt
of the complaint, the Commission shall call the parties for a conference.
If within thirty (30) days the matter cannot be settled amicably, the
complaint shall be forwarded to the Legal Department for appropriate
- For billing complaints filed with the Commission, the customer or
end-user, shall not be required to deposit the amount contested. The
PTE may temporarily suspend the service (s) to the customer or end-user,
subject to the suspension of service to be unwarranted, the service
shall be restored immediately without any charges and the Commission
may impose sanctions against the PTE pursuant to law, rules and regulations.
- The PTEs shall submit a monthly complaints within fifteen (15) days
each month detailing the nature of action taken thereon including the
action and the response time.
820 CUSTOMER PREMISES EQUIPMENT
- The Rules and Regulations on the deregulation of Customer Premises
Equipment under NTC MC 1-04-88 series of 1988 are hereby adopted.
830 EXPANSION AND/OR MODERNIZATION
- Expansion and upgrading of existing and previously approved plant
and facilities for purposes specified in RA7925 within the same areas
covered by the existing plant and facilities previously approved shall
not require approval by the Commission.
- Any financing arrangement f or the purpose specified in Rule 830
(a) including increase of capital shall not require approval by the
- The PTE who wishes to expand and/or upgrade its existing or previously
approved plant and facilities within the same approved area shall submit
to the Commission its planned expansion and/or upgrading, the timetable
of implementation and the amount needed to carry out such expansion
and/or upgrading thirty (30) days prior to the commencement of the projects.
- PTEs undertaking expansion and upgrading of facilities shall submit
a quarterly report on the status of the project implementation incorporating
therewith the list of equipment, materials and accessories and the amount
900 OTHER REGULATIONS
- In prescribing standards, the Commission shall consider internationally
- Standards set by international organizations through a convention
or treaty to which the Philippines is a party shall form part of the
920 CABLE TELEVISION (CATV)
- Cable TV operations shall be governed by E0205 series of 1987. If
CATV operators offer public telecommunications services they shall be
treated just like a public telecommunications entity.
930 IN CASE OF MERGERS/ACQUISITIONS OF CMTS/IC
- The surviving entity in case of mergers or the entity that acquires
a CMTS or IC shall assume all local service obligations of the CMTS/IC
merged or acquired.
- Call back, dial back and other similar scheme which results in the
same prohibited operation is not and will not be authorized.
- Resale of private leased lines is prohibited ad will not be authorized.
- PTEs with franchises granted by local government units which have
been duly authorized by the Commission on or before 22 March 1995 with
either a CPCN or a PA shall continue to provide services until the expiration
of their respective franchises or until their respective CPCNs or PAs
are sooner revoked or cancelled.
- Valid and existing franchises which are not operating or without
pending applications for certificates of public convenience and necessity
at the time of the effectivity of RA7925 (effectivity date is 23 March
1995) are deemed revoked.
IN CASE OF NULLITY IN ANY OF THE PROVISIONS
- If, for any reason, any provision, section, subsection, sentence,
clause or term of this Circular is held to be unconstitutional or declared
void by a competent court, such decision shall not affect the validity
of the other provisions of this Circular.
- This Circular may be revised, amended or repealed as the Commission
deems fit in accordance with law and shall take effect within fifteen
(15) days after publications in the Official Gazette or in a newspaper
of general circulation and the filing with the University of the Philippines
Law Center three (3) certified copies of every rule adopted by it.
Quezon City, Philippines ____September 25, 1995____
(sgd) SIMEON L. KINTANAR