Rationalizing spectrum user fees in the age of 4G and 5G

At the core of Republic Act No. 12234 or the Konektadong Pinoy Act (KPA), which took effect on Sept. 14, 2025, is the policy objective of expanding digital connectivity while promoting fair competition and efficient use of spectrum resources. The KPA and its implementing rules and regulations contemplate future reforms in spectrum allocation, pricing, and utilization, as telecommunications technologies continue to evolve.

Against this backdrop, on March 31, the National Telecommunications Commission (NTC) signed NTC Memorandum Circular (MC) No. 003-03-2026, which seeks to rationalize, harmonize, and update Spectrum User Fees (SUF) to ensure that they remain responsive to evolving technological capabilities. The Circular amends portions of the long-standing SUF framework under NTC MC No. 10-10-97 and related issuances.

NTC MC No. 003-03-2026 comes at a time when the Philippine telecommunications sector is undergoing technological transition. The NTC recognized that SUF rates originally formulated for second generation (2G) and third generation (3G) technologies may no longer adequately reflect present-day spectrum utilization, particularly with the rollout of 4G and 5G technology, and future emerging technologies.

The NTC noted that charging SUF on a per-radio station basis may discourage efficient use of spectrum, a limited public resource. The Circular therefore adopts a revised fee structure intended to rationalize spectrum pricing that reflects developments in radio technology and network deployment.

The revised SUF framework applies to entities authorized by the NTC to use radio frequencies, including public telecommunications entities (PTEs), private networks, satellite service providers, and Satellite Systems Provider or Operator (SSPO). For public land-based radio stations, the Circular imposes annual SUF rates based on frequency bands. Certain commercially valuable frequency bands, including portions of the 700 MHz, 850 MHz, 1800 MHz, 2100 MHz, 2300 MHz, and 3500 MHz ranges, are now subject to SUF rates of up to P5 million per MHz of bandwidth annually.

At the same time, the Circular adopts differentiated rates depending on geographic location and type of radio service. Private land base stations, trunked radio stations, and mobile radio stations are subject to varying rates depending on whether operations are located in Metro Manila, highly urbanized cities, or other areas. The framework appears to recognize differences in market density, spectrum demand, and commercial value across locations.

The Circular likewise includes provisions covering fixed radio stations and satellite networks. Satellite service providers and SSPOs that provide facilities or frequency assignments connected to internet access services are subject to a SUF equivalent to one percent of gross annual revenue derived from Philippine operations. This represents a departure from purely bandwidth-based computation and may raise questions on how revenue attribution and compliance monitoring will be implemented in practice.

A key aspect of the Circular is its treatment of the ongoing decommissioning of 2G and 3G services. The NTC introduced prorated SUF computations for certain frequency bands beginning July 1 following the reported full decommissioning of 3G services in 2025 and the anticipated decommissioning of 2G services.

The Circular also imposes penalties for late payment, including surcharges and possible recall of assigned radio frequencies of an entity for non-payment of its SUF. In addition, the NTC reserved the authority to review the Circular after one year and issue supplemental orders, circulars, guidelines, and/or regulations, particularly in light of the forthcoming Spectrum Management Policy Framework contemplated under the KPA.

As the telecommunications industry continues to migrate toward newer technologies and increasingly data-intensive services, the revised SUF framework signals the NTC’s attempt to modernize spectrum regulation and pricing. Whether the new fee structure ultimately promotes more efficient spectrum use and encourages infrastructure investment in line with the policies of the KPA, or increases compliance burdens for operators, will likely become clearer as implementation progresses.

The views and opinions expressed in this article are those of the author. This article is for general informational and educational purposes only and not offered as and does not constitute legal advice or legal opinion.

Bianca Ysabel A. Baluyut is an associate of the Corporate and Special Projects Department of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW).

babaluyut@accralaw.com

8830-8000