What you need to know about the Konektadong Pinoy Law

Lagging behind ASEAN neighbors in the race for better internet may soon be a thing of the past, with this measure that quietly passed into law last August.

For a country consistently dubbed as the world’s Social Media Capital, it’s jarring that only 33% of Filipino households nationwide are able to connect to the internet. To little surprise, World Bank research highlights a persistent challenge for the country’s digital economy: slow and costly broadband and mobile internet compared with regional peers.

This digital divide has long been a drag on economic growth and competitiveness, but a new measure—the Konektadong Pinoy Law—seeks to change that.

Formally known as Republic Act No. 12234, the measure lapsed into law on August 25 after President Ferdinand Marcos Jr. opted not to sign it. The Department of Information and Communications Technology (DICT) has pledged to release the Implementing Rules and Regulations (IRR) by October, a crucial step for investors and industry players looking to capitalize on new opportunities under the law.

Advocates of the law boast of its potential to widen internet access, especially in rural areas, while long-standing telco players warn that the law could open the industry to exploitation. But where do consumers stand in this debate? radar breaks it down:

Far-reaching promises

The Konektadong Pinoy Law sets down regulations for companies looking to extend data transmission and internet connectivity to consumers. It promises to ease the registration process for these entities and remove the need for a Congressional franchise in order to provide these services.

“Standard telecom operators still need a franchise. But ISPs and middle mile operators, those who will connect to the backbone of telcos and distribute to barangays, they will not need a franchise,” said DICT secretary Henry Aguda in Filipino in an August 25 interview with DZMM Teleradyo.

By easing entry barriers for smaller providers, the law could open new investment opportunities in internet connectivity—segments long dominated by major telcos. Analysts also expect a rise in partnerships between local ISPs and foreign tech firms eyeing the Philippine market.

The law makes a distinction between the entities that run data transmission or internet connectivity businesses—which it calls data transmission industry participants—and the entities that operate the infrastructure needed to enable these services—or access providers.

Access providers will be mandated to allow other entities to use their infrastructure “in an open, fair, reasonable, and non-discriminatory basis, subject to the technical feasibility of the access seeker’s request.” The law also requires access providers to build infrastructure in remote and underserved areas while ensuring that services remain cost-efficient.

Aguda added that satellite operators work under the model illustrated by the Konektadong Pinoy Law. For example, some ISPs and cable providers use satellites from other companies in order to provide services to their customers.

The DICT also hopes to improve the resilience of the country’s data networks with the law. “In times of typhoons and calamity, supporting the Philippines after continuous connectivity,” said Aguda.

A move towards ‘legitimacy’

Rural service providers, business groups and advocates all welcomed the law as a step towards more widespread digitization.

Jose Luis Dabao, chief executive of Negros Occidental-based Kabankalan Community Antenna Television System, said provincial players have the most to gain from the law because it lends legitimacy to their otherwise small operations.

“A lot of these mom-and-pops have been operating without licenses… so with the legitimacy, they will have the confidence to expand their capital and also be given access to training and all of these other things that they wouldn’t be able to because they were ashamed to admit that they were internet service providers for fear of being penalized,” Dabao told Bilyonaryo News Channel after the passing of the law.

For smaller players, this could also mean easier access to financing and partnerships, as formal recognition reduces regulatory uncertainty—one of the biggest barriers to telecom investment outside Metro Manila.

The Philippine Competition Commission supported the law amid concerns that industry competition would become an issue. On the contrary, the PCC believed that competition would only push providers to improve their services.

Competition breeds better prices

“The Konektadong Pinoy [Law]…is a landmark reform that will help build a more inclusive, competitive, and consumer-centric digital economy, where innovation and accessibility are driven by market competition,” the PCC said in a July 1 statement.

Dozens of business groups have urged for the passage of the law, including the Philippine Chamber of Commerce and Industry, European Chamber of Commerce of the Philippines, and FinTech Alliance Philippines. In their joint statement back in July, the groups lauded the effort to update analog-era legislation “that have long stifled Internet connectivity in the country.”

The Joint Foreign Chambers, EU-ASEAN Business Council, IT and Business Process Association of the Philippines, and US-ASEAN Business Council also issued a joint release supporting the Philippines after it was passed. 

Pushback from telco companies

For the country’s dominant players, the new law could disrupt long-standing market structures. By allowing smaller entities to operate without a Congressional franchise, the measure effectively lowers the moat around a multibillion-peso industry once tightly controlled by a handful of firms.

The country’s major telco players have changed their tune on the passage of the law. PLDT, Smart, Globe, DITO and Converge have initially called on the president to veto the law, citing cybersecurity concerns and potential unfair practices.

“Threat actors can embed malware and other malicious software into the system,” said Globe’s Head of Legal Policy Ariel Tubayan at a July 2 forum.

PLDT similarly expressed concern over the law. Senior Vice President Marilyn Victorio-Aquino told reporters on August 12 that the company would consider challenging the constitutionality of the law before the Supreme Court.

Complying with international cybersecurity standards

“The data transmission providers are being given so much benefits which are not being given to the telcos. So in a sense, there is a discrimination against the telcos,” Victorio-Aquino said.

Insider PH alleged that chief executives of the four companies sent a joint letter to the president dated July 18, appealing for a veto since they were not consulted over the measure.

Amid their concerns, the DICT assured stakeholders that the agency would monitor the law’s implementation and ensure fair representation in the crafting of the IRR.

Aguda said, “All telcos, new or old, should comply with international cybersecurity standards [within a period of] two years… this will be an adjustment period for everyone. We believe that their fears are rooted in a fear of change, but I personally told these telcos that if they have any doubts, they should join the crafting of the IRR.” 

The real test, however, will come once the IRR is released and new entrants start applying for registration. Industry analysts say this will reveal whether the law can truly attract new investment—or simply deepen existing rivalries among players.

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