Guidelines on Monitoring Converge's Performance Commitments

June 21, 2022 FIRB RESOLUTION NO. 019-22 WHEREAS , Section 297 (A) (5) of the National Internal Revenue Code (NIRC) of 1997, as amended by the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, has expanded the functions of the FIRB to check and verify, as necessary, the compliance of registered business enterprises with the terms and conditions of their availment, in particular, the agreed target performance metrics, rules and regulations of the NIRC, and other laws or issuances; WHEREAS , FIRB Resolution No. 007-22 dated 07 April 2022 approved the tax incentives application submitted by Converge Information and Communications Technology Solutions, Inc. (Converge) to the Board of Investments (BOI); WHEREAS ,the maintenance of a minimum speed commitment of 100 Megabits per second (Mbps) with a price not exceeding the prevailing market rate; and that all covered areas of the multi-phased project will be adequately served, with priority to identified unserved areas, are commitments imposed onto Converge for the latter's eligibility to avail of tax incentives continuously; WHEREAS ,the FIRB members instructed the FIRB Technical Committee (TC) members to come up with a robust monitoring system that will allow the FIRB, BOI, and the National Telecommunications Commissions (NTC) to monitor compliance of Converge of the above-stated commitment; WHEREAS ,reliance on an independent or third-party auditor has become a common practice and has helped increase tax revenues through efficient assessment and coordination; WHEREAS ,the members of the FIRB-TC agreed to use an independent or third-party auditor to monitor the performance commitments of Converge at its expense; NOW, THEREFORE, BE IT RESOLVED, AS IT IS HEREBY RESOLVED ,That Converge must submit a compliance report prepared by an independent or third-party auditor who will be responsible for monitoring, analyzing, and providing a report on Converge's compliance with its commitments with the FIRB Resolution 007-22 BE APPROVED ; RESOLVED, FURTHER ,that the following monitoring system shall be strictly followed: 1. The third-party auditor will be responsible for monitoring, analyzing, and providing a report on Converge's compliance with its commitments to the FIRB. The report must be submitted to the NTC on the last day of January, covering the results of operations of the preceding calendar year. The NTC shall then simultaneously submit the certified report to the BOI and FIRB through its Secretariat fifteen (15) calendar days from the date of receipt of the audit report. The report shall contain information on these commitments: a. The monthly internet quality metrics prescribed by the FIRB TC; b. Annual comparison of prevailing market rates; and, c. Annual service coverage and subscriber count. 2. To effectively monitor the quality of the internet plans Converge provides, the FIRB, through a third-party auditor, should audit the minimum internet bandwidth, which is at 100Mbps per FIRB Resolution No. 007-22 ,and all other metrics that affect it, including download throughput, upload throughput, minimum service reliability, jitter, latency, packet loss, data cap, and throttling. 3. The internet speed floor of 100Mbps shall only apply to the download throughput of all plans and upload throughput for business plans, whereas upload throughput for household plans, jitter, latency, and packet loss should be tied to national/international medians, whichever is higher, up to 100Mbps. 4. Converge's household and business internet subscription plans must be priced competitively against the prevailing market rate, based on the top three internet service providers (ISP) in the Philippines with the most fiber optic internet subscribers, excluding Converge itself. Converge shall not have an internet subscription plan priced higher than the cheapest of the top three ISPs for the equivalent or greater near-equivalent internet subscription plan. 5. Prevailing market rate shall be compared through the unit price per Mbps of Converge and the cheapest of the equivalent or greater near-equivalent unit price per Mbps of the other three ISPs. 6. Converge must provide projections on when it will achieve 100% service coverage of its most basic household internet plan in all regions in the Philippines, based on the municipalities covered in its project. All households within these regions must be able to subscribe to Converge's most basic household plan at the same quality and price as everyone else the project covers. 7. The third-party auditor must provide the methodology of its annual monitoring report on Converge's commitments to BOI, FIRB Technical Committee, and NTC to ensure that the method adheres with the guidelines written herein. RESOLVED, FURTHER ,that the following tasks and their corresponding timelines shall be strictly followed: No. In-charge Task and output Receiver Deadline 1 Converge Select a third-party auditor, per SEC list, and secure the FIRB TC's approval FIRB TC On or before 1 August 2022 2 Third-party auditor Submit an audit methodology in accordance with the FIRB TC's guidelines BOI, FIRB, and NTC On or before 31 August 2022 3 FIRB TC and NTC Endorse the third-party auditor's methodology as aligned with the FIRB TC's guidelines Third-party auditor On or before 30 September 2022 4 Third-party auditor Annually submit the audit results and supporting data directly to the NTC NTC On or before 31 January 5 NTC Evaluate the audit results and supporting data and issue a certification covering the report FIRB and BOI On or before 15 February RESOLVED, FINALLY ,That if there are changes in the audit methodology or if a negative endorsement is received from the NTC, the separate guidelines per 21 June 2022 memorandum submitted by the FIRB Secretariat to the FIRB, shall be followed. The detailed metrics, supporting formula per metric, and other operational guidelines detailed in the said memorandum shall also be adhered to. Any changes thereto must be approved by the FIRB TC. This Resolution may be signed in any number of counterparts, each of which, when duly executed and sent by facsimile or electronic transmission to the Secretariat, shall be valid and effectual as if executed as an original, but all the counterparts (including those sent by way of facsimile or electronic transmission) shall together constitute one and the same document. Adopted by the Board in its meeting on 21 June 2022, where a quorum was present. (SGD.) TINA ROSE MARIE L. CANDA Officer-in-Charge and Undersecretary of Budget and Management (SGD.) KARL KENDRICK T. CHUA Secretary of National Economic and Development Authority LORAJEAN A. ALAMIN Assistant Executive Secretary (SGD.) RAMON M. LOPEZ Co-Chairperson and Secretary of Trade and Industry (SGD.) CARLOS G. DOMINGUEZ Chairperson and Secretary of Finance