July 7, 2011

Telcos agree' to NTC initiative lowering costs of calls, text messages

GMA News

In a rare occasion, the Philippines' Top 3 telecommunications firms have agreed to lower SMS and call access charges as spelled out in the proposal by the National Telecommunications Commission (NTC).

In a hearing at the NTC on Monday, Globe Telecom Inc., Philippine Long Distance Telephone Co. (PLDT) and Digital Telecommunications Philippines Inc. (Digitel) did not reject the proposal, but expressed reservations on the proposed lowering of interconnection charges.

Interconnection charges are the on calls or text messages outside the subscribers own network as in Globe to Smart or the other way around. The fee is part and parcel of the cost of calls or text messages charged against the subscriber’s account, be it prepaid or postpaid.

The existing interconnection charge for SMS is P0.35 for each text message, while the charge for calls is at P4 per minute.

The NTC proposes to lower the SMS access charge to P0.35 on a staggered basis until it reaches P0.15 after three years.

The access charge for calls will also be reduced to as low as P1 three years after the NTC’s draft memorandum circular is implemented.

In coming out with the proposed rates, the NTC cited the cases of neighboring countries in the Southeast Asian region, where charges for calls only cost around P1.24 to P1.30 per minute.

Yes, but...

Globe, for its part, asked for a six-month reprieve before full implementation of the new rule.
"Globe has for so many years prepared for this eventuality," said Froilan Castelo, SVP of Globe's corporate legal services group, in an interview on GMA News' "Balitanghali."

"What we're just saying to the regulator is that they just have to cushion the impact on the telcos, because we will experience a huge revenue hit," he added.

Smart did not readily agree to the draft memo, but asked the commission to reconsider the proposed rates on interconnection charges.

"You cannot just compare directly through benchmarking (with other countries) without considering the total picture of what's happening in the local telco industry," said Alfred Carrera, PLDT's first vice president for regulatory and telecom industry relations.

Digitel, on the other hand, supported the proposal but asked the regulator to lower the access charges for international calls as well.

"We just have to make sure that proper safeguards are in place," said William Pamintuan, Digitel SVP for legal and inter-carrier services. "[This is] so that the other sources of revenue of telcos may not be affected."

Good for telcos

In an earlier report, Bureau of Internal Revenue Commissioner Kim Henares said that contrary to the telcos' fears, the new rates will in fact be beneficial to services providers.

“The thing here is, if you lower [the charges], people will use [their cellphones] more. I don’t think it will affect [business] because people will just call and text… more," Henares said.

However, consumer group TXTM8 Consumer Group Tayo Inc. (TxtMate), did not believe the three telcos' unified stance on the matter.

"We're skeptical because, as history will show, there's always opposition, and there's always delay," said TxtMate president Mars Veloso.

The NTC is giving the telcos and consumer groups until July 11 for filing their respective position papers.

A clarificatory hearing will be set after July 11 before the draft memo is made final after which the NTC believes the proposed memorandum will be implemented — by the end of July or early