WHY us?

The Philippine Long Distance Telephone Co. (PLDT) Group on Wednesday raised this question during a public hearing on the government’s proposal to limit access charges in short message service (SMS).

If implemented, text messaging rates could go down for as low as P0.40 per SMS.

Other phone companies, meanwhile, asked the National Telecommunications Commission (NTC) to give them more time to formally comment on the proposal. They also said they will incorporate their comments in another plan, which seeks to put a cap on voice-access charges to no more than P1.50 per minute. The telcos are expected to submit their respective position papers due on June 16.

Globe Telecom, Digitel Mobile Philippines Inc. (DMPI) and Bayan Telecommunications Philippines Inc. (Bayan) asked regulators to give them 10 days within which to file their respective rejoinders.

Depending on how the carriers will comment, the NTC said it could finalize the rules at the soonest possible time, particularly if there are no contentious issues.

“We are quite concerned about the amount of focus that the government is giving to the issue of interconnection charges. Unlike electricity charges, water charges and transport fares which keep increasing from time to time, SMS charges, on the other hand, have not increased, and in fact, have decreased over the years. This is one of the very few industries where prices have been going down,” said PLDT group head for regulatory affairs and policy Ray Espinosa. He pointed out that SMS pricing today is one of the most innovative and socialized pricing schemes among consumer services. This is driven largely by robust and vibrant competition in the industry.

For its part, the NTC said it was just doing its job. Deputy commissioner Jorge Sarmiento said the draft circulars on the reduction of interconnection charges for both voice calls and SMS are “responses to the clamor” that the government and consumers have raised.

“We are fully aware of what the telcos have to put up in order to provide basic communication services. But there has been clamor to reduce further the cost of communication and we are just responding to that clamor,” said Sarmiento.

Last Friday, the NTC released two draft circulars. One of the proposed policies seeks to limit access charges in SMS to not more than P0.15, while the other draft circular calls for a P1.50 cap per minute in cellular calls.

“At P1 per text, the cost of an operator sending the text is P0.35. The cost of the other operator receiving the text is also at P0.35. These amounts are what we know under the present setup between two interconnecting carriers. So if the two components of SMS already cost P0.70, this means that the cost of interconnection facilities is pegged at P0.30 to arrive at a retail price of P1 per text,” explained NTC director Edgardo Cabarios after the public hearing.

Assuming that interconnection links will remain at P0.30 while both operators charge one another P0.15 in access charges then the new retail price per SMS will cost only P0.60.

“For voice, if interconnection links cost roughly P1 and if our proposal to limit access charge of up to P1.50 is implemented then, we would arrive at a P4-per minute charging rate for cellular calls,” added Cabarios.

But according to Smart, in a presentation before the NTC yesterday, mandating a cap on interconnection charges would be ultra vires [beyond the power] of the commission as it runs contrary to the statute that the regulation seeks to implement.

“NTC regulations imposing a cap on interconnection rates would violate the constitutional right of telcos to nonimpairment of contracts,” said Smart.

The country’s largest cellular firm added that the Republic Act 7925 or the Public Telecoms Act of 1995 provides that the access charge arrangements between all interconnection carriers shall be negotiated between the parties.

“While we acknowledge that the government has the power to regulate, it should be exercised only when the industry does not show a level of competition,” added Espinosa.

Consumer group and other concerned parties at the public hearing also urged the NTC to remove expiry dates on prepaid load credits. However, the NTC was prohibited until an injunction order against it is lifted.

WHY us?

The Philippine Long Distance Telephone Co. (PLDT) Group on Wednesday raised this question during a public hearing on the government’s proposal to limit access charges in short message service (SMS).

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