Globe unit denies Smart accusation

Globe Telecom’s wireline subsidiary Innove Communications yesterday brushed aside accusations hurled by archrival Smart Communications that it has been engaging in predatory pricing and anti-competitive behavior.

Innove chief executive Gil Genio told The STAR that Smart’s complaint should be dismissed by the National Telecommunications Commission (NTC) as there is nothing in Innove’s new Speak n’ Surf service that would constitute these prohibited activities.

Smart earlier asked the NTC to enjoin Innove from further offering its Speak n’ Surf service, which allows subscribers to have both a wireless phone and unlimited broadband service for P995 a month.

According to Smart, subscribers of Globelines Broadband are offered "free first 500 texts per month to other Speak n’ Surf phones and to Globe Handyphone and Touch Mobile," a service prohibited by the NTC as it offers another network preferential rates not offered to other competing networks.

"The Globelines Broadband service is offered by Innove while the mobile service is being offered by Globe. Such arrangement on a permanent basis is offered below cost and therefore violates the NTC policy against predatory pricing," Smart said in its complaint before the NTC.

Genio explained that while Globelines Broadband subscribers are allowed to send for free 500 texts from a landline to another landline (Speak n’ Surf phone to another Speak n’ Surf phone) or from a landline to a mobile phone (Speak n’ Surf phone to a Globe or Touch Mobile subscriber), Innove still pays Globe the standard 35 centavos per text message termination fee, the same rate Philippine Long Distance Telephone Co. (PLDT) pays to Globe everytime it terminates a landline text to a mobile phone.

"This means that of the P995 a month subscription fee for Speak n’ Surf, around P175 is spent by Innove to pay Globe for the termination fee of the 500 text messages. And P175 is still small compared to the total monthly subscription fee, therefore allowing us to still make money from the service," Genio said.

He added that Innove does not discriminate in favor of Globe and against competing networks (Smart and Digitel’s Sun Cellular) as landline text messages from Speak n’ Surf phones can be terminated to the Smart and Digitel mobile network. "The only thing that is preventing that from happening is the absence of interconnection agreements for this type of service. But we are prepared to do that immediately," he emphasized.

At present, text messages from PLDT landlines are allowed to terminate in Globe’s network but those from Innove landlines cannot send text messages to Smart mobile phones. Sources say that Smart has yet to agree on the interconnection.

Genio also explained that Innove is not engaged in predatory pricing. "To do so, there are two requirements – first, you must be losing money, and second, you must be the dominant player. Innove is neither losing money from the Speak n’ Surf service nor is it the dominant player (PLDT is still the dominant landline player in the country)," he said.

Smart, in its complaint, pointed out that the NTC has already prohibited discriminatory practices in inter-corporate, inter-carrier, and/or inter-network crossings.

NTC’s Memorandum Circular 14-7-2000 further provides that an access provider must "treat each seeking interconnection on a basis that is non-discriminatory and no less favorable as to terms, conditions, and rates that the treatment which the access provider affords to itself, its parent, subsidiaries, affiliates, or to any other public telecommunications entity (PTE) to which it is providing a materially equivalent service."

Smart said that based on Globe’s own line of arguments (when Globe filed a complaint against Smart’s all-day texting promo), Globe and Innove are operating as a criminal combination in restraint of trade because in offering the Speak n’ Surf service to their subscribers, they are acting in concert to corner the market and thus create a virtual monopoly. "This service of Globe and Innove are in open defiance and mocks the circulars, rules, orders, and policies of the NTC which Globe sought to promote," Smart emphasized in its complaint.