House threatens telecommunications companies with financial audit

MANILA, Philippines - The House of Representatives threatened telecommunications companies (telcos) yesterday with a financial audit if they don’t reduce the cost of text messaging by half to 50 centavos per text.

“We will have them audited just like what the government is doing with oil companies,” Quezon Rep. Danilo Suarez, oversight committee chairman, told the Serye Café’ news forum in Quezon City.

“I will have a joint resolution approved by the House and the Senate authorizing the financial scrutiny,” he said.

He said both Speaker Prospero Nograles and Senate President Juan Ponce Enrile support his proposal for a 50-centavo price cap on text messages and installation of a metering device that would allow the government to monitor the revenues of mobile phone service providers.

“If we are able to do it with oil companies, which are accused of overpricing their products, we can do it with telcos,” he said.

Telcos are resisting Suarez’s price cap and metering initiative, which the National Telecommunications Commission (NTC) has taken up.

Suarez said actually, NTC on its own could fix a price cap, while the Bureau of Internal Revenue (BIR) could install a metering device similar to equipment being used in other countries without prodding from lawmakers.

“I don’t know why they are not doing it,” he said.

He said he would expose the “unconscionable” profits that telcos are raking in if they succeed in blocking his proposal.

“The cost of text messaging now to a post-paid subscriber is P1 per text, while the cost to a pre-paid subscriber is 30 centavos to 50 centavos. But the actual cost to the telcos is less than 10 centavos,” he said.

“If we assume a 50-centavo profit and two billion text messages a day, the figure they submitted to us, that’s P1 billion a day or P365 billion a year in profits from text messaging alone. And yet, they reported only P149 billion in 2007,” he added.

He pointed out that without the metering equipment, the government does not have the capability to monitor the revenues of telcos.

“BIR officials have admitted in one of our hearings that they only accept what the telcos report to them,” Suarez said.

He stressed that additional revenues are critical for the government at this time in the wake of the financial crisis and collection shortfalls reported by BIR and Customs.