Extelcom opposes proposed 5-centavo regulatory fee

MANILA, Philippines - Express Telecommunications Co., the country’s first mobile phone service provider, is opposing a proposal from the congressional oversight committee to impose a five centavo regulatory fee on all the telecom services offered by the telecommunication companies.

Lawyer Ermar Benitez, counsel for Extelcom, said the charging of the five centavo regulatory fee is in fact a tax imposition and branded it as “anti-consumer.”

He explained that, far from being a regulatory measure, its purpose of raising revenues for a public purpose makes it a tax burden much similar to a sin or excise tax imposed on the consumption of tobacco products and alcoholic beverages.

“The proposal will lead to a negative impact not only to the industry but, ultimately, to the end consumer,” Benitez said. 

The congressional committee proposed that SMS or text messaging charges by the telecom companies should be pegged at 50 centavo per text so that the burden of the five-centavo imposition for computer education will not be passed on to the consumer.

Extelcom warned that Congress should not unnecessarily pass on the burden to the National Telecommunications Commission (NTC) of promulgating a very unpopular rule or regulation, which would result in higher telecommunication costs for the consuming public. 

“Being clearly a tax measure, its enforcement should be through a law to be passed by Congress, and not to masquerade as a regulatory rule to be forced upon the NTC at the expense of, or to the detriment of its credibility as a regulatory agency,” Benitez said.

Instead of discussing the text tax measure, Extelcom said it will prod the NTC to immediately act on lowering interconnection cost.

Benitez said one way to ensure lower telecommunications cost to the consumers is to lower the rates of network access charges, or the rates that carriers charge one another for crossing into each other’s network for the purpose of making the call or text message reach the called subscriber.

Extelcom cited studies that show that the Philippines has the highest interconnection rate in Asia. This means that, compared to other countries like Malaysia and China , a person in the Philippines pays more than anyone else when connecting to other telephone subscribers using other networks.

It quoted studies conducted by Merrill Lynch in 2008 and by Pyramid in 2009 showing that the interconnection rates on voice calls per minute in the Philippines is P4 or $9.15 cents based on the prevailing peso value in 2008 as compared to Indonesia with $4.95 cents, Thailand with $2.97 cents, Malaysia with $2.55 cents, Pakistan with $2, China with $0.88 cents, India with $0.71 cents and Hong Kong with 0.56 cents. 

“The results are staggering: Other more economically well-off countries like China and Hong Kong are paying far less for their network-to-network charges,” Extelcom said.

The NTC has began to address this concern when it started late in 2008 the process of issuing a memorandum circular calling for a decrease in interconnection charges from the current charge of P4 per minute to P1.50 per minute for voice calls, as well as SMS messages from P0.35 per SMS to P0.15 per SMS. 

The memorandum circular also provides that the quality of the calls and texts should still meet the standards it set. The proposed MC has undergone a series of public hearings as consultation and now only awaits a final decision from the regulator. 

“The NTC should act speedily in ensuring that the Filipino consumer will benefit from lower call cost and ensuring domestic operators meet the quality standards for both text and calls versus paying attention to Suarez’s bitter pill,” Benitez said. Rep. Danilo Suarez heads the congressional oversight committee and is a proponent of the measure calling for a 50-centavo per text fee of which five centavo will be aside for a government fund for computer education.

Extelcom said it believes that the MC, which will decrease the access charges, is a more effective and feasible approach to achieve the government’s higher mandate in providing quality and more affordable communication which can be enjoyed by all sectors in the country. This will, in effect, boost the country’s economy and will thus result in higher government revenue.