NTC to push through with lower interconnection charges

MANILA, Philippines - Despite growing opposition from mobile telephone companies, the National Telecommunications Commission (NTC) said it will still push through with plans to order the lowering of interconnection charges before the May 2010 elections.

NTC deputy commissioner Douglas Michael Mallillin said they hope to issue before the elections a memorandum circular that will lower interconnection charges, or the fees which telcos pay one another everytime a subscriber calls or sends a text message to another network. Lowering interconnection charges, the NTC believes, will further reduce call and text rates.

The commission has asked the telcos to submit their respective data that could help it come up with reasonable caps on interconnection charges.

The NTC drafted a memorandum circular last year that lowered the cap on access charges to 15 centavos per text and P1.50 per minute on voice calls. With the reduction in interconnection charges, the NTC expects text messaging rates to drop to 40 to 50 centavos per message, and mobile voice call rates, to around P4 per minute.

The country’s major telcos, however, have opposed the draft. But Mallillin said the circular is still undergoing review and can still be changed.

According to the NTC, mobile phone companies charge access rates of 35 centavos per text and P4 per minute for voice calls. The rates are higher than those in Thailand and Malaysia, which slap per-minute access charges of P1.36 to P1.70 and P1.24 to P1.30, respectively.

Mallillin also revealed the NTC is closely coordinating with the Department of Finance (DOF) to study the possible implications of lowering interconnection charges, due to concerns that lowering access charges will mean lower revenues for telcos, and therefore reduced tax collections for government.

Globe Telecom president and CEO Ernest Cu earlier said interconnection rates should be determined not by government but by way of bilateral agreements among the telco operators. “It is something that telecom operators just have to discuss among themselves,” he emphasized.

However, Mallillin said if the initiative to lower interconnection charges will be given to telcos, then it will likely be delayed due to revenue issues.

One of the reasons for the delay in the issuance of the NTC circular on interconnection charges is the alleged refusal of telcos to submit their reference access offers (RAO), which refers to the statement of conditions, prices and terms that a company proposes to provide access to its network, facilities, systems or customer base to another firm.

Mallillin revealed that if telcos conti-nue to refuse, then the NTC can conduct an independent study on how much the access rates should be, even as he brushed aside arguments raised by the Philippine Long Distance Telephone Co. (PLDT) Group and Globe that fixing access rates is beyond NTC’s authority.