Telcos ordered to refund subscribers 20¢ per text

MANILA, Philippines - Globe Telecom, Smart Communications Inc. and Digitel Mobile Philippines Inc. will have to shell out at least P1.42 billion in refund to subscribers for failing to slash their P1 text fees despite an order from the National Telecommunications Commission (NTC).

Edgardo Cabarios, NTC director for Common Carriers Authorization Department, said in a press conference that the telco providers are being penalized for non-compliance with NTC Memorandum Circular 02-10-2011, which reduced text interconnection charge to P0.15 from P0.35. The reduction was meant to make text messaging more affordable to the public. The order supposedly should have lowered the rate per text to P0.80 from P1 as early as Dec. 1 last year.

The memorandum circular was issued on Oct. 10 last year but it took effect in December.

The refund covers excess charge of P0.20 per off-net SMS or text messages – estimated at 20 million – sent from one network to another. The amount is estimated at P4 a day since December last year.

Cabarios admitted the NTC has no exact refund figure, saying the number of text messages has been declining due to the shift in public interest to social networking.

He added that latest figures showed that about 20 million off-net text messages per day were sent in 2010.

“We are still estimating. We do not have an estimate because regular text messages are declining due to unlimited text offerings as well as the shift to social networks,” Cabarios said.

Latest data showed that the PLDT Group’s cellular subscriber base reached 68.6 million as of end-September. Subscribers of wireless arm Smart Communications Inc. stood at 25.6 million, followed by Talk ‘N Text with 26.5 million, and Digitel’s Sun Cellular with 16 million.

On the other hand, Globe’s mobile subscribers stood at 32.1 million as of end-September.

Increasing demand for Internet connectivity, fueled in part by the popularity of social networking sites, has propelled the company’s broadband business.

Globe’s total broadband subscribers during the period surged 20 percent to over 1.6 million from the previous 1.4 million.

Cabarios said telco providers were given 15 days to submit documents and other records on off-net SMS of subscribers who had been charged the regular rate of P1 per SMS from Dec. 1 last year.

Likewise, the NTC official said telco providers were fined P200 per day from Dec. 1, 2011 or until the date of compliance or some P71,000 since last year.

NTC legal department director Dennis Babaran told reporters yesterday of the agency’s issuance of three separate decisions in connection with administrative cases filed against Globe, Digitel, and Smart.

He said that based on NTC computation, the retail price of off-net SMS consists of the cost of the network sending the short message or text plus the cost of the network receiving the text plus the cost of the interconnection.

The NTC pointed out that the savings realized from the reduced interconnection charge on SMS sent to other networks (off-net SMS) were formulated not to simply benefit the telcos but to enable them to pass on the savings to their subscribers.

It added that while the SMS is by nature a value added service (VAS), nothing prevents the NTC from lowering the cost of communications service for the benefit of the public.

He said the three telecom giants may appeal the NTC order. “They have the right to avail of all the legal remedies available,” Babaran said.

Globe corporate and legal services group head Froilan Castelo said the company would seek legal relief.

“There are other various legal grounds by which we base our opposition.  In this regard, Globe shall avail of all legal remedies to preserve its right to determine the pricing of its services,” he stressed.

He pointed out that telco providers have the right to set the retail price of a deregulated service such as SMS.

“In fact, this has worked for the benefit of the consumer because the prices have gone down drastically with the advent of customization, bucket and combo promos, and unlimited services.  There is no provision in the NTC Circular which imposes a ceiling price of P0.80 per SMS sent,” Castelo explained.

Smart and Sun also said they are planning their next move. “We would like to reserve comment on this matter as we review our options for seeking remedies,” the companies said in a joint statement.