After ignoring order to lower texting rates, telcos told to pay subscribers

In the age of mobile, telecommunications companies are among the most profitable enterprises on earth. Now Philippine telcos are being told to give some of that money back. For ignoring a government order to reduce SMS rates to P0.80 from P1 per text message, Globe and PLDT subsidiaries Smart and Sun must reimburse their subscribers the difference since the order took effect in December of last year. Globe has already announced that it will take the government to court over the order.

 

National Telecommunications Commission (NTC) director Edgardo Cabarios told reporters in a briefing Tuesday the industry is being penalized for not heeding "Memorandum Circular 02-10-2011: Interconnection Charge for Short Messaging Service."

 

Companies were ordered to refund subscribers the excess charge of P0.20 for each "off-net" SMS, or text messages sent from one network to another since the memo took effect, said Cabarios. 

 

NTC legal director Dennis Babaran told reporters the regulator also issued three separate decisions in connection with Administrative Case Nos. 2011-098, 2011-099 and 2011-100 filed against Globe, Digitel, and Smart.

 

Regulator NTC also ordered the telcos to pay P200 per day starting Dec. 1, 2011 until they are able to comply with the circular.

 

The commission also ordered Globe, Smart, and Sun to reduce their off-net SMS rates to not more than P0.80 from P1 “effective immediately,” said Babaran. 

 

NTC noted the retail price of off-net SMS accounts for the cost of the network sending the message, plus the cost of the network receiving the text, plus the cost of the interconnection facilities.

 

Globe, however, will take NTC to court. 

 

“There are other various legal grounds by which we base our opposition,” said Globe corporate and legal services group head Froilan Castelo. 

 

“In this regard, Globe shall avail of all legal remedies to preserve its right to determine the pricing of its services,” the company said in a statement attributed to Castelo.

 

Telecommunications companies have the right to set the retail price of text messages, Globe claimed, saying SMS is a deregulated service.

 

The 2011 NTC circular reduced the interconnection charge to P0.15 from P0.35 to make text messaging more affordable to the public as directed by of the Office of the President, said Cabarios.

 

Globe, Smart, and Sun have been given 15 days to submit documents, records, and reports covering all off-net text messages sent by their subscribers since Dec. 1, 2011.

 

“We would like to reserve comment on this matter as we review our options for seeking remedies,” noted Smart and Sun in a joint statement Tuesday.

 

NTC said the savings from the reduced interconnection charge on SMS sent to other networks were designed not to benefit the telcos but for them to pass the savings on to their subscribers.

 

SMS is a value added service, and the commission is not prevented by law from lowering the cost of communication to better serve the interest of the public, the regulator added. — VS/BM/HS, GMA News