Text interconnection rates may soon go down

By Mary Ann Ll. Reyes, The Philippine Star

Posted at Oct 14 2011 06:58 AM | Updated as of Oct 14 2011 06:59 PM

MANILA, Philippines - The National Telecommunications Commission (NTC) is set to release a memorandum circular that will require cellular mobile telephone service (CMTS) providers to drastically bring down interconnection rates for text messaging instead of a gradual three-year phasedown period.

However, the proposed reduction in interconnection rates for voice calls will still be achieved over three years.

Highly-placed sources told The STAR that due to the huge impact on the consumers of affordable text messaging or SMS rates, the NTC is inclined towards reducing interconnection rates immediately rather than over a three-year period. “However, the commission has not yet decided on how much the reduced rate will be,” a source said.

The original plan by the NTC was to bring down the interconnection charge for SMS between two separate networks from the existing rate of 35 centavos per text message to not higher than 25 centavos during the first year from effectivity of the circular; not higher than 20 centavos on the second year; and not more than 15 centavos per SMS on the third year.

The retail price of SMS or short messaging service consists of the cost of the network sending the short message or text plus cost of the network receiving the text plus the cost of the interconnection facilities.

The NTC noted that public telecommunications entities (PTEs) are offering SMS at a price as low as 15 centavos per SMS within their respective networks, and a higher rate for text messages to other networks, basically because the latter involves paying interconnection charges.

The draft MC will also require SMS network providers to ensure that facilities are sufficient to guarantee that 99 percent of short messages or texts sent are received by the addressees within 30 seconds from the time the texts are sent.

The circular likewise mandates that each of the parties to the interconnection shall provide the interconnection links or circuits required to carry their respective SMS traffic. The parties shall ensure that termination equipment is sufficient to connect the interconnection links or circuits to their respective networks. The parties shall provide the interconnection links and facilities with sufficient capacity in a timely manner.

Meanwhile, the separate draft MC for mobile voice service notes that the interconnection charges (termination rates) to mobile service operators in Thailand and Malaysia range from an equivalent of P1.36 to P1.70 per minute and P1.24 to P1.30 per minute respectively, whereas the prevailing interconnection charges for voice calls between mobile operators with separate networks in the Philippines is P4 per minute.

As planned, the interconnection charge for voice calls between two separate networks will be reduced to not higher than P2 per minute for the first year, no more than P1.50 per minute on the second year, and a maximum of P1 per minute on the third year.