Telcos submit new schemes to reduce SMS charge

By Lenie Lectura, BusinessMirror

Posted at Dec 29 2011 07:07 AM | Updated as of Dec 29 2011 09:02 PM

MANILA, Philippines - Telecom firms Globe Telecom Inc. and Smart Communications separately submitted to the National Telecommunications Commission (NTC) their respective proposals on how the reduction in SMS (short message service) interconnection charge can translate to lower text messaging fee without necessarily applying the adjustment.

“There is a proposal already with NTC. It’s going to lower the SMS rate,” said Smart President Napoleon Nazareno.

He declined to reveal what Smart proposed, saying it is up to NTC to announce it. “But in effect, it’s the same,” said Nazareno when pressed for details. The cellular firm’s proposal was submitted about two weeks ago, he added.

Globe Telecom President Ernest Cu, when sought for comment, also said his company has raised a proposal to NTC.? But a show-cause order issued by the regulators is preventing Globe and Smart from making public statements about the issue.

“We can’t talk because there is a show-cause order but we are working with NTC to resolve this. There is no comment yet on our proposal. They still insist that is should be 1:1 [adjustment], but it doesn’t work that way,” said Cu.

Early this month, Globe said it will soon come up with new SMS unlimited offerings to show it is in compliance with the regulator’s latest order on reduction of SMS access charge.

“Globe is one with NTC and supports its pro-consumer policies. It is on this context that Globe shall come up with better, lower and affordable unli pricing for the greater good and benefit of its subscribers,” said Froilan Castelo, Head of corporate and legal services group at Globe.

The company said it adheres strongly to maintaining a healthy tripartite partnership among the industry, the regulator and the public.

“With these new menu of lower and better unli packages that will be offered very soon, more people shall be able to enjoy and benefit as a result of the NTC initiative to reduce the SMS domestic access charges,” added Castelo.??

Smart came out with a similar statement. “The introduction of more innovative flat-rate SMS offers in the coming months will further enhance the affordability of these value added service packages to our subscribers,” it said.

For his part, NTC Commissioner Gamaliel Cordoba said his office has not received any proposal but added that there were indeed discussions with representatives of Globe and Smart two weeks ago.

“I can’t talk about it because there is really nothing formal to talk about simply because there was no proposal submitted on the table. ?They, however, floated some suggestions like initially enrolling the discounted SMS rate as a result of the access charge cut. But we can’t act on those suggestions because nothing was formalized,” said Cordoba.

Smart, Globe and?Digitel Mobile Philippines Inc., operator of Sun Cellular,?were ordered by the NTC?to explain why they continue to resist a directive to reduce text messaging fees by at least P0.20 even after a cut in the SMS interconnection charge.

NTC’s earlier memorandum circular mandating interconnection charge reductions called for a cut in the rate charged by one carrier for every SMS that passes through the network of another carrier from P0.35 to P0.15, effective November 30. NTC had expected that such 20-centavo cut will automatically result in a reduction of regular SMS rates from P1 to at least P0.80, or a similar reduction of P0.20 per text.

NTC said this directive was “non-negotiable” and gave the telcos until December 12 to comply with the circular.

In NTC’s earlier explanation, the retail price of SMS is made up of: the cost of the network sending the short message and cost of the network receiving the text; plus the cost of the interconnection facilities.

But Globe and Smart insist that there is no 1-to-1 equivalence between the cut in the interconnection charge and the reduction in the SMS rate charged to users.

The telcos were given 15 days from receipt of the show-cause order to file their comment. A hearing is slated next month. “Failure to appear as directed to file an answer within the period herein granted shall be considered waiver of their rights to be heard and the commission shall render such judgment as the law and evidence may warrant,” the NTC said.