Telcos face franchise loss
Sen. Ramon “Bong” Revilla Jr. INQUIRER FILE PHOTO
Lawmakers on Wednesday urged phone companies to comply immediately with the National Telecommunications Commission (NTC) order to refund the excess charges on text messages slapped on their millions of subscribers or risk losing their franchise.
Sen. Ramon Revilla Jr. said that if the phone companies would not follow the NTC order, “I, as chair of Senate committee on public services, will initiate a review of the telcos’ franchises as this may be a ground for their revocation.”
Revilla said in a statement that the mobile phone companies should not “dilly-dally” considering that the NTC had ordered them to lower their interconnection charges from 35 centavos to 15 centavos for cross-network text.
In a circular, which took effect on Dec. 1, 2011, the NTC said the reduction should have pushed down regular off-net text prices to a maximum of 80 centavos, instead of the prevailing P1, a fee that has stayed the same for more than a decade.
“They should not wait for public outrage to arise before they act,” Revilla said of Smart Communications, its affiliate Sun Cellular and Globe Telecom.
The three telcos have a combined subscriber base of just over 100 million users and make a profit of nearly P50 billion a year.
By Philippine Daily Inquirer’s own estimate, the three companies would be required to refund P1.42 billion to subscribers for the extra 20 centavos charged for every text message.
Over 2 billion text messages are sent in the Philippines every year. Only text messages sent between customers of different networks who aren’t subscribers to “unli” promos are covered by the NTC decision.
Sen. Alan Peter Cayetano urged the telcos not to go to court and appeal the NTC decision but rather consult with their customers on an efficient and equitable process to reimburse the subscribers, 95 percent of whom were anonymous, or prepaid users.
“This (20-centavo refund) is a significant amount because research shows that cell phone has been competing with food in the share of family expenses,” said Cayetano in an interview with reporters.
Motion for reconsideration
Smart, the mobile unit of dominant network Philippine Long Distance Telephone Co. (PLDT), said it would file a motion for reconsideration to ask the NTC to reverse its decision on interconnection charges.
“First, our position is there is no basis for finding that Smart has violated the NTC memorandum circular and overcharged its subscribers,” the company said in a statement.
Smart said interconnection charges pertained to rates that mobile phone operators were charging each other in order to deliver text messages from other networks to their own subscribers. It said it had already complied with this circular.
Smart claimed that the circular did not order mobile phone operators to reduce retail rates charged to customers.
Deregulated service
Under NTC rules, text messaging is a deregulated service, which means telcos are free to price services as they please, Smart said.
“The rate-fixing power of the NTC is residual in nature and may be exercised only under specific circumstances,” Smart said.
Republic Act No. 7925, also known as the Public Telecommunications Policy Act, states that such residual powers can be exercised only when ruinous competition results or when a monopoly or a cartel or combination in restraint of free competition exists and the rates or tariffs are distorted or unable to function freely and the public is adversely affected, Smart said.
The law further states that the NTC “shall exempt any specific telecommunications service from its rate or tariff regulations if the service has sufficient competition to ensure fair and reasonable rates or tariffs,” Smart said.
Long overdue
Rep. Teodoro Casiño urged the NTC not to “flip-flop” on its decision, saying the ruling was “long overdue.”
“We are shocked to learn that the telcos reduced their interconnection charges as ordered by NTC last year but they kept the savings for themselves instead of translating these to lower SMS rates,” he said in a statement.
House Minority Leader Danilo Suarez expressed serious doubts that the NTC order would go anywhere.
“Really, it’s difficult to fight an industry worth P700 billion. You cannot fight them. They will fight you anywhere. They will fight you up to the court, and the chances of winning [are] dim,” Suarez told reporters.
“Nice try, [but] nothing will happen. Telcos will not refund. They will go to court and contest it,” he said.
While it was possible to refund postpaid subscribers, it would be difficult for consumers using prepaid numbers, said Suarez, who once proposed imposing a tax on text messages in 2009.
He said the NTC order might have been intended “just to placate people [and show] that [it is] doing something.”
