NTC orders big telcos to give small players subsidies

THE National Telecommunications Commission (NTC) has granted the request of small telecom players to get subsidies from mobile-phone service providers.

In a decision, the regulator said that the members of the Philippine Association of Private Telecommunications Co. Inc. ( Paptelco) are entitled to subsidy from cellular mobile telephone services (CMTS) pursuant to Republic Act 7925.

“It is therefore just and reasonable that the interconnection charge paid to LEC’S [local exchange carriers] be at least equal to the interconnection charge paid to the CMTS providers,” the NTC said.

The NTC also recommended that the interconnection charge to/from the LECS and from/to CMTS providers to be P2.50 per minute.

The current settlement charges for Paptelco traffic, which is transported or hauled via PLDT to CMTS, are: hauling or transport charge, P1.14 and access charge, P3.64. This means that Paptelco’s total payable to CMTS and PLDT is P4.78.

While the access charge for CMTC traffic that is transited via PLDT to Paptelco is P2.50.

Paptelco claims to be losing due to the discrepancy or deficit.

The order further said that the local exchange network should be directly interconnected to the CMTS networks.

“Paptelco, Globe and Smart should negotiate direct interconnection within 90 days. Should parties fail to reach an agreement, the Commission shall set the terms and conditions of the direct interconnection,” the NTC said.

The NTC also suggested that Paptelco and Globe Smart and PLDT pursue negotiation for sender- keeps- all ( SKA) interconnection agreements.

The SKA will allow Paptelco member companies to compete with the bigger telcos.

The NTC said that the negotiation should be a period of nine 90 days from December 19, 2011.

In 2009, the NTC issued a showcause order against PLDT, Globe and Smart for their failure to provide subsidies to local exchange carriers (LECS) as mandated by Republic Act 7925, in correlation with Memorandum Circular 0809-1995 and Memorandum Circular 14- 07- 2000.

Under the MC 14-07-2000, the national, international long distance and cellular phone calls origi- nating and/or terminating in public telephone entities must include the appropriate interconnection subsidy, which will be collected and remitted to the LECS.

Earlier, PLDT refused to grant subsidies to smaller rivals operating outside Metro Manila, claiming that it is not a CMTS operator, and so “not directly” covered by the complaint of Paptelco on the subsidy required by law.

Smart had said that a LEC is “only entitled to a cross subsidy if it is serving any unprofitable local exchange service areas,” adding that “any grant of subsidy is not automatic but subject to certain conditions.”

Globe, on the other hand, said that it is open to the idea of subsidy.

However, the Ayala-led telco said that there is a need for a direct interconnection with Paptelco members, which should be done through negotiation as provided under the existing rules and regulations on interconnection.