Telcos: NTC did not order us to lower rate to P0.80

The circular talked about lower interconnection charges which would bring rates down

THE telecommunications companies’ resolve to scorn the National Telecommunications Commission’s order for them to lower the texting rates they charge their subscribers has led the NTC to issue another order:

Submit all records of short messaging services (SMS) rendered to their subscribers for which they charged P1 per text.

The records required to be submitted will be from December 2011 up to the day the order was given last week.

The NTC, which is the regulatory body over telcos, is being pressured by President Aquino, the public and some members of Congress, to compel the NTC to lower regular text rates from the present P1 per text.

The NTC in October ordered the telcos to reduce the rate to eighty centavos (P0.80) but the telcos refused to comply.

They claim that the government has no power to order business companies to dictate what rates to charge.

NTC is supposed to do something about getting its order obeyed. It said it needs to hold hearings.

“The documents [required from the telcos] are very important before we make any decisions on the issue, so we can proceed with the hearings,” Dennis Babaran, director of the legal department of the NTC said.

In December last year, the regulator issued separate demands to the telcos why they should not be sanctioned for failing to obey the order to lower rates despite the issuance of Memorandum Circular 02-10-2011 lowering the interconnection charge from 30 centavos to 15 centavos.

Presumably the NTC had calculated that this would result in the reduction by at least twenty centavos ( P0.20) of every text message.

The NTC show-cause orders were against Smart Communications Inc., Globe Telecom and Sun Cellular whom the NTC said it had ordered to lower SMS rates by at least 20 centavos,

The circular took effect on November 30 last year. The telecommunications firms were likewise ordered to preserve and submit all SMS records of subscribers charged P1 per SMS sent since December 1.

Smart, Globe and Sun were required to submit a weekly report to the NTC as to the total number of SMS charged P1 per subscriber commencing from that same date. The NTC issued the order in response to mounting complaints that the companies continued charging P1 per SMS.

The NTC’S One-stop Public Assistance Center conducted a series of tests by using prepaid mobile numbers from the three telecommunications companies to verify the complaints.

Telcos: No order from NTC to lower text rates

In separate position papers, Smart, Sun Cellular and Globe said the main reason for their refusal to lower their rates to P0.80 per text is that the NTC circular to them did not contain any directive to cut the rates of their SMS or text messaging by 20 centavos.

They said the NTC circular clearly refers to lowering interconnection charges and not the retail rates for SMS.

The telcos then attacked the principle of a government body dictating what the price of business company’s service should be.

“The imposition of SMS retail rates is anticompetitive as it seriously impairs the ability of PTES [public telecommunication entities] to offer the market with pricing schemes that will suit the requirements of different sectors of the market, and thus defeats the healthy competition,” Smart said.

In a bid to comply with the directive of the government to lower the cost of SMS, Globe said it would offer a permanent promo of 80 centavos per text to all networks.

“This offering, which effectively translates to a rate of P0.80 per SMS, is in effect a substantial compliance with the supposed, albeit unwritten and non-existent, intent of the questioned circular to lower the regular retail text rate from P1 to P0.80,” Globe said.

Because of this, Globe said, “the show cause order ought to be of no force and effect for being moot and academic.”