CA voids order for telcos to refund excess SMS charges

MANILA, Philippines – The Court of Appeals (CA) has voided an order requiring telecommunications companies to cut their SMS or short messaging system rates and return the excess amount paid by subscribers.

The CA nullified an order issued by the National Telecommunications Commission (NTC) in November 2012, reducing the text messaging fee from P1 to not more than 80 centavos per SMS.

The ruling, promulgated on June 27, granted a petition filed by Digitel Philippines Inc., operator of Sun Cellular Network.

The NTC had ordered Digitel to refund the excess 20 centavos per SMS to subscribers, starting from the effective date of a memorandum circular issued in 2011.

The appellate court, however, said penalizing the telecom companies for not reducing the SMS retail rates would be an injustice, as this was not mandated under the memorandum.

It said the NTC order was baseless as the agency failed to explain why the SMS should be made more affordable.

“We find this essential because the NTC is invoking the power of regulation over telecommunications service. There is no evidence showing the present P1 per text rate is unreasonable and unjust,” the ruling, penned by Associate Justice Priscilla Baltazar-Padilla, said.

The CA said a cut in the interconnection charge did not necessarily mean reduction in SMS rates.

“While the issuance of the 2011 memorandum circular satisfied the requirement of due process insofar as the interconnection charge is concerned, this does not apply to the lowering of the SMS retail rate,” it said.

In the assailed ruling, the NTC said Digitel violated the memorandum, which required the petitioner and other telecom firms – Smart Communications Inc. and Globe Telecom – to reduce their interconnection charges from 35 centavos to 15.

In August 2014, the CA issued a temporary restraining order stopping the implementation of the NTC order.

Smart and Globe filed similar petitions with the CA.

Regulators had estimated the refund at P7 billion, to be refunded by way of prepaid load discounts or bill deduction for postpaid subscribers.