Globe asks NTC to gradually bring down mobile interconnection rates

MANILA, Philippines - Globe Telecom and subsidiary Innove Communications have asked the National Telecommunications Commission (NTC) to implement a gradual reduction in mobile interconnection rates starting on Jan. 31, 2012.

In a position paper submitted to the NTC, Globe and Innove proposed the following rates:

• For mobile voice service: P2.50 on the first year; P2 on the second year; and P1.50 on the third year;

• For SMS: P0.25 per SMS on the first year; P0.20 on the second year; and P0.15 on the third year; and

• For LEC: P2 on the first year; P1.50 on the second year; P1 on the third year.

Globe corporate and legal services head Froilan Castelo noted that in the Philippines, the prevailing interconnect charge for voice calls between mobile carriers is P4 per minute while the current interconnect rate for SMS is P0.35 per SMS. On landline, the termination rate is P3 per minute.

He said that studies both by the NTC and the private sector show that the Philippines has one of the highest voice termination rates in the region, with the Philippines averaging at $0.10, with most in the $0.03-0.05 range.

“If indeed the government would want to see lower domestic rates to go down, interconnect rates should also go down as well. Given this, the proposal of the NTC to reduce the interconnect rates on a glide path basis is acceptable to cushion the revenue hit, and a grace period for implementation be given so that telcos will have the ability to restructure their business plans and models with the coming of this new pricing scheme,” Castelo said.

He pointed that the reduction in interconnect rates should not only be applied to mobile (voice and SMS), it should also be applied to the fixed line or local exchange carrier (LEC) service. “Otherwise, we shall see an absurd situation where it will be costlier to call on landline, than on mobile,” he said.

Globe proposed that a three-year glide path method be implemented beginning on Jan. 31, 2012 to cushion the effect on the company.