NTC move to lower interconnection fees illegal - PLDT, Digitel

MANILA, Philippines - Philippine Long Distance Telephone Co. (PLDT) and Digital Telecommunications Phils. Inc. (Digitel) have branded as illegal attempts by government to lower cellular interconnection charges.

According to PLDT, which owns Smart Communications, and Digitel, whose wholly-owned subsidiary Digitel Mobile runs Sun Cellular, interconnection rates should be determined through bilateral agreements between telecom firms rather than imposed by the National Telecommunications Commission (NTC).

They said NTC’s draft order lowering interconnection rates on both voice calls and text messaging between telecom firms is illegal.

PLDT and Digitel argued that by law, interconnection rates are negotiated bilaterally by telecom firms.

“The draft MCs may be struck down for lack of legal basis,” PLDT vice-president and head of regulatory strategy and support Alfredo Carrera said.

He added that the NTC only has the power over interconnection facilities and not on the charges at which the interconnection is done.

Carrera also pointed out that benchmarking the Philippine telecoms industry with that of Malaysia and Thailand as basis in coming up with the order is “far from being fair and reasonable.”

He explained that the Philippines has a different operating and regulatory environment, far from the neighboring countries’ situation.

“We earnestly implore the NTC to restudy the proposed MCs in order to ensure that all angles are carefully evaluated before coming up with any issuance on the matter,” Carrera said.

For his part, Digitel vice-president for legal services William Pamintuan said that if the cut on interconnection rates pushes through, the company’s revenues will further be challenged, adding to the pinch of cutthroat pricing in the industry.

He added that if the MCs are inevitable, the NTC should give “a grace period” and “a longer glide-path” in implementing the rules.

He proposed that the rule be implemented starting next year instead and that a five-year glide period be put in place, instead of the NTC-proposed three-year glide period.

Pamintuan also recommended that interconnection charge for fixed or local exchange carrier services be reviewed.

Globe earlier proposed the reduction in interconnection rates be implemented starting January 2012.

NTC commissioner Gamaliel Cordoba said the regulator will look at all the position papers of PLDT, Sun and Globe before finally issuing the rules.

 “We will also consult the Finance Department on this matter,” he said.

Cordoba said the NTC would like to push through with the rules as soon as possible since it has been more than eight years since interconnection charges were reduced.