NTC rejects appeal of telcos, stands firm on P0.20 refund

MANILA, Philippines - The National Telecommunications Commission (NTC) has directed dominant carrier Philippine Long Distance Telephone Co. (PLDT) and Ayala-led Globe Telecom Inc. to roll back the rates imposed on text messages and refund subscribers the overcharged amount over the past two years.

This after the NTC issued separate orders dated May 7, 2014 denying the motions for reconsideration filed by PLDT’s Smart Communications Inc. and Digitel Mobile Philippines Inc. as well as Globe filed in December of 2012 seeking to reverse NTC’s order on the roll back of short messaging system (SMS) rates to P0.80 from P1 in December 2011.

Edgardo Cabarios, director of NTC’s  Common Carriers Authorization Department, said in an interview that Smart, Globe, and Sun Cellular would have to comply with Memorandum Circular 02-10-2011 or the “Interconnection Charge for SMS” that took effect in December of 2011.

Cabarios said the telecommunications provider could elevate the matter to the Court of Appeals (CA).

According to him, the order would cost telecom companies billion of pesos as they failed to immediately comply with the order of NTC.

He pointed out that an average of two billion text messages are sent by cellular phone subscribers every day but the order covers only off-net SMS as well as regular text messages not covered bucket promos such as unlimited text services.

Cabarios said telco providers could credit the prepaid load of prepaid subscribers and effect the refund through the respective subscriber billing for postpaid subscribers;

In the separate orders issued last May 7, NTC ruled that “the commission finds no congent or compelling reason to disturb its previous order which clearly explained the basis for this ruling.”

The orders were signed by NTC Commissioner Gamaliel Cordoba as well as deputy commissioners Carlo Jose Martinez and Delilah Deles.

The NTC circular that took effect in December 2011 supposedly reduced the SMS or text interconnection charge to P0.15 from P0.35 for the purpose of making text messaging more affordable to the public pursuant to the directive of the Office of the President.

This should have lowered the rate to P0.80 per text message instead of P1 per text message as early as Dec. 1 last year.

 The companies were directed to refund or reimburse their subscribers the excess charge of P0.20 per off-net SMS or text messages sent from one network to another network from the effectivity of the circular until fully settled.

 The NTC computed that the retail price of off-net SMS consists of the cost of the network sending the short message or text plus the cost of the network receiving the text plus the cost of the interconnection facilities as clearly emphasized in the circular.

The NTC pointed out that the savings realized from the reduced interconnection charge on SMS sent to other networks (off-net SMS) was formulated not to simply benefit the telcos but was intended for them to pass on the savings to their subscribers.

It added that, while SMS is in the nature of Value Added Service (VAS), the NTC is not prevented from lowering the cost of communication to better serve the interest of the public.

After failing to comply with the circular, the NTC issued another decision in November of 2012 directing Smart, Sun Cellular, and Globe to reduce its regular SMS retail price to other networks to not more than P0.80 per SMS from P1 and reimburse its subscribers the excess charge of P0.20 per off-net SMS from the effectivity of the circular.