REFUND Smart, Sun, Globe ordered to reimburse, cut text messaging charges

The Philippine government on Tuesday ordered mobile phone companies to “immediately” refund and cut text messaging charges to P0.80 from P1.

This directive was indicated in separate orders issued by the National Telecommunications Commission (NTC) to Globe Telecom, Sun Cellular, and Smart Communications Inc.

The Memorandum Circular also told telecommunications companies to refund or reimburse excess interconnection charges of P0.20 per off-net short messaging service (SMS) to their customers upon effectivity of order until fully settled. These reimbursements can be done by providing additional credits to their prepaid subscribers and/or giving the refund through the respective subscribers billing for postpaid subscribers.

Refunds should be undertaken immediately after receiving the decision, the NTC said.

The recent order was based on a separate directive issued last year that directed telecommunication companies to reduce the maximum interconnection charges–or the cost of connecting to another telco–for SMS between two separate networks to P0.15 per text from the existing P0.35 per text.

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

However, in their positions papers, Smart Communications Inc., Globe Telecom, and Digital Telecommunications Philippines Inc., the operator of Sun Cellular, said that there was no directive from the NTC regarding reduction of SMS charges.

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

After receiving the order, telcos were also required to submit within 15 days documents, records, and reports pertaining to off-net SMS of all its subscribers who were charged the regular rate of P1 per off-net SMS from December 1. The NTC also imposed a fine of P200 a day from December 1, 2011, until the date of compliance.

“The NTC pointed out that the savings realized from the reduced interconnection charge on SMS sent to other networks was formulated not to simply benefit the telcos but was intended for them to pass on the savings to their subscribers,” the NTC order said.

While SMS, by nature, is a value added service (VAS), the NTC is not prevented from lowering the cost of communication to better serve the public interest.

“The NTC also pointed out that the issuance of the MC was a valid exercise by the State of its police power for the benefit of the consuming public,” the order said.

Dennis Babaran, NTC legal director said telcos can file a motion for reconsideration. At present, the country’s total mobile subscribers stood at 100.7 million.

In a text message, Smart Communications said that the company “would like to reserve comment on this matter,” pending review of its options for seeking remedies.

Of the total, Smart and Sun Cellular have combined subscriber base of 68.6 million at end September and Globe had 32.1 million subscribers The group of Philippine Long Distance Telephone Co. recorded a one billion to P1.4 billion daily average text sent by its subscibers, including unlimited services.

For its part, Globe says its customers send more than 640 million text messages a day.

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