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MANILA, Philippines – Smart Communications Inc. will ask the National Telecommunications Commission (NTC) to reconsider its order requiring mobile phone companies to refund subscribers P0.20 per text message sent in the last year, saying it had “no basis.”
“First, our position is there is no basis for finding that Smart has violated the NTC memorandum circular and overcharged its subscribers,” the company said, referring to Memorandum Circular 11-24-2011.
Issued on October 24, 2011, the circular required mobile phone operators to reduce interconnection charges by P0.20 to P0.15 per text message from P0.35 effective December 1 the same year.
Interconnection charges pertain to rates that mobile phone operators charge in order to deliver text messages from other networks to their subscribers.
The NTC said that since interconnection charges are a component of the text message cost, text charges should also go down by an equivalent P0.20.
Nearly a year after the circular’s effectivity, the NTC questioned why the cost of sending text messages remained the same.
Smart argued that the NTC circular “did not order mobile phone operators to reduce retail rates charged customers,” but only interconnection charges.
“Smart has already complied with this circular (on interconnection charges),” said the company.
It explained that the reduction in interconnection charges will not necessarily reflect on text message rates. It is not a 1:1 ratio, it insisted.
Rate-fixing
Therefore, NTC’s order to reduce SMS rates to P0.80 has no basis, Smart said.
It noted that requiring telcos to reduce the rate is equivalent to “rate-fixing.”
“Under the law and existing NTC regulations, SMS is a deregulated service. The rate fixing power of NTC is residual in nature and may be exercised only under specific circumstances,” Smart said.
These circumstances include one, when there is a monopoly, and two, when a cartel exists “and the rates or tariffs are distorted or unable to function freely and the public is adversely affected.”
“None of these conditions exists. In fact, the [law] clearly states that the NTC shall exempt any specific telco service from its rate or tariff regulations if the service has sufficient competition.”
Intense industry competition is the major reason why telecommunications firms have been booking lower revenues in the past years. Mobile operators are forced to provide a wide range of bucket and unlimited offers to attract and retain subscribers, resulting in thinner profit margins.
The NTC is fining telcos P200 per day from December 1 until such time they are able to comply with its order.
The NTC is asking telcos to explain where the P0.20 savings per text message went as “consumers did not benefit from it.” – Rappler.com
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