NTC hits major telcos over failure to lower SMS rates

MANILA, Philippines – On the morning of Tuesday December 13, the National National Telecommunications Commission (NTC) hit the major mobile phone companies, with a show cause order for failing to lower their short messaging service (SMS).

Smart Communications Inc., Globe Telecom Inc. and Sun Cellular now have 15 days to explain why they failed to lower their rates by the P0.20 that the NTC mandated.

NTC Commissioner Gamaliel Cordoba has been firm in bringing down the SMS fees from 1 peso to 80 centavos, a cut which was meant to go into effect as yesterday, December 12th, 2011.

The phone companies were supposed to pass on the lower SMS charges following the drop in SMS interconnection charges, the fee on messages outside the subscribers own network, from 35 centavos to 15. Both Philippine Long Distance Telephone Co. and Globe Telecom, Inc. hold that they have complied with the drop in interconnection charges. This however, did not result in a drop in customers’ SMS rates.

Reached for comment, Smart pointed out that SMS is a deregulated service. In terms of the regulated interconnection rates, Smart reaffirmed that it “has fully complied with the NTC’s memorandum circular lowering SMS interconnection rates.” 

The mobile company added, “In any case, the lowering of the interconnection charges enables Smart to offer more attractive services, SMS service packages ranging from premium and regular SMS to bucket and unlit plans.”

Smart also said that affordable packages “have already reduced the effective per SMS rate to around 10 centavos.” 

Meanwhile, Globe declined to comment on advice from their head of corporate and legal services group, Attorney Froilan Castelo, to avoid making a sub judice statement relating to the show cause order.

The commission’s past attempts to lower voice and text message interconnection charges in 2008 and 2009 largely failed. The NTC’s next moves will test its strength to regulate the giant telcos.