Analyzing Telcos’ Per Pulse Call Charge Proposal

Do you remember the third memorandum circular of the National Telecommunications Commission (NTC) ordering the cellular phone companies to shift to per pulse (6-second = 1 pulse) charging of calls from the current per minute charge? I had a article on this subject entitled “Lowering Cellphone Calls Pulse Rate” where I discuss the possible effect of NTC Memorandum Circular No. 05-07-2009 on the cost of making cellphone calls. In that blog post, I anticipated the possibility of having lower cost of cellphone calls but recent developments may prove otherwise.

In compliance with the circular’s Guideline No. 2, the country’s telecommunication firms are asking the National Telecommunications Commission (NTC) for a “flag down rate” of PhP3.00 to 8.00 for the first 12 seconds or two pulses of a mobile phone call and anywhere from PhP0.70 to 2.25 for every pulse or 6 seconds thereafter. The phone firms said the flag down rate is meant to recover the cost of a call set-up. The telcos also asked the NTC to defer the implementation of the new billing system until January 31, 2010 so they could make necessary adjustments.

At present, prepaid cellphone call from one telco to another telco costs  a straight PhP6.50 per minute. All excess seconds in a call are rounded off as one minute so a call of say 1 minute, 5 seconds is charged as 2 minutes and therefore gets PhP13.00 deduction to the caller’s prepaid credits. Now, if we apply the lowest figures proposed by the cellular phone companies to the same call, the first 12 seconds of the call will cost PhP3.00 while the succeeding 53 seconds will be charged as 9 pulses or PhP6.30 at PhP0.70 per pulse bringing the total cost of the call to P9.30 only.

Based on the sample call lasting 1 minute and 5 seconds, the prepaid cellphone user will save PhP3.70 (PhP13.00 – 9.30) but savings will not be realized on all calls. You may note that if a caller makes an exact two-minute call, he will be charged PhP8.60 for the first minute (PhP3.00 flag down rate + PhP5.60 for the 8 pulses x PhP0.70) plus PhP7.00 (10 pulses x P0.70) for the second minute or a total PhP15.60 instead of only PhP13.00 in the current scheme.

You can make your own calculations on different length of calls and chances are the costs will really be higher in the per pulse method than the current per minute straight charging. Because of this, I cannot understand how the original intention of lowering the cost of cellphone calls will be achieved if NTC would agree to the proposed rates by the telecommunication companies.