Reducing Interconnection Charges

In an effort to make the cellular phone services in the country become more affordable to many people, the National Telecommunications Commission (NTC) drafted separate memorandum circulars (MC) on access or interconnection charges for Short Messaging Service (SMS) and Mobile Voice Service. In the draft circulars, the regulating agency proposed to cut the interconnection charges for inter-network text messages and voice calls. The move is aimed to reduce communication costs and to maintain and foster fair competition in the telecommunications industry.

When the draft MC on the interconnection charge for SMS gets approved and implemented,  the interconnection charge for text messages in the first year of its effectivity would be PhP0.25 per text; PhP0.20 per SMS in the second year and PhP0.15 per SMS in the third year. Currently, the existing interconnection charge for SMS is PhP0.35 per text and cellphone companies charge a regular fee of one (PhP1.00) peso per text message.

According to the NTC, the reduced interconnection charge means that the regular SMS rate in the first year would be PhP0.50 per text; PhP0.40 per text for the second year; and PHP0.30 per text in the third year of implementation. We must note that cellphone companies are offering SMS at prices as low as PhP0.15 per text within their respective networks via promotional offerings.

In the separate draft MC on interconnection charge for voice calls, the reduced charge for voice calls will be PhP2.00 per minute (from the current PhP4.00 per minute) in the first year of effectivity; PhP1.50 per minute in the second year and PhP1.00 per minute in the third year. Given these figures, the regular rate for voice calls should go down to between PhP4.00 and PhP4.50 per minute in the first year; PhP3.50 to PhP4.00 per minute in the second year and PhP3.00 to PhP3.50 per minute in the third year of implementation. At present, cellphone companies impose between PhP6 and PhP6.50 per minute for voice calls.

Aside from reducing the interconnection charge, NTC also said that SMS network providers should ensure that facilities are sufficient to guarantee that 99 percent of short messages or texts sent are received by the addressees within 30 seconds from the time the texts are sent. It was likewise revealed that industry studies show that the Philippines has the highest interconnection charge rates in Asia at PhP4.00 per minute of call. At present, interconnection charge is only PhP1.24 to PhP1.30 per minute of call in Malaysia and Thailand.

In a surprise development during the first public hearing last Monday, July 4, 2011, representatives of Smart, Globe and Digitel did not oppose the reduction of interconnection charges. They just like the implementation to be deferred to next year.  It must be recalled that in 2008, the NTC issued draft circulars that mandated a P0.15-interconnection charge per text message and P1.50 for voice calls, but the regulator shelved the proposals in the wake of opposition from big telcos such as Smart and Globe. I wonder what’s in store for these draft circulars? Remember what happened to per pulse call charging.