• Consumers losing out on 20 centavos per SMS?

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    LAST Tuesday, as the country picked up from the destruction by Typhoon Ruby, a short item appeared on my phone news feed concerning the call to refund consumers an excess charges of at least P7 billion from text messages. The news report quotes Associate Justice Priscilla Baltazar-Padilla of the Special Sixth Division of the Court of Appeals (CA) allowing Makabayan bloc representatives Bayan Muna Rep. Neri Colmenares and Carlos Zarate to become intervenors in the case at the court. Together with the lawmakers are former Kabataan party-list Rep. Raymond Palatino, Ricardo Bahague of the Computer Professionals Union, and Anakbayan chairperson Vencer Crisostomo.

    The case stemmed from the Memorandum Circular (MC) issued by of the National Telecommunications Commission (NTC) on October 2011 requiring that the interconnection charge for SMS (short messaging service) between different networks be not higher than P0.15 per SMS. MC 02-10-2011 lowered this interconnection charge effectively from P0.35 to P0.15, a reduction of twenty centavos. A 200 peso fine was also to be imposed per day until the telcos complied with the order.

    The NTC later issued a show cause order for the three telcos, Globe, Smart and Sun, why they have not yet implemented the memorandum. That show cause order was issued by the NTC nearly three years ago on December 12, 2011. As the telcos still did not lower their charges, the NTC ordered them to refund or reimburse both prepaid and postpaid subscribers 20 centavos per off-net SMS on November 2012. The telcos later brought the case to the Court of Appeals to stop the NTC from implementing the said order.

    How much is the running cost of the refund?

    The NTC computed the refund at a rate of P8 million per day. As of August 22, 2014, when the CA restrained the NTC from implement its order, the telcos will have owed at least P7.27 billion plus their fines. Had it continued, the refund amount would have been nearly P9 billion pesos at the end of the year.

    The 8 million pesos per day, according to the NTC, stems from their estimate that around 20 percent of the 200 million text messages sent per day being charged the regular P1 per text rate are sent between telcos, or termed as “off-net” messages. This would amount to 40 million SMS multiplied by 20 centavos which totals P8 million. The P8 million multiplied by number of days since December 2011 will give the P 7.27 billion estimate.

    TXTPower, a coalition that has been active in protecting the rights of mobile users against telco practices since 2001, gives a larger estimate. They pointed out that the refund should also include “on-network” SMS in addition to “off-network” SMS since the telcos have been charging the same P1.00 rate for both on-net and off-net standard SMS. Since there is no difference between the two, TXTPower argues, the P1.00 rate must have contained the same costs despite on-net SMS not requiring any interconnections services. Reduction of P0.20 centavos for off-net SMS only would leave SMS within the network itself with an inexplicable P0.20 “cost” difference over those going out its network.

    TXTPower points out that the 2013 PLDT Annual report shows that about 6% of total SMS traffic for the same year is considered standard SMS (at one peso rate). Performing simple arithmetic, this would amount to at least P18M a day – much higher than the NTC estimate of P8M refund per day. Using that multiplier, the refund should be around P16 billion pesos.

    Txtpower has set up an online SMS refund tracker based on the price set by NTC. The site is at http://www.cp-union.com/sites/www.cp-union.com/files/sms-refund-monitor/sms_refund.html.

    The number of mobile subscribers is nearing 110 million. The easiest way to refund everybody is to simply refund every number. The mobile identification numbers stored in the telcos system can serve as identifiers for the recipients much like the telcos track the load for each number.

    The amount can be an immediate refund of slightly around 93 pesos per sim card holder or an equivalent number of SMS message or call credits. A more immediate effect of lowering the cost of SMS to 0.80 is that it adds 85 more messages on a P100 peso load credit for everyone. The petition of the Bayan Muna lawmakers also asked for a legal interest rate of 6 percent a year starting December 1, 2011 until the final judgment on the cases has been rendered by the court.

    Texting has been a part of our lives and serves a vital link to each other across our archipelagic country. There is even a law requiring emergency warnings over SMS in times of disasters (which unfortunately has not been implemented by the DOTC and the NDRMMC during Ruby). Making such services cheap and accessible would bring not only economic relief to users but would also make our inter-connections to each other stronger.

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    2 Comments

    1. Edgar G. Festin on

      Let’s do People Power na, Dr. Tapang–against the anti-Philippine Republilc Comelec-Smartmatic-PCOS machines, against the Aquino Admin NTC and the Telcos, against the Meralco, etcetera. AGAINST ELITE CONTROL, SPECIALLY THE ELITE YELLOW ARMY CONTROL, OF THE PHILIPPINE GOVERNMENT AND THE FUTURE OF THE FILIPINOS!!!

    2. The billion-peso overcharge should be taken over by Gobyerno-Pilipinas and the money used for salaries to build 1,500 new elementary- and secondary-schools in Visayas and Mindanao.