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By Darwin G. Amojelar, Reporter
SMART Communications Inc. is bucking a
government plan to impose a cap on interconnection charges, saying
the resulting decline in revenues could put off its network
expansion.
The National Telecommunications Commission (NTC)
last month issued a draft circular imposing a P0.15-interconnection
charge per text message or SMS (short messaging service), lower than
the current rate of P0.35.
A separate circular would also reduce the
interconnection charge for voice calls to P1.50 or lower per minute,
or 63 percent cheaper than the current rate of P4 between mobile
operators with separate networks.
In its position paper, the wireless unit of
Philippine Long Distance Telephone Co. said the cap on
interconnection charges will discourage further investments in the
industry as telecommunication companies cannot expect a reasonable
period of time for the return on their investments.
”Dictating lower access charges by imposing
rate caps while adopting the existing interconnection model does not
provide equitable returns to the network provider for its investment
in facilities,” Smart said.
“This will also have an adverse effect on the
industry as new players will be wary of competing and entering the
market given the uncertainty on the reasonable return on their
investments, considering that they may have difficulty in recovering
or recouping losses,” the country’s largest mobile phone service
provider said.
Smart said lower text and voice service charges
will mean a surge in traffic, resulting in huge costs that would
require expanding one’s network.
The company said 80 percent of Smart’s total
network capacity utilization is associated with SMS use. To date,
its outgoing and incoming messages per day stood at more than 1.2
billion
Last year, Smart spent more than P12 billion for
its SMS. ”Due to the complexity of the price caps and the equally
important issues that need to be seriously considered, Smart
respectfully submits that the unexpected results may be more
damaging to the industry and ultimately to the consuming public,
than the gains that are expected and hoped from their
implementation,” the telco said.
Smart noted that since the proposed NTC
circulars already set the maximum interconnection rates between
operators, the regulator directly contravenes Section 18 of Republic
Act No. 7925 which specifically mandates that such rates should be
negotiated between the parties.
”The proposed circulars would be
unconstitutional as they would impair the obligations of contracts
and confiscate the proper right of mobile operators to recover their
investment without due process of law,” it added.
The mobile phone service provider said
interconnection is a voluntarily commercial transaction all over the
world, adding the goal of regulation should be to encourage
economically efficient investment to promote the long-term interest
of end-users.
”If regulation is used to compel CMTS
[cellular mobile telephone service] operators to engage in
involuntary transactions, which results in lower returns on capital
employed or economically inefficient investment, both practical
[end-users will suffer] and legal and constitutional issues will
arise,” Smart said.
The telco said charges for mobile
telecommunication services in the country have been steadily
declining and are already one of the lowest if not the lowest in the
world today.
”Unlike electricity charges, water charges and
transport fares, which keep increasing from time to time, SMS and
voice charges on the other hand, have not increased and, in fact,
have decreased over the years,” Smart said.
As against the nominal headline charge of P1 per
message sent in the Philippines, the SMS charge in Singapore amounts
to P1.50; in Thailand, P2.70; in Indonesia, P0.46; in Australia,
P10.50; in Canada, P6.52; in the Middle East, P1.16; in the United
Kingdom, P2.56; in South Africa, P1.28 and in Malaysia, p1.35.
For voice, the Philippines, likewise has one of
the lowest rates both for off-peak and peak hours.
During non-peak hours, the voice charges in the Philippines can go
as low as $0.07 compared with a high of $0.18 per minute for the UK.
During peak hours, charges for voice calls in the Philippines are
still at a low of $0.14 per minute compared with a high of $0.28 for
the United Arab Emirates.
Smart said SMS rates today can be described as
highly socialized with different pricing schemes catering to almost
every segment of the market, thus making SMS very affordable even to
the lowest daily income earner through sachet or tingi load.
”SMS is also the cheapest form of
communication in the country benefiting more than 50 million
Filipinos. This is largely due to fierce competition in the mobile
phone industry, which has forced mobile phone operators to become
increasingly innovative in terms of products and pricing in order to
maintain or gain customer,” Smart said.
It added that the rates for the voice services
have also been going down as mobile service providers provide
service packages that offer lower calling rates.
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