Overcharging telcos being penalized a measly P200 a day

In the realm of punishment, it is almost like a caress. Overcharging telecommunications companies are being fined a measly P200 a day, starting Dec. 1, 2011 when the industry regulator, the National Telecommunications Commission (NTC), sent out a circular order to lower SMS rates by P0.20.

Not surprisingly, the telcos are choosing to pay the fine rather than comply with the order, continuing business as usual that rakes in billions a year from text-happy Filipinos.

 

The penalty – amounting to P72,800 a year – is based on a 76-year-old law, known as the Public Service Act of 1936, NTC director Edgardo Cabarios told GMA News Online in a phone interview on Wednesday.

The telcos have chosen to pay the negligible penalty rather than reimburse mobile users to the tune of P4 million a day since last December for overcharged text messages. The NTC ordered the reimbursement by the telcos on Tuesday.

 

That is why the NTC is now considering proposals to increase the fines to P5 million a day and another up to a maximum of P50 million, Cabarios said.

 

NTC legal director Dennis Babaran told reporters on Tuesday the savings of P0.20 per off-net SMS – as a result of lower interconnection charges between the telcos – was formulated by the commission not to benefit the telcos but for the companies to pass on the savings to their subscribers.

"Off-net SMS" are messages sent between different networks. The industry, with government approval, lowered the charges for such messages from P0.35 to P0.15, hence the P0.20 savings.

 

On Tuesday, the commission said it ordered Globe Telecom and rival Smart Communications and its affiliate Digitel Mobile Philippines to reimburse their subscribers P0.20 for each off-net SMS.

 

Cabarios said the commission was reinforcing its 2011 circular order, the “Interconnection Charge for Short Messaging Service,” which the telcos simply ignored. 

 

NTC also renewed its order to Globe, Smart, and Digitel Mobile Philippines – operator of Sun Cellular – to reduce the rate for off-net messages by P0.20 to P0.80 from P1.

NTC’s weakness

 

Industry's non-compliance highlights NTC’s weakness as a regulator, which the commission is now trying to remedy by calling for an amendment of the 1936 Public Service Act and bringing the level of fines on par with the age of mobile connectivity.

 

Compared with the revenues of telco giants Globe and Smart parent PLDT, P200 a day or P72,800 a year is loose change.

 

Globe posted consolidated service revenues of P61.3 billion in the first nine months of the year, up 6 percent from P57.7 billion a year earlier.

 

“Sustained topline growth was underpinned by strong performances of the mobile, broadband, and fixed line data businesses which grew 6 percent, 14 percent, and 9 percent over last year’s results, respectively,” Globe said in a disclosure to the Philippine Stock Exchange.

 

“Despite the very challenging competitive environment, our business remains fundamentally strong. We were able to build on our earlier triumphs, with customer focus being our key differentiator,” noted Ernest L. Cu, Globe president and CEO.

 

“Going against a traditionally lean season, we sustained our growth momentum once again in the third quarter,” Cu added.

As of end-September 2012, PLDT's consolidated core net income reached P28 billion, down 8 percent from P30.6 billion a year earlier on higher operating expenses.

 

“We continue our steady financial performance as we wait for the industry situation to stabilize,” said PLDT chairman Manuel V. Pangilinan.

 

“We hope to provide a better indication of when we can expect to return to the profit growth track when we announce our yearend results next March. In the meantime, we are maintaining our core profit guidance for 2012 at P37.0 billion,” Pangilinan added.

 

What could put a bite into NTC’s bark against the rich telcos remains pending in Congress – since 2001 at the House of Representatives and since 2009 at the Senate.

 

"Kasalukuyang nasa Congress – Senate and House – ang NTC Reorganization Bill na may pagkakaroon ng substantial increase sa fine,' Cabarios told GMA News Online.

 

The NTC Reorganization Act of 2001 proposes "to make it more responsive to the needs of the fast evolving Telecommunication Industry in the new millennium," said Rep. Simeon Kintanar in his explanatory note to House Bill 131.

 

Kintanar, a former NTC commissioner, is now the representative of Cebu's second district.

 

In 2009, Senate President Juan Ponce Enrile filed Senate Bill 3465 – also calling for a reorganization of NTC.

 

"The birth of new industry players has made it imperative for the government to provide a regulatory environment, to allow all sectors to develop the best available technology, on a leveled playing field," Enrile said in his explanatory note.

 

"There is a need now to reorganize the NTC to define and strengthen its power and functions as proposed in Senate Bill No. 3465," he added.

On Tuesday, Globe issued a statement saying it intends to exhaust all possible legal remedies against NTC. 

 

Smart, however, said it is still in the process of reviewing the NTC order. 

 

"Medyo malaki ang ire-refund nila,” Cabarios said in an interview with Kara David on GMA News TV’s “News To Go” on Wednesday.

 

“Base sa 2010, ang mga text na tumatawid between networks ay nasa 20 to 30 million sa isang araw," the NTC official noted.

 

"Halimbawa, 20 million [text messages] nalang, at 20 centavos ang ire-refund nila, P4 million po iyon per day sa isang telco," he added.

 

Lowering the cost of communication as a service to the public is in line with the directive of President Benigno Aquino III, said Babaran, adding that SMS is a value added service and should not be expensive. — VS/HS, GMA News

Source: http://www.gmanetwork.com/news/story/283197/economy/companies/overcharging-telcos-being-penalized-a-measly-p200-a-day