Mobile subscribers deserve a refund for excessive SMS rates

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Sunday, 15 June 2014 - Last Updated on March 18, 2015


The mobile phone is arguably one of the most important possessions of every Filipino in this day and age. This is largely due to the observation that ‘texting’ or the short messaging system (SMS) feature of mobile phones has become one of the primary means of communication for the average Filipino, who uses it to communicate with his loved ones, co-workers, and just about anybody he wants to stay connected with.

Many ascribe the texting phenomena to SMS being purportedly one of the cheapest modes of communication as every text message is charged only P1 by the network providers. But are the current rates of sending SMS really reasonable and cheap?

Apparently not. For the longest time, the country’s largest telecommunication networks have been erroneously charging millions of Filipino mobile users for text messages and have been reaping millions of unjustified profits on a daily basis.

In 2011, the National Telecommunications Commission, the government agency tasked with regulating telecommunications operators in the country, directing network providers to cut their SMS rates by 20 centavos, or from P1 to P0.80.

The NTC said this was warranted by the fact that telcos have for so long wrongfully pegged the SMS interconnection rate, or the cost they incur in sending a text message to another network provider, at P0.35. The NTC said this should be reduced to only P0.15.

Expectedly, the companies who benefited from the boom in the telecommunications industry during the past decade (due mainly to the massive use of SMS by Filipinos) disagreed with the said order, as this would mean a slash in their profits. The largest network providers, Globe, and Smart and Digitel, moved to declare the said NTC order null and void, filing a motion for reconsideration before the agency in 2012. Since then, the telcos have not been complying with the said NTC order, allowing them to charge millions of cellphone users excessive rates.

Globe is owned by the Ayala Corporation, while Smart and Digitel are subsidiaries of the Philippine Long Distance Telephone Company. PLDT controls about 70 percent of the cellular market, while the remainder is held by Globe. As of March 2014, there are 25.9 million Smart Subscribers, 25.9 million Talk ‘n Text users, and 15.1 million Sun users. Globe subscribers, meanwhile, reached 38.1 million as of last year.

Sadly, it was only after almost two years or last May 2014 that the NTC issued its final word on the matter. It dismissed the motions filed by the telcos, reiterating their 2011 order to cut SMS rates, and ordered the telcos to reimburse their subscribers an estimated P7 billion in excess charge for the past two years.

In arriving at the said refund amount, the NTC said that about 10% or 200 million of the 2 billion text messages sent by subscribers of Smart, Sun and Globe are charged the regular rate of P1 per text. Twenty percent or 40 million of these 200 million text messages are “off-net” or sent from one network to another. Thus, the companies would have to refund P0.20 per text message or P8 million per day since the NTC issued the 2011 memorandum, or a total of 880 days. The NTC ordered the refund because the savings to be incurred from the reduced charges must be passed on to the subscribers and not add to the telcos’ coffers.

Apart from the refund, the telcos are ordered to pay a daily fine of P200 starting December 1, 2011, or the effectivity date of the 2011 NTC order. Progressive party-list organization Bayan Muna asserted that PLDT and Globe should pay a “legal interest” of at least P438 million to the subscribers on top of the refund. Bayan Muna said the fine must be imposed in order to teach the telcos a lesson not to unjustly overcharge subscrbers to increase their already super-profits.

But can the millions of Globe, Smart, Talk ‘N Text and Sun subscribers expect a refund anytime soon?

Unfortunately, according to the NTC, subscribers would have to wait much longer before any money would be returned as the telcos have already brought the matter . Globe and Smart have filed an appeal before the Court of Appeals, and should they still get an unfavorable judgment from the appellate court, the matter would be raised to the Supreme Court.

According to Bayan Muna Rep. Neri Colmenares, however, the NTC can already enforce the decision because it has become final and executory and the court has not issued a temporary restraining order. The NTC, however, is of the legal opinion that the filing of the appeal itself was enough to halt the implementation of the order.

Most likely, the contentious legal issue that would be deliberated upon by the court is whether the NTC could dictate the price of text messaging, which according to law and current government policy, is a deregulated service.

The telcos have argued before that in accordance with the Public Telecommunication Act of 1995, the power of the NTC to fix rates is only residual in nature and may be exercised only when “stiff competition becomes detrimental to companies, or when a monopoly or cartel that muffles the competition is in place and when tarrifs are so distorted and having an adverse effect on the public. The law clearly abides by the highly-criticized deregulation policy of the government, which, some economists have blamed for the high prices of basic services.

It bears emphasizing however, that the same law directs the NTC to “provide the most extensive access to basic telecommunications services available at affordable rates to the public.”

Meanwhile, TxtPower and Computer Professionals Union have created a refund tracker to inform phone users of the current financial obligations of mobile operators. The refund trackers show per second charges on the refund amount and shows the equivalent load credits that telcos should return, if all of the 2013 subscribers are refunded.

Congress should also look into various legislations proposed before the House of Representatives seeking to strengthen and broaden the NTC’s regulatory powers. An example is House Bill 4380 filed by Kabataan Rep. Terry Ridon. According to the youth solon, “Even as existing executive orders and regulations empower the NTC to regulate mobile service rates, the said commission still needs essential legislation to further empower it to impose sanctions against telecommunications companies that do not adhere to the commission’s regulations.”

“Telecommunications companies have for so long acted like all-powerful bullies that disregard the NTC, to the grave disadvantage of consumers. It’s time for Congress to grip the reins tighter and ensure that essential mobile phone services become affordable for every Filipino,” Ridon said.


Jan Marcel Ragaza (10 Posts)

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