A bit of good news for text and call addicts. The National Telecommunications Commission (NTC) has ordered telecommunications companies to lower their interconnection charges to 50 centavos (P0.50) per minute for voice calls and 5 centavos (P0.05) for every text message.
Currently, the interconnection charge for voice calls is P2.50 per minute while the charge for each text message is P0.50.
NTC reduces interconnection charges for calls, text messages. For calls, P2.50/min rate is reduced to 50 centavos/min. For text, 15 centavos/text rate is reduced to 5 centavos. @gmanews pic.twitter.com/vwgTKZ4RSH
— Tina PanganibanPerez (@tinapperez) July 19, 2018
According to Memorandum Circular No. 05-07-2018, the prevailing interconnection charges in the Philippines for voice calls and SMS are high compared to other countries in Southeast Asia. For comparison, Thailand charges the equivalent of P0.56 per minute while Malaysia charges P0.48 per minute. There are no interconnection charges in Singapore, Myanmar and Brunei.
The NTC also claimed that the new rates are in line with their findings that the average interconnection cost in the last three years for voice calls and SMS are P0.486 per minute and P0.044 per message, respectively.
The NTC memorandum will take effect 15 days after publication in a newspaper of general circulation. Telecommunication companies have up to 20 days after the publication to comply with the memorandum.
NTC Deputy Commissioner Edgardo Cabarios said that the telcos did not object to the NTC order, but wanted a two-year “glide path.” The NTC rejected the suggestion.
The telcos, in their position papers, expected revenue losses as a result of lower interconnection charges, but the NTC dismissed the claim, saying that the reduced rates have little effect on the telcos’ income.
“Meron silang sinasabi sa position papers na maaapektuhan ang kanilang rate of return on investment, ROI. But sa pag-aaral kasi namin, nakita na maliit naman yung epekto nito sa kanilang revenues (In their position papers, they said that their return on investment or ROI will be affected. But based on our study, we saw that it has little effect on their revenues),” Cabarios said.
Both Smart Communications and Globe Telecom have yet to comment on the NTC memorandum.
According to the memo, reduced interconnection charges is for the “best interest of the ordinary Filipino consumer.” The NTC has said that it wants to lower the costs of calling and texting for mobile subscribers, particularly in the C, D and E economic classes.
Lower interconnection rates would also help a future third player compete better with the existing telcos. With standard interconnection charges, mobile subscribers will no longer have to choose an operator or mobile network based on the subscriptions of their friends or family members.
It remains to be seen whether the lower interconnection fees will translate to actual cost reduction for the consumers. The last time interconnection rates were reduced was in 2016, when the fees for voice calls were reduced from P4.00 per minute to P2.50 per minute.
Both Smart and Globe have experienced declining revenues due to the increasing popularity of Internet-based applications such as Facebook, Viber and WhatsApp.