Telcos to challenge NTC refund order

MANILA, Philippines—The country’s two major telco players are set to challenge a National Telecommunications Commission order to refund an estimated P7 billion in “excess” charges for certain text messages over the past two years and five months.

After their appeals were denied by the NTC on May 7, spokespersons for Globe Telecom and Philippine Long Distance Telephone Company (PLDT)’s Smart Communications and Digital Mobile said on Friday they would take their case to the Court of Appeals.

The move was expected by industry observers and even the NTC, which said it was “confident” of winning the case should it be brought to a higher court.

Longer wait

But the broader implication of a court battle was that mobile subscribers would have to wait much longer before any money, if warranted, would be returned.

The refund was the more contentious aspect of the NTC’s May 7 decision, which denied the telcos’ 2012 appeal, reiterating its order for telcos to cut the price of their short message service (SMS) to other networks to 80 centavos from P1.

The NTC, which said the excess 20 centavos should be returned to customers, said the lower rate was warranted by the reduction in the SMS interconnection rate from P0.35 to P0.15.

The NTC also told the telcos to pay a daily fine of P200 starting December 1, 2011, when the order became effective, and submit all records pertaining to the covered messages, formally called “off-net SMS” that are not part of a bucket pricing plan.

These off-net SMS account for two percent of an estimated two billion text messages sent daily, the NTC said.

This amounts to about P8 million per day since the order became effective, or a total of P7 billion.

Brunt of refund

PLDT was expected to bear most of the brunt of refunds given that it controls about 70 percent of the cellular market with the remainder held by Globe.

“We intend to pursue all legal remedies, including raising the matter to the Court of Appeals,” PLDT spokesperson Ramon Isberto said in a text message on Friday.

A similar statement was made by Froilan Castelo, Globe general legal counsel, in a phone interview on Friday.

At the center of the issue was whether the NTC could dictate the price of text messaging, which is a deregulated service.

Telcos have also seen declining profit margins in text and calls given the increasing use of alternative services like Internet messaging application Whatsapp and social networking sites like Facebook and Twitter.

30 days to appeal

NTC director for regulations Edgardo Cabrios said both Globe and PLDT had 30 days to file an appeal.

Explaining the more than one year period in deciding to junk the appeals, which were filed in December 5, 2012, Cabarios noted that they studied the matter carefully.

“As far as the commission is concerned, we are confident that we can win this in the CA,” Cabarios said.

Militant group Bayan Muna, meanwhile, said PLDT and Globe should pay “legal interest” of at least P438 million to the subscribers” on top of the refund.

“After all, the telcos earned hundreds of millions in interest for just depositing the overcharged billions in banks,” said Bayan Rep. Neri Colmenares in a statement.

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