PLDT, Globe lower charges for cross-network calls
The telco duopoly of Philippine Long Distance Telephone Co. (PLDT) Inc. and Globe Telecom agreed on Monday to lower access charges for domestic voice calls between their networks, described as among the highest in Asia.
The agreement came less than a week after President Duterte renewed a threat to open up the telecommunications and energy sectors to new investors to improve the quality of service.
Mr. Duterte said he would “forget my statement” if prices went down.
Philippine mobile internet and voice services are among Asia’s slowest and most intermittent.
The lower access charges, effective early next year, came as a welcome surprise to some subscribers, including driver Marcelino Pescueso.
“Most of the time, I just text if its to another network. It’s cheaper that way,” Pescueso said in an interview after he heard about the agreement signing on Monday morning.
“Of course, it’s better to call. I can say more things, instead of typing long messages,” he added.
Raise quality of voice calls
Pescueso, who appealed to both PLDT and Globe to also improve the quality of voice calls, is not enrolled on any postpaid plan and uses a so-called feature phone.
In other words, he is part of a still significant number of the country’s 100 million population without a smartphone.
This is a market that has yet to fully transition in the telco industry’s digital shift in which subscribers move away from conventional calls and text messaging to instead use internet-powered platforms like Facebook and Viber to communicate.
It was also this market that PLDT and Globe sought to highlight when they agreed on Monday to “voluntarily” cut the interconnection rate for voice calls between their networks by up to 38 percent.
The event was witnessed by officials from the Department of Information and Communications Technology and National Telecommunications Commission.
According to the agreement, the interconnection rate for a Globe subscriber calling a PLDT subscriber, which includes the Smart, Sun and TNT brands, or vice versa, would be fixed at P2.50 per minute effective Jan. 1, 2017.
Previously, the interconnection rate, basically an add-on fee that telcos charge rivals for using their networks, was set at P4 per minute for mobile to mobile calls, and P3 per minute for mobile to landline voice calls, or a 16.7-percent to 38-percent cut.
Telcos pass on the interconnection charge to subscribers, meaning a reduction here would translate into lower cross network calling rates. It would have an impact on PLDT and Globe’s voice call revenues, which are declining because of the digital shift.
At par with rates in region
NTC Commissioner Gamaliel Cordoba said the new access fee would put the Philippines at par with most of the countries in the region, where interconnection rates range from P2.25 to P2.50 per minute.
“It is really ushering in all the 50 percent that are not yet on smart devices, which are really the lower-income demographic,” Eric Alberto, who will be PLDT’s new chief revenue officer, said in a press conference after the signing.
Alberto said this was a “move [that] would rationalize voice interconnection to make calling more affordable.”
A separate NTC memorandum indicated that prices would go down “taking into account the agreed interconnection charge”—but it was not certain up to what level.
Cordoba said government could not dictate this and it was a business decision to be made by each telco.
But Gil Genio, Globe chief technology and information officer, said this would lead to more unlimited offers in terms of cross network, or “all net” calling promos.
These exist today, but the bundles are not marketed aggressively.
“It will help us be more aggressive in voice calling going forward,” Genio said, adding that voice traffic was rising, but revenues were “not growing as fast.”
“The question as a business is when do you start doing something… to prevent [conventional] voice calling from disappearing from the telcos,” he added.
Voice service revenue down
Earnings disclosed by PLDT and Globe indicated that voice calls, while still a massive part of their business, have been steadily declining, as more subscribers shift to internet applications.
In the first nine months of this year, PLDT said voice service revenues fell 18 percent to P28.3 billion, while Globe saw a 9-percent drop to P25.4 billion. By contrast, mobile internet revenues rose 34 percent for Globe and 45 percent for PLDT.
That shift is expected to pick up as smartphones become more affordable and accessible to broader market segments.
A number of consumers said both telcos should also improve internet services, which they described as “unreliable” and “expensive.”
“Next one should be internet connectivity speed, lower rates and reliability,” Facebook user Rafael de Leon said in a social media comment after hearing about Monday’s signing.
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