PLDT, Globe told to cut interconnection rates

The National Telecommunications Commission (NTC) ordered industry giants PLDT Inc. and Globe Telecom to cut the interconnection rates for voice calls and text messaging within a month, partly delivering on a promise to lower the cost of services.

The NTC, in a memorandum circular dated July 19, 2018, set the new voice call interconnection rate at P0.50 per minute from P2.50. For short messaging services, the rate was set at P0.05 per message from P0.15.

The development comes days before President Duterte is set to deliver his State of the Nation Address, where he is expected to outline the progress made on ICT initiatives even as the government’s efforts to bring in a third telco player have fallen well behind schedule.

Lower interconnection fees are among the key issues that the administration wants to address in line with bringing in new competition.

Its impact, however, has declined in recent years with more subscribers shifting to smartphones and relying on internet-powered platforms to send messages and make calls.

According to the NTC, the lower interconnection rate shall be imposed by PLDT and Globe within 20 days from the effectivity of its circular, which will be 15 days after publication.

The circular was released on orders from the Department of Information and Communications Technology’s (DICT) that the interconnection rate, an access fee charged by a telco operator to allow their subscribers to call and send text messages to subscribers from another network, be brought down to the minimum.

Citing data gathered in the last three years, NTC determined that the average cost of interconnection was at P0.49 per minute of voice calls and P0.04 per text message.

From being among the highest interconnection rates for voice calls in the region, the new charges have brought the Philippines to among the lowest. NTC said the local voice call rate was bested only by Malaysia (P0.48 per minute) as well as Singapore, Myanmar and Brunei, which do not charge access rates.

PLDT chair and CEO Manuel V. Pangilinan said in June the cut would have a “minimal impact” on PLDT’s revenues.

The DICT’s move to lower call and text rates would have the biggest impact on subscribers using 2G or second-generation mobile phones.

2G phones are still used by around 40 million subscribers in the Philippines, according to estimates from industry players.