The government has no power to set the rates charged by local firms on their subscribers in the country’s deregulated telecom sector, the Philippines’ top mobile carriers said this week.
Responding to a National Telecommunications Commission (NTC) show-cause order, Ayala-led Globe Telecom Inc. reiterated that market forces should be allowed to work and that companies should be able to set their own rates, based on supply and demand, without any government interference.
“The rates for cellular services are deregulated or exempted from rate-fixing by the NTC,” Globe said in a statement Tuesday.
The company was answering a recent order by the regulator for an explanation as to why Globe and other mobile carriers refused to cut their basic internetwork text messaging rates.
The reduction was supposed to be in line with a recent order mandating a cut in interconnection fees that carriers pay one another for text messages sent.
The interconnection fee for each text message was lowered to 15 centavos each from the previous 35 centavos. The NTC said the savings of 20 centavos that companies enjoyed should have been passed on to consumers in the form of lower text rates.
This would have resulted in text rates falling to 80 centavos each, instead of the prevailing P1.
However, Globe said it was never “expressly or impliedly” conveyed in the NTC’s order that “the regular cost of text shall be 80 centavos only.”
“If a person is penalized despite an unclear and silent law like the said [memorandum circular], NTC will be guilty of gross violation of constitutional due process,” Globe said.
The company said it has been competition, not government intervention, that worked over the past decade in driving down the cost of text messaging and voice calls for Filipino subscribers.
“Because of effective competition in the SMS offerings, particularly the unlimited text promos, it cannot be said that the consumers are damaged and prejudiced. The pricings of SMS now are so low that competing telcos are virtually cutting each other’s throat,” Globe said.
In a separate answer, Globe’s rival Smart Communications said the NTC’s position was based on an erroneous assumption that interconnection charges between companies were directly passed on to consumers.
Even if the NTC had the power to set rates, which Smart maintained the agency did not, the company said interconnection charges were not directly proportional to the fees charged from subscribers.
“With all due respect, the competitive deregulated market does not operate as simplistically as [NTC] appears to view it,” Smart said in its own answer earlier this week.
The company, the mobile unit of Philippine Long Distance Telephone Co. (PLDT), said that because of competition, the average revenue that telcos collect for each text message has already fallen to about 10 centavos each.