SC asked to order refund of excess SMS fee to subscribers

By , on September 19, 2017


National Telecommunications Commission (NTC) (Photo by NTC)
National Telecommunications Commission (NTC) (Photo by NTC)

MANILA — The Bayan Muna partylist filed a petition before the Supreme Court (SC) seeking to compel the country’s major telecommunication companies to give a refund to their subscribers for overpriced text message rates amounting to more than PHP17.7  billion.

In a 44-page petition, Bayan Muna Reps. Neri Colmenares and Carlos Isagani Zarate sought the reversal of the Court of Appeals’ (CA) decision issued on June 27, 2016 barring the National Telecommunications Commission (NTC) from implementing its November 2012 orders directing mobile phone companies namely Globe Telecom, Smart Communications Inc. and Digitel Philippines Inc., which operates Sun Cellular to immediately refund and cut text messaging charges to PHP0.80 from PHP1.

The said telco companies were named as respondents in the petition.

Bayan Muna said  the reduction of SMS retail rate insisted that the reduction of the SMS retail rate was merely a necessary consequence of the lowering of the interconnection charge and not act of regulation by the NTC.

“Respondents claim that interconnection charges do not form part of the SMS retail rate and lowering interconnection charge will not result in the lowering of the rates imposed on subscribers. This incredible claim lacks factual basis and should not have been used as the Court‘s basis for overturning the NTC Decision,” the petitioner said.

It noted that even Globe has admitted in several media reports that lowering of interconnection rates is a factor in the lowering of SMS retail rates.

The petitioners explained that while telco companies report interconnection charges as expenses, they necessarily pass this on to consumers through a higher SMS retail rate.

“It is absurd for respondents to claim that while interconnection charge costs them billions in expenses they are so altruistic as to absorb these losses and not pass them on to the consumers,” the group said.

“The Court instead of relying merely on the Respondents incredible claim, should have asked these telcos to prove this claim of spending billions to connect users to each other without charging these users for the interconnection,” it added.

The petitioners also argued that the CA erred in ruling that the telco companies were not accorded due process when the NTC issued the assailed orders.

It noted that several hearings were conducted since 2008 where it was discussed that the issue of lowering interconnection charges shall cause the lowering of the SMS retail rates.

However, the petitioners said when the hearings continued in 2011,  the respondents began to change their tune claiming that interconnection charges have no relation to SMS retail rates.

“In this case, the telcos  were afforded the fair and reasonable opportunity to ventilate their postures with respect the matter of lowering of text message rates as a necessary consequence of the lowering of the interconnection rates.

That there was no hearing conducted regarding the reduction of the SMS retail rate is inaccurate, considering that several opportunities were given to the telcos  to present their side,” the group said.

The telco companies earlier said the NTC’s refund order will put into jeopardy the financial viability of the entire telecommunications industry and the public will likely suffer eventually.

In its June 27, 2016 decision, the CA ruled in favor of the telco companies and struck down the orders of the NTC  “for being bereft of legal basis and for having been rendered in utter disregard of the requirements of due process.”

It held that to penalize the three telco companies for not lowering the SMS retail rate “will be the height of injustice and unfairness” considering that it is not mandated under MC Memorandum Circular (MC) No. 02-10-2011.

It added that “the demands of justice and fair play should not be relegated to the background for the sake of popularity.”

The Computer Professionals Union (CPU), one of the parties pushing for the implementation of the NTC order, claims that PLDT, Smart, and Sun’s excessive amount collected daily from overcharged standard text message  is at least PHP17.5 million.

It based this data from the 2013 PLDT report and the third quarter report of Globe for 2013.

The petitioner said using this CPU data, the amount of over-collection by Smart and Globe as of  Sept. 11, 2014 is not less than PHP17.7 billion.

In the said order , the NTC also directed  the three telecom companies to refund or reimburse their subscribers these excess charge of PHP0.20 per off-net SMS from the effectivity of Memorandum Circular (MC) No. 02-10-2011 in October 2011 until fully settled, by crediting the load of prepaid subscribers or effecting the refund through the respective bills for postpaid subscribers.

NTC Memorandum Circular (MC) No. 02-10-2011 orders the lowering of the interconnection charge between networks from PHP0.35 to not more than PHP0.15 which the telco companies acceded to.

However, despite the supposed adjustment, the NTC found out that subscribers continued to be charged PHP1.00 for each regular off-net text message.

This prompted the NTC to order the PHP0.20 refund, which it insisted was a necessary consequence of lowering the interconnection charge.

The case stemmed after the telco companies filed a petition before the CA assailing the validity of the PHP0.20 refund.