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Philippine government agency to sue telcos for violating order to lower SMS rates

The Philippine’s National Telecommunications Commission (NTC) is filing a legal case against the country’s three largest telecom companies - Globe Telecom, Smart Communications, and Sun Cellular for failing to lower their Short Messaging Service (SMS) rates according to an NTC executive order.

According to NTC director Ed Cabarios in a report presented to the local press, “The commission is seriously determining what legal action they will file against the three companies.”

“If a public telecom entity repeatedly violates the terms and conditions of the authority, they are liable to fines not more than 5 dollars per day,” the director added.

In response to the NTC move, Globe Telecom’s Corporate and Legal Services head Froilan Castelo stated, “We maintain that Globe has firmly complied with the NTC regulation on reduction of SMS access charges. Accordingly, the company has quickly amended its interconnect agreements with other telco carriers to this effect.”

However, Cabarios replied, “the lowering of interconnection charges should be felt by the consuming public.”

SMS rates were expected to go down from $0.022 to $0.20 last November 30, but many consumers complained that the lower prices did not even take effect. Meanwhile, NTC also issued a memorandum that required telcos to maintain their unlimited call and text services during the holiday season this December.

“The NTC directive instructs them to refrain from removing the unlimited service offerings during this December 23 until December 26, including December 30 to December 31, January 1 and January 2,” said Cabarios.

Sun Cellular is a wholly owned subsidiary of Digital Telecommunications Philippines, or Digitel. The company Digitel is in turn owned by the JG Summit Group with a minority stake held by the TeliaSonera Group. It began its operations in 2003, positioned as a latecomer in the market allowed it to put up infrastructure at lower cost. Sun Cellular gained popularity because of its "24/7" offer of unlimited text messaging and calls for a fixed price for Sun-to-Sun transactions.

Smart Communications is a wholly owned mobile phone and Internet service subsidiary of the Philippine Long Distance Telephone Company (PLDT). On June 30, 2010 the company reported that it had over 45 million cellular subscribers.

Globe Telecom, commonly known as Globe, is the third largest telecommunications company in the Philippines. Globe provides mobile, fixed line, and broadband Internet services.

Around 1.8 billion SMS messages were being sent every day in the Philippines by 2009. This was the largest SMS volume in the world, the Philippines accounting for more than 10% of global SMS at one stage and the country’s mobile operators were reported to be generating the highest proportion of non-voice revenues in the world. But as an indication of the constant change in the mobile market the SMS market had started to decline in 2010 as the impact of Internet-based social networks started to have an impact on SMS usage.