Philippine Operators Oppose Free SMS Bid

Claiming it could cut revenues in half, mobile operators in this island nation oppose congressional proposals for free text messaging

Two Philippine congressmen last week pushed forward two proposals, urging local carriers to lower their charges and make SMS free.

Congressman Roilo Golez proposed operators charge 60 centavos (US$0.013) for SMS sent to and from rival networks, and 50 centavos (US$0.011) for SMS exchanged within the same network.

Congressman Al Francis Bichara filed a bill seeking to make SMS free for prepaid subscribers. Bichara's proposal also included a condition to allow subscribers to use the free service as long they have existing credits on their prepaid phone cards.

Current SMS charges vary in the Philippines, but in most cases, carriers charge as much as double the rates for SMS messages sent outside their own networks.

However, the country's phone companies said the proposal to make SMS free will significantly affect the quality of service and alter an existing "ecosystem" of thousands of retailers peddling prepaid text in small denominations.

In a report from local paper BusinessWorld, Roy Ibay, legal corporate counsel of dominant carrier Philippine Long Distance Company (PLDT), said: "Competition has forced players to come up with pricing promotions to gain and retain subscribers." PLDT is the parent company of Philippine top mobile carrier Smart Communications.

Ibay noted that making SMS free could severely affect the livelihood of more than a million Filipino families, currently signed up as part of Smart's prepaid retail distribution system. He further warned of a network "collapse", should free SMS be implemented, noting that the operator's network may not be able to handle the billions of SMS that will be sent and received once the free scheme is implemented.

Globe Telecom, meanwhile, faces the possibility of having its revenues cut by half, should the free SMS scheme be enacted into law, said a senior executive from the carrier, who was also quoted in the BusinessWorld report.

However, Rodolfo Salalima, Globe's senior vice-president for corporate and regulatory affairs, said the company is willing to "sit down" with lawmakers to discuss the proposal to lower service charges. Salalima added that Globe is willing to "work out the issue" with government representatives on interconnection rates that could further bring down the cost of SMS.

Sun Cellular, the smallest among the country's top carriers, currently already offers free SMS, but has come under scrutiny due to complaints of clogged networks and poor service.

Philippine mobile carriers continuously generate a big chunk of their revenues from non-voice services, such as SMS, boosted by a domestic market that exchanges a large volume of SMS everyday, surpassing most countries. Industry estimates that, on average, Filipinos send nearly 1 billion text messages a day.