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Text Refund – In My Humble Opinion

Last November 22, 2012, I was invited to be a resource person for the program Kape at Balita aired on GMANEWS TV.  The topic – Text Refund and how social media is affecting the popularity of text messaging.  Edgardo Cabarios, National Telecommunication Commission (NTC) common carriers authorization department director was also invited to shed light on the issue of text refund.

Before I go any further, I would like to say that I am a subscriber of Globe Telecom (postpaid), Smart Communications (prepaid) and SunCellular (prepaid).  So whatever dissatisfaction, complains, headaches that you experienced like drop calls, delayed messages, network unavailability, slow internet connection and others – I also experienced.  I am with you in demanding for a better service.  Also I would like to say that I am an I.T. practitioner and I am not a legal expert.

So let’s go back to our topic – text refund.  The debate started with Memorandum Circular No. 02-10-2011 concerning ‘INTERCONNECTION CHARGE FOR SHORT MESSAGING SERVICE’ (</), where NTC states that 1 – WHEREAS, the existing interconnection charge for SMS is PhP0.35 per SMS; and 2 – under Section 1. The interconnection charge for SMS between two (2) separate networks shall not be higher than PhP0.15 per SMS.  So in other words, NTC’s Memorandum Circular No. 02-10-2011, is about lowering interconnection charges on text messages to P0.15 per text message from the current P0.35.

Furthermore, the order supposedly should have lowered the rate per text to P0.80 from P1 as early as Dec. 1, 2011.  And with the .20 cent reduction, NTC ordered the telcos to refund the .20 cents per text sent by their respective subscribers.  So how much is the total refund?  According to NTC, an estimated 20 million off-net (call or message made on a different network) text messages were sent daily in 2010 – which means the telcos would have to refund to their subscribers a total of P4 million per day. (Formula:  20 million multiplied by .20 cents), which would translate to P1.42 billion since the circular took effect on Dec. 1, 2011.  NTC also ordered the telcos to pay a fine of P200 per day until they have complied with the order.

The debate started when telecommunication companies decided to defy the order of NTC to do a refund on overcharged text messages.  Their contention – that the NTC circular did not order telco operators to reduce retail rates charged to customers but only interconnection charges and that SMS is a deregulated service therefore the telcos can impose charges or set the retail price.

As I’ve said I am not a legal expert so I decided to consult some legal experts and according to them – in the legal world, everything should be clearly stated – the rules, the directives and the penalties – everything should be in black and white, no gray areas so as to avoid technicalities.  If you get to read MC No. 02-10-2011, indeed there was no directive that a .20 cents refund was to be made.  I will leave this to the legal experts because this is now up to the courts to decide.

Now for the sake of discussion, let us say the courts decided that telcos should comply and refund the .20 cents to its subscribers.  My questions are simple – who will be entitled to a refund?  Based on the directive – from P1.00, the rate per text should be lowered to P0.80.  In other words, only those who are charged P1.00 per text sent are entitled to a .20 cents refund.  Who are they?  How many messages were sent by these subscribers?  To which mobile numbers should the refund be given to?  Remember, prepaid users do not have any identity because they are not registered.

Prepaid subscribers who availed of unlimited text promos are not entitled to the refund because they are not charged P1.00.  Postpaid subscribers who entered into different plans are also not entitled to the refund because they are also not charged P1.00 per text.  So again, the only ones who are entitled to the .20 cents refund are prepaid users who are charged P1.00 per text.  Again, who are they and how many messages did they sent?  To the best of my knowledge, telco operators DO NOT keep records of messages sent by users with prepaid numbers.

NTC admitted that they don’t have their own records as well as to how many messages were sent by mobile users – both prepaid and postpaid subscribers.  So even if the telco operators decided to comply – who will they give the refund to and how much?  Try asking the prepaid users, I am sure they will not be able to tell us how many messages did they sent during the stated period.

In my humble opinion, this text refund issue is both a legal issue and a technical issue.  To rectify this, perhaps NTC should issue another circular ordering telco operators to do the refund (I am not sure if this is doable) and install a system that will enable them to monitor SMS traffic.  But during my informal discussion with Director Cabarios, he admitted that monitoring SMS traffic is almost close to impossible as this will require billions of pesos to setup.

To be honest, I am saddened by this development because to me – the government and the private sector should work hand in hand for the betterment of the country and its people.  Providing a good service at the most economical cost is beneficial to all of us.  We need an agency like the NTC to make sure telco operators provide quality service to its subscribers.  A legal battle between the parties will not be healthy.  I really wish this issue will be settled amicably.

(Article written by Jerry Liao)

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