Congress mulls metering device to track revenues of mobile phone companies

MANILA, Philippines – Congress wants government to keep a close track of the revenues of the cellular mobile telephone service (CTMS) providers through the installation of a metering device.

The move is in line with a legislative proposal to impose an additional fee on all telecom services to fund the computerization of public schools nationwide, House oversight committee chairman Rep. Danilo Suarez said.

In a briefing, Suarez told reporters that the metering device, which cost about $30 million, will come from the five-centavo fee per text message that will be set aside for computer education as proposed by some members of the House of Representatives.

The electronic metering device will be connected to the Bureau of Internal Revenue (BIR), the National Telecommunications Commission (NTC), the Commission on Information and Communications  Techonology (CICT), and the telecommunication companies (telcos).

The device aims to monitor the revenue streams of the telcos, which are subjected to the five-centavo fee, Suarez said.

With the device, Suarez said the BIR can now identify, how much is the industry’s earnings per year.  ”There are several layers of revenue that has not been captured,” he said.

Suarez earlier revealed that the Lower House is preparing a resolution that will be binding on the NTC, which will fix the maximum cost of text messaging at 50 centavos per message based on an agreement reached with the commission and service providers. The 50 centavos includes a five-centavo computer education tax.

“Our estimate of the telcos’ text messaging cost is 18-19 centavos. If you include the five-centavo tax, the net cost should be about 25 centavos. So if they offer text messaging at 30 centavos per tax, they have a profit of five centavos. Since Filipinos send two billion text messages per day, making us the texting capital of the world, a five-centavo profit translates to P100 million a day, P3 billion a month and P36 billion a year,” Suarez stressed.

The Philippine Long Distance Telephone Co., Smart Communications Inc., Globe Telecom Inc., Digital Telecommuncations Phils. Inc. and Bayan Telecommuncations have opposed the proposal to impose a five-centavo fee and the reduction of text rate to 50 centavos from P1.

Globe Telecom president Ernest Cu earlier warned that it will be the consumers who will be hurt at the end of the day if government pushes through with a plan to peg text messaging rates at 50 centavos.

Cu said that they are just like any other business where the basis of pricing is cost. “No one but the consumer will pay at the end of the day this unilateral tax imposition,” he emphasized.

He also pointed out that such plan would limit the offers and flexibility currently being enjoyed by mobile phone service providers since it assumes that the text messaging rate is still P1 per text and that it has to be cut by half, with only 45 centavos supposed to go to the provider.

However, industry experts have argued that the P1 per text rate which Suarez claims is still the applicable text messaging rate applies only to postpaid subscribers which account for a very small portion of the total subscriber base. If the zero-rated text and those covered by promotional offers are considered, the blended cost per text can be as low as 12 to 18 centavos per text. Of this amount, a huge portion goes to value-added tax, traders’ commission, among others, leaving service providers with very little profit per text, maybe even lower than the five centavos per text that will be set aside for computer education as planned.

Meanwhile, Cu also emphasized that the congressional proposal would severely curtail telcos’ ability to roll out new products and to invest in their networks. “In fact, our rollout of WiMAX did not come cheap at P7 billion. Government should allow telcos to sufficiently generate cash flow in order to contribute to nation building. magine the wealth of information that the people can get from the Web, access to which is a service that we provide. It will be detrimental to the whole nation if they keep taxing us,” he said.

Roy Ibay, Smart Communications Inc. senior manager for regulatory and telecom relations, said the 5-centavo fee is not an additional regulatory fee, but a tax, which is a detrimental to the consumers. ”It’s a sin tax. Telecom services, particularly SMS cannot be included as a sin tax,” he said.

For Alfredo Carrera, PLDT head and first vice president for regulatory strategy and support, the proposal of the government is “discriminating” to the telecom industry. ”We are already paying a lot of taxes,” he added.

William Pamintuan, senior vice president of Digitel said the government proposal would impact on the telcos’ offering of unlimited bucket promo. –Mary Ann. L. Reyes, Philippine Star