Philippine mobile operators have ‘agreed’ to change the way they bill customers following orders from the regulator, the National Telecommunications Commission (NTC).   The switch from rating calls in one minute minimum to six seconds blocks is perceived to bring down prices, but will it?

The order forms part of a series of reforms the NTC, backed by a Senate enquiry and bill, aims to resolve complaints from customers about disappearing pre-paid credit and SMS spam messages.  The first two orders, aimed at providing better service and value to the country’s approximately 70 million subscribers, directed that phone loads or recharges last for three months and the barring of spam text messages.

The author of the bill, Rep. Elpidio Barzaga, said he was concerned that the operators all had very similar charges, indicating possible collusion on rates.  This is a bold statement in a market where such topics are rarely discussed openly.  It may also explain why Philippines messaging numbers, 1.39 billion SMS per day, are the largest SMS volumes in the world as users snub voice calls because of price.  No operator appears willing to drop voice prices to gain market share, unlike counterparts in Indonesia faced with the same dilemma. (Refer XL interview )

The operators will have until December to set the maximum billing for mobile phone services, whether prepaid or postpaid, at six seconds per pulse, or the time cycle on which call charges are based. Some operators, still using legacy systems, are not happy as they may need to upgrade their billing software to comply.  They will have to be ready by December as they only have 120 days from notification on July 23 to comply with the new ruling.

It seems unusual that six second increments were settled on, probably a leftover from the old pulse metering days of fixed line.  Most calls today are rated on a time basis and at per second increments in developed markets.  Of course, there will be some cost saving for subscribers making sub-minute calls (currently every call is rounded up to the next minute, even if it lasts 61 seconds two minutes would be charged), but there is no guarantee that operators will effectively change tariffs.  They are most likely to charge each six second block at one tenth the minute rate for existing plans.  It won’t be long before they start developing super complex rating plans that sound cheap but require a math degree to fathom.  Capped plans like those marketed in Australia an example.  Not sure if the Philippines is quite ready for that.

As Edgardo V. Cabarios, NTC common carrier and authorization director stated, “This bill will really give more teeth to us as a regulator.“  Let’s just hope it doesn’t bite off more than it can chew!