MANILA, MAY 26, 2008
(STAR) By Marvin Sy - Malacañang supported the proposal of the Department of Transportation and Communications (DOTC) to make text messaging a free service to consumers.

Presidential Management Staff chief Cerge Remonde said the Palace would support any measure that would provide some sort of relief for consumers who are already burdened by the spate of increases in fuel and basic commodities.

Transportation Secretary Leandro Mendoza said a petition would be filed before the National Telecommunications Commission (NTC) to compel mobile phone providers to make text messaging a free service for subscribers.

Mendoza argued the move is consistent with their franchise agreement that only allows them to charge voice calls.

Remonde said Mendoza studied his homework thoroughly before making the proposal.

“I’m sure that Secretary Larry Mendoza has studied that very carefully. As you know, the Palace will support anything that would provide relief to our people,” Remonde told dzBB radio.

Lawmakers warned they could amend the franchises of telecommunication firms if they do not allow the free use of short messaging system (SMS).

The Philippine Long Distance Telephone Co. earlier warned that offering free SMS would reduce the government’s tax collection.

Speakers Prospero Nograles said congressmen will review the congressional franchises of the three biggest cellular phone service providers – Smart, Globe Telecom and Sun Cellular – which he said, should have included free text messages in their services.

Nograles said his colleagues in the House of Representatives are already studying ways on how to “amend the franchise of the country’s telecommunications companies to compel them to stop charging their customers for SMS use.”

“We have to check whether they are legally allowed to charge text messages. If their franchise allows them to do so, we can make corrective measures and file a resolution as soon as possible for the NTC to address this concern,” he said.

Nograles said the telecom companies have been raking in billions in profits since they are no longer allowed to pay the three percent franchise tax on gross receipts.

He said the telecom firms are no longer subjected to the 12 percent cap in terms of income, based on return of investments (ROI).

Instead, the telecom firms are required to pay the 12 percent expanded value added tax, which they conveniently pass on to consumers.

“This taxation system should also be studied to lower the present rates,” Nograles said.

“We have to review the specifications of their franchise. We are in the middle of a very difficult economic situation and it will be a great help if we can remove the use of SMS from their daily budget,” he said.

Three House committees – legislative franchises, information and communications technology and oversight committee – have been tasked to “find out” if these telcos “are really allowed to charge their customers for using SMS.”

Nograles asked Iloilo Rep. Ferjenel Biron, chairman of the legislative franchise committee, Catanduanes Rep. Joseph Santiago of information and communications technology and Quezon Rep. Danilo Suarez of the oversight committee, to “scrutinize” the legislative franchises of the telecom firms.

Nograles, a habitual texter himself, joined the snowballing support for Mendoza’s proposal for free text messaging.

He said he finds it more convenient to send text messages to reporters who ask for his comments on the issues of the day.

Nograles said this mode of communication “has become a necessity even among poor Filipinos who rely on this technology for their day-to-day personal and business communications requirement.”

He estimates that even the poorest Filipino household spends an average of P25 to P60 per day for their texting needs. “This is already equivalent to one to two kilos of rice or 10 packs of instant noodles,” he said.

Nograles said “projections that oil prices in the world market will soar further will make life even more difficult.”

He added it is the “obligation of the government to find every available option to help the public cope with the present economic situation.”

Santiago, for his part, also disclosed moves by lawmakers to amend Republic Act 7925 or “An Act to Promote and Govern the Development of Philippine Telecommunications and the Delivery of Public Telecommunications Services.”

Santiago, a former NTC commissioner, explained that before the passage of the law, a 12 percent cap was imposed on the income of telecom firms.

The 12 percent rate of return on their investments is similar to the cap on public utilities like Meralco and water companies.

But in 1995, he said the cap was removed to encourage the entry of telephone providers.

Although the law provides fair return on investments of telecommunication companies, Santiago said it apparently failed to define what is “fair rate of return.”

“We should return the cap and amend RA 7925. The presence of a cap for these firms would definitely lower the rates of cellular phone use,” he said.

Santiago said his committee learned the telecom firms enjoy a 36 percent rate of return on investments.

But Santiago opposed the idea of providing free text messaging as a value added service to subscribers.

He said this would be a burden on the part of the telecom companies.

“The bigger issue is to bring back the franchise tax and to impose a cap on their income so that they will have no choice but to lower their rates,” he said. – With Delon Porcalla, Pia Lee-Brago

Chief News Editor: Sol Jose Vanzi

All rights reserved