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Philippines Globe Mulls Shift To
Per-Second Call Fees
Toronto, MANILA (Dow Jones)--Globe Telecom Inc. (GLO.PH), the
second largest Philippine cellular service by subscribers and
assets, is considering a shift to per-second billing for voice
calls from the per-minute rate if a marketing promotion
introduced in December continues to generate better revenue.
"It's revenue accretive," said Globe President and Chief
Executive Gerardo Ablaza of the per-second charging, which
service providers have in the past so strongly resisted.
"There's traffic stimulation," he added, without elaborating on
financial or call traffic details.
Globe only offers per-second billing on an intranetwork basis,
which means only calls among its subscribers are charged by the
second.
Normally, a call is charged PHP6 a minute even if the call only
lasts a few seconds. Under per-second billing, a subscriber pays
only PHP0.10 a second, or PHP6 only if the call lasts a full
minute.
"So far, we haven't yet seen any of the downsides (of per-second
billing)," said Ablaza. But he said it is still early days to
conclude that Globe will make per-second charging of voice calls
a permanent service offering.
Ablaza noted that it took Globe seven months to pilot test its
unlimited text service before it was convinced it was a viable
proposition. Under this program, a Globe subscriber can send
unlimited text messages to other Globe subscribers for a certain
fee over a limited period.
Because of per-minute charging of voice calls, cellular
subscribers have turned to text messaging, with each message
usually costing only PHP1 to send.On average, the 34 million
cellular subscribers in the Philippines each send 10 text
messages a day, or a total 340 million daily.
But with the cheaper voice call rate, Ablaza said subscribers
are expected to just call instead of sending text messages. "You
could say a lot in 10 seconds," he said.
In late 1999, regulators sought to introduce a system that
billed voice calls on six-second pulses, but telephone firms
resisted that proposal on the grounds it would hurt revenue and
slow the recovery of billions of pesos worth of investments.
In 2003, the Supreme Court sided with the telephone companies
and stopped regulators from implementing the billing system.
Now, several proposals are pending in Congress seeking to
mandate per-second billing.
Ablaza said, however, that it may take a while before the
industry adopts the per-second charging as standard, since
settlement rates - or the amount paid by a phone company to
another firm if its subscriber calls another network - are still
measured in minutes.
"We're constrained by the settlement issues," he said.
Local telecommunications companies have been reluctant to cut
settlement rates as they have invested heavily to build their
networks in recent years and want to maximize the return on
these investments.
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