Updated 19:31 PM PHT Tue, November 29, 2016
Metro Manila (CNN Philippines) — Phone calls to different telecom networks will soon become cheaper, as rivals Globe Telecom, Inc. and Smart Communications, Inc. agreed on Monday to cut their interconnection charges.
The interconnection charges will be cut to ₱2.50 per minute starting January 1, 2017. Previously, they charged ₱4.00 per minute for mobile-to-mobile and ₱3.00 per minute for mobile-to-landline voice calls.
Globe and Smart officials signed a memorandum of understanding, witnessed by regulators from the Department of Information and Communications Technology and the National Telecommunications Commission.
Globe Chief Technology and Information Officer Gil Genio said the lower interconnection rates would translate to lower charges for voice calls, giving customers a more affordable and accessible way to communicate.
Ray Espinosa, the regulatory head of Smart's parent firm, PLDT, Inc., added: "We are supporting government's efforts to bring down the cost of telecom services in the country."
The telecom giants have come under intense pressure to improve the quality of their services and bring down costs for consumers, with no less than President Rodrigo Duterte as one of their fiercest critics.
The President last week repeated his threats during the presidential campaign to bring in foreign competition, in a bid to force Globe and Smart to shape up.
Duopoly allegations have flared in recent months after Globe and Smart bought out San Miguel Corp.'s telelcoms business. San Miguel was hoping to enter as a third player in the industry, partnering up with Australia-based Telstra Corp., Ltd.
Globe and Smart contend they are ready to compete with new players, both local or foreign. They also point to the intense price competition between them as a sign they have not been colluding to cheat consumers.
However, the two players' move to bring down charges comes at a time when voice call usage has already dropped drastically.
Voice revenues dropped 15 percent for Smart and nine percent for Globe as of the third quarter this year compared to a year ago.
Consumers have been shifting to calls via mobile data, using Voice over Internet Protocol apps instead.
Still, Genio said, this was still an important concession as only half of subscribers in the country have smartphones and access to apps.
PLDT Executive Vice President Ernesto Alberto agreed, saying, "Most of our subscribers who still use conventional voice calls tend to be in the lower strata, so cost is an important consideration for them."
Globe and Smart officials said the lower interconnection charges would allow them to be "more aggressive" in pricing their calls, texts and data bundles, which mainly offer unlimited promos just for intra-network calls.
Meanwhile, Information and Communications Technology Secretary Rodolfo Salalima was hopeful the agreement would be the first step to bring down costs for otherservices, especially mobile and broadband internet.
He said the complaints of subscribers have been "loud and clear."
PLDT's Alberto assured the companies are already working together to improve internet services, sharing infrastructure, and and moving towards internet peering.