Jose Miguel Arroyo
Manny PacquiaoNTC ban on "spam" texts puts P5-B industry in peril
MANILA – Between numerous complaints of Filipino mobile phone customers and a homegrown P5 billion sunshine industry, what’s a regulator to do?
Years ago, the National Telecommunications Commission (NTC) has been balancing the interests of these groups by issuing guidelines and slapping on the wrist with meek fines the telecommunication firms that fail to address customer complaints on these. It took no less than the Senate president to make public his vanishing phone credits to push the industry regulator to be more firm.
By Thursday, the NTC ruling that bans the controversial but easily misunderstood service will take effect.
On Monday, a group of mobile content providers said they will appeal the NTC ruling and, if needed, will to go to court to obtain a restraining order. In essence, they were implying that the industry regulator, pressured by politics, is strangling them instead of promoting a more vibrant environment for creative and enterprising Filipinos.
On July 7, the NTC issued Memorandum Circular 04-07-2009, which is essentially a blanket ban on mass sending of both "spam" (unsolicited) and legitimate messages. It was issued in response to recent Senate hearings on vanishing pre-paid phone loads, which were attributed to "push messages" or those that content providers or mobile phone companies send out to subscribers who may have subscribed or not to those texts.
The MC 04-07-2009, which will take effect on Thursday, July 23, made the flow of mobile content more stringent by limiting how subscribers could avail of the service and how the content providers could "push" their content.
It requires, among others, that a mobile phone subscriber would only avail of a service offered by content providers or mobile phone companies after he/she has initiated "an operative act of communicating"— in writing, through text message, or the internet.
Content providers could also only send surveys and other broadcast messages "only upon prior written consent by the subscribers."
Mobile content—or value added service—providers are independent firms or in-house units of mobile phone companies that create services that add value to the standard phone service offerings, like calls and texts.
P5-billion industry
In a press conference on Monday, John Alonte, chief executive officer of G-Gateway Mobile Phils. Inc. and spokesman of the industry association of value added service providers, said their P5 billion thriving industry is in peril because of NTC’s new memorandum.
“The implementation of Memorandum Circular 04-07-2009 will kill this sunrise industry,” said Alonte.
"This MC provides an absolute ban on all push messages, including legitimately subscribed content…causing revenues to drop to zero overnight," he added.
Previouly a cluster of mom-and-pop businesses that peddled their service to giant telecommunication firms in the country, content or value added service providers have grown to more than 400 players, some of them gaining international recognition and reach.
The meteoric growth of mobile phone users in the country has been partly facilitated by early content providers, which used to just offer the now ubiquitous ringtones and wallpapers. As mobile phone penetration reach over 85% of the population, content providers, too, have evolved into a more complex–and profitable–business.
Homegrown Chikka, for example, has been dubbed "the new multinational" for exporting the PC-to-text messaging service perfected in the Philippines where there is an advanced texting culture. "If it sells here, it is likely to sell abroad,” a company official once told Newsbreak.
The rich text culture here has also spurred innovative mobile phone services now used in other countries, including the mobile commerce system that facilitates the electronic transfer of value—whether cash or airtime credits—from one card to another.
Mobile phone companies have long recogized the mutual benefits of third-party mobile content providers since these services spur their existing subscribers to use their phones more and allow the operator to drive up their average-revenue-per-user, a key industry measure of financial performance.
The usual 70:30 revenue sharing agreement between content providers and the phone companies favors the latter, which have to spend more for setting up the physical infrastructure all over the country, industry players stressed.
Nonetheless, phone giants Globe Telecoms and Smart Telecommunications have since acquired several content providers, while media companies have also set up their own interactive units.
Eventually, the menu of services have grown by leaps and bounds. These include text voting, which is now a staple in reality TV shows, and news content—from national and economy to sports and entertainment—pushed by various media organizations.
Alonte said their industry has also become a key employer, citing his own company, which he said employs some 70 individuals and supports local musicians who earn from royalties from songs downloaded through mobile phones.
Spam or not to spam
Throughout the growth years of the mobile phone operators and the content provider industry, customers have paid the price for service inefficiencies and undelivered promises.
Way back in early part of the decade, mobile phone users—which have already included overseas Filipino workers and even those in the lower economic class who depend on their mobile phone as their primary communication tool—have been vocal about unsolicited or "spam" text messages.
Glenn Dumayas, a mobile phone subscriber, told ABS-CBN News that while he is not being charged for the unsolicited text services, he will be charged just so he can opt-out. "It says I can turn it off. But if I do that, I will even be charged P2.50."
In 2005, NTC issued Memorandum Order 03-03-2005 where it set the guidelines for broadcast messages that could be sent to mobile phone users. It also became the basis for fining mobile phone companies that do not address complaints promptly, thus egging them to improve their backend.
The fines, however, are no less than a slap on the wrist. For example, in 2007 the NTC fined Smart and its content provider only P20,800, and Globe and a number of content providers mere P12,200 for sending "spam" messages and for failing to adopt the keyword "STOP" as the universal keyword for opting-out.
Fast forward to 2009, the same complaints exist. No less than Senate president Enrile complained that his pre-paid load "vanished." He led a series of senate hearings where he found out that he lost about P400 to unwanted messages, including 4 ringtones that he did not subscribe to.
The strong stand of Enrile, other senators, and various interest groups against NTC’s seeming lack of strong will to discipline the industry players that it oversees earned praise from the public.
On July 3, the NTC has already issued Memorandum Circular 03-07-2009 that extended the validity period of pre-paid phone credits.
On July 7, the NTC issued MC 04-07-2009, an amendment to MO 03-03-2005.
Blanket ban
The value added service providers, as expected, are not pleased.
"We categorically deny that Value-Added Services (VAS) are the reason for the so-called ‘vanishing load’ issue. It is impossible for VAS providers to cause vanishing load as we do not have the ability to deduct load from subscribers," Alanto said last
Monday.
During the Senate hearings, Alanto has tried to explain that "there are multiple layers of consumer protection before a mobile user is subscribed to a service. The terms and conditions of the service are clearly communicated to the subscriber — including the tariff of a service, frequency of the content delivery, and how to unsubscribe from the service. Mobile users can unsubscribe from any service at any time and reminders describing how to do so are sent to subscribers periodically."
He also said that "a content provider does not have the ability to unilaterally deduct the load from the subscriber. Once the content provider delivers the content to the subscriber, our server sends a message to the operator’s billing system to charge the subscriber.”
Alonte’s group stressed that said MC 04-07-2009 "indiscriminately bans all push messages—whether legitimately subscribed to by mobile users or not."
"The MC will not stop text spam because those generally originate from prepaid mobile phones and are outside the control of the NTC," the group said.
They said only 14 million of the registered 67 million mobile phone subscribers subscribe to VAS. Of the nearly 12,000 complaints on vanishing load received by the NTC last year, they said less than 200 are related to VAS.
These complaints, Alonte said, can be resolved by an investigation of the electronic logs of the relevant complaints.
Adding that the NTC was "hasty" in concluding that they are "to blame for these ills of the telecom industry," and that the NTC did not formally investigate before it issued MC 04-07-2009, the group said they are mulling asking for a temporary restraining order from a local court to stop the blanket ban from being implemented starting Thursday.
This time, however, the NTC seems bent on pushing through with the widely praised ruling.
NTC Commissioner Ruel Canobas told ABS-CBN News that these unsolicited texts have to stop since "their promos are deceiving."
Canobas added that there were enough consultations with the content providers before NTC issued MC 04-07-2009.
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