Olongapo Telecom & Information Technology

Friday, July 07, 2006

Smart, Globe promo war turns ugly

By Mary Ann Ll. Reyes
The Philippine Star

The war between arch-rivals Smart Communications and Globe Telecom has turned uglier after the former asked government regulators to investigate Globe and its wireline subsidiary Innove Communications for alleged predatory pricing as well as unfair and anti-competitive behavior.

Smart specifically asked the National Telecommunications Commission (NTC) to enjoin Innove from further offering its Speak n’ Surf service, which allows subscribers to have both a wireless phone and unlimited broadband service for P995 a month.

Smart legal and regulatory department head Enrico Espanol said subscribers of Globelines Broadband are offered "free first 500 texts per month to other Speak n’ Surf phones and to Globe Handyphone and Touch Mobile."

"Obviously, such service is among the claimed prohibited services or promos being vehemently assailed by Globe because they ‘cross over’ the networks of two different companies. The Globelines Broadband service is offered by Innove while the mobile service is being offered by Globe. Such arrangement on a permanent basis is offered below cost and, therefore, violates the NTC policy against predatory pricing relied upon by Globe in its complaint against Smart and Piltel," Espanol emphasized in Smart’s complaint before the NTC.

Espanol noted that Globe has recently made an issue over promos or services that cross over two companies’ networks and argued that such promos or services are allegedly predatory and anti-competitive and have been declared illegal by the NTC.

It will be recalled that Globe opposed before the NTC the all-day texting 258 promo of Smart. This promo covers text messages sent from one Smart subscriber to another as well as messages from a Smart to a Piltel subscriber, Piltel to Piltel, and Piltel to Smart, which means that Smart and Piltel do not pay text access charges to each other, unlike those paid to other networks like Globe and Sun Cellular.

Globe said Smart and Piltel are still two different carriers with different congressional franchises and NTC authorizations and frequencies. Since the promotional scheme was introduced without giving all other mobile carriers the opportunity to at least agree to be a part of it, the promo smacks then of discrimination, as well as cutthroat competition, Globe stressed.

Since Smart has been treating Piltel as part of its network, Globe sought the revocation of the congressional franchise given to Piltel as well as all authorizations and frequencies granted to Piltel for non-operation or non-use.

Globe also noted that the authority given by the NTC in favor of Piltel and Smart is merely one approving Smart’s facilities management, administrative support and customer service management over Piltel. "It does not authorize the merger of Smart and Piltel and thus exempt them from paying access charges to each other," it stressed.

For his part, Espanol said that as already pointed out by Globe, the NTC has already prohibited discriminatory practices in inter-corporate, inter-carrier, and/or inter-network crossings in its June 14, 2005 order in the case of Innove vs. Smart.

NTC’s Memorandum Circular 14-7-2000 further provides that an access provider must "treat each seeking interconnection on a basis that is non-discriminatory and no less favorable as to terms, conditions, and rates that the treatment which the access provider affords to itself, its parent, subsidiaries, affiliates, or to any other public telecommunications entity (PTE) to which it is providing a materially equivalent service."

Smart’s legal counsel stressed that based on Globe’s own line of arguments, Globe and Innove are operating as a criminal combination in restraint of trade because in offering the Speak n’ Surf service to their subscribers, they are acting in concert to corner the market and thus create a virtual monopoly. "This service of Globe and Innove are in open defiance and mocks the circulars, rules, orders, and policies of the NTC which Globe sought to promote," Espanol added.


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