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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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