Siasat, Jennifer: Rationalization of the Expiration of Prepaid Cell Phone Load

INTRODUCTION

The Philippines is considered as one of the prolific text messaging centers in the world. In 2007 alone, Filipinos sent an average of one billion text messages daily and went up to eighty percent in 2009 as a rising economy enables more people to buy mobile phones. Based on the records of the two leading telecommunication companies in our country, they have over 50 million subscribers and the country’s mobile penetration rate is around sixty percent. [1]

Due to the wide range of mobile phones, pay phones are increasingly becoming obsolete. Phone cards are being sold by shops which sell cell phone loads and cards. In May 2003 Smart introduced a new service based on the Smart Buddy mobile commerce technology platform called Smart Load, the service enables the electronic transfer of airtime via SMS. [2]

The booming of largely unexpected and extremely competitive mobile telephony in the Philippines is tempered with economic realities that many people live day-to-day with just the money in their pocket. For many Filipinos, neither a monthly subscription for cell phone usage nor saving money to purchase prepaid calling cards fits their lifestyle or purchase patterns.

In order to accommodate the needs of the public to communicate thru their mobile phone without the monthly subscription and the relatively high cost of cellphone cards, the prepaid calling and texting industry has come a long way. Smart’s answer was to eliminate the need for a physical card as the mechanism to purchase or re-load cellular phone minutes. As a result, by the end of the second quarter of 2003, Smart eliminated production and distribution of their P100 re-load card. Advertised by Smart as “telecoms in sachets,” the smaller denominations were designed for the low-income Filipino market that already purchases consumer goods in small quantities. [3]

Globe AutoLoadMAX on the other hand, is the popular service that exemplifies the concept of “sachet marketing” where you only buy what you need, when you need it. Globe Telecom has revolutionized the prepaid calling card foundation of the Philippine mobile phone industry by simplifying the process of loading airtime value onto a subscriber’s mobile phone. However, the very simplicity of the design and ubiquitous accessibility of the service generates enormous volumes of database transactions. To manage this in-demand service, Globe Telecom selected Sybase ASE for its speed, reliability, and small memory footprint. The Sybase-powered data infrastructure allows Globe Telecom to pursue sachet marketing while preserving efficiencies and managing costs. [4]

Aside from this “sachet marketing” which was introduced by Smart and Globe , prepaid cell phone cards had again penetrated the market with a minimum denomination of one hundred pesos. The consumers thereafter had the opportunity to choose on which of these services would fit their lifestyle to be able to still communicate with others thru their mobile phone. However, after years of servicing the public, the telecommunication companies are now facing the serious complaints from the consumers that the latter cannot get the value of what they pay for in terms of the services offered by prepaid calling companies. The consumer complaints of “vanishing loads” and the “setting of the expiration dates on the prepaid load” need to be given a serious attention.

Hence, this paper aims to discuss the rationale on the issues of diminishing of loads and the expiration dates previously set, its implication and its appropriate remedy to protect the interest of the public in general.

DISCUSSION

The main advantage of prepaid cell phones is the combination of freedom and control that they offer. With a prepaid cell phone, the user is not locked into a multi-year plan with a set number of minutes per month during specific calling and texting times, additional charges if he/she exceeds the limit and a costly fee if he/she breaks the contract. The user is free to talk whenever he/she wants, as long as he/she wants, until he/she runs out of minutes. And the user doesn’t have to pay a monthly bill. Talking more for one month and less makes no difference, and leftover minutes roll over from one month to the next. Plus, if the user wants to change to a different type of plan, a prepaid phone gives the user the freedom to switch whenever he wants.

The above mentioned advantages are now being coupled with the mounting complaints from the consumer section that the mysterious disappearance and expiration of their prepaid loads either in the form of cell cards or sachet marketing (E-load), is a clear indication that the interest of the consumer is at risk.
Senate President Juan Ponce Enrile complained that he too was a victim of what many refer to as “the vanishing load”. Senators thereafter, condemned the country’s mobile telecommunications providers for the alleged disappearance of prepaid card credits. A hearing was held by the joint Senate public service and trade and commerce to look into the supposed disappearance of credit load. Vice-President Noli De Castro supported the Senate investigation into the disappearance of the prepaid phone load because he himself was also a victim of the same “theft”. [5] De Castro reiterated that the disappearance of load credit is a form of “theft” as the putting an expiry on the prepaid load was wrong since it was already bought and paid for in cash. The expiration on his load happened when he bought a 300 peso load before he went to Syria last April 15 and when he returned here the 300 peso load was already disappeared/expired even if he did not use even a single centavo from that said load credit.

During the Senate hearing on the case of Enrile’s missing load, a National Telecommunications Commision ( NTC) executive said it was a deregulated industry and cited the nine-year-old temporary restraining order issued by a court on the NTC when it tried to fix the rates for customers. “I have a feeling that the telecommunication companies (telcos) and NTC are in collusion because how in the world can you believe that a TRO lasted this long. It is inconceivable that an injunction is imposed for nine years without the government doing anything about it,” Senator Joker Arroyo said. [6] The said injunction was filed by the telcos due to the NTC’s creation of Memorandum Circular 13-06-2000 which was supposed to be implemented as early as 2000 but held up due to the imposition of the said injunction. The memorandum circular provides rules, guidance and sanctions against erring telecommunications companies, as well as rules that would require people to show identification whenever they’re buying prepaid SIM cards, mandatory billing statements for consumers, prepaid usage and interconnection.

RATIONALE OF EXPIRATION OF LOAD CREDITS

What is the truth behind the diminishing of load credits? Why there is a need to have the same expired? How these matters affect the consumer? In the Philippines, when we buy a 100 peso prepaid load, we have to consume it within a specified number of days or else the load will expire which means it disappears or forfeit regardless of how much is left in our credit.

A representative of one telecom company said that the reason why the prepaid load expires is “because mobile numbers with no load or activity still occupies space and bandwidth of their network, because other users can still call or text them”. What space and bandwidth does it occupy when it has no activity? The telcos just took the load credits away by force based on their specified time frame. The basic and clearer reason on why telcom providers put an expiry date on mobile phone credits-MONEY. The expiration date will guarantee telecommunication companies prepaid load revenue. Once expired, users will have no choice but to buy new mobile credits. [7]

Kabataan party-list Rep. Raymond “Mong” Palatino said that the rationale behind prepaid expiration dates is that telecoms are dictating how consumers should use their purchased load for them to be able to rake in more profits. He added that service providers impose a time limit on loads so that consumers would have to use the discretion to use up their prepaid minutes when they want to since they paid for this. “It is the consumers’ prerogative to choose to conserve their load and make them last. This is not like food or medicine that would spoil if they are not used at once,” Palatino said.

Commission on Information and Communications Technology (CICT )Chairman Ray Anthony Roxas-Chua stressed that there could be technical issues with how people load their credits in their phones that could cause for the disappearance. However, the problem could also be due to some glitches with the telecommunications infrastructure. Roxas-Chua said the missing load controversy opened new opportunities for the government to review laws that govern the telecommunications companies. [8]

Whatever may be the reason for the disappearance and expiration of the prepaid load credits, one thing is for sure..that the prepaid load was already bought and paid for in cash by the users and such shall never be taken away from them by force.

REMEDIES

In light of the alleged disappearance of pre-paid airtimes, Senate President Juan Ponce Enrile has proposed laws that would strengthen the NTC. Enrile said that one of the existing laws that would be reviewed is Executive Order 546 which created the NTC in 1979. [9] “This will take some time to investigate. I’ve outlined the problems to be discussed,” Enrile said.

Senator Manuel Roxas II also warned that the Congress could interfere in the operations of the telecommunications providers if they continue to brush off complaints from mobile users.

“What you don’t want is for Congress to start writing up your Operations Manual and imposing limits, including the number of minutes for lunch breaks or your pensions. We are resonating the public’s complaint and if you stonewall these, we will take the necessary steps,” Roxas said.

Senator Ramon Revilla Jr. also joined in the fray saying that he would personally spearhead the review of the telecommunications franchise if the companies are unable to explain disappearance of the credits. “I would like to remind them that since a franchise is merely a privilege granted by the government through Congress, it would be tantamount to a gross violation of their franchise if such claims be proven true,” warned Revilla, who chairs the Senate public service committee. [10]

The telecommunications industry is governed under Republic Act 7925, which gives franchises to telecommunications companies. The NTC, which is now under the Commission on Information and Communications Technology (CICT), is the primary agency tasked to implement RA 7925.

Two of the abuses mostly committed by companies in the prepaid calling industry are: (1) diminishing load; (2) setting of expiration dates on prepaied call-text cards. In view hereof, Rep. Narciso D. Santiago authored House Bill No. 6793 An Act Prohibiting Prepaid Telephone Calling Service Providers to Impose Expiration Periods on the Validity of Prepaid Call-Text Cards and The Forfeiture of the Peso Load Thereof or otherwise be known as the “Prepaid Load Protection Act of 2009”. The primary objective of this bill is to protect the Public Consumer from unfair practices committed by Telecommunication Companies. Common complaints from the consumers of prepaid calling cards such as the deduction from card balances, and expiration dates on prepaid call-text cards would be strictly prohibited.

This bill will make it unlawful for any prepaid telephone calling service provider to impose expiration dates on prepaid call-text-cards and to forfeit peso value loads of a consumer.

Section 2. Definition—

(B) PREPAID TELEPHONE CALL-TEXT-CARDS-

(1) IN GENERAL-The terms prepaid telephone call-text cards’ mean any right of use purchased in advance for a sum certain linked to an access number and authorization code that enables a consumer to use a prepaid telephone calling service. Such rights of use may be embodied on a card or other physical telephone calling service. Such rights of use may be embodied on a card or other physical object or may be purchased by an electronic or telephonic means through which the purchaser obtains access numbers and authorization codes that are not physically located on a card or other physical object.

(2) EXCLUSION- The terms ‘prepaid telephone call-text cards’ do not include cards or other rights of use that provide access to-

(i) a telecommunications service with respect to which the card or other rights of use and the telecommunications service are provided for free or at no additional charge as a promotional item accompanying a product or service purchased by a consumer; or

(ii) a wireless telecommunications service account with a wireless service provider that the purchaser has a preexisting relationship with or establishes a carrier-customer relationship with via the purchase of a prepaid wireless telecommunications service handset package.

Under Section 3 HB No.6793, It shall be unlawful for any prepaid telephone calling service provider to do any of the following:

  1. To impose any expiration period on the validity of the peso value loaded from a prepaid telephone call-text card.
  2. To forfeit any peso value loaded from a prepaid telephone call-text card.

Section 4 of the said act penalizes “any director, officer or agent of a corporation who shall authorize, order or perform any of the acts or practices constituting in whole or in part a violation of Section 3, and who has knowledge or notice of noncompliance received by the corporation from the Commission, shall upon conviction, be subject to a fine of not less than One Hundred Thousand pesos but not more than One Million Pesos or imprisonment of not less than six years but not more than twelve years, or both upon the discretion of the court. In case the violation is committed by, or in the interest of a juridical person duly licensed to engage in business in the Philippines, such license to engage in business shall also be immediately revoked.

Although the intention of the said bill is to protect the interest of the consumer, yet the enactment of this is still in the process. In a positive note, the NTC had issued the Memorandum Circular (MC) No. 03-07-2009 dated 03 July 2009 with the subject titled as “Guidelines On Prepaid Load” to Telecommunication Companies such as Smart, Globe, Sun etc. This is in response to the complaint of Senate President Juan Ponce Enrile about the mysterious disapperance of his prepaid load. [11]

Under this MC, prepaid credits of mobile phones – popularly known as “load” – will now have longer expiration dates. The new rules will take effect fifteen (15) days after the publication of the memorandum circular in newspapers unless the cellular phone companies can again get a restraining order from the court that will prevent the implementation of the order like what happened nine (9) years ago in the case of Memorandum Circular 13-06-2000 which indicated that the expiry period of prepaid phone cards should not be less than two (2) years. [12]

This new rule will benefit all the prepaid users and not the telecom companies. All prepaid cellphone loads will have longer expiration or validity period as shown in the table:

Prepaid Load Purchased Expiration/Validity Period Previous Validity Period
P 10 or lower 3 days 1 day
P11 to P50 15 days 5 days
P51 to P150 30 days 10 days
P101 to P150 45 days 30 days
P151 to P250 60 days 30 days
P251 to P300 75 days 30 days
Above P300 120 days 30 days

The new circular provides that the loads’ validity will start upon confirmation receipt of amount purchased. Newly-purchased credits will be added to unused loads, thereby extending the validity of the total loads as in if a subscriber with an unused load of PhP20.00 buys PhP10.00 worth of new credits, the new validity period is 15 days, the NTC explained. The new rule also provides that accessing balance inquiry services through text messaging should be free of charge.

Memorandum Circular No. 03-07-2009 did not totally answer the issues in the expiration of prepaid load credits. This new rule only extended the validity period of the load but did not scarp the expiration of it. Rep. Raymond Palatino said thet although the extension guidelines issued by the NTC the other day provided some measure of relief to consumers, the agency should have compelled telecommunication companies not to put a deadline on cell phone credits. [13] “Increasing the shelf life of prepaid loads is not enough to address the concerns of millions of subscribers, the rationale behind prepaid expiration dates is that telcos are dictating how consumers should use their load in order for them to rake in more profits. The loads should not have expiration dates in the first place.” Palatino said

Because of this new time limit imposition on loads, consumers would have to use their loads faster and then buy more of the same. The economics behind leaving load to wilter has morte to do in keeping the cashflow moving-as a telco, it is definitely a way to coerce subscribers to purchase more load, leaving them no quarter to save money. The consumers’ discretion to use their prepaid minutes when they want to should have been considered since they paid for this, in the first place.

Without scrapping the expiration of the prepaid load, we have at least a longer time to consume the load wherein we can however avoid it being expired. With this, Speaker Prospero Nograles Jr. urged telecommunication companies to take pro-consumer steps that would make their services more affordable to their clients.

Addressing to the new rule, Speaker Nograles said that “ This is a welcome news especially now that Filipino consumers are hard pressed to get more value for their hard earned money. That’s why Congress is continuously trying to find ways to make basic necessities—such as telecommunications—more affordable to consumers.”

Doing away with the expiration dates for prepaid cellular phone loads might have been the better option than extending the cards’s shelf life, but since this premise is yet to be upheld then we can nonetheless, save our load from expiration by consuming it within the new time limits.” Let us hope that our lawmakers can see that they are given the runaround. Protect the interest of the consumer.” [14]


Endnotes

[1] Rosemarie Francisco-Reuters 3/04/08

[2] Leaf Me Alone June 29, 2009

[3] Leaf Me Alone June 29, 2009

[4] Leaf Me Alone June 29, 2009

[5] Phil. Daily Inquirer /Cynthia Balane 6/27/09

[6] Phil. Daily Inquirer/ Cynthia Balane 6/27/09

[7] InfoChat by Jerry Liao

[8] Inquirer.net /Alexander Villafranca

[9] Inquirer.net /Amid Case of Missing Load/Alexander Villafranca

[10] Inquirer .net/Alexander Villafranca

[11] NTC Memorandum by Glitch 07/06/2009

[12] Celphone Load Expiry Period Made Longer by Edzee 07/05/09

[13] Inquirer .net/Aldexander Villafranca

[14] InfoChat by Jerry Liao

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