There was a time when Filipinos get to send text/sms messages for free — but that was almost 10 years ago. The decade has past and SMS now costs Php1.00 a pop, a fairly cheap rate compared to telcos in other countries (in the U.S., Verizon and Sprint Nextel charges $0.15 an SMS or Php6.50)*.
This year, a lot of noise have been going around with lobbying to free text messaging. Yes, we all love free and bottomless anything and that goes with sending SMS too. But with over 400 Million SMS sent in the Philippines everyday, I don’t think the telcos would easily give up that big slice of their annual revenues.
For PLDT/Smart alone, cellular data comprises 52% (Php11.7 Billion) of their Php22.5 Billion total wireless services revenue for 1st quarter of 2008. Cellular Voice services only took 39.55% or Php8.9 billion. This clearly indicates that SMS is making the majority of the telco’s annual revenues in the mobile front.
But consumer groups and some people in the government sector want these services to be free. The main reason — because the telcos are already making a huge amount of money from it. I am pro-consumer but if we strike down all businesses just because they’re making a huge profit, then nobody’s going to invest in the Philippines anymore.
I myself have been in the IT business for over 5 years (running a web hosting) and I know how it feels to operate in an environment where almost everybody wants bottomless or unlimited services.
400 million SMS each day, even at Php1.0 rate. How much do you think would that number grow once you introduce free/unlimited service? The Philippines is already on top of the list with an average of 15 SMS deliveries per day. That 400 million could easily jump to 4 billion a day. And though it’s a good idea to get texting for free, I can only imagine how agonizing the SMS delays and network problems this will create.
There must be some middle ground here — it could be lower SMS rates or bundled bulk charges.
Note: *SMS rates for non-committed/prepaid subscribers.