Why isn't SMS cheap in the Philippines?

If you're Filipino, it's quite unlikely that you haven't heard of what "txt" (sms) is. You're most like to have at least one "celfon" - a mobile phone, in your pocket or dangling around your neck. If you live in large urban cities, you may even have more than one phone or use more than SIM card (the arrival of dual-sim phone has eased many a person's burden of carrying an extra phone or two)

There are only three mobile phone networks in the Philippines (Globe, Smart and Sun). Globe operates a  prepaid value-brand that uses their own network, Touch Mobile (aka TM.) while Smart operates two other brands, one of which competes directly against Globe in the same market segement Talk and Text (aka TnT). Smart also operates Red Mobile (formerly uMobile, an "exclusive" ad-supported network ) which was being positioned for 3G and other advanced network services only but had to readjust their strategies and are now usable for 2G phones, as well.

These virtual networks are operated along with the prepaid services of their own main brands.

Sun's marketing strategy sits somewhere between the shadow of these two giants. It targets the market segment that especially appreciates good value for money, and this group swathes across traditional market segments.

Its market offers are disruptive. Not surprising from a Gokongwei-owned company; it's Cebu Pacific airline took the same approach and look what it did to the Philippine airline industry - affordable air travel for every "juan".

When it first offered unlimited call and text in the Philippines, the strangle-hold of the oligoply of Smart and Globe was shaken. True, those were trying times for Sun's network infrastructure and a number of subscribers found their service unreliable or unacceptable but a large number of patient subscribers were willing to accept these faults and remained with them. To be honest, I got hit by the Sun bug then, but a few months later, (and I'm not known to be a patient man) I left without a hint of regret.

Last year, noticing how the monthly phone bills are starting to become more expensive (I have an old plan and I only get free messages within the network), I've decided to look back at Sun again. They still kept the same offers, introduced new features and their network has achieved a balance of some sort. It no longers takes you several re-tries to make a call, and sending messages rarely fails anymore, except in network fringes.

One of their recent offers I like very much is the "Metro Manila-wide" 3G service. They don't really cover the whole Metropolis but the service seems to be available in areas where it really matters (or where the market really is.) It's just a shame that I'm not staying often in Manila these days to take advantage of cheap mobile 3G Internet and they don't appear to be in any rush to launch it in Zamboanga anytime soon - and I'm not going to hold my breath for them. (WiMax was launched about a month or two ago in several areas in dowtown Zamboanga, but too far from the farm.)

In fact, I've noticed that a significant number of contacts are no longer using Sun (because of Globe's DUO - this is an innovative Globe service that I wish I had in Zamboanga) and this is why I decided to remove the unlimited services from my subscription and make it all consumable instead. In the last few months, I've noticed that I'm paying more than what I'm using for these unlimited services, and that I'm better of paying ala carte.

The NTC also made some new rulings that are of great benefit to prepaid users but not much to postpaid users. Why is that? The only "new" benefit we got from NTC is their mandate to these mobile telcos to shorten the pulse rate, and charge calls by the second. This is not a new thing for Globe subscribers, we've had this for 2-3 years now and they're great.  I don't really understand why the NTC took such a long time to require such change.

And about a month after the NTC made this rules, guess what? The NTC commissioner resigns from his post. Hmm ... so with a new NTC commissioner, are the telcos going to challenge these guidelines and defeat it? And then the NTC will claim that they've followed procedures but will have to revert to the old system? It's possible but how probable is it?

I don't really understand why we're still paying an arm and a leg for a single, 160-character SMS when the networks are charging us PhP 0.15 per kilobyte (Globe's rate). A character is one byte, and a kilobyte is simply 1,024 characters. (let's not get into the murky details as to why kilo is equal to 1,024 when originally meant to be 1,000. For simplification, I've used 1 character is equal to 1 byte (in reality special characters, yes, those cute accented letters you use as emoticons actually uses more than a byte).

Given the above numbers, we shouldn't be paying more than 5 centavos for every 160-character message:
    Cost per byte, per kB charging:     0.15 PHP ÷ 1,024 bytes = 0.000146484 PhP
    Cost per byte, current SMS rates:     1.0 PHP ÷ 160 bytes = 0.00625 PhP

    Effective cost of 160-char SMS, per kB: 0.000146484 PhP x 160 bytes = 0.0234375 PhP
    Effective cost of 160-char SMS, current: 1 PhP

So why is SMS data 42 times more expensive than Internet data, when the PhP 0.15 per kB they're charging us for mobile Internet also already includes the cost of global Internet access itself, and the use of their own network while SMS data only uses the operators own network, or another local telco?

For many of todays young consumers (arghh. this makes me sound old), they probably haven't even seen what a 5-centavo coin looks like, but guess what? The cost of sending 2 SMS messages is actually less than five centavos.
   
If the telcos claim that they can't lower the cost of SMS, then how can they justify the fact that they're charging us only PhP 0.15 /kB but when we use the same rates they charge us for SMS they should've been charging us PHP 6.40 per kB for mobile data access charges.

Mukha na bang tubong lugao? But wait, there's more ...

Hold your horses, it actually gets cheaper.  If you're a postpaid Sun cellular subscriber, and you're not using any unlimited service, their default rate for intra-network SMS is only PhP 0.50 per 160-character message. So now the rates effectively becomes 4 SMS messages for five centavos.

With Sun, Multimedia Messages (aka MMS, Picture Messaging) only costs PhP 2.00 and you can send 300 kB worth of data (text, images, sounds.)
    Cost per byte, current MMS rates:     2.0 PhP ÷ 307,200 bytes = 0.00000651 PhP / byte

    Effective cost of 160-char SMS, per MMS rates: 0.000006667 x 160 = 0.001041667 PhP

Now, the cost is less than 1 centavo per SMS message. Actually, you could send 9 SMS messages for just 1 centavo!

These telcos cannot claim that they're going to lose money if they reduce the cost of SMS. They, themselves set the price for their data services (their claim is that these are Value Added Services (VAS), thus outside the jurisdiction of NTC. Is it really?) and they will never set a price for something from which they cannot recover its cost, plus some extra for profit.

So, do you think paying 1.00 per SMS is fair when you could actually be sending 959 messages for the same amount? No wonder these telcos freely offer their unlimited SMS services where the cost each message hover anywhere from 0.25 - 0.50 per message.

Anyhoo, I found Secret Sun Trick - send email to Sun Cellular subscribers phones for free.

(Nota bene:
Ten or more years ago, SMS was really costly and the cost of PhP 1.00 was probably justifiable. These days, all our telcos are operating 2G or 3G networks where the cost of tranmitting data has substantially gone down. It couldn't be as expensive as it was in first generation networks.)

What else do you do for sleepy, Sunday afternoon?