The STAR reported on Friday that AT&T and MCI WorldCom had filed a petition last Feb. 7 with the US Federal Communications Commission (FCC) accusing Philippine telcos of "whipsawing‚" when the latter raised their share of revenues from calls from the US to the Philippines from nine cents a minute to 12 cents for calls terminating to landlines and from 12 cents to 16 cents for those terminating to mobile phones.
Sources revealed that local telcos were given by the US FCC up to Feb. 20 to respond to the charges made by AT&T and WorldCom. Whipsawing, which happens when foreign carriers like those in the Philippines play US carriers against each other to get better terms, is a violation of FCC regulations.
Because of AT&T and Worldcom’s refusal to agree to the new rates, local telcos blocked US calls to the Philippines coming from the two companies. AT&T and WorldCom account for more than 50 percent of US call traffic terminating in the Philippines.
In a decision issued on Feb. 7, the NTC said "Philippine telecommunication carriers with existing and effective agreements with foreign telecommunications carriers relative to termination rates shall comply with, specifically in maintaining the flow of traffic in and between circuits and facilities covered by such agreements."
The NTC further ordered that, "Philippine telecommunications carriers without existing and effective agreements relative to termination rates are encouraged to negotiate and conclude agreements. Pending any conclusion, the parties may agree on provisional/interim arrangements for continuity of service."
An industry official said the NTC in effect ordered the local telcos to open their circuits to those US carriers with existing agreements. "In the case of AT&T and WorldCom, this does not apply since our agreements with them already lapsed last Jan. 31," the source said.
The STAR learned that NTC initially wanted to order the local telcos to open their circuits and maintain the old rates but decided against it. Instead, it left the matter for the telcos to decide.
In their separate petitions to the US FCC, AT&T and WorldCom asked that, as an interim relief, US carriers be prohibited from making payments to the Philippine carriers until their international service is fully restored.
Once the service is fully restored, AT&T and WorldCom asked FCC to direct US carriers to pay no more than the lowest international settlement rate previously agreed to with the local telcos retroactive to Feb. 1, 2003
Named respondents in AT&T’s petition before the FCC are Philippine Long Distance Telephone Co. (PLDT), Globe Telecom, Digital Telecommunications Phils. Inc. (Digitel), Bayan Telecommunications (Bayantel), Smart Communications, and PLDT subsidiary Subic Telecom while WorldCom’s petition included only PLDT, Smart, and SubicTel.
Local telcos insist that the new rates have already been accepted effective Feb. 1 by a majority of the largest telecommunications carriers worldwide such as those in Canada, Singapore, Hong Kong, United Kingdom, Japan, Australia, Germany, Malaysia, Indonesia, Portugal, among others.
In the US alone, more than 14 telcos have started to implement the new rates, including Sprint, one of the biggest telecommunications providers in the US.
Meanwhile, sources from PLDT said that they are now in the process of preparing submissions, including comments/opposition to the petitions and the requested interim relief through the company’s US counsel.
The country’s largest telco maintained that termination rates are governed by bilateral commercial agreements between the parties.
"AT&T and WorldCom’s termination rate agreements with PLDT expired in December 2002. Prior to this, PLDT had given notice to them of its intention to increase termination rates and since then had been in discussions and negotiations with them in respect of such termination rates," PLDT officials explained.
They added that on Dec.13, 2002, PLDT sent notice that it will implement that rate increase Feb. 1, 2003. "The termination rate agreements of AT&T and WorldCom lapsed in Dec. 2002, without them agreeing with PLDT any provisional arrangement or permanent agreement on the new termination rate for continuity of service," PLDT said.
PLDT explained that its termination rate increase to 12 cents a minute from eights cents for those to landline networks is below the FCC’s benchmark rate of 19 cents per minute for low middle income economies, such as the Philippines. It is also substantially below the International Telecommunications Union (ITU)-suggested target settlement rate of 23.8 cents for countries like the Philippines with teledensity between one to five telephones per 100 population. "As of today, PLDT has already concluded agreements for new termination rates with 92 carriers worldwide. With respect to AT&T and WorldCom, PLDT remains open to negotiate an agreement on the new rate," it said.