As expected

We weren’t expecting any less.

As expected, the US Federal Communications Commission (FCC) adopted the position taken by American giant carriers AT&T and WorldCom that the recent termination rate increase imposed by six Philippine carriers led by PLDT is unfair and unreasonable.

I would be surprised if the FCC took the position of the Philippine carriers. Sources say the FCC is comprised of ex-AT&T executives who are out to make sure that the commission protects AT&T’s interest.

FCC even admitted in its ruling that it had to adopt such position after efforts to convince the Philippine government to ensure that calls from the US to the Philippines are not disrupted. It mentioned that the US State Department itself lobbied with the Philippine government to no avail.

FCC’s ruling is another clear manifestation that the Philippines has not freed itself from the clutches of American rule. Name it, finance, agriculture, telecommunications, banking, securities regulation, and you’ll see the United States’ hand manipulating policies and programs to suit its very own interest.

The mere presence of the US-funded AGILE office at the National Telecommunications Commission is enough to raise eyebrows. The AGILE is said to be responsible for certain telecommunications policies of the NTC, such as the cost-based pricing scheme, that are really meant to protect US interests.

What really earned the ire of local telcos is the fact that while it is only AT&T and WorldCom which are opposing the increase and more than 100 telcos worldwide have already accepted it including 15 in the US (i.e. Sprint), the FCC’s order undoes the agreements reached with these 100 telcos and prohibits not only AT&T and WorldCom but also the 15 other US telcos from making any payments until AT&T and WorldCom’s services are fully restored by the Philippine carriers.

AT&T and WorldCom are desperate. They are bleeding heavily. Even the US baby bells are asking for rate increases to cover them in case WorldCom totally collapses. The two big bells will do everything within their means to make sure that they keep every penny and not share a single one to their Filipino counterparts.

The Philippine telecommunications industry should unite in opposing the FCC’s ruling. Local telcos should stand by the rate increase, which no less than the NTC believes is justified.

Minimal impact

ABN-Amro agrees that the FCC decision is hardly surprising. And it believes that with WorldCom already back in negotiations with the Philippine carriers, with discussions centering around a termination rate of between six and 12 cents a minute, it is reasonable to assume that it is only a matter of time before AT&T itself initiates a dialogue with its Philippine counterparts.

AT&T and WorldCom cannot afford to lose the Philippines as a destination. The FCC itself said it: The Philippines is the fourth largest destination for US calls, even bigger than India. AT&T and WorldCom have more to lose. If nobody accepts its calls, what will they do? Spend more by utilizing a third network that will terminate the calls in the Philippines?

ABN-Amro also believes that lower settlement rates will have a neutral to minimal impact on its earnings forecast for both PLDT and Globe. It assumes for 2003 a declining incoming settlement rate of seven cents and six minutes, respectively.

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