US FCC lifts stop-payment order vs Globe Telecom

The US Federal Communications Commission has lifted its stop-payment order against Globe Telecom, paving the way for US carriers to remit their long overdue payables to the Philippine company.

The FCC’s move followed the conclusion of commercial arrangements between Globe and American carriers AT&T, Sprint, and MCI for termination rates applicable to calls from the US to the Philippines.

"This paves the way for the normalization of relations between us and the US carriers," Globe carrier business head Gil Genio said.

Asked about the ongoing investigation by the Honolulu grand jury on charges of price-fixing and violation of US anti-trust laws by Philippine carriers, Genio said he hopes that the conclusion of commercial arrangements between the Philippines and US carriers signals to the US government that both sides have put closure to this matter in the best manner possible – through bilateral commercial negotiations – and would like to move on in their relationship.

Despite this, however, he said Globe is preparing for and has already engaged US lawyers to handle the ongoing investigations in the US for them.

The FCC earlier lifted the stop-payment order in the case of PLDT, Smart Communications, Bayan Telecommunications and Digital Telecommunications.

It will be recalled that in December 2002, Philippine carriers had sought to negotiate with their US counterparts for an increase in the termination rates that American carriers pay to Philippine telcos.

The US carriers rejected the increases and in February 2003 sued Philippine carriers, including Globe and PLDT, before the FCC claiming that Philippine carriers had engaged in whipsawing or the act of trying to pick off one competitive US carrier against the other to pressure them to agree to the increase in rates.

On March 10, 2003, the FCC international bureau issued an order prohibiting US carriers from paying Philippine telcos even for services rendered under the old disputed rates. On March 11, the Philippine National Telecommunications Commission (NTC) issued an order directing Philippine carriers not to accept traffic on direct circuits from US carriers who would not pay.

The US Department of Justice recently initiated an investigation of the conduct of Philippine carriers in the dispute and served subpoenas on some executives of different Philippine telcos attending the Pacific Telecommunications Conference in Honolulu. The subpoena required the executives to appear before a grand jury to testify in relation to the dispute in order to determine if US laws have been violated.

Local telco executives pointed out that through the encouragement of the NTC and the FCC, the dispute was ultimately resolved through bilateral negotiations between the carriers, so the DOJ’s action came as a complete surprise.