US gov’t bullying small RP telcos

PLDT, Smart, Globe, Digitel or Bayantel may be big by RP standards. But they’re just as small as dozens of state-wide telephone companies in the US, with a few million dollars capital each. Only two US telcos can be called giants: AT&T and WorldCom. AT&T may no longer be the "Mother Bell" of the ’60s, having been forced by antitrust suits to let go of noncore operating units. Still, it’s a multibillion-dollar colossus whose shadow covers wide swaths of the East and West Coasts. Even bigger, WorldCom is the cheat who cotton-candied its accounting to fleece stock market players. Its top managers may be facing charges, but US trade officials are striving to keep it alive and kicking at rivals.

In a globalized era when size does matter, governments are expected to cradle the small guys to growth. But AT&T and WorldCom are known to lavishly fete US officials in anticipation of huge favors. No wonder the US-Federal Communications Commission cast a decision bullying the small RP telcos and babying the two giants. The FCC in effect emboldened AT&T andWorldCom to not pay normal connection fees to RP. The RP telcos will thus lose $60 million-$80 million (P3 billion-P4 billion) from the decision this year alone.

The issue is about termination rates, the cost to complete calls or text messages between the US and RP which telcos from both sides bear. When a party calls the US, the RP telco pays its counterpart, and vise versa. It’s a revenue-sharing of sorts, as the counterparts reconcile their computerized records each month. The fee should not affect the actual bill to the party, set at roughly 40¢ a minute and P10 per text from whichever side. That is, if a telco knows what it’s doing and stays within cost-efficiency levels.

Trouble brewed when the giants started charging higher termination rates than RP and other US carriers were. The FCC had raised to 19¢ the ceiling for such fee in 2002 when the International Telecommunications Union upped its worldwide limit to 23¢. Forthwith AT&T and WorldCom began billing RP telcos 12¢ to complete a landline call to the US, and 16¢ if by mobile phone.

RP telcos didn’t mind at first, since they were being serviced by the many smaller US carriers who stuck to the mutually agreed rate of 8¢ for land and 12¢ for mobile calls. But to rub salt on cut, AT&T and WorldCom also fell late in paying their lower fees to RP telcos. Everybody was feeling the pinch of 9/11, but the giants felt themselves privileged. AT&T owed Globe $8.5 million in the last quarter of 2002, for which it paid $3 million early this month. It has since racked up another $5 million in termination debts from January-February 2003.

RP telcos individually began to negotiate higher rates with the small US counterparts. All agreed to equalize the fee at AT&T’s and WorldCom’s 12¢ for landlines and 16¢ for mobiles. It was only fair. But not for the two giants who couldn’t keep operating costs down because of their executives’ high-flying ways. Instead of negotiating with individual RP telcos as is the practice of telecoms firms, AT&T and WorldCom ran to the FCC, to collect perhaps on the all wining and dining and jet-setting they had bankrolled.

In February two RP telcos decided on their own to block calls from AT&T and WorldCom. The National Telecommunications Commission, FCC’s counterpart in RP, admonished them to keep the lines open and pursue their talks. More so since AT&T and WorldCom control 55 percent of the RP-US traffic. The RP telcos felt bad. But the NTC reiterated everyone’s duty under RA 7925: "to develop and maintain a viable, efficient, reliable and universal telecommunications infrastructure using the best available and affordable technologies as a vital tool to nation-building." So, back to the negotiation table they went.

To everyone’s surprise came the order of Donald Abelson, chief of FCC’s international bureau. AT&T and WorldCom, he said, were to ignore the new rates that RP telcos wished. Describing as "whipsawing" the talks between RP and US telcos to the isolation of the sobbing giants, he forbade all US carriers from paying their RP compeers as well. For good measure, Abelson decreed "to remove the Philippines from the FCC list of US-international routes." Meaning, no more calls and texts, and no negotiations either, contrary to what the NTC is imposing on RP telcos.

The Abelson order is so one-sided that American lawyers are set to take him to court. As Globe wireline head Gil Genio says, "Nothing in law requires us to render service to a company that will not pay it."

One may wonder if Abelson is the reason why Asian Intelligence Report rated the US to have grown corrupt since last year’s corporate scandals. But his intention is clear when he said that RP telcos are in effect forcing AT&T and WorldCom to increase charges to callers and texters. He wants Filipinos in America to raise a howl not against the bungling giants but the small guys in RP who only desire parity. If that isn’t whipsawing, what is?

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