AT&T breaks silence, says RP telcos blocking calls from US

US telecommunications giant AT&T yesterday finally broke its silence and accused Philippine carriers of blocking calls from the US to the Philippines and raising their call rates to the detriment of local customers.

On the other hand, local carriers are saying that AT&T and Worldcom are muddling the issue which is a simple sharing of call revenues. "AT&T and Worldcom can choose to forego some of their profits and allow us to increase our share, without increasing the call rates to the customers," they said.

Last Feb. 7, AT&T and MCI Worldcom asked the US Federal Communications Commission (FCC) to stop local carriers from increasing call settlement rates from the US to the Philippines from between eight and 9.5 cents a minute to 12 cents.

Top AT&T officials held one-on-one talks with select members of Philippine media yesterday, hoping to clarify issues surrounding the case they filed against Philippine carriers.

Philippine carriers, led by the Philippine Long Distance Telephone Co. (PLDT), Globe Telecom, Bayan Telecommunications (BayanTel), Digital Telecommunications Phils. Inc. (Digitel), and Smart Communications, however, have expressed no intention of rolling back their rates.

According to AT&T Asia-Pacific international ventures Chip Barton, the higher fees would lead to higher costs for callers and stifle growth in calls.

AT&T asked Philippine fixed line and mobile carriers who are refusing to allow the termination of inbound calls from AT&T and several other foreign telecom carriers to reestablish communications connectivity into the Philippines and to return to the negotiating table.

The US company said it is unable to effectively terminate calls from the US directly into the Philippines because local carriers blocked AT&T calls when the latter refused to agree to demands for an increase of up to 50 percent in termination fees starting Feb. 1, 2003.

AT&T described the actions of Philippine carriers as contrary to international telecom business practice, counterproductive to the goal of serving consumers and businesses who need to communicate with the Philippines, and inconsistent with the Feb. 7 order issued by the Philippines’ National Telecommunications Commission (NTC) which required that services with international operators be restored while negotiations were being pursued.

On the other hand, local carriers said the NTC only asked them to open their circuits, which they continue to do, but there was no order for them not to increase their rates. "The NTC recognizes the fact that settlement rates should be the subject of bilateral negotiations," according to one telco executive.

Barton also stressed that international carrier termination charges to the Philippines are already among the highest in many Asian and international markets.

He said the demand for the rate increase is inconsistent with the declining cost of international telecommunications facilities and contrary to worldwide trends of decreasing termination rates.

AT&T said the action taken by Philippine carriers has raised serious concerns among many US and overseas companies that have operations in the Philippines or who conduct business with the country.

"We are very worried that this action by the domestic operators will damage the reputation of the Philippines as a place to do business and has the potential to undermine the confidence of foreign corporations," Barton explained.

He also noted: "The Philippine government is trying hard to attract foreign investment to boost the economy by positioning the Philippines as a communications hub for call centers, software development, and outsourcing, among others things. Such a dramatic potential increase in the cost of doing business with the Philippines undermines these initiatives."

Barton, during the interview, said that in addition to the disruption, inconvenience and financial impact on companies doing business with the Philippines, the fee hike could result in a major impact on Filipino families who have friends and loved ones working overseas to support their families back at home.

"There are about eight million Filipinos working abroad with high concentrations in US, Hong Kong, Singapore, and Taiwan. Given the traditional strong family ties, they rely heavily on reasonably priced phone calls to keep in touch with their families. If they are forced to spend more on phone calls, it will directly affect their livelihood. So it is Filipino families that will ultimately be hardest hit by this action," he said.

According to AT&T, in 2002, overseas Filipino workers remitted about $8 billion to their families in the Philippines, accounting for 30 percent of the gross domestic product. AT&T alone carries more than 750 million minutes of calls to fixed and mobile phones in the Philippines.

"We urge Filipino consumers and interest groups to voice their concern about the impact this move will have on the livelihood of Filipino families," Barton said.

PLDT executives, on the other hand, pointed out that if AT&T is really concerned about the Filipino, it can do two things: agree to the increase, and reduce the high rates they are charging Filipinos overseas of over 21 cents a minute.

They also emphasized that contrary to AT&T’s claims, Philippine settlement rates are lower compared to other countries in the region and even lower than the US FCC and International Telecommunications Union (ITU)-prescribed rates.

Meanwhile, Barton said Philippine-bound calls from the US have risen almost five times from 350 million minutes in 1996, primarily because of lower fees.

"We are hoping that this can be resolved through negotiations," Barton said. "It escapes me how this can be good for the Philippines when you have eight million Filipinos working overseas."

Barton said there is no problem with fees when the traffic between two countries is balanced. "The negotiations become more interesting when there is an imbalance, and the Philippines is the most dramatic in terms of imbalance," he stressed. There are 40 times more calls to the Philippines from the US than the other way around.