NTC to telcos: Bar US calls from AT&T, MCI

The Philippine government, through the National Telecommunications Commission (NTC), has finally given local telecommunications companies the go-signal to disallow calls coming in from the United States through the networks of AT&T and MCI/Worldcom.

Around half of all calls coming from the US originate from AT&T and MCI/Worldcom.

In a letter to the US Federal Communications Commission (FCC), NTC Commissioner Armi Jane Borje and deputy commissioner Kathleen Heceta said that without any provisional or interim arrangement or agreement between the local telcos and the two US companies, there would be termination of service between the parties who are thereby encouraged to seek other routes or options to terminate traffic to the Philippines.

This means that Philippine telecommunications companies can now legally refuse to accept calls from the US originating from AT&T and Worldcom.

All the local telcos involved in the dispute, namely the Philippine Long Distance Telephone Co. (PLDT), Globe Telecom, Smart Communications, Digital Telecommunications Phils. Inc. (Digitel) and Bayan Telecommunications (BayanTel) do not have provisional or interim arrangements with AT&T and Worldcom.

"With the NTC’s order, we are relieved because this means that we do not have to allow calls from AT&T and Worldcom to come in and risk not being paid when FCC grants their petition," a representative from one of the Philippine telcos told The STAR.

Before NTC’s directive, the local telcos were still allowing calls from AT&T and Worldcom to come in.

For its part, PLDT, through spokesperson Menardo Jimenez Jr., said: "We stand by NTC’s position that we can terminate service with foreign carriers in the absence of any provisional or interim agreement. We hope that the US FCC will likewise honor the position of the NTC and act favorably on our petition."

But the local telecommunications industry assured that there will be no disruption of services once they start terminating the service with the two US telcos since there are at least 15 other US companies that have agreed to the new Philippine termination rates.

Just last Feb. 7, AT&T and Worldcom filed separate petitions before the FCC alleging "whipsawing" and disruption of service on the US-Philippine route after local telcos unilaterally increased their termination rates from 8.5 to nine cents a minute to 12 cents a minute for calls terminating in Philippine fixed line network and from 12 cents to 16 cents for those terminating in mobile networks.

Termination rates refer to the amount which a carrier pays another for terminating a call into that other carrier’s network. Whipsawing, an act prohibited by FCC, refers to an act in which a foreign carrier pits one US telco against the other to get better terms.

AT&T filed the complaint against PLDT, Globe, Smart, Digitel, Bayantel, and PLDT subsidiary Subic Telecom while Worldcom named only PLDT as respondent.

In the case of most local telcos like PLDT, Globe, Smart, and Bayantel, their termination rate agreements with AT&T and Worldcom expired either Dec. 31, 2001 or Jan. 31, 2002. The increased rates took effect Feb. 1 even after AT&T and Worldcom said they are not agreeing to the new rates.

In the case of Digital Telecommunications (Digitel), the company recently informed AT&T that it is terminating its agreement with them. Digitel’s counsel William Pamintuan said the agreement between Digitel and AT&T does not have an expiry date and is continuing in nature, which is in effect until terminated.

AT&T and Worldcom, in their petitions, asked the FCC to order US carriers not to pay the Philippine carriers until the termination rate issue is resolved.

For its part, NTC said in its letter that "if so ordered by the FCC, this will definitely create dire consequences to the Philippine economy and is definitely detrimental for the Philippines, a developing economy with an infant telecommunications infrastructure that badly needs foreign exchange revenues."

"We strongly urge FCC to give due consideration to the official position taken by the Philippine regulatory body, consistent with international comity and in the interest of all economies," the NTC added.

The local commission maintained that in keeping with international practice, commercial arrangements and national laws that terminate rates are private commercial arrangements entered into by carriers of their own free will pursuant to the constitutional guarantee of freedom to contract.

It said the new rates imposed by the local carriers are still below the 19 cents a minute FCC benchmark and the International Telecommunications Union (ITU)-suggested rate of 23.8 cents applicable to countries such as the Philippines and are, therefore "fair and reasonable."

The NTC also emphasized that the Philippine termination rates have been accepted by most foreign operating administrations worldwide.