AT&T won’t budge on call rate issue

First, US giant carrier AT&T rejected the increased rates of local telecommunications companies. Now, it wants rates that are even lower than the old, expired rates.

AT&T said it will never agree to the higher rates imposed by Philippine telecommunications carriers on calls from the US to the Philippines, and instead wants the Philippines to even reduce the old termination rates, The STAR learned yesterday.

Despite fellow US carrier MCI/WorldCom’s communications that it is already willing to consider the higher rates, AT&T has given Philippine carriers an ultimatum: Reduce the rates or face sanctions from the US government.

In a letter to local telecommunications giant Philippine Long Distance Telephone Co., AT&T regional director for Asia Pacific route management Mark Miller said that any negotiation for an interim and commercial agreement based on the old rates, much more on the increased rates, will be pointless because AT&T will never agree. A similar letter was sent to other Philippine telcos.

"This behavior of ATT, which is best described as egregious, is contrary to every norm of civilized conduct and flies in the face of good faith, commercial negotiations in competitive markets. It goes against every grain of the public policies enshrined in the 1995 Philippine Public Telecommunications Act," PLDT board member and lawyer Ray Espinosa told The STAR.

AT&T and WorldCom filed separate petitions with the US Federal Communications Commission (FCC) last Feb. 7 accusing Philippine carriers of "whipsawing," or making US service providers compete against each other unfairly to get better terms during negotiations.

AT&T named in its petition PLDT, Smart Communications, Globe Telecom, Digital Telecommunications Phils. Inc. (Digitel), Bayan Telecommunications (BayanTel), and PLDT subsidiary Subic Telecom. WorldCom, on the one hand mentioned only PLDT, Smart, and Subic Tel.

Effective Feb. 1, local telcos increased their termination rates (or the amount they charge a foreign carrier for terminating a call in the Philippines) from eight or nine cents to 12 cents a minute, for calls to Philippine landlines and from 12 cents to 16 cents for calls to mobile phones.

Thursday, The STAR reported that WorldCom and PLDT have already entered into an interim agreement covering the period Feb. 28 to March 31, 2003 on new rates for US calls entering PLDT’s network.

The interim agreement was entered into by the parties to provide continuity of flow of traffic while they are in the process of negotiating for new termination rates. The interim rates are retroactive to Feb. 1, 2003.

A similar interim agreement was entered into between WorldCom and PLDT subsidiary, Smart Communications covering the period from March 1 to 31, 2003.

For its part, AT&T’s Mark Miller has written PLDT saying it will enter into negotiations with PLDT only to talk about lower termination rates, as the US carrier repeated that it will not agree to any rate than what it proposes, which is even lower than the old expired rates.

AT&T’s letter was in reply to a PLDT letter informing AT&T that consistent with NTC directive, PLDT is prepared to enter into interim arrangement on mutually agreed terms.

Effecfively, AT&T is forcing PLDT to accept lower rates or face FCC sanction. "That’s pure and simple economic blackmail. The Philippine government should denounce this kind of egregious behavior by AT&T," Espinosa told The STAR.

He added that AT&T’s letter is one-sided, take it or leave it because it made it clear that it is not willing to talk of increased rates nor old rates.

"In fact, Miller said if PLDT wanted to talk about those, it would be a waste of time because AT&T will never agree. That is clear bad faith. So what AT&T is doing to Philippine carriers is economic blackmail and sabotage because it is using the threat of FCC sanction to cow RP carriers into submission. Since when can a private party be assisted by a government agency to extract terms that it wants. Is that the rule of law?," Espinosa added.

The PLDT official noted that given the letter, it is very clear that AT&T has not and will not engage in any true commercial negotiation with PLDT, but merely seeks to use the power/authority of the US FCC to bludgeon PLDT into accepting AT&T’s unreasonable terms.

The new Philippine rates have reportedly been accepted by a majority of the largest telecommunications carriers worldwide such as those in Canada (Teleglobe and Telesus), Singapore, Hong Kong, United Kingdom, Japan, Australia, Germany, Malaysia, Indonesia, Portugal, among others.

In the US alone, more than 14 telcos have started to implement the new rates, including Sprint, one of the biggest telecommunications providers in the US.

The country’s National Telecommunications Commission (NTC), in a recent letter to the US FCC, defended local telcos and said that the new rates are within the benchmarks established by the FCC itself as well as the International Telecommunications Union (ITU).