RP telcos gird for tough legal fight over call rates

Philippine telecommunications carriers, through their local and foreign-based lawyers, are preparing for a tough legal battle ahead as they prepare to question the legality of the decision rendered by the international bureau of the US Federal Communications Commission (FCC) that the recent call termination rate increase of local telcos was unjust and baseless.

Leading carriers Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom said they are considering appealing to the US FCC en banc the decision of its international bureau issued on March 10 ordering all facilities-based US carriers to stop payment to their Philippine counterparts for charges on calls from the US to the Philippines made starting last Feb. 1.

They said the international bureau issued the ruling in excess of its authority or jurisdiction.

For its part, Smart Communications said it will not appeal the bureau’s decision since being illegal, all Smart has to do is disregard it and just proceed with barring calls from AT&T. "The bureau is merely mandated to promote international relations between telcos. It does not possess judicial powers at all. We are not going to abide by the ‘Abelson’ order. We have no choice then but to block calls of AT&T," Smart head for legal and carrier relations Rogelio Quevedo said.

Quevedo was referring to Donald Abelson, head of the US FCC international bureau, who last March 10 upheld American carriers’ AT&T and MCI-WorldCom’s contention that Philippine carriers violated FCC rules when they unilaterally increased their termination rates for the US-Philippines route.

The FCC international bureau said that Philippine carriers, in particular PLDT, Globe, Smart Communications, Digital Telecommunications Phils. Inc. (Digitel), Bayan Telecommunications (BayanTel), and PLDT subsidiary Subic Telecom, committed whipsawing when they used their market power to force US carriers into agreeing to their increased rates.

According to the bureau, this was made evident when these Philippine carriers blocked calls from AT&T and WorldCom after the two US carriers refused to agree to the new rates which were made effective starting last Feb. 1. On the one hand, at least 15 other US carriers and around 90 others in several countries have accepted the new rates.

PLDT lawyers told The STAR that since the order was issued by the international bureau, they can move for reconsideration by the FCC itself. If the FCC denies the motion for reconsideration, then PLDT can appeal the order to the US Federal Court of Appeals.

It was learned that the Philippine carriers have 30 days from receipt of the FCC international bureau decision to file the motion for reconsideration. "But we want to file it earlier than that. Our US-based lawyers are already preparing for it," a PLDT official said.

In the case of Globe, senior vice-president and counsel Rodolfo Salalima said that the bureau had no authority to issue the order, without giving Filipino carriers the benefit of a hearing.

"The order of Abelson not only violated due process but also was made in excess of his jurisdiction. Only the FCC itself can decide on the merits of the case," he told the STAR. The bureau, he emphasized, has no quasi-judicial powers.

Salalima told The STAR that there are only two instances when the commission can delegate to its bureau the power to decide: On non-hearing matters or on interlocutory (or interim) matters. "But this matter is neither non-hearing nor interlocutory. Abelson made it clear in his decision that he was not only granting the interim relief sought by AT&T and WorldCom. He was making a final decision based on the merits of the case. But the case cannot be decided on the merits without affording the parties the benefit of a hearing. Otherwise, due process is not observed," he said.

He said that Philippine carriers have two options: To appeal to the FCC the decision of its bureau, or to go to the US courts. Salalima explained that they are now studying whether the two options can be availed of simultaneously, or whether the principle of exhaustion of administrative remedies applies in the US in which case it is only after an adverse decision by the FCC en banc that the decision can be appealed to the courts.

Meanwhile, Smart Communications, Inc. branded as ‘illegal’ the latest order of the FCC international bureau. "The position of Smart is that the International Bureau order was illegal and without jurisdiction. Its head, Donald Abelson, acted in excess of his authority. It is the FCC acting as a body that has the authority to issue such an order," according to Rogelio V Quevedo, Smart’s head for legal and carrier relations.

He added that there is no reason for the bureau, which is a part of the federal commission, to intervene as the termination rates are governed by bilateral commercial agreements between carriers.

On the bureau’s findings that local carrier committed whipsawing, Quevedo reiterated that there was no whipsawing involved and that the main issue is not the increase in termination rates, but rather the disparity in revenue sharing between US and Philippine carriers. He said the current revenue sharing arrangement is lopsidedly in favor of US carriers.

There are strong indications that pending appeal, Philippine carriers have no intention whatsoever of rolling back their rates. Effective Feb. 1, the termination rates were increased from between eight and nine cents a minute for calls to Philippine landlines to 12 cents and from 12 cents for calls to Philippine mobile phones to 16 cents.

PLDT lawyers explained that the US order was directed to all facilities-based US carriers, all of who were ordered to stop making termination rate payments to Philippine carriers effective Feb. 1. "Thus, it is the US carriers who will be sanctioned if they do not comply with the FCC order," they told The STAR.

They added that Philippine carriers are not obligated to accept direct traffic from US carriers if the latter will not pay the former because of the US FCC bureau’s order.

The lawyers emphasized that the order covers only direct circuit voice traffic between US and local carriers.

"US traffic destined for Philippine carriers will have to find other routes to the Philippines if the inbound direct circuit traffic is suspended by RP carriers to avoid a pile of receivables," they said.