PLDT confronts AT&T in HK

Telecommunications giant Philippine Long Distance Telephone Co. (PLDT) wants US carrier AT&T to have the order of the US Federal Communications Commission international bureau reversed PLDT, and lifted, with no finding whatsoever of unfair practices on the part of Philippine carriers, for any final agreement on new rates between the two telcos to materialize, The STAR learned yesterday

PLDT has also laid down at least four parameters, including immediate payment of outstanding obligations, which US carrier AT&T will have to meet before any discussions on the possibility of a "ceasefire‚" can materialize. PLDT through the ACCRA law firm has sent a demand letter to AT&T asking for immediate payment of $4 million in charges for services rendered by the local telco before Feb. 1, a large portion of which covers 2002 and Jan. 2003.

A team from PLDT is meeting with top AT&T officials in Hong Kong for two days beginning yesterday after AT&T regional head Mark Miller requested for a meeting with Philippine carriers in the light of a decision handed down by the US FCC bureau ordering all US carriers to stop payments to Filipino telcos until services to AT&T and WorldCom are restored and finding said telcos guilty of "whipsawing‚" when they raised their charges to US carriers.

"If we reach a final agreement and commercially agree on a new set of rates, that FCC bureau order must be reversed and lifted, with no finding whatsoever of whipsawing on our part because no less than the National Telecommunications Commission has ruled that there is no anti-competitive behavior on our part," PLDT board member Ray Espinosa told The STAR.

The PLDT top official also said the ongoing talks with AT&T are without prejudice to any legal action the Philippine telco might take to enforce its claims regarding its receivables from AT&T as well as any appeal it may undertake on the FCC bureau order.

Espinosa said that in their discussions with AT&T, four parameters were emphasized. Firstly, any discussion with AT&T will have to be in the context of the Philippine National Telecommunications Commission (NTC) directive and not the one issued by US FCC international bureau chief Donald Abelson. "In the first place, it is NTC which has jurisdiction over us and not FCC," the official said.

The NTC, following the FCC order, gave Philippine carriers the go-signal to reject calls from the US if the US carriers refuse to pay in compliance with the FCC order. The Philippine regulatory agency likewise directed the local telcos to exhaust means to collect what is due them.

The second parameter is that all receivables for services already rendered by PLDT to AT&T must be paid. "PLDT will faithfully comply with the latest order of the NTC. PLDT will vigorously enforce its rights to collect telecom charges due us for all past services rendered to AT&T under then existing and valid termination rate agreements. AT&T cannot hide behind the veil of the Abelson order which interdicts even payments for past services duly rendered by PLDT to AT&T and other US carriers," Espinosa said.

He added that AT&T acted in bad faith when it solicited the Abelson order so as to avoid payments arising under valid contractual arrangements and neither AT&T nor Abelson can disregard and break a valid contract.

The third parameter is that if AT&T wants to continue discussions with the PLDT, the US carrier will have to enter into an interim arrangement with PLDT on mutually acceptable terms. Earlier, AT&T said that it will agree only to termination charges that are lower than the rates that expired last Jan. 31, 2003.

From around eight to nine cents a minute, the termination charge or the charge which a Philippine telco collects from a US carrier for calls to Philippine landlines was increased to 12 cents a minute effective last Feb. 1. For calls from the US to Philippine mobile networks, the rates were increased from 12 cents to 16 cents. AT&T and WorldCom opposed the increase and filed separate petitions with the US FCC.

The fourth parameter basically states that PLDT is against the Abelson order which provides that from the current termination rate regime (i.e. a Philippine carrier collects a certain fee from a US carrier for calls from the US to the Philippines while a US carrier imposes a certain termination charge on the Philippine carrier for calls from the Philippines to the US), the US-Philippine call route will have to go back to the old accounting rate regime whereby the call rate (say 40 cents a minute collected from consumers) is equally divided between the Philippine and US carrier.

Espinosa said the purpose of the meeting is to exchange ideas on how to find a solution to the current impasse. "We will keep open our channels under certain parameters. It must be clear that we cannot work under the framework of the FCC bureau order," he said.

PLDT vice-president and spokesperson Butch Jimenez said the first day of discussions with AT&T can be characterized as exploratory in nature.

"We made it very clear with AT&T that we are governed by the ruling of the NTC that absent any agreements, we can terminate service. Furthermore, we stressed that we cannot open our circuits as ruled by the US FCC unless both parties come to an agreement on rates. "

He added that PLDT is pleased that AT&T clearly understands their position and is exploring all possible options to resolve the dispute.

PLDT also served its demand letter to AT&T for immediate payment of fees due the company. "We reserve the right to take whatever action is necessary, including strong legal action if AT&T does not honor its obligations to us," Jimenez said.