Local telcos accuse AT&T of ‘bad faith’

Local telecommunications companies have accused US carrier AT&T of "bad faith" after the latter increased the amount it charges its American wholesalers for US calls to the Philippines without a corresponding increase in its cost.

The STAR obtained a copy of a recent communication from AT&T to all countries notifying them of the new rates for the respective countries. In the case of the Philippines, the new rate is 12 cents a minute for calls from the US to Philippine landlines and 16 cents for calls to mobile networks.

Official sources said the increased rate to American wholesalers for calls to the Philippines would have been justified if AT&T accepted the increased 12 cent a minute "termination" rate of the Philippines for calls from the US.

The termination rate refers to the amount which Philippine carriers charge their US counterparts for calls from the US to the Philippines. For calls to Philippine landlines, the rate was increased by local telcos from eight cents to 12 cents effective Feb. 1 for calls terminating in Philippine landlines, and from 12 cents to 16 cents for calls to Philippine mobile phones.

Calls from the US to the Philippines cost the consumers between 28 to 35 cents a minute. Of this amount which the American carrier collects from its subscriber, it pays the Philippine carrier a termination charge.

However, the US Federal Communications Commission (FCC) international bureau granted separate petitions filed by AT&T and MCI-Worldcom questioning the increased rates. The bureau ordered all US facilities-based carriers to stop all payments to Philippine carriers, including those which they owe prior to Feb.1, until all services to AT&T and Worldcom are returned to normal.

Among the Philippine carriers affected by the FCC bureau ruling are the Philippine Long Distance Telephone Co. (PLDT), Globe Telecom, Smart Communications, Digital Telecommunications Phils. Inc. (Digitel), and Bayan Telecommunications (Bayantel).

Local telcos were surprised to learn that despite their failure to implement the new increased termination rates, AT&T was already collecting from its American wholesalers based on the new Philippine rates.

Because of the FCC bureau order signed by Donald Abelson, US carriers are enjoined from paying Philippine carriers, who in turn will not accept calls coming directly from the networks of American carriers who refuse to pay.

Meanwhile, US carriers like AT&T who still have to land calls to the Philippines are "refiling" the calls or using third-party networks such as those in Europe, Canada or Singapore that will in turn terminate the calls to the Philippines. Since the third party carrier is not covered by the US FCC order and is therefore already being charged a 12 cent (or 16 cent for calls to mobile) a minute by Philippine carriers, US carriers have to spend more.

"Thus, contrary to AT&T’s claim, the volume of calls from the US to the Philippines has not changed because US carriers still have to land these calls to the Philippines, even through a third party network," a Philippine telco official said.

On the one hand, The STAR learned that most Philippine carriers that send calls to the US are no longer using AT&T and Worldcom’s networks. Instead, the Philippine telcos are tapping the services of smaller American telcos, such as the baby bells, which offer the same service at lower prices.

"This is the reason why AT&T and Worldcom have realized that they have created more problems for themselves when they solicited the Abelson order. It costs them more to send calls to the Philippines since they are utilizing third parties. On the one hand, Philippine carriers have nothing to lose even if they cease their relationship with AT&T and Worldcom," the same official emphasized.

Unlike in the US where there are more carriers (the big bells against the baby bells) and the competition is more cutthroat, there are fewer Philippine carriers that adopt a "uniform pricing policy," as provided for under Republic Act no. 7925. This policy has been misinterpreted by the Abelson order as collusion.

Philippine carriers, through their respective US counsels, are now preparing their respective motions to ask for a reconsideration of the Abelson order, possibly with the US FCC en banc. They claim that the order was issued in excess of the bureau’s authority and has no basis whatsoever in fact and in law.