In separate submissions to the US FCC last April 9, the Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom filed their respective applications for review with the FCC en banc, questioning the order issued by the FCC international bureau headed by Donald Abelson which also found Philippine telcos guilty of ‘whipsawing’ or making US carriers unfairly compete with each other.
The 51-page motion of PLDT was filed through its Washington-based legal counsel Sullivan & Cromwell while Globe’s 108-page application for review was submitted by another Washington law firm, Wiley Rein & Fielding.
Both PLDT and Globe, through their US-based lawyers, said the international bureau issued the order in excess of its authority, and that the Abelson order was baseless and unfounded.
The questioned Abelson order granted separate petitions filed by American carriers AT&T and WorldCom in February which questioned an increase in ‘termination rates’ imposed by Philippine carriers starting Feb. 1, 2003 to be paid by all foreign carriers, including US facilities-based ones.
The termination rates, which were increased from nine to 12 cents a minute for calls from the US to a Philippine landline and from 12 to 16 cents for those terminating in Philippine mobile networks, refers to the amount which a foreign carrier pays to a Philippine carrier when using the latter’s network.
AT&T and WorldCom alleged that when they refused to agree to the new Philippine rates, services to them were blocked by the Philippine carriers, which include PLDT, Globe, Smart Communications, Digital Telecommunications Phils. Inc. (Digitel) and Bayan Telecommunications (Bayantel).
In its controversial ruling, the FCC international bureau, through its chief Abelson, ordered all US facilities-based carriers not to make any payments to Philippine telcos until services to AT&T and WorldCom are fully restored.
Abelson also rebuffed claims by Philippine carriers that the new rates are below benchmarks set by the FCC and the International Telecommunications Union (ITU), saying that the benchmarks are above costs so that all negotiated rates should be below the benchmarks.
In response to the first Abelson order, the Philippines’ National Telecommunications Commission (NTC) allowed Philippine carriers not to accept calls from US telcos that do not make any payments.
Philippine carriers, to avoid unpaid dues from AT&T and Worldcom from piling up, have either totally blocked direct calls from US carriers or have restricted access.
Because of this, US carriers are now forced to ‘refile’ calls from the US to the Philippines by using third party networks in other countries that have accepted the new Philippine rates and are not covered by the Abelson stop-payment order.
Philippine telcos, on the one hand, are avoiding using the networks of AT&T and Worldcom for calls from the Philippines to the US and are instead utilizing smaller American telcos or the so-called ‘baby bells’ which offer lower rates and better services.