MCI, PLDT-Smart reach accord on phone rates

American telecom giant MCI International has asked the US Federal Communications Commission (FCC) international bureau to lift its order prohibiting payments to the Philippine Long Distance Telephone Co. (PLDT) and its wireless subsidiary Smart Communications Inc. after the two groups reached agreement on the rates for calls made from the US to the Philippines, The STAR learned yesterday.

In a letter to FCC secretary Marlene Dortch dated Nov. 14, 2003, MCI associate counsel for international affairs Scott Shefferman officially notified the FCC bureau that PLDT and Smart have ceased blocking MCI traffic destined for said carrier networks in the Philippines.

"MCI is now requesting the bureau to lift the suspend payment requirement (contained in the FCC international bureau order of March 10, 2003) with regard to PLDT and Smart as expeditiously as possible so that MCI may resume making payments to those two carriers," Shefferman said.

It will be recalled that sometime February this year, MCI-Worldcom and AT&T filed a complaint with the FCC against PLDT, Smart, Globe Telecom, Digital Telecommunications Inc. (Digitel), Bayan Telecommunications (BayanTel), and PLDT subsidiary Subic telecom accusing said Philippine carriers of ‘whipsawing’ or pitting one US carrier against the other when the six telecom companies unilaterally raised their so-called termination rates or the charges they impose on calls from US facilities-based carriers from eight cents to 12 cents for calls to Philippine fixed lines and from 12 cents to 16 cents per minute for calls to mobile phones effective Feb. 1, 2003.

On March 10, 2003, the FCC international bureau headed by Donald Abelson issued a controversial order that found the six carriers guilty of ‘whipsawing’ and ordered US carriers to suspend any payments to Philippine carriers until the rates are rolled back to pre-Feb. 1 rates.

To avoid an accumulation of unpaid charges, Philippine carriers blocked the circuits, forcing US carriers to utilize third-party carriers in other countries in order that calls to the Philippines will reach the RP telcos. The Philippines’ National Telecommunications Commission (NTC) likewise issued an order that allowed RP carriers to block the calls from US carriers that refuse to pay.

The stop-payment order was lifted in the case of Digitel and BayanTel since according to AT&T, the two carriers were already accepting calls from them. The suspension of payments, however, remained in the case of the four others.

Just this September, NTC commissioner Armi Jane Borje met with US FCC chairman Michael Powell in Washington DC and agred to allow US and Philippine carriers to freely negotiate mutually acceptable termination rates and to provide the atmopshere for these commercial negotiations to prosper.

Last Oct. 17, the NTC ordered all local phone companies "to immediately accept terminating traffic via direct circuits from US facilities-based carriers on mutually acceptable final or interim termination rates, on terms and conditions agreed upon by the parties. Globe Telecom opposed the NTC’s move, saying Philippine carriers should start accepting calls only when the Abelson order is lifted and US carriers start resuming payments.

Earlier, PLDT announced that it has arrived at an interim agreement with MCI regarding termination rates and that calls are now being accepted for termination from each other’s networks.

PLDT senior-vice-president and international and carrier business group head Alfredo Panlilio said this was in keeping with the desire of the NTC for the speedy resolution of the rates dispute between local and US carriers.

"We are indeed making significant progress regarding negotiations with our US counterparts. It was in the spirit of cooperation, compromise and moving forward that PLDT and MCI agreed on the termination rates, and now we accept traffic for termination to each other’s network," he said.

Under the agreement, PLDT will accept traffic from MCI’s network, while MCI will settle all oustanding amounts and pay the termination fees to PLDT once the US FCC lifts its stop-payment order between MCI and PLDT.

"Like the NTC, we also want to resolve this long-standing issue on termination rates and move on to growing our business. PLDT’s agreement and exchange of traffic with MCI is one big step towards this objective. We are confident that this would soon come into fruition with the other US carriers," Panlilio added.

While he refused to mention the iterim rates agreed upon, Panlilio who is in Hong Kong told The STAR "we are respecting the 12 cents a minute rate," without elaborating. He added that the interim rate will eventually be the commercial rate.