DFA hits FBI harassment

The Department of Foreign Affairs (DFA) decried yesterday the action of the United States Justice Department in serving subpoenas to 30 Filipino telecommunications executives attending the Pacific Telecom Conference in Honolulu, Hawaii.

It was learned that the executives were served subpoenas — through the US Federal Bureau of Investigation (FBI) — over the weekend, compelling them to testify this week before a grand jury in Honolulu in relation to the ongoing investigation on the rate dispute between Philippine telecom companies and US carriers.

Foreign Affairs Secretary Delia Albert said it was her understanding that the issue had already been discussed and resolved at various levels so the action by the FBI against the Philippine firms and their executives was unwarranted.

Albert summoned US Ambassador Francis Ricciardone yesterday to express the Philippine government’s dismay over the incident.

"This was an issue that has been resolved through negotiation and dialogue between our telecommunications authorities. There has been a clear understanding on how to address our differences on this issue, an understanding that has even been touched upon at the highest levels," Albert stressed.

"This action by the US Department of Justice goes against the understandings we had achieved through negotiations. This is inconsistent with what has been discussed and is an action that we would not expect from a close friend and ally," she added.

The foreign affairs chief pointed out that the timing of the issuance of summons while the Philippine executives were attending an international conference "is alarming and perhaps motivated by the desire of the complainants to embarrass the Filipino telecom executives while abroad and perhaps even the Philippine government in general."

After their meeting, Ricciardone was issued a strongly worded "aide memoir," which contained the position of the Philippine government on the issue and other details of their discussion.

The US Embassy reserved comment, saying that it cannot speak on judicial proceedings. US Embassy press attaché Karen Kelley said that the US justice department should be the one to issue any statement.

Albert has also directed the embassy in Washington to formally convey the sentiments of the Philippine government to the US government. The Consul General in Honolulu has also been ordered to assist the Filipinos who were served the summons to ensure that their rights are protected.

Jones Campos, Globe Telecom spokesman, told The STAR that the move of the US justice department "came as a surprise."

"The issue has been settled several weeks ago," he said in a telephone interview. "We are in contact with the DFA and we are coordinating with them."

In a separate telephone interview, Ramon Isberto, Smart Communications spokesman, said that they would have to defer comment on the matter.

Philippine Long Distance Telephone Co. (PLDT) on the other hand, said it is currently consulting with its US lawyers regarding their plan of action.

Rate dispute

The investigation being conducted by the US justice department is in relation to the rate dispute between Philippine local carriers such as PLDT, Globe Telecom, Smart Communications, Digitel, Bayantel and Subic Telecoms — all of which provide long distance telephone services — and US carriers such as AT&T.

In March last year, the US Federal Communications Commission (FCC) ordered the US carriers not to settle their dues with the Philippine carriers unless a price rollback for their termination rates is implemented.

Termination rates are the fees charged by Philippine carriers to their foreign counterparts for terminating calls to the Philippines through their gateways.

The FCC directive was in response to the increase implemented by the local carriers for calls from the US to landlines and mobile phones in the Philippines. Local carriers raised the termination rate for calls to landlines from eight to 12 cents per minute and 12 to 16 cents per minute for calls to mobile phone networks.

US carriers resisted the increase and filed their petitions with the FCC.

However, the Philippines’ National Telecommunications Commission (NTC) upheld the rate increase, saying that the rates were fair and reasonable because they were well below the $0.238 benchmark rate set by the International Telecommunications Union and the $0.19 benchmark rate set by the US FCC itself.

In the same order, the NTC also acknowledged that in the absence of any provisional or interim arrangement or agreement, "there would be termination of service between the parties who are thereby encouraged to seek other routes or options to terminate traffic to the Philippines."

After months of negotiations, the FCC lifted the stop payment order imposed on Smart Communications Inc. after it entered into an interim rate agreement with AT&T and MCI-WorldCom and all US carriers which experienced circuit disruptions notified the FCC that their circuits had been restored.

Under the interim agreement, Smart Communications will restore all direct call connections of AT&T to its network. AT&T will also be granted direct inbound calls and access from the US to the local mobile operator’s network.

But for its part, AT&T should settle all its outstanding obligations to Smart Communications.

In a letter to NTC Commissioner Armi Jane Borje dated Jan. 5, 2004, Michael Powell, an official of the FCC, said that the same process will be followed on a carrier-by-carrier basis for all other Philippine carriers affected by the stop-payment remedy.

"We will promptly lift the stop-payment order for each Philippine carrier upon confirmation from all affected US carriers that their circuits have been restored by the Philippine carrier in question," Powell stated.

Over the weekend, PLDT announced that its relations with AT&T are also expected to normalize after they signed an interim agreement that will govern the rate at which AT&T will be paying PLDT for calls from the US terminating to the Philippines while a commercial rate agreement has not been signed.

"The Philippines has been discussing and negotiating these telecommunications issues in good faith," Albert emphasized. "We intend to continue to maintain the highest levels of good faith in our dealing with other countries, including the United States, and I am confident that we will be able to resolve this issue once again," she said.