FCC intervenes in US-Philippines tariff spat

12 Mar 2003

Telephone links between the US and the Philippines are being severely disrupted thanks to a dispute over international settlement rates currently raging between US regulator Federal Communications Commission (FCC) and Filipino operators Philippine Long Distance Telephone (PLDT), Smart Communications, Globe Telecom, Digital Telecom and Subic Telecom. The FCC has ordered US carriers to stop making payments to their Filipino counterparts after receiving complaints from AT&T and MCI WorldCom that the Filipino operators had blocked traffic from the US due to disagreements over an increase in tariffs which they implemented on 1 February 2003. From that date PLDT and its fellow domestic operators raised the cost of settling incoming US calls from USD0.085 a minute to USD0.12 a minute. PLDT has publicly denied the claims that AT&T and WorldCom are being treated unfairly, and said it reserved the right to terminate incoming calls if US carriers stopped making the necessary settlement payments. It also said that the connections of carriers which had agreed to the rate increases had not been disrupted. In a statement the FCC’s International Bureau accused the six Filipino operators of using their market power to play AT&T and WorldCom off one another in order to gain ‘unduly favourable terms and benefits’. It also alleged that the rates being charged by the Filipino carriers were more than twice the termination fees paid to US carriers for terminating traffic originating from the Philippines.