November 9, 2004 (STAR) By Mary Ann Ll. Reyes - The US Federal Communications Commission (FCC) once again failed to include the Philippines in the list of countries exempt from the international settlements policy (ISP) which would have allowed local telecommunications carriers to bilaterally negotiate call settlement rates with their American counterparts.

According to the commission, with respect to the US-Philippine route, the FCC will issue a separate order after it conducts a complete review of the issues and concerns raised during the comment period.

Both the Philippine National Telecommunications Commission (NTC) which has been making representations with the US FCC is hopeful that the Philippines will finally be included in the list since bilateral interim settlement rates have already been arrived at between local and US carriers.

However, the US FCC earlier hinted, when it found Philippine carriers guilty of whipsawing or engaged in cartel-like practices to force higher termination rates on US carriers, that this might affect the Philippines’ exemption from the ISP.

It will be recalled that the purpose of the ISP was to prevent whipsawing by prohibiting US carriers from accepting discriminatory terms and conditions for the termination of traffic in overseas markets.

Philippine carriers unilaterally raised effective Feb. 2003 its termination rates which was protested by US carriers led by AT&T and MCI-Worldcom and which led the FCC international bureau to issue its controversial ruling that found RP carriers guilty of whipsawing.

The bureau’s ruling was upheld by the US FCC en banc, a move that was opposed by Philippine telcos.

Also, inquiries are still ongoing by the Honolulu grand jury regarding allegations by the US anti-trust division office that Philippine carriers have violated American anti-trust or anti-monopoly laws when they raised their settlement rates as a group.

The US FCC has just released 40 routes that qualified for exemption from the ISP after at least one US carrier has certified benchmark compliance and after no concerns were raised regarding the routes during the comment period. Benchmark compliance means that the settlement rates of a particular country do not go beyond benchmark rates established by the FCC.

Inclusion in the ISP list would bind a country’s carriers to the FCC-imposed termination rates which would naturally favor American carriers.

Termination rate refers to the amount which US carriers for instance are supposed to pay an international carrier, say the Philippine Long Distance Telephone Co. (PLDT), for terminating calls from the US to the Philippines through PLDT’s network.

Last March 30, the US FCC released the ISP Reform Order that revised its policy and rules to remove the ISP from benchmark-compliant routes.

In the order, the commission identified 96 routes that clearly qualified for exemption from the ISP pursuant to the new rules. It also listed 77 routes that were believed to be benchmark-compliant, but provided interested parties with the opportunity to comment on those routes.

The FCC’s international settlements policy was originally designed to prevent monopoly foreign carriers from taking advantage of the competitive marketplace in the US by playing one carrier off against another – a practice known as "whipsawing" – in order to extract higher rates for the completion of international calls originating in the US.

Reported by: Sol Jose Vanzi

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