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U.S. Moves to Protect Philippines Telecom Route

The International Bureau of the Federal Communications Commission (FCC) has ordered all U.S. carriers providing facilities-based service on the U.S.-Philippines route to suspend all payments for termination services to six Philippine carriers pending restoration of all circuits and service on the route.

The six Philippine carriers began disrupting the U.S.-Philippines networks of AT&T and WorldCom on Feb. 1. The Bureau says the Philippine carriers actions were taken in retaliation for AT&T's and WorldCom's refusals to agree to the Philippine carriers' demand for rate increases for termination services on their networks in the Philippines.

The Bureau found that the Philippine carriers' behavior constitutes "whipsawing" of U.S. carriers, which violates the FCC's longstanding International Settlements Policy (ISP), a policy framework intended to protect U.S. carriers from the abuse of market power by carriers on the foreign end of a U.S.-international route.

"Whipsawing" generally involves the abuse of market power by a foreign carrier to play U.S. carriers against one another in order to gain unduly favorable terms and benefits. According to the Bureau, this type of anti-competitive behavior could lead to higher costs for U.S. carriers and result in higher calling prices and poorer service quality for U.S. consumers.

As a result of the Philippine carriers' actions, the International Bureau, in addition to suspending all payments, enforced the provisions of the ISP on all U.S. carriers providing facilities-based service on the U.S.-Philippines route in order to ensure nondiscriminatory treatment of U.S. carriers. The action also removed the Philippines from the FCC's list of approved routes for more flexible International Simple Resale agreements, pending U.S. carrier compliance with the conditions set forth in the FCC order and absence of further anticompetitive behavior.

The six Philippine carriers named in the order include Philippines Long Distance Telephone Company, Globe Telecom, Bayan Telecommunications Company, Digitel Telecommunications Philippines, Smart Communications, and Subic Telecom.