Payback Time

In what appears to be a virtual victory over their US counterparts over a protracted rates debacle, local telco giant Philippine Long Distance Telephone Co. (PLDT) announced it received from American carriers AT&T, MCI, and Sprint Communications some $8 million in overdue termination fees.

PLDT senior vice president for international and carrier business group Alfredo Panlilio said these were “long overdue payments” and the result of interim agreements that have already been reached on different occasions.

The termination rates, paid to Philippine carriers for processed inbound calls from the US, are $0.12 per minute for US calls to landline circuits and $0.16 for cellular phone calls.

The US Federal Communications Commission (FCC) early last year ordered US telcos to suspend payments to Philippine carriers for processed inbound calls from the U.S. US carriers alleged that PLDT and other Philippine telephone companies were blocking calls from US carriers to force them to pay higher termination fees.

PLDT resumed direct circuit services with MCI and Sprint in November and with AT&T in January after reaching an interim agreement in which it would accept traffic from foreign carriers while they settled all outstanding termination payments.

Despite this development, Filipino telecom executives are still facing possible criminal raps regarding the rates dispute. Filipino telco firms have resorted to hiring the services of US-based lawyers to help them in their case relating to the summons served to them for an anti-trust suit by US telecom giant, AT&T and MCI.

On 12 January, agents of the US Federal Bureau of Investigation (FBI) served the summonses to 30 Filipino executives who were attending the annual Pacific Telecommunication Council Conference in Hawaii. More than 20 of them have since been allowed to return home but not quite a few have had to remain in the US to attend deliberations on the claim by a grand jury.

The Anti-Trust Division of the US Department of Justice has charged Philippine telcos with violation of US anti-trust laws and of engaging in price fixing when they unilaterally raised their termination rates on 1 February 2003. The local telecommunication firms included in the antitrust suit include PLDT and its mobile unit, Smart Communications Inc., run by the Hong Kong-based First Pacific group; the Ayala-controlled Globe Telecom Inc.; the Gokongwei-owned Digital Telecommunications Inc.; and the Lopez-controlled Bayan Telecommunications Inc. The FCC has ordered US carriers not to pay their dues with the Philippine carriers until they rollback their rates. The local private sector expressed alarm over the heavy-handed manner in which the US seeks to intervene in commercial disputes. The present US government is seen to be particularly insensitive and lumbering as it seeks to intimidate foreign governments and companies into submitting to US dictates, thus a backlash would also be likely at some point. President Gloria Macapagal Arroyo has noted the indignation of the local community at this latest bullying from Washington and has decried the improper treatment of Filipino executives by the FBI. She said she wanted a proper explanation from US authorities.

Land values in Metro Manila remained flat throughout 2003, but will start to appreciate within the year. The recovery in 2004, according to Colliers International in its January 2004 property report will be supported by strengthening rents due to falling vacancies.

At P171,250 per square meter, land values in the Makati Central Business District (CBD) was static quarter-on-quarter in October to December 2003, more than 60% down from their peak in 1997. Land values at the Ortigas CBD also remain at an average of P77,500 per square meter.

Colliers is forecasting that land values in Makati and Ortigas will post a ten percent year-on-year recovery. “Prime sites in the Makati CBD is forecasted at a value of P188,375 per square meter while Ortigas developable plots could escalate to P85,553 per square meter by the end of 2004,” the report said.

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