Competition forces PLDT, BayanTel to cut int'l call rates

The Philippine Long Distance Telephone Co. (PLDT) and Bayan Telecommunications Inc. (BayanTel) are set to significantly lower their charges for international calls following a continuing reduction in US settlement rates.

From $0.23 in 1999, the settlement rate went down to $0.19 this year. Settlement rate is the amount which a carrier pays its overseas counterpart for every minute of call completed.

At present, PLDT charges its customers an average of $1.30 per minute for international calls while BayanTel has a flat rate of $0.85 regardless of destination.

Rodolfo Salazar, BayanTel president, said that they have to go with the global trend, with the expectations that the increase in call traffic volume will compensate for the decline in rates.

Revenues from international long distance calls represent about 20 percent of BayanTel's total earnings.

For the first half of last year alone, BayanTel international toll revenues increased by almost 50 percent as compared to the same period in 1998.

On the other hand, PLDT's income from international calls which in the past accounted for 70 percent of its total revenues, sharply dropped to a mere 39 percent last year due to stiff competition.

Salazar refused to reveal when the new rates will take effect while a PLDT source said that theirs will be within the first quarter of the year.

Although both companies did not say what their new international toll charges will be, they both gave assurance that the amount will be competitive.

Already, another operator, Globe Telecom is offering international calls for only $0.70 per minute during peak hours and $0.50 for off-peak period.

Another industry source said PLDT will not be able to match Globe's rates due to its bank obligations which have to be paid within a certain period.

According to the source, PLDT had the loans even before the US Federal Communications Commission (FCC) ordered the drastic reduction in settlement rates in 1997, thus, payment arrangements were based on old projections.

Before the FCC directive, settlement rates had reached as high as $1.50 per minute.

Meanwhile, PLDT is also set to lower the access charges from $0.17 per minute to $0.11 to allow the carriers to realize more revenues from international calls.

Access charge is the amount a carrier pays a telecom firm for international calls that pass through the latter's system.