6 top telecom firms sign agreements to resolve issue of call revenue sharing

() - July 11, 2001 - 12:00am
Six of the country’s leading telecommunications companies signed yesterday several interconnection agreements aimed at resolving the long-standing "irritant" among them on how to settle call revenues.

Industry players said this was the first time, not only here but also worldwide, that carriers agreed to interconnect without the courts having to compel them to do so.

The National Telecommunications Commission (NTC) expressed hopes that these new revenue-sharing agreements that will govern interconnection among the industry players will result in lower rates for the consumers.

"This wholesale signing of interconnect agreements is in pursuit of the President’s desire to make telecommunications services affordable and available to most Filipinos," NTC Commissioner Eliseo Rio said.

With interconnection, it is expected that more traffic will be generated that will eventually redound to lower cost for the providers and reduced rates for the consumers "as market forces come into play," Rio said.

He said the telecommunications industry is the only industry in the country where rates have been going down upon the initiative of the players.

Among the companies that entered into separate interconnection agreements with one another are the Philippine Long Distance Telephone Co. (PLDT), Globe Telecom, Smart Communications, Digital Telecommunications Phils (Digitel), Isla Communications, and Pilipino Telephone Co. (Piltel). The agreements will cover both their cellular and fixed landline (local exchange carrier) businesses.

The interconnection agreements signed involve those between PLDT and Smart LEC (fixed line) and Globe/Islacom CMTS (cellular) and vice versa; Globe/Islacom LEC and PLDT/Smart LEC and vice versa; PLDT/Smart international gateway facility (IGF) and Globe/Islacom CTMS and vice-versa; Globe/Islacom IGF and PLDT/Smart IGF and vice versa; Smart CMTS and Globe CMTS and vice-versa; Smart CMTS and Globe LEC.

Piltel also joined the signing with separate agreements with Globe and Islacom while Digitel had another set of interconnection agreements with Smart and Piltel.

There was also a separate agreement involving PLDT, Globe, and the Philippine Association of Private Telephone Companies (Paptelco) which comprises the provincial telephone operators. Globe Telecom gave the 54-member Paptelco a special and exclusive rate package to make their national long distance business more competitive.

Conspicuously absent was Bayan Telecommunications (BayanTel) and Express Telecommunications (Extelcom) although according to the NTC, it will make sure that the Lopez group will join the foray. "BayanTel cannot afford not to join because it will be at the losing end," an industry official said.

"We have agreed to this by way of compromise and in answer to the NTC’s call for greater universal access in the rural areas. Before interconnection with the Paptelco was only by way of acquiescence of PLDT because we’re using its interexchange carrier. This is a transition agreement without prejudice to the Paptelco establishing direct connection with Globe," said Rodolfo Salalima, Globe senior vice president for corporate and regulatory affairs.

The new scheme simplifies the revenue-arrangement for national direct dial (NDD) calls by having a single "access-based interconnect charging arrangement."

According to Digitel vice-president William Pamintuan, the old revenue-sharing arrangement does not provide the carriers flexibility to determine their rates "since we now have an agreement in place, we can later improve on it and pass on the benefit to the consumers," he said.

For his part, PLDT first vice-president for interconnection Ramon Santiago said that the single access charge now makes the determination of charges simplier. "Oftentimes, when two carriers do not agree, we at PLDT are caught at the middle since they pass through our network," he said.

Santiago said that hopefully with the new scheme, there will be less unpaid interconnection charges among carriers.

Paptelco vice-president Eric delos Reyes said that the previous revenue-sharing arrangement was a ‘big problem’ to the industry. "For so many years, we have been looking for a solution and now it is here. This will now give us the flexibility to react to market forces," he said.

Effective July 1, PLDT and Smart LEC have started paying Globe and Islacom P6.50 per minute for every call to their CMTS (cellular) networks, down from P8.50 per minute. The amount is scheduled to go down further to P4.50 per minute by Jan. 1, 2002.

For calls originating from Globe and Islacom CMTS networks to PLDT and Smart (LEC), the charge is P2 per minute. Calls between CMTS networks is P3 per minute, to be adjusted to P4.50 per minute by Jan.1, 2002.

For direct traffic between Globe/Islacom and PLDT/Smart landlines, the originating carrier will pay the receiving party P2 for every minute of processed call.

For international traffic through PLDT/Smart international gateway facilities (IGF) and terminating to Globe/Islacom CMTS, payment is 12 cents per minute beginning Oct. 1, 2001. The current rate of 9.5 cents per minute shall be enforced pending implementation of the new settlement rate.

PLDT and Smart, however, started paying Globe and Islacom eight cents per minute effective last July 1 for international calls to the latter’s fixed wire networks. The same amount will be paid for indirect international outbound traffic and for IGF-to-IGF call.

"This only goes to show that competition between major players can be enlightened where the carriers compete not in the spirit of destruction but cooperation towards affording more people greater access to telecommunications," Salalima said.

Meanwhile, Smart and Globe have entered into a revenue-sharing arrangement whereby the two agreed to pay each other P3 per minute as intercarrier settlement for calls made to each other’s cellular networks. The two parties have also agreed to adjust these access charges to P4.50 per minute effective Jan. 1, 2002.

Under the deal which amended the one signed in April 1997, Globe agreed to pay P6.50 per minute for calls made from its local landline network terminating to Smart CMTS. The same access charges will be lowered to P4.50 per minute at the start of next year.

For calls originating from Smart CMTS and terminating to Globe landlines, Smart shall pay Globe P2 per minute effective last July 1.

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