New FCC NOI May Dull International 'Whipsaws'

Telecom Policy Report, August 1, 2005

The FCC may be ready to open a Notice of Inquiry (NOI) concerning the effects of anti-competitive conduct and circuit disruption by foreign carriers on U.S-international routes that sometimes are called "whipsaw" acts in the trade. The International Bureau-handled NOI is set for discussion at this week's open FCC meeting (Aug. 4), but details have not yet been disclosed.

With the stated object of averting harm or protecting U.S. service- provider competitors and end user customers caused by anti-competitive conduct, the FCC could be fielding specific complaints by American carrier companies against specific foreign rivals. Or it may be conducting a somewhat broader investigation based on pricing, blocking and/or traffic-share trends, which suggests something is amiss.

One of the most recent high-profile whipsaw cases was a May 2004 FCC decision that six Philippine carriers had disrupted the U.S.-Philippine networks of U.S. carriers by acting collectively to demand rate increases for termination services on their networks in the Philippines. These carriers were retaliating against AT&T and MCI WorldCom for their refusal to meet the demands by cutting off circuits, blocking traffic or otherwise disrupting the U.S. carriers' routes.

AT&T and MCI WorldCom in 2003 filed the complaints at the commission against national incumbent Philippine Long Distance Telephone (PLDT) as well as against Globe Telecom, Smart Communications, Bayantel, Digitel and Subic Telecom. In the Philippine case (and in other such matters), the FCC ordered the U.S carriers to suspend payments for termination of services under its International Settlements Policy, pending restoration of the circuits.

The Philippine matter later escalated into a legal and diplomatic flap when the U.S. Department of Justice's Antitrust Division hauled the alleged offending carriers through the courts on antitrust and discriminatory business practice charges. Such tactics were for naught, however. A federal judge in Hawaii earlier this year ruled that the U.S. courts had no jurisdiction over Philippine telcos that don't operate in the U.S. on a continuous basis.

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