021507: PLDT says no to fees abolition

By Lenie Lectura

Reporter

PHILIPPINE Long Distance Telephone Co. (PLDT) is opposing the elimination of interconnection and access charges between phone firms operating in provinces as proposed by the National Telecommunications Commission (NTC). Such move, if implemented, would dampen investment in telecommunications infrastructure, the country’s largest telecommunications company said in a comment filed with the NTC Wednesday. Without substantial investment, network expansion will not be sustained, PLDT said, noting that this will have a negative effect not only on the big players but more so on the small carriers, PLDT said. The NTC’s draft circular states that there shall be no interconnection and access charges between interconnected local exchange carriers (LECs) within a local calling area. It also seeks to mandate interconnecting firms to provide the required space and termination free of charge, if the installation of radio facilities is necessary. PLDT believes that involuntary transactions would reduce—not increase—incentives to invest in telecommunications infrastructure necessary to address the low fixed line penetration rate in the country. “The proposed regulatory practice of implementing involuntary transactions will unfavorably alter the return on investment and therefore make it less likely that the needed investments will be forthcoming,” it said. The phone giant pointed out that commercial arrangement shall never be dictated by regulation. Globally, interconnection has been and continuous to be a voluntary commercial transaction. “Commercial arrangements should never be dictated by regulation. The spirit of bilateral commercial negotiations should always rule over involuntary commercial arrangement to be dictated by regulatory rules,” PLDT said. Further, PLDT said, the implementation of involuntary commercial transactions covering interconnection arrangement is not consistent with the basic policy of various networks under Republic Act 7925. If regulation is used to compel LECs to engage in involuntary transactions, which results in lower returns on capital employed or economically inefficient investment, both practical and legal issues will arise. “It does not help the industry to achieve Philippine policy goals, if access to capital is made more difficult by imposing a regulation that will lower the return of capital employed as a result of policy guidelines that deviates from the well-accepted economics of interconnection,” said PLDT. The NTC was forced to issue the draft rules after several local exchange carriers operating in one local calling area sought the intervention of the commission for the interconnection of their local exchange networks.

 

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