Pakistan's International Clearing House is taking a retaliatory stance against a recent FCC order that prohibits facilities-based U.S service providers from paying the coalition's higher long-distance termination fees by threatening to block traffic terminated in the country.
The ICH, a coalition of 14 Pakistani long distance international (LDI) providers, said that any service provider that does not pay the higher LDI rates, which rose an estimated an estimated 500 percent from $0.02 per minute to $0.088 per minute, will have their traffic blocked.
In October, Pakistan's long-distance service providers, with support of the country's government, moved to increase the cost to complete calls to the country.
Critics of the ICH argue that the service providers will be able to keep prices artificially high by "eliminating competition."
This increase prompted over-the-top VoIP provider Vonage (NYSE: VG) to file a petition requesting that the FCC issue an order stopping U.S. settlement payments to certain Pakistani LDI carriers. In its petition, Vonage, which offers consumers a plan with unlimited domestic and international calling to more than 60 countries for a set price per month, said that the LDI carriers' new "termination rates [have] forced it to charge its customers significantly more for calls to Pakistan thus resulting in harm to U.S. consumers."
Joining Vonage was AT&T (NYSE: T), which said in its reply that the Pakistani rate increase violates the FCC's policies "protecting U.S. consumers against anticompetitive conduct by foreign carriers to force above-cost settlement rate increases." AT&T added that instead of completely stopping payment as suggested by Vonage, the FCC should issue an order that prohibits increased U.S. settlement payments above the rates that existed before Oct. 1, 2012.
The FCC requested that U.S. service providers only pay the earlier set fee of $0.02 per minute rather than the new $0.088 per-minute rate.
"We find that recent and ongoing actions by certain Pakistani long distance international carriers (Pakistani LDI carriers) to set rate floors over previously negotiated rates with U.S. carriers for termination of international telephone calls to Pakistan are anticompetitive and require action to protect U.S. consumers in accordance with Federal Communications Commission policy and precedent," the FCC said in their order. "Their continuation would result in a substantial increase in the cost of and repress demand for calling Pakistan."
The country's telcos maintain that they are subject only to the rules set by the Pakistan Telecommunication Authority (PTA) and the Islamabad government and that the FCC has no authority in its country.
However, according to a report in The Nation citing unnamed sources, the PTA is taking "action against 14 LDI operators over illegal collection of 8.8 cents per minute from the consumers on incoming international calls."
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