FCC Orders to Suspend Payments to Pakistani Telecom Operators for Charging Higher Call Rates

International CallsThe Federal Communications Commission, the regulatory body in USA, has ordered all U.S. telecommunications service providers to freeze payments to Pakistani long-distance carriers for termination services in excess of 2 cents per minute.

In an order issued on March 5th, 2013 and posted to the FCC website yesterday, the agency’s International Bureau agreed to partly grant an October 2012 petition by Vonage Holdings Corp. for commission intervention in what the company claims is a 500 percent increase in the rates charged for outgoing calls to Pakistan.

Such rates prior to Oct. 1, 2012, had been based on cost, averaging $0.02 per minute, but Pakistani carriers decided to raise the rate to $0.088 per minute following the creation of a new “International Clearing House.”

AT&T Inc. also supported Vonage’s petition, and said that Pakistani carriers’ actions violate the commission’s policies protecting U.S. consumers against anticompetitive conduct by foreign carriers to force “above-cost” settlement rate hikes.

However, instead of issuing a full stop payment order as requested by Vonage, AT&T recommended that the commission issue an order prohibiting increased U.S. settlement payments above the rates that existed before Oct. 1, 2012.

Complete copy of FCC’s order can be downloaded by clicking this link.

FCC in its order said:

“We find anticompetitive the Pakistani LDI [long-distance international] carriers’ actions demanding a substantial rate increase above previously negotiated rates in a way that amounts to a rate floor. By establishing the International Clearing House plan, the Pakistani carriers acted in concert to impose unilaterally this rate floor without engaging in meaningful negotiations with U.S. carriers and foreclosing future separate negotiations between U.S. and individual LDI correspondent carriers.”

“Vonage is extremely disappointed in the exorbitant price increase imposed by the Pakistani providers.  The increase hurts consumers and prevents us from providing greater value to our Pakistani customers,” said Michael Tempora, Senior Vice President of Product Management for Vonage. “Vonage appreciates the efforts of the United States government and the FCC. We are hopeful that this Order will spark a prompt reduction in calling rates so that consumers can once again afford to call Pakistan with the freedom and frequency they enjoyed before.”

It merits mentioning here that telecom operators in Pakistan were charging higher calls and hence had posted tremendous increase in stock value and revenues during Q4 2012. With this order, and possibly the similar action in other markets, operators are likely to face the monetary brunt.

  • A very good example of a Government standing up for its citizens (US Consumers including Pakistani living abroad) on the contrary Pakistani Govt collude with private parties to lootify everyone sparing no-one.

  • CJ zindabaad jis ne ICH ko restore kar diya ab hum .088 mein se kuch hisa CJ sahib ko b dein gy ta’k un ka b guzr basr ho saky. CJ ke har faisly se awam ko bohat benefit ho raha hai.

  • The PTA should also order pakistani operators to stop payments to Foreign Satellite operators who are charging 4000-5000 US per mhz whereas the world prices and Paksat rates are below 2500

  • Our doo PPP ko vote, bhutto aur us ki beti aaj bhi zinda hai par awam kuttay se bhi badtar halat mein mar rahe hein

  • Yeh tou hona hee tha!

    We had agreed – if only the damn incompetent and greedy people at the helm of affairs would have spent time reading (or at lest asking people who know this subject) – the clear understanding which Pakistan had with FCC in bringing down the Settlement rates (termination rates are a part of this) from the once 60 cents to a low of 3.5 cents – see all the documentation made for deregulation over a period of time.

    This was done and it accomplished the dual benefit of eliminating the thievery of illegal traffic and meeting with our international obligations.

    The formation of the ICH is based on flawed principles and seeks to benefit only one party and rolling back deregulation.

    And now a slap on the face of Pakistan.

    I wonder if we will ever have a clean and professional PTA, MoIT and of course the Government.

    • Mr. Ansari with all due respect the only mistake the companies and people behind ICH made was that they didn’t hire you as a consultant to put your rubber stamp on it and make consultancy fees so that you could vociferously defend it. Because they haven’t done this, they have to listen to this warped explanation.

      FCC is defending American companies and the PTA should defend Pakistani companies and their right to make money.

      • are you PTA employee. PTA is not defending pakistani companies they making ways to get money for polititatins

    • Well said Ansari sahib. As for @Dastan Khua your statement is so illogical. FCC defends open competition. They are asking their companies to go with lower rate as set by market not higher rates like Pakistani companies which have formed a cartel. The same has been said by CPP (Competition Bureau)

      • Rais stop this illogical hogwash. The FCC says nothing to several Middle Eastern or Chinese operators because they dont have the guts to. And all these sovereign nations have the right to regulate as they desire. Stop and think why only until some years ago Etisalat was the only monopoly co in UAE and then just Du was allowed. Pakistan has 5 companies and call rates are cheapest on Earth.
        In USA there are only a handful of operators and these legalized duopploies have the regions divided amongst themselves and nobody is allowed to enter. See what happened to lightsquared and how superbly they got screwed by Verizon and AT&T. So yes these cartels exist in other places and FCC doesnt do anything because these other governments can tell them to piss off. But with Pakistan because we are so weak everybody takes a shot and we have no self esteem to defend ourselves. Imagine if FC
        , tried the same with India or china or middle east co? Why fcc not saying anything to at&t and verizon when they simultaneously added volume limits to their lte packages?

        I am not saying I dont support FCC for protecting American interests. Im saying PTA must do the same for Pakistani interests.
        Govt of Musharraf era sold Pakistan national jewels to foreign bidders and not one local telecom remains of any significance.

        I dont know this Ansari guy and i dont agree woth @Dastan attack on him but I do agree with the need for PTA to support Pakistani operators like FCC does for USA companies.

  • There is Customer protection and consumer protection laws in US and all European countries.Here they are hiking prices of Petrol, gas, electricity and on and on. All expatriates living in these countries are protected by these laws. Calls for Bangla Desh and India are still at .01 cent per minute. There are crooks in these both countries but they have some respect for their foreign exchange earning foreign residents. This is a classic example of Loot and plunder here. Even the Judiciary is siding with them.

  • USA carriers blocked by LDIs after FCC orders. Traffic is now coming through indirect routes resulting into more cost for USA carriers. Also, Sindh High Court has issued restraining order to CCP on for maintaining Status Quo on Show Cause proceeding against LDIs related to ICH matter.

  • Very well done FCC, this will actually help overseas Pakitan and might bring calling rates to Pakistan lower again which got higher due to cartel between LDIs and PTCL with blessings of PTA which is completely involved in lootifying overseas Pakistanis who send billions of dollars every year to support economy of Pakistan. No one realizes that without this money sent by overseas Pakistanis ,Pakistan’s economy wont survive for long. But PTA is completely involved in this. Overseas Pakistan are very upset with this where they see Indians calling at Rs 1/min (in PK currency) back to India while Pakistanis now pay 8x higher , even than Nepalis and Bangalis.

  • yes pta needs to come up and show on media that why rates are going so high. fcc is AMERICAN, i live here in USA and know that they care for only apna interest. Pakistani telecom companies tu cartel hain he but this fcc drama is all thanks to Vonage ane Verizon who at 1 cent and 2 cent take away the business from Pakistani companies. These is all FCC drama saying we r trying to help Pakistani customers in USA. Thats a lie. They are trying the level best to get the business back to their country so you pay here and make inki companies grow giants. Our SCourt has to come up with some sort of a rate which helps us living here and our companies in Pakistan as well. A rate which is not 8.8 nor 2 sthing liek 4 to 5 or whatevr all parties can agree on. But 2 is only best for FCC VONAGE VERIZON and Reliant India.

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