Smart: DITO shirking penalties for fraudulent voice traffic

Smart Communications Inc., hit back at DITO Telecommunity Corporation saying its accusation of anti-competitive behavior is baseless, a ploy to shirk huge penalties for the fraudulent voice traffic it fails to control in its network, to the detriment of Smart and the government.

While Smart has yet to receive a copy of the complaint which DITO filed with the Philippine Competition Commission (PCC), the telco company issued a statement Tuesday, Aug. 9, assuring the public that it is not engaged in any act constituting abuse of dominant position against DITO.

"DITO falsely claimed that its subscribers are not being allowed to interconnect with the Smart network," said Smart Vice President for Regulatory Affairs Atty. Roy Ibay in the statement.

“Smart and DITO have an existing interconnection agreement, which Smart continues to honor. DITO is now requesting for additional capacity, and has raised this via petition to the National Telecommunications Commission (NTC), where it is pending. DITO’s filing of the PCC complaint on the same subject-matter is blatant forum-shopping,” he continued.

In its petition with the National Telecommunications Commission, DITO asked for extra capacity for interconnection, citing congestion and overutilization of trunks.

However, Smart argued that before asking for extra capacity, DITO should first clamp down on its subscribers who have abused the interconnection framework to make fraudulent international calls to Smart subscribers under local rates.

“Simply put, DITO has failed to prevent its network from being misused for fraud, with DITO SIMs masking international calls as domestic, resulting in huge monetary losses for Smart,” Ibay underscored.

Smart claimed that because of its robust monitoring and fraud detection systems, the company is able to track and block such illegal calls emanating from its end.

“Smart reiterates its willingness to grant DITO’s request for capacity augmentation, provided that it sign an agreement to compensate Smart fairly in the event that such fraudulent calls continue to proliferate," he added.

"Otherwise, Smart cannot allow its interconnection arrangement with DITO to perpetuate fraud."

The illegal bypass activities committed by DITO subscribers to the detriment of Smart also negatively impact on the Philippine government, depriving it of the corresponding tax revenues from international voice traffic that could have been used to provide basic public services, Atty. Ibay maintained.

“It is a disturbing development that while Smart continues to interconnect with DITO despite these outstanding issues and while we were still negotiating with DITO on a bypass agreement, DITO now attempts to avoid liability for these fraudulent international calls by filing a baseless complaint with the PCC accusing Smart of anti-competitive behavior."

"It should have instead acknowledged that PLDT, Smart’s parent company, was instrumental in helping DITO fulfill its commitments to the NTC and Congress as a third telco, considering that PLDT built for DITO a big portion of its telco infrastructure,” said Ibay.

In response, DITO issued a rejoinder Wednesday morning, Aug. 10.

"Interestingly, Smart has taken a similar approach as Globe in regard their position on the Philippine Competition Commission complaints that DITO filed," stated Chief Administrative Officer Atty. Adel Tamano.

Firstly, Smart’s usage of the ISR (International Simple Resale) issue is an admission that they are making interconnection, which is mandated by law, subject to the acceptance of their request for compensation.

Secondly, as with Globe, informing the media about these alleged interconnection penalties or ISR is a disclosure of confidential business information that is a violation of the PCC’s rules of procedure.

However, given that they have already publicly disclosed this information, then DITO has a right to respond.

Thirdly, these ISR calls are not made by DITO. Rather, these are fraudulent calls made by third parties – and DITO is equally a victim of such calls.

"Additionally, there are also ISR calls from Smart to DITO. It is not true that DITO has not taken steps to stop ISR calls to Smart. We have the data and the facts to show the steps undertaken by DITO to minimize these ISR calls," Tamano emphasized.

Fourthly, on the issue of forum shopping, there is no forum shopping in this case as the petitions with the NTC are for violations of the Telecom Policy Act and the corresponding NTC Memorandum Circulars.

The complaints with the PCC are anchored on violations of the Philippine Competition Act for abuse of dominant position.

These are two very different causes of action, with different tribunals, which have distinct jurisdictions.

On the matter of PLDT building a big part of its telco infrastructure, this was paid for by DITO.

"It was not done gratis et amore," he reiterated. "And the building of that infrastructure was done in compliance with the legal mandate for interconnection and not to help DITO fulfill its commitments to the NTC and Congress."