Interconnection Rules for Philippine Telecoms

Legal Framework and Policy Basis

The circular is anchored on the liberalized telecommunications policy under Republic Act No. 7925 (telecommunications liberalization).
It implements the State mandate under Executive Order No. 59, Series of 1993, which requires interconnection of public telecommunications entities.
The Commission is vested with authority to ensure more effective use of affordable telecommunications facilities and to maintain healthy and effective competition through interconnection regulation.
The circular’s policy aims include universal access, end-to-end interoperability, transparency, nondiscrimination, equality of access, and consumer/user protection.

Applicability and Key Definitions

These rules apply to all duly authorized Public Telecommunications Entities (PTEs).
A PTE is any person, firm, partnership, or corporation (government or private) duly enfranchised and authorized by the Commission to provide telecommunications services to the public for compensation.
Interconnection is the linkage (by wire, radio, satellite, or other means) of two or more existing PTEs to enable their subscribers/customers to access each other.
Interoperability covers technical features of interconnected systems that ensure end-to-end service delivery in a consistent and predictable way.
Access Charges are remuneration paid by an interconnecting PTE to an access provider for accessing facilities and/or customer base needed for origination, termination and/or transiting traffic from interconnection.
Access Seeker requests access to a network/system/facilities/customer base of another PTE; Access Provider is requested to provide such access.
Point of Interconnection (POI) is the designated interconnection point where one PTE’s responsibility starts and the other carrier’s responsibility ends.
Meet Point is a designated interconnection point where one PTE’s responsibility begins and the other’s ends under a meet point arrangement.
Major Supplier is a PTE able to materially affect the market through control of essential facilities and market position, and Market Power is the ability to raise and maintain prices above competitive levels and act independently of competitors and consumers.
Customer Premises Equipment (CPE) is equipment in a customer’s premises not part of, but connected to, a PTE’s system/network.

Mandatory Interconnection Rules

Interconnection must enable subscribers/customers of two PTEs to communicate (any-to-any).
Interconnection must provide end-to-end interoperability across interfaces of sufficient functionality.
Interconnection must follow fair compensation, timely settlement, and service usage rules, and must not involve irregular or illegal traffic access or bypass.
PTEs must have equal responsibility to interconnect and must carry out interconnection swiftly and efficiently.
Requests for interconnection must be satisfied in a timely manner, and interconnection must be prompt, efficient, and seamless for both end-users.
Interconnection agreements must satisfy government telecommunications policies and international commitments.
All duly authorized PTEs must interconnect with one another.
Interconnection must be ensured at any technically feasible point, under:
- Non-discriminatory terms, conditions (including technical standards/specifications), and charges with quality no less favorable than for the provider’s own like services or those of non-affiliated suppliers/affiliates; and
- Transparent, reasonable, cost-based and sufficiently unbundled terms so the supplier does not pay for network components not required for the service being provided.
Interconnection must result in a universally accessible and fully integrated nationwide telecommunications network for public benefit.
Within the same local calling area, PTEs must interconnect on a direct basis unless IXC-based routing is more feasible or efficient, and no additional charges may be passed on to end-users.
Interconnection across different local calling areas must be through an IXC network, with further requirements for cases where both are IXCs.

PTE Duties, Prohibited Conduct, and Continuity

All PTEs must, among others:
- Provide interconnection at cost-based charges in a sufficiently unbundled manner.
- Negotiate in good faith for interconnection agreement terms.
- Interconnect directly with other PTEs’ facilities/equipment to allow access to all types of services available to both parties’ customers.
- Install network features/functions/capabilities necessary for interconnection.
- Provide non-discriminatory access to network elements at any technically feasible point under just and reasonable charges/terms.
- Provide unbundled network elements so requesting carriers can combine them to provide telecommunications service.
- Provide, in a timely manner, data and other relevant necessities for efficient, timely, and reliable interconnection.
- Not abuse information obtained from competitors regarding interconnection.
A Major Supplier must not engage in anti-competitive cross subsidization to subsidiaries/affiliates or with other PTEs, and must not commit other acts similar to these.
An Access Provider must:
- Treat each interconnecting party seeking access on non-discriminatory, no-less-favorable terms and rates as for the provider’s own and materially equivalent services to its affiliates/other PTEs.
- Treat each subscriber/customer of an interconnecting party on non-discriminatory, no-less-favorable terms as for the access provider’s own customers or materially equivalent service customers.
- Deal with each interconnecting party non-discriminatorily regarding technical/operational quality, including quality, availability, time of provision, and technical standards/specifications.
No PTE shall disconnect, disrupt, or discontinue interconnection or bar/impede end-user access to services of an interconnected PTE without prior written approval of the Commission.

Interconnection Agreements, Mandates, and Dispute Flow

PTEs may negotiate and enter interconnection agreements on their initiative.
An access seeker must serve an access provider its request/demand for interconnection, and must furnish the Commission a copy with proof of service on the other party.
The interconnection request must include key technical and commercial information, including:
- Copies of the access seeker’s legislative franchise and CPCN/PA.
- System/network configuration, proposed POI/s, trunk requirements and signaling system.
- Proposed traffic routing and numbering scheme.
- Traffic forecast and assumptions for at least five (5) years.
- Traffic types/systems covered, proposed interface, proposed implementation schedule.
- List of suitable existing exchanges and number of lines available.
- Compensation scheme and proposed access charge/settlement procedure.
The access provider must serve a counter-proposal/reply within ten (10) days from receipt of the request/demand.
Parties must discuss, negotiate, and execute the interconnection agreement and submit it to the Commission for approval within ninety (90) days from the Commission-received notice copy.
If the agreement expires without extension or a new agreement being executed, the interconnection agreement continues in full force except for the compensation scheme; any new/revised compensation scheme retroacts to the date following expiration.
The Commission may mediate between parties at its own initiative and at any stage of negotiation.
If both PTEs refuse to negotiate, the Commission may intervene upon complaint or motu proprio, assume jurisdiction, and direct physical interconnection under terms it deems proper.
Even during mandated interconnection, the parties must be given ninety (90) days from notice of filing of the complaint to negotiate and execute an interconnection agreement; until execution, the interconnection mandate remains in full force and effect.
Any negotiated interconnection agreement must be submitted to the Commission within ten (10) days from execution.
The Commission may disapprove agreements for legally/regulated-inconsistent terms, lack of minimum required provisions, discrimination against non-parties, unreasonable or non-cost-based/discriminatory compensation/rates/charges, inconsistencies with national security/public interest, public morals/safety conflicts, and other just and valid causes in the interest of public service and convenience.
The Commission must notify approval/disapproval within thirty (30) days from submission; failure to act within this period results in deemed approval.
Compulsory arbitration/interconnection mandate may proceed:
- When parties fail to agree within the ninety (90) days window, and the Commission can initiate motu propio or upon petition by interested persons or local government unit where parties operate.
- The Commission immediately assumes jurisdiction, directs provisional interconnection, and sets governing commercial/technical terms.
- The Commission requires responsive pleadings within a non-extendible period of (10) days from receipt; the case is deemed submitted after responsiveness (or after reply/rejoinder if ordered).
- Resolution must be issued within thirty (30) days from submission for resolution, and the mandate is final and immediately executory.
The Commission must consider public interest, necessity and convenience of interconnection, viability of alternatives, equal access arrangements, network integrity and interoperability, market positions, promotion of competition, and universal access when mandating.
Interconnection agreements or mandates may be revised, amended, or revoked by the Commission for just and valid cause after due notice and hearing in the interest of public service.

Minimum Agreement Terms and Mandatory Standards

Interconnection agreements and mandates must include, at minimum:
- Commercial and financial relations, including terms of payment and billing/collection procedures.
- Requirements for exchanging information and the notice frequency/periodicity.
- Procedures for proposed alterations to the interconnection offer.
- Definition/limitation of liability and indemnity.
- Procedures/legal remedies for degradation of service.
- Intellectual property rights where applicable.
- Duration, conditions, mechanics of re-negotiation.
- Provisions governing requests/offers for new types of interconnection.
Agreements must include interconnection service and remuneration terms for:
- Access to basic services, including switching and leased lines for public network operators.
- Access to supplementary services.
- Billing services for third parties.
- Collocation provisions.
Agreements must include technical provisions covering:
- Measures enabling equal access and equivalent formats.
- Measures to ensure compliance with essential requirements.
- Comprehensive interconnect interface description.
- Service quality (availability, security, efficiency, synchronization).
- Traffic routing arrangements.
Agreements must include arrangements for:
- Traffic forecasting, implementation of interconnect interfaces, and leased line termination point identification and provision timeframes.
- Designation of POIs and physical interconnection arrangements.
- Reciprocal sizing of interface equipment and systems common to both networks.
- Testing for interface operation and service interoperability.
- Fault clearing and recording.
Interconnection operations must comply with technical and operational requirements under approved agreements or Commission mandates and must comply with standards specified in NTC MC 10-17-90 (Service Performance Standards) and NTC MC 10-16-90 (Technical Standards), plus standards the Commission later prescribes.
Parties must:
- Cooperate and provide facilities for testing.
- Agree on standard trouble reporting/testing procedures and share information for efficient message routing.
- Exchange traffic and facility forecasts at least semi-annually, including network/interconnection-relevant information and lists of suitable exchanges and lines.
- Provide additional circuits based on 30 days of separately but simultaneously conducted traffic measurements/studies, comparing results and agreeing on circuit additions.
- Not count misrouted or unauthorized traffic in computing required circuits.
- Complete additional circuits within 15 days after the circuits are agreed upon.
- Deactivate excess trunks within 15 days from written notice if underutilized, subject to evidence requirements for urgent alternate use or consistent under-utilization over at least six (6) months.

Call Measurement, Settlement, and Charge Collection

Parties must measure both outgoing and incoming calls from their respective networks.
Each party must bill and collect payments for:
- All outgoing paid calls made by its own subscribers/customers; and
- If agreed by parties, incoming collect calls from another party’s subscribers/customers.
Unless otherwise agreed, billing/collection for outgoing calls using an IXC or IGF facility of another party is the responsibility of that IXC or IGF operator.
Parties must submit settlement statements to each other within sixty (60) days from the end of the month the statement pertains to, using mutually agreed required data.
If a party fails to submit within the sixty (60) days period, available data are used for reconciliation and statement.
The party who failed to submit may contest/dispute reconciled data within three (3) months from the transaction month; thereafter, it is barred to dispute.
If the receivable party disagrees with settlement statements, it must send its own reconciliation statement within sixty (60) days from receipt.
A payable party must pay undisputed calls within thirty (30) days from receipt of the receivable party’s billing statement.
Settlement disputes follow variance rules:
- If variance is 4% or lower: pay the lower amount reflected in the two reconciliation statements.
- If variance is more than 4% but not more than 7%: pay the lower amount plus 50% of the variance amount.
- If variance exceeds 7%: parties have 30 days to settle; if not settled, refer to the Commission for arbitration.
Proceedings in disputes under this section are summary in nature and the Commission resolves within thirty (30) days from submission for resolution.
For International Calls:
- Collection from foreign administrations for incoming paid calls and outgoing collect calls is the responsibility of the IGF operator that received/sent the international paid calls.
- Interconnect charges for a particular month must be settled within 30 calendar days from receiving the statement through a toll journal mutually agreed upon.
- Within 15 days from receipt of the toll journal, the payable party must send a reconciliation statement; otherwise the toll journal is deemed accepted.
Payment modes, and interests/penalties/surcharges for late payments must be mutually agreed by the parties.

Points of Interconnection, Equal Access, and Capacity

POIs must be established and maintained at mutually agreed technically feasible points in each carrier’s system/network, or at points mandated by the Commission.
For agreements between LECs and IXCs/IGF operators, the LEC must program and activate the IXC/IGF access code assigned by the NTC so subscribers can access their chosen long-distance carrier.
When an LEC upgrades to stored program control (SPC) exchanges, it must implement an equal access preprogrammed option and still allow subscriber freedom of selection of inter-exchange or international gateway operators.
The access seeker must provide sufficient POI/POP details for network conditioning evaluation and cost estimation.
For IXC-to-IXC interconnection:
- Each carrier bears its own port, data fill, and switch costs to support a POI.
- The parties share interconnect capacity costs equally.

Interconnection Links, Trunk Costs, and Subsidies

Interconnection links and trunks needed to effect interconnection are provided by each interconnecting party according to respective traffic requirements on a 50-50 basis, unless otherwise provided; other terminating facilities installed at each party’s premises are borne by each party.
In inter-exchange interconnections, the IXC provides interconnecting facilities up to the LEC’s MDF, but only where the LEC has total system-wide exchange line capacity not exceeding five thousand (5,000), and applies only to LECs that do not offer services other than VAS; otherwise the preceding section applies except as otherwise agreed.
The IGF operator provides interconnecting trunks up to the LEC’s MDF where the IXC cannot provide facilities; if the LEC is also an IXC, the IGF-to-LEC interconnection proceeds through the LEC’s IXC facility.
POI locations are prescribed by routing categories unless specified otherwise by the Commission, including:
- LEC-to-LEC cases within a local calling area using direct interconnection for single-switch LECs, and tandem interconnection requirements where multi-switch structures exist.
- LEC-to-IXC to the nearest IXC point with POI established within the LEC’s service area.
- LEC-to-IGF and LEC-to-CMTS, LEC-to-TRN, and other listed combinations with stated POI placement requirements in the LEC’s service area and nearest-point rules.
- IXC-to-IXC interconnection at all regions if technically feasible.
Interconnect facility costs and ownership:
- Unless otherwise agreed or provided in existing memorandum circulars, parties jointly and equally provide and share interconnect facility costs necessary to interconnect their systems.
- For an IXC–LEC interconnection where the LEC has less than 5,000 total system-wide exchange line capacity and provides only VAS, the IXC shoulders the interconnection cost.
- Parties may agree an advancing party advances costs at its own expense.
- Beneficial/legal ownership of facilities at the reimbursing party’s premises vests upon full payment of half of the interconnection costs (or as mutually agreed).
- No fees may be collected from a party for collocation of indispensable interconnection facilities within another party’s premises for basic service interconnection.
LEC network subsidy framework:
- Charges for basic interconnection include access charges for network interconnect usage and a network interconnect subsidy for the LEC (where the other party is not a LEC).
- The LEC subsidy does not apply where the interconnected networks are both LECs.
- IGF and CMTS operators are not exempt from providing the LEC network interconnection subsidy when they interconnect with another carrier’s local exchange.
- The Commission prescribes the interconnect subsidy for access deficit, high cost service areas, and universal access support.
- National and international long distance calls and CMTS calls originated and/or terminated by PTEs include the appropriate interconnect subsidy, which is collected and remitted to the LECs.
- Where an access provider offers competing services, interconnect service charges are imputed to the access seeker’s competing service through internal transfer pricing arrangements between service categories.

Charging Guidelines and Technical Requirements

Interconnect service charges must promote efficient and sustainable competition for the public and promote economic and efficient network use.
Interconnection charges in agreements must follow objectivity, transparency, reciprocity, and non-discrimination; undue excessive charges are not allowed.
Charges should match cost causation patterns: fixed costs produce fixed charges; usage costs produce usage charges.
Interconnect service charges must be transparent and unbundled so the interconnecting PTE does not pay for network elements/equipment/facilities/components it does not need for interconnection.
Specific charges must be based on long run incremental costs of providing the services, but this requirement applies only once the Commission prescribes a specific cost methodology.
Interconnect services are classified as:
- Basic interconnection service: regular call conveyance including origination and call termination of basic telecommunications services.
- Ancillary interconnection service: conveyance involving enhanced services, or to enable services such as Equal Access, Carrier Pre-subscription, Number Portability, Directory Inquiry, Operator-Assistance, and Emergency Services, or use of certain network elements like call-related databases not essential for basic interconnection; provision depends on the service provider.
Ancillary interconnection service charges should be based on costs of providing the specific ancillary interconnect services requested, including:
- Non-recurring (one-time) and recurring (rental) costs (engineering, specific equipment, signaling resources, compatibility testing, connection maintenance).
- Variable charges for directory/operator assistance, data collection, billing, switched-based, and advanced services whenever applicable.

Grade of Service and Capacity Provisioning

Interconnection must be for sufficient capacity to meet all reasonable traffic demands between the systems, implemented within a reasonable timeframe.
The Commission, in consultation with industry, must develop codes of practice for forecasting, ordering, and provisioning interconnection capacity.
A PTE may request additional interconnection capacity from another interconnected PTE; the request must include:
- The number of additional interconnection capacity needed,
- The approximate date it must be provisioned/activated, and
- A traffic study referred to in the referenced capacity study provisions.
Requests for provisioning/activation of additional capacity must be filed with the Commission no later than the day the request is served on the other party.
The access provider must provide, within ten (10) days from receipt of the request copy furnished to the Commission, whether it will grant the request, whether it can do so within required time frames, and if not, specific detailed justification.
If the access provider indicates it can provide capacity, it must perform system conditioning and provisioning procedures within agreed periods.
Grade of service requirement:
- Both PTEs must provide grade of service P.01 or one percent (1%) blocking starting at the point of interconnection and throughout their networks.
Capacity and traffic forecasting rules:
- Parties must ensure sufficient trunk/interconnect facilities at each POI to meet prescribed grade of service.
- If the grade of service fails, both parties must immediately implement solutions to achieve the required grade of service.
- Parties must exchange traffic and facility forecasts with actual measurements and parameters at least once every three (3) months and exchange basic interconnection-relevant network and exchange/line information.
- Parties must provide additional circuits based on 30 days simultaneous studies; if traffic data do not tally, the additional trunks count uses agreed traffic data not less than half the difference between the two parties’ traffic data.
- Additional trunks must be placed in operation not later than 15 days from agreement.
- For LEC-to-LEC when traffic data are not available, initial capacity is computed using the Erlang B equation with grade of service at P.01 and assuming 0.12 Erlang traffic per subscriber line during busy hour.
- For other network interconnection types, the number of interconnect trunks/subscriber lines must be initially mutually agreed, then adjusted based on actual measured traffic.

Access to Unbundled Network Elements

An access provider may provide an access seeker access to its network elements on an unbundled basis for provision of telecommunications service.
Unbundled network element access includes providing a connection to an unbundled network element independent of the provider’s interconnection to the access seeker.
The access provider must provide access to unbundled network elements with all unbundled elements features/functions/capabilities so the requesting PTE can provide any telecommunications service that can be offered using that network element.
An access provider may offer, on just/reasonable and non-discriminatory commercial terms, technically feasible methods of obtaining interconnection or access to unbundled network elements at a requested point.
Unbundled access is linked through meet point interconnection arrangements unless otherwise agreed, with POI placement rules applying where the access provider is a LEC.

Efficient Provisioning and Network Change Notice

A PTE must provide reasonable advance notice to all other interconnected PTEs of planned changes to its telecommunications services.
Parties must ensure additional circuits/trunks are operational within prescribed timeframes following agreement.
Parties must deactivate excess trunks when underutilized, subject to evidentiary requirements for disconnection requests and the specified underutilization period.