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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) PHILIPPINE LONG DISTANCE) TELEPHONE COMPANY,)File No. E-95-26 Complainant,) v.) ) DIALBACK USA, INC.,) Defendant.) MEMORANDUM OPINION AND ORDER Adopted: August 8, 1997; Released: August 13, 1997 By the Chief, Common Carrier Bureau: I. INTRODUCTION 1.The Philippine Long Distance Telephone Company (PLDT) filed the above-captioned complaint against DialBack USA, Inc. (DialBack), alleging, inter alia, that DialBack has violated Sections 203 and 214 of the Communications Act of 1934, as amended (Act), as well as requirements set forth in the Commission's Call-Back Proceeding. Specifically, PLDT alleges that DialBack failed to secure Commission authorization under Section 214 of the Act and failed to file a tariff prior to providing its call- back, or call reorigination, service. PLDT further alleges that DialBack offers its service to customers in the Philippines where, according to PLDT, such a service is illegal. Thus, argues PLDT, DialBack's actions also violate the Commission's orders in the Call-Back Proceeding. PLDT also seeks an award of damages. For the reasons discussed below, we grant PLDT's complaint to the extent described in this Order. II. BACKGROUND 2.DialBack provides international long distance telephone service utilizing the "uncompleted call signalling" configuration of "call-back." PLDT claims that DialBack provides such service by reselling the services of facilities-based common carriers. Uncompleted call signalling, also known as "code calling," is an activity in which a reseller assigns its foreign customer a specific telephone number in the United States and instructs the customer to call that number whenever the customer wants to place a call and hang up after a specified number of rings. The reseller's switch then places an outbound call to the foreign customer and provides the customer with a United States dial tone that can be used to complete calls to the United States or elsewhere. The resulting call is placed at U.S.-tariffed rates which are generally lower than those of the originating country. 3.DialBack markets its international telephone service in the Philippines, and it has activated telephone lines for hundreds of subscribers in the Philippines, including "multinational companies, exporters, importers, stockbrokers, travel agencies, entrepreneurs and expats [sic]." DialBack charges each customer a one-time activation fee and requires a monthly minimum usage; all customers in a given location are charged identical rates for long distance service. III. THE PLEADINGS 4.In its complaint, PLDT alleges three violations by Dialback. First, PLDT asserts that DialBack is providing international common carrier telephone service using call-back without Commission authorization, which, PLDT argues, violates Section 214 of the Act. Second, PLDT asserts that DialBack is providing its service without having a tariff on file with the Commission in violation of Section 203 of the Act. Third, PLDT claims that the government of the Philippines prohibits service that uses call-back and that DialBack is violating the Commission's policy that prohibits U.S. carriers from providing service to countries in a manner inconsistent with the laws of that country. 5.By Notice of Formal Complaint, the Formal Complaints and Investigations Branch of the Common Carrier Bureau directed DialBack to answer PLDT's complaint no later than June 23, 1995, and to retain all records which may be relevant to the complaint. DialBack responded by letter to Commission counsel for this proceeding, stating that it would not file an answer to the complaint. In addition, DialBack stated in its letter that, due to financial difficulties, it was terminating its operation, and provided a Philippine address for future correspondence. In this letter, DialBack's only communication to the Commission or to PLDT regarding this proceeding, DialBack does not deny, or make any reference to, the allegations in the complaint. 6. PLDT has filed an Emergency Motion for Default and Summary Judgment, asserting that DialBack's letter to Commission counsel did not constitute an answer as contemplated by the Commission's rules and that the Commission should find DialBack to be in default. PLDT also asserts in its Motion that because DialBack failed to deny any of the allegations in the complaint, the Commission should deem those allegations to be admitted by DialBack, and the Motion for Summary Judgment should be granted. PLDT later served interrogatories and moved to compel answers to its interrogatories from DialBack, to which DialBack also failed to respond. 7. PLDT asks the Commission to order DialBack to terminate immediately its international telephone service using a call-back configuration in the Philippines, and to order DialBack to cease and desist all international telephone service unless and until it receives Section 214 authorization and files tariffs. PLDT also asks the Commission to assess a forfeiture against DialBack for its unlawful activity, and to award compensatory damages to PLDT as may be determined to be appropriate. IV. DISCUSSION 8.Section 1.724(a) of the Commission's rules requires the defendant to a complaint action to answer the complaint within thirty days, or as otherwise directed by the Commission. Section 1.724(b) states that "[a]ny party failing to file and serve an answer within the time and in the manner prescribed by these rules may be deemed in default and an order may be entered against defendant in accordance with the allegations contained in the complaint." Further, pursuant to Section 1.724(d), the averments contained in a complaint "are deemed to be admitted when not denied . . . ." In this proceeding, DialBack has expressly declined to answer the complaint as required under the Commission's rules. Therefore, pursuant to Sections 1.724(b) and 1.724(d), we find DialBack to be in default and the averments contained in the complaint to be admitted. Specifically, we find that DialBack admits that it is a reseller of international common carrier service to the Philippines operating without Section 214 authorization or a tariff, and that such service is offered utilizing an uncompleted call signalling configuration of call-back. 9.PLDT has submitted into the record marketing materials distributed by DialBack that support the factual allegations deemed to be admitted by DialBack. In an order resolving a formal complaint filed by PLDT against a different defendant, the Commission found similar marketing materials sufficient to support a finding that the defendant was providing international common carrier telephone service to the Philippines using call-back. The Commission also concluded in that case that "the government of the Philippines has, by law, regulation, or ruling, prohibited call-back in the Philippines." Accordingly, the Commission found that the defendant violated the Call-Back Proceeding by providing international common carrier telephone service to the Philippines using call-back without first obtaining authorization under Section 214. The Commission also found that the defendant violated the requirements of its Call-Back Proceeding by providing service using call-back to a country that prohibits such service. 10.Because the operative facts alleged and deemed admitted in this proceeding are substantially the same as those found by the Commission to constitute violations in PLDT v. ITL, we grant PLDT's instant complaint. Our decision to grant PLDT's complaint as a result of DialBack's default renders PLDT's Emergency Motion for Default and Summary Judgment moot, and we dismiss it as such. Because we have deemed the allegations in PLDT's complaint to be admitted, we also dismiss PLDT's Motion to Compel as moot. Because DialBack is apparently no longer providing international telephone service, PLDT's request to order DialBack to cease and desist provision of such service is also moot. 11.PLDT has also asked us to assess a forfeiture against DialBack. While we may, on our own motion, pursuant to Section 503(b) of the Act, 47 U.S.C.  503(b), and Section 1.80 of our rules, 47 C.F.R.  1.80, assess a forfeiture against any person found to have willfully or repeatedly violated any provision of the Act or any Commission rule, regulation, or order, we decline to do so here. Forfeitures are payable to the United States, and, as such, are not available as a remedy to a complainant in a formal complaint proceeding. V. CONCLUSION 12.We have reviewed the materials submitted by the complainant and considered the defendant's failure to respond. For the reasons discussed above, we find that DialBack has violated Sections 203 and 214 of the Act, as amended, 47 U.S.C.  203, 214, and the requirements of our Call-Back Proceeding. Pursuant to Section 1.722 of the Commission's rules, PLDT may file a supplemental complaint for damages within 60 days after the release of this order. In this supplemental proceeding, the parties will have a full and fair opportunity to build a record on damages. VI. ORDERING CLAUSES 13.Accordingly, IT IS ORDERED, pursuant to section 1.724 of the Commission's rules, 47 C.F.R.  1.724, that the defendant in this proceeding, DialBack, IS IN DEFAULT and the averments contained in PLDT's complaint ARE DEEMED ADMITTED. 14.IT IS FURTHER ORDERED, pursuant to Sections 1, 4(i), 4(j), 203, 208, and 214 of Act, as amended, 47 U.S.C.  151, 154(i), 154(j), 203, 208, 214, and sections 0.91, 0.291 and 1.724 of the Commission's rules, 47 C.F.R.  0.91, 0.291, 1.724, that the complaint filed by PLDT IS GRANTED to the extent indicated herein. 15.IT IS FURTHER ORDERED that PLDT's Emergency Motion For Default and Summary Judgment and Motion to Compel ARE DISMISSED as moot. 16.IT IS FURTHER ORDERED that PLDT's request to order DialBack to cease and desist provision of international telephone service IS DISMISSED as moot. 17.IT IS FURTHER ORDERED that PLDT, in accordance with the Commission's rules, see 47 C.F.R.  1.722, MAY FILE a supplemental complaint concerning damages within 60 days after the release date of this order. FEDERAL COMMUNICATIONS COMMISSION Mary Beth Richards Deputy Chief, Common Carrier Bureau