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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 HI-RIM COMMUNICATIONS, INC., ) ) Complainant, ) ) v. ) File No. E-96-18 ) MCI TELECOMMUNICATIONS ) CORPORATION, ) ) Defendant. ) ) MEMORANDUM OPINION AND ORDER Adopted: August 25, 1997; Released: August 25, 1997 By the Deputy Chief, Common Carrier Bureau: I. INTRODUCTION 1. This Memorandum Opinion and Order addresses a complaint filed by Hi-Rim Communications, Inc. ("Hi-Rim") against MCI Telecommunications Corporation ("MCI"), pursuant to Section 208 of the Communications Act of 1934, as amended (the "Act"). Hi-Rim alleges that MCI unlawfully billed Hi-Rim over a four-month "relevant period" for calls that were uncompleted, interrupted, or rang busy, in violation of Section 201(b) of the Act, and MCI's international tariff filed with the Commission pursuant to Section 203(a) of the Act. Hi-Rim seeks an order declaring MCI to be liable under Section 201(b) for engaging in billing practices that are not just and reasonable, and seeks to establish the precise amount of its damages through filing of a supplemental complaint pursuant to Section 1.722(b) of the Commission's rules. For the reasons discussed below, we deny Hi-Rim's complaint. II. BACKGROUND 2. Complainant Hi-Rim is a reseller of interexchange and international telecommunications services. MCI is a provider of domestic interstate and international services. Hi-Rim purchased domestic interexchange and international telecommunications services, also referred to as "switched" and "switchless" products, from MCI, and resold them to its customers pursuant to a carrier agreement entered into on or about May 25, 1995 (the "1995 agreement"). All of Hi-Rim's customer traffic using MCI's "switched" product was routed through Hi-Rim's own switch and the customers were billed based upon call records produced by Hi-Rim's own switch. In contrast, Hi-Rim's customer traffic that used MCI's "switchless" product was routed through MCI's switch, and the customers were billed based upon the call records that MCI provided to Hi- Rim. 3. According to Hi-Rim, sometime in late 1995, Hi-Rim discovered apparent discrepancies in MCI's bills for switched international telephone calls, and Hi-Rim informed MCI about the problem. The fact that during the period covered by the complaint Hi-Rim complained to MCI that it was being billed for uncompleted, interrupted, and rang busy calls, is undisputed. According to MCI, in order to address Hi-Rim's concerns, MCI needed supporting documentation from Hi-Rim, but such documentation was not provided. Upon investigating MCI's invoices to Hi- Rim for international telephone calls, and complaints from Hi-Rim customers, Hi-Rim identified what it considered to be instances of over-billing for such calls on each invoice. The disputed calls totalled more than eight million minutes for international long distance service. MCI did not provide Hi-Rim with credits for any of the disputed calls. III. DISCUSSION 4. Hi-Rim's Allegations. Hi-Rim alleges that after the parties started operating under the 1995 agreement, Hi-Rim was billed over a four-month period (September through December 1995), for 396,000 calls that were uncompleted, interrupted, or which rang busy, and that Hi-Rim complained to MCI about the billing for such calls. Hi-Rim claims that it lost revenue, customers, and agents due to these billings. Hi-Rim also claims that it provided documentation to MCI of the disputed billings. 5. Hi-Rim contends that the standard practice in the telephone industry is that a caller cannot be billed for making a call that is unanswered. In support thereof, Hi-Rim cites to its own standard Switch Termination Agreement that it employed in 1994, which states that unanswered calls will not be billed, MCI's faxed correspondence with Hi-Rim containing terms-and-conditions language that "the inbound portion of the call only applies if the call is completed", and MCI's letter to Hi-Rim that "pursuant to MCI's [FCC] Tariff No. 1 MCI does not charge any of its customers for calls which are unanswered". Hi-Rim states that pursuant to Sections 153(h), 203(a) and 203(c) of the Communications Act, MCI is required not only to file a tariff showing all charges for each of its communications services, but also to provide telecommunications services in strict adherence to the tariff provisions that have been filed with the FCC. Citing Carter v. American Tel. & Tel. Co., Hi-Rim states further that court decisions have made it clear that violating a filed tariff is the same as violating the law; it is not merely a breach of contract. Hi-Rim asserts that "MCI's conduct in billing for incomplete calls violates the Communications Act because the Act explicitly requires that carriers' charges be reasonable." Hi-Rim further asserts that "[b]y MCI's own admission, it is not reasonable to charge a customer for a call that was not answered or was otherwise interrupted before completion. Therefore, MCI's conduct violates Section 203(b)." 6. MCI's Response. MCI concedes that Hi-Rim complained to MCI about inaccurate billing. It asserts, however, that despite its requests, Hi-Rim failed to provide MCI with documentation to support its claims. MCI also asserts that "at all times relevant to this complaint and in all its dealings with Hi-Rim, [MCI] billed Hi-Rim in complete compliance with its tariff and the Communications Act." MCI denies any wrongdoing and disputes the probability that Hi-Rim was billed for calls that were unanswered, interrupted, or which rang busy. MCI states that its traffic agreements with foreign entities that interconnect their networks to MCI's network require "Answer Supervision," and, therefore, the likelihood of any billing for uncompleted calls is highly remote. MCI states that, notwithstanding Hi-Rim's failure to provide any substantiating documentation, MCI conducted an investigation and determined that there was no problem in its network or the networks of the international entities with whom MCI interconnects in order to provide international service to its customers. MCI claims that it subsequently terminated its agreement with Hi-Rim for non-payment of charges for services provided by MCI. MCI asserts that pursuant to its tariff FCC No. 1, Section B-7.01 Hi-Rim's responsibility for payment of all charges for services furnished by MCI was absolute. According to MCI, Hi-Rim owed MCI in excess of $21 million at the time of service discontinuance. 7. MCI alleges that Hi-Rim's complaint is frivolously filed to compel MCI to settle with it for less than the $21 million that Hi-Rim allegedly owes MCI, and to foreclose MCI from bringing a collection action against Hi-Rim. MCI also alleges that Hi-Rim's "conduct" constitutes an abuse of the Commission's formal complaint processes. MCI contends that Hi-Rim has failed to make the requisite evidentiary showing because it has not provided evidence that supports Hi-Rim's claims brought pursuant to Section 208 of the Communications Act. MCI also contends that Hi-Rim has not met its threshold burden of establishing a prima facie case that MCI violated the Act. 8. Discussion The gravamen of the dispute before the Commission is whether MCI engaged in billing practices that violate Sections 201(b) and 203(b) of the Act. In pertinent part, Section 201(b) requires that "[a]ll charges, practices, classifications, and regulations for and in connection with . . . communication service, shall be just and reasonable, and any such charge, practice, classification, or regulation that is unjust or unreasonable is . . . declared to be unlawful[.]" In pertinent part, Section 203(b) provides that "[n]o change shall be made in the charges . . . which have been so filed and published except after . . . notice to the Commission and to the public, which shall be published in such form and contain such information as the Commission may by regulations prescribe." To prove that MCI violated the provisions of Sections 201(b) and 203(b), Hi-Rim must establish that MCI engaged in billing for uncompleted, interrupted, and rang busy calls. The keystone for determining whether MCI did, in fact, bill for uncompleted, interrupted, or rang-busy calls is the information furnished by the parties. As discussed below, we find that Hi-Rim has not met its burden of proof in establishing that MCI unlawfully billed Hi-Rim for 396,000 calls that were uncompleted, interrupted, or which rang busy. 9. It is well established that, in a Section 208 formal complaint proceeding, the complainant has the burden of establishing a violation of the Act or of the Commission's rules or orders. Under the Commission's general pleading and format requirements, formal complaints against common carriers must, inter alia, contain a complete statement of facts which, if true, are sufficient to constitute a violation of the Act, Commission rules or order. The Commission's rules provide that facts must be supported by affidavits or other relevant documentation. The rules also require complainants to describe "fully and clearly the specific act or thing complained of, together with such facts as are necessary to give a full understanding of the matter, including relevant legal and documentary support." 10. To support its complaint, Hi-Rim attached a variety of exhibits to its brief, including: the 1995 agreement itself; MCI's verified answer; Hi-Rim's standard switch termination agreement; MCI's faxed memo outlining terms and conditions for wholesale debit card; one page each of the deposition of Hi-Rim's Vice-President Wayne Godbout and a MCI person; copy of the international portion of a November 1995 invoice; and correspondence between the parties. Hi-Rim also attached as an Exhibit to its reply brief what is purportedly a page from a telephone bill. Collectively, however, the exhibits simply demonstrate the parties' contractual obligations, Hi-Rim's complaints to MCI, and MCI's requests to Hi-Rim to furnish substantiating documentation. None of the exhibits demonstrates that MCI engaged in billing practices in violation of Section 201(b) or conduct in violation of Section 203(b). 11. More specifically, Exhibits 1 through 4 merely establish that the parties entered into a carrier agreement and that the terms and conditions did not permit billings for unanswered calls. Exhibits 5, 9 and 10 are just duplicates of other exhibits that Hi-Rim has submitted. The depositions, phone bills, and correspondence associated with Exhibits 6, 7, 8, 11, and 12-15 do not establish that MCI did, in fact, charge Hi-Rim for calls that were unanswered, interrupted or rang-busy. Exhibits 6, and 12-15 amply demonstrate that Hi-Rim complained to MCI that it had been billed for uncompleted, interrupted, or rang-busy calls, and that MCI solicited documented information that would substantiate Hi-Rim's claim. In Exhibit 7, which is a page of a deposition of a MCI personnel, MCI testifies that whereas Hi-Rim had several times raised the issue of MCI charging Hi-Rim for unanswered and intercepted calls and had committed to providing MCI with documents that would enable MCI to investigate the alleged problem, Hi-Rim did not provide MCI with such documents. By contrast in Exhibit 8, which is a page of a deposition of Hi-Rim's Vice-President Wayne Godbout, Mr. Godbout testifies that Hi-Rim provided MCI with call records showing that MCI overbilled Hi-Rim for switched international calls. The only billing records that Hi-Rim has provided in the instant proceeding, however, are Hi-Rim's invoice bill dated November 10, 1995 (Exhibit 11), and a single page from a purported telephone bill of a Hi-Rim customer (Exhibit attached to Hi-Rim's Reply Brief). Without any supporting affidavits or other relevant documentation, neither of these two exhibits establishes anything beyond a reflection of charges for calls of short duration. They do not affirmatively prove whether the calls, were unanswered, interrupted, or rang busy. In sum, none of the exhibits demonstrate, or even indicate, that MCI billed Hi-Rim for calls that were unanswered, interrupted, or rang-busy. 12. It is uncontroverted that both parties entered into the 1995 agreement pursuant to which Hi-Rim resold domestic interexchange and international telecommunications services. Nor is it disputed that Hi-Rim complained to MCI that it was being billed for calls that, allegedly, were unanswered, interrupted, or which rang busy. For us to determine that MCI billed Hi-Rim for 396,000 uncompleted, interrupted, and rang-busy calls, Hi-Rim was required to develop and validate its claim with relevant statements of fact and supporting evidence that such billing actually occurred. Having reviewed the record in this matter, we conclude that nothing in the record establishes that MCI did, in fact, bill Hi-Rim for such calls. Likewise, Hi-Rim did not provide any facts that would support a conclusion that MCI acted inconsistent with the terms of its tariff. 13. Hi-Rim contends that MCI's answer acknowledges that it billed Hi-Rim for unanswered calls. We disagree. MCI's concession that in a small number of cases calls may have been made to devices that provide "off-hook" response is not an admission that such calls did, in fact, occur. Even assuming that an uncertain number of calls were made to such devices, that fact alone does not support a conclusion that MCI billed for unanswered calls. Liability must be based upon factual information, not unsupported assertions that require conjecture and surmise on our part. We are not convinced that MCI's vague acknowledgment is an adequate substitute for Hi-Rim's obligation to provide both a complete statement of facts that such occurrences did take place and supporting affidavits or other relevant documentation that MCI billed for unanswered calls arising out of such occurrences. Hi-Rim has not provided the requisite factual and documentary proof. This conclusion is entirely consistent with the Commission's rules requiring that formal complaints must contain complete statements of fact supported by other relevant documentation. 14. Likewise, we are not persuaded that the half-minute calls reflected in the November 1995 invoice (Hi-Rim Exhibit 11) are necessarily or "obviously" calls that were not answered. Standing alone, the short duration of the calls is not dispositive, or even compelling proof that the calls were not answered. The limited, conclusory facts alleged by Hi-Rim do not support a finding that these calls were billed unlawfully within the meaning of Section 201(b), or were billed inconsistently with MCI's tariff, in violation of Section 203(b). Similarly, absent the submission of affidavits, sworn statements, or other corroborating documents, we are not persuaded by Hi-Rim's assertion that the page of a telephone bill (attached as an exhibit to Hi-Rim's reply brief) relates to calls that "were [either] not answered or were answered by the PTT [Postal, Telegraph and Telephone] recording stating [that] no lines were available to complete the call." Pursuant to the Commission's rules, Hi-Rim was required to submit affidavits or relevant documentation to support its claims. Hi-Rim has not done so and has, therefore, failed to carry its burden of proof. 15. We find unpersuasive Hi-Rim's suggestion that its failure to carry its burden in this case is attributable to Hi-Rim's inability to independently verify failures in MCI's equipment or procedures. We note that Hi-Rim represented that it lost revenue, customers, and agents due to the alleged unlawful billings. We also note that Hi-Rim represented that it is aware of witnesses who have personally witnessed incomplete or interrupted international calls appearing on MCI bills. Hence, from Hi-Rim's own assertions, Hi-Rim could have obtained testimony through affidavits, or other sworn statements from aggrieved customers, witnesses, and agents who allegedly complained to Hi-Rim, that may have corroborated Hi-Rim's claims. Hi-Rim neglected to do so. Neither Hi- Rim's limited and conclusory statements of fact, nor the exhibits that it submitted validate Hi-Rim's claim that MCI billed Hi-Rim for 396,000 calls that were uncompleted, interrupted, or rang busy. V. PROCEDURAL MATTERS 16. Hi-Rim filed a Motion to Strike Separate Defense on the ground that the pleading did not constitute an avoidance or affirmative defense under the Commission's rules or under Rule 8(c) of the Federal Rules of Civil Procedure. MCI opposed the Motion to Strike on the ground that the motion itself is frivolous. Hi-Rim's motion is made moot by our ruling on the merits. Accordingly, we dismiss the motion. 17. MCI filed a Motion to Dismiss on the grounds that Hi-Rim's complaint is "utterly without substantive merit and was filed for the sole purpose of employing the Commission's formal complaint processes in an attempt to force MCI to settle its account with Hi-Rim by accepting less than the amounts due and owing for services furnished to and used by Hi-Rim in providing its telecommunications services to the public." Hi-Rim opposed the motion with the assertion that the complaint meets the standards articulated in Sections 1.720 and 1.721 of the Commission's rules, for filing a formal complaint, and denied that the complaint was filed to subvert or abuse the Commission's processes. MCI's motion is made moot by our ruling on the merits. Accordingly, we dismiss the motion. 18. Further, Hi-Rim requested that we address the issue of liability and sought to establish the precise amount of its damages through filing of a supplemental complaint pursuant to Section 1.722(b) of the Commission's rules. Section 1.722(b) provides, in pertinent part, that "[d]amages may be awarded, . . . , upon a supplemental complaint based upon a finding [of liability] of the Commission in the original proceeding." Having found that Hi-Rim did not meet its burden of proof regarding its allegation that MCI violated the Act, Commission rules and orders, a separate proceeding on damages issues is not warranted. VI. CONCLUSION 19. We conclude that Hi-Rim has failed to prove its allegations that MCI has engaged in billing practices for common carrier services that violate Sections 201(b) and 203(b) of the Act. VII. ORDERING CLAUSES 20. Accordingly, IT IS ORDERED, pursuant to Sections 4(i), 4(j), 201(b), 203(b) and 208 of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 154(j), 201(b), 203(b), 208, and the authority delegated by Sections 0.91 and 0.291 of the Commission's rules, 47 C.F.R.  0.91, 0.291, that the above-captioned complaint filed by Hi-Rim Communications, Inc. IS DENIED. 21. IT IS FURTHER ORDERED that Hi-Rim's establishment of a separate proceeding through filing of a supplemental complaint to establish precise amount of damages IS DENIED. 22. IT IS FURTHER ORDERED that Hi-Rim's Motion to Strike Separate Defense IS DISMISSED. 23. IT IS FURTHER ORDERED that MCI's Motion to Dismiss IS DISMISSED. 24. IT IS FURTHER ORDERED that this proceeding IS TERMINATED. FEDERAL COMMUNICATIONS COMMISSION Mary Beth Richards Deputy Chief, Common Carrier Bureau