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                           Before the
                FEDERAL COMMUNICATIONS COMMISSION
                     Washington, D.C.  20554


APCC Services, Inc.,                    )
Data Net Systems, LLC,             )
Davel Communications, Inc.,             )
Jaroth, Inc. dba Pacific Telemanagement )
Services, and                      )
Intera Communications Corp.,       )
                              )
Complainants,                      )
                              )
                              )
     v.                       )    File No. EB-02-MD-012
                              )
TS Interactive, Inc.,                   )
                              )
Defendant.                         )


                              ORDER

     Adopted:  December 19, 2002             Released:  December 
20, 2002

By the Chief, Enforcement Bureau:


                        I.  INTRODUCTION

  1.      In this Order, we grant a motion for default judgment 
     against TS Interactive, Inc. (``TS Interactive''), thereby 
     resolving a formal complaint proceeding filed by APCC 
     Services, Inc., et al. (``APCC'' or ``Complainants'') 
     against TS Interactive pursuant to section 208 of the 
     Communications Act of 1934, as amended (the ``Act'').1  The 
     complaint alleges that TS Interactive breached section 276 
     of the Act2 by failing to pay dial-around compensation to 
     Complainants for certain categories of completed coinless 
     calls originating from payphones, in violation of Commission 
     rules and orders.3  For the following reasons, we grant 
     APCC's motion for default judgment to the extent indicated 
     below.
                         II.  BACKGROUND

  2.      Complainants identify themselves as either payphone 
     service providers (``PSPs'') or the agents of PSPs for the 
     billing and collection of ``dial-around compensation.''4  
     Defendant TS Interactive is described by Complainants as a 
     switch-based reseller of certain communications services of 
     Global Crossing Ltd. (``Global Crossing''); as such, TS 
     Interactive allegedly provides interstate and intrastate 
     telephone toll service, and carries traffic originating from 
     payphones owned or represented by Complainants.5

  3.      On April 19, 2002, Complainants filed the formal 
     complaint in this proceeding against TS Interactive seeking 
     to recover unpaid ``dial-around compensation'' that 
     Defendant was allegedly required to pay Complainants under 
     section 276 of the Act and section 64.1300 et seq. of the 
     Commission's rules.6  Specifically, Complainants allege that 
     TS Interactive failed to pay them dial-around compensation, 
     despite entering a contract with Global Crossing in which TS 
     Interactive assumed the responsibility to make such payments 
     after February 28, 1999.7  In accordance with the 
     Commission's formal complaint procedures, Complainants 
     indicated their desire to have the liability issues resolved 
     prior to the consideration of damages, and requested leave 
     to file a supplemental complaint for damages in the event 
     that the liability issues are resolved in their favor.8

  4.      TS Interactive participated in the pre-answer stage of 
     this proceeding by making an initial settlement proposal and 
     by specifically requesting an extension of time to file its 
     answer.9  Eventually, however, TS Interactive indicated to 
     Commission staff in a telephone conference that it did not 
     intend to take part further in this proceeding.10  
     Consistent with this stated position, TS Interactive failed 
     to submit an answer to the complaint, as required by the 
     Commission's formal complaint rules.11  In a letter dated 
     July 10, 2002, Commission staff weighed the consequences of 
     TS Interactive's failure to file an answer, and determined 
     that, on or before August 9, 2002 (thirty days from the date 
     of the letter), Complainants had to either withdraw the 
     complaint (in order to file an informal complaint against TS 
     Interactive alleging identical claims) or file a motion for 
     default judgment, and that a failure to take either of these 
     steps could result in a dismissal for failure to 
     prosecute.12  This date was later extended to September 6, 
     2002.13  Accordingly, on September 6, 2002, Complainants 
     filed a Motion for Default Judgment on the issue of 
     liability.14  Consistent with its failure to file an answer, 
     TS Interactive also failed to file an opposition to 
     Complainants' Motion for Default Judgment.

                        III.  DISCUSSION

  5.      Section 1.724(a) of the Commission's rules requires a 
     defendant in a formal complaint proceeding to file an answer 
     within twenty days of service of the formal complaint, 
     unless otherwise directed by the Commission.15  Furthermore, 
     section 1.724(d) of the Commission's rules states that 
     ``[a]verments in a complaint . . . are deemed to be admitted 
     when not denied in the answer.''16
 
  6.      The Commission has at its disposal ``a wide range of 
     sanctions to address violations or abuses of [its] formal 
     complaint rules, including summary grant or dismissal of a 
     complaint.''17  Although the Commission's formal complaint 
     rules do not address default judgments specifically, when a 
     defendant fails knowingly to answer a complaint against it, 
     the Commission may find the defendant in default, and may 
     consider the material facts alleged in the complaint to be 
     admitted.18  

  7.      In determining whether we should issue a default 
     judgment here, we examine the Federal Rules of Civil 
     Procedure for guidance.19  Rule 55 of the Federal Rules of 
     Civil Procedure states that, when a party against whom a 
     judgment for affirmative relief is sought has failed to 
     plead or otherwise defend, a default judgment may be entered 
     against it.20  Federal courts construing Rule 55 have held 
     that they have broad discretion in determining the 
     appropriateness of entering a default judgment.  Factors a 
     court may consider include: whether the facts alleged in the 
     complaint state a valid claim; whether the defendant has 
     clearly failed to defend; whether the defendant's failure to 
     defend has continued for a significant period of time; 
     whether the defendant's failure to defend derives from 
     excusable neglect or a good faith mistake; whether the 
     defendant's failure to defend has substantially prejudiced 
     the plaintiff's rights; whether the plaintiff has prosecuted 
     the matter properly; whether the claim concerns important 
     matters of public policy; and whether the claim seeks 
     substantial monetary damages.21  We find it appropriate to 
     use these factors here.  For the reasons described below, 
     applying those factors here, we conclude that complainants 
     are entitled to a default judgment on liability. 

  8.      First, the alleged facts, if true, constitute a 
     violation of law.22  For payphone traffic between October 7, 
     1997 and November 23, 2001, the Commission's rules and 
     orders required switch-based resellers such as TS 
     Interactive to pay dial-around compensation to a PSP if the 
     switch-based reseller entered into a contract with the first 
     facilities-based IXC requiring the switch-based reseller to 
     compensate the PSP.23  In this case, the complaint alleges 
     that TS Interactive entered into just such a contract.  
     Specifically, the complaint alleges that on May 3, 1999, TS 
     Interactive entered a contract called a ``Payphone Dial-
     Around Compensation Agreement'' with Global Crossing (then 
     known as Frontier Communications),24 in which TS Interactive 
     assumed ``sole responsibility for the reporting and payment 
     of per call payphone `dial-around compensation' charges'' 
     for its customers' calls from payphones that were carried 
     over Global Crossing's network.25  This contract between the 
     parties was effective as of February 28, 1999.  Thus, 
     applying the alleged facts to the applicable law, we 
     conclude that the complaint states a valid basis for 
     requiring TS Interactive to pay dial-around compensation to 
     Complainants during the period at issue in the complaint.

  9.      Second, we conclude that TS Interactive has clearly 
     failed to defend the complaint; that TS Interactive's 
     failure to defend has continued for a significant period of 
     time; and that TS Interactive's failure to defend does not 
     derive from excusable neglect or a good faith mistake.  TS 
     Interactive plainly received timely notice of the complaint 
     and of the deadline for filing its answer.  Indeed, as 
     stated above, counsel for TS Interactive participated in the 
     early stages of this proceeding, and on one occasion even 
     specifically requested an extension of time to file its 
     answer.26  Moreover, as indicated above, TS Interactive 
     communicated a conscious intent not to participate in this 
     proceeding, and, consistent with that position, failed to 
     respond to the answer, participate in status conferences, or 
     respond to correspondence sent by Commission staff setting 
     forth procedures for Complainants to pursue a default 
     judgment.27  This failure to participate or otherwise defend 
     the complaint has lasted for several months, and TS 
     Interactive has neither offered a legitimate rationale for 
     its failure to participate nor shown any indication that it 
     has had a change of heart regarding its conduct.  We 
     therefore find that TS Interactive clearly, knowingly, and 
     repeatedly failed to defend against the complaint.

  10.     Third, Complainants have been substantially prejudiced 
     by the delay caused by TS Interactive's failure to defend 
     the complaint.  As described above, the ``Payphone Dial-
     Around Compensation Agreement'' between the parties 
     indicates that Complainants are entitled to the compensation 
     they seek.  TS Interactive's failure to participate in this 
     proceeding has delayed the payment of this compensation.

  11.     Fourth, Complainants have properly prosecuted this 
     case.  Complainants have complied with the Commission's 
     formal complaint rules (including the rules regarding 
     service and filing), and have participated in a number of 
     status conferences with Commission staff.  Moreover, as 
     discussed above, Complainants entered into settlement 
     negotiations with TS Interactive during the initial stage of 
     this proceeding.  Only when further settlement talks 
     appeared fruitless, and TS Interactive indicated its intent 
     to no longer participate in this proceeding, did 
     Complainants file their motion for default.

  12.     Finally, the claim presented here is not an important 
     matter of public policy, such as a constitutional or 
     statutory construction issue, but rather is a 
     straightforward, private payment dispute.  Moreover, 
     although the complaint does not requests specific damages, 
     Complainants do indicate that if TS Interactive is not 
     forthcoming in its responses to discovery requests arising 
     from a subsequent supplemental complaint for damages, 
     Complainants ``will seek judgment in the amount of 
     $99,000.''28  Such an amount is not so large as to preclude 
     a default judgment.29

  13.     In conclusion, we find that TS Interactive is in 
     default regarding the liability alleged in the complaint.  
     Thus, we grant APCC's motion for default judgment on 
     liability.  In accordance with the Commission's formal 
     complaint procedures, APCC may file a supplemental complaint 
     for damages within sixty (60) days of the release of this 
     order (unless the 60-day period is extended by order).30

  14.     In addition, Complainants request that the Commission 
     order the Defendant to pay interest on the past-due dial-
     around compensation at an annual rate of 11.25%, although 
     Complainants have failed to justify the imposition of such a 
     rate.  We deny this request, without prejudice to 
     Complainants' ability to request a payment of interest in 
     its supplemental complaint for damages.  If Complainants 
     decide to request such relief, they must explain the 
     appropriateness of a particular interest rate, based upon 
     past Commission precedent.31

                      IV.  ORDERING CLAUSES

  15.     Accordingly, IT IS ORDERED, pursuant to sections 1, 
     4(i), 4(j), 208 and 276 of the Communications Act of 1934, 
     as amended, 47 U.S.C.  151, 154(i), 154(j), 208, and 276, 
     sections 1.720-1.736 and 64.1300-64.1320 of the Commission's 
     rules, 47 C.F.R.  1.720-1.736, 64.1300-64.1320, and 
     authority delegated by sections 0.111 and 0.311 of the 
     Commission's rules, 47 C.F.R.  0.111, 0.311, that the 
     Complainants' motion for default judgment IS GRANTED to the 
     extent indicated herein.

  16.     IT IS FURTHER ORDERED, pursuant to sections 4(i), 4(j), 
     208, and 276 of the Communications Act of 1934, as amended, 
     47 U.S.C.  154(i), 154(j), 208, and 276, sections 1.720-
     1.736 and 64.1300-64.1320 of the Commission's rules, 47 
     C.F.R.  1.720-1.736, 64.1300-64.1320, and authority 
     delegated by sections 0.111 and 0.311 of the Commission's 
     rules, 47 C.F.R.  0.111, 0.311, that the defendant in this 
     proceeding IS IN DEFAULT and the factual averments contained 
     in APCC's complaint ARE DEEMED ADMITTED.

  17.     IT IS FURTHER ORDERED, pursuant to sections 1, 4(i), 
     4(j), 208 and 276 of the Communications Act of 1934, as 
     amended, 47 U.S.C.  151, 154(i), 154(j), 208, and 276, 
     sections 1.720-1.736 and 64.1300-64.1320 of the Commission's 
     rules, 47 C.F.R.  1.720-1.736, 64.1300-64.1320, and 
     authority delegated by sections 0.111 and 0.311 of the 
     Commission's rules, 47 C.F.R.  0.111, 0.311, that the 
     above-captioned complaint IS GRANTED to the extent indicated 
     herein.


                              FEDERAL COMMUNICATIONS COMMISSION  


                              David H. Solomon
                              Chief, Enforcement Bureau


_________________________

1         47 U.S.C.  208.
2         47 U.S.C.  276.
3         See 47 C.F.R.  64.1300-64.1320.  The Commission 
promulgated these rules to implement section 276 of the Act, 47 
U.S.C.  276. 
4         APCC Services, Inc., et al., v. TS Interactive, 
Complaint, File No. EB-02-MD-012 (filed April 12, 2002) at 2, 11, 
 1, 21 (``Complaint'').  ``Dial-around compensation'' refers to 
the per-call payments that interexchange carriers (``IXCs'') must 
make to PSPs for certain categories of completed coinless calls 
originating from payphones, including access code calls and calls 
to subscriber toll-free numbers.  47 C.F.R.  64.1300 et seq.
5         Complaint at 2, 11,  2, 22.
6         Complaint at 3,  4; 47 C.F.R.  64.1300 et seq.; 47 
U.S.C.  276.
7         Complaint at 3, 11,  5,  23; Attachment 2. 
8         Complaint at 13,  33.  See 47 C.F.R.  1.722.
9         See APCC Services, Inc., et al., v. TS Interactive, 
Letter from Douglas R. Hirsch, Counsel for TS Interactive, to 
Warren Firschein, Attorney, Market Disputes Resolution Division, 
Enforcement Bureau, FCC, File No. EB-02-MD-012 (May 15, 2002); 
APCC Services, Inc., et al., v. TS Interactive, Letter from 
Warren Firschein, Attorney, Market Disputes Resolution Division, 
Enforcement Bureau, FCC, to Albert H. Kramer, Counsel for 
Complainants, and Douglas R. Hirsch, Counsel for TS Interactive, 
File No. EB-02-MD-012 (May 31, 2002); APCC Services, Inc., et 
al., v. TS Interactive, Letter from Warren Firschein, Attorney, 
Market Disputes Resolution Division, Enforcement Bureau, FCC, to 
Albert H. Kramer, Counsel for Complainants, and Douglas R. 
Hirsch, Counsel for TS Interactive, File No. EB-02-MD-012 (May 
15, 2002).     
10        See APCC Services, Inc., et al., v. TS Interactive, 
Letter from Warren Firschein, Attorney, Market Disputes 
Resolution Division, Enforcement Bureau, FCC, to Albert H. 
Kramer, Counsel for Complainants, and Douglas R. Hirsch, Counsel 
for TS Interactive, File No. EB-02-MD-012 (July 10, 2002) (``July 
10 Letter'').
11        Id. at 2.  See 47 C.F.R.  1.724, 1.720.
12        July 10 Letter at 2.  We note that this matter was one 
of a series of similar cases filed by APCC against switched-based 
resellers for the recovery of dial-around compensation.  See APCC 
Services, Inc. et al. v. Advanced Business Telephone, Complaint, 
File No. EB-02-MD-007 (filed April 12, 2002); APCC Services, Inc. 
et al. v. Bee Line Long Distance, Complaint, File No. EB-02-MD-
008 (filed April 12, 2002); APCC Services, Inc. et al. v. Gadjraj 
& Sons Import & Export, Inc., Complaint, File No. EB-02-MD-009 
(filed April 12, 2002); APCC Services, Inc. et al. v. Orion 
Telecommunications, Complaint, File No. EB-02-MD-010 (filed April 
12, 2002); APCC Services, Inc. et al. v. Tekbilt World 
Communications, Inc., Complaint, File No. EB-02-MD-011 (filed 
April 12, 2002); APCC Services, Inc. et al. v. United 
Technological Systems, Inc., Complaint, File No. EB-02-MD-013 
(filed April 12, 2002); APCC Services, Inc. et al. v. Vertex 
Group, Complaint, file No. EB-02-MD-014 (filed April 12, 2002).  
The defendants in several of those cases failed to file an answer 
or otherwise participate in the proceeding.  In each case where 
the defendant failed to answer, the staff required APCC to either 
withdraw the complaint or file a motion for default judgment, or 
risk a dismissal for failure to prosecute, to encourage APCC to 
prosecute these matters to their conclusion promptly.  See APCC 
Services, Inc. et al. v. Advanced Business Telephone, Letter from 
Warren Firschein, Attorney, Market Disputes Resolution Division, 
Enforcement Bureau, FCC, to Albert H. Kramer and Edward G. 
Modell, counsel for Complainants, and Robert Gold, President, 
Advanced Business Telephone, File No. EB-02-MD-007 (dated May 24, 
2002); APCC Services, Inc. et al. v. United Technological 
Systems, Inc., Letter from Warren Firschein, Attorney, Market 
Disputes Resolution Division, Enforcement Bureau, FCC, to Albert 
H. Kramer and Edward G. Modell, counsel for Complainants, and 
S.K. Mohan, President, United Technological Systems, Inc., File 
No. EB-02-MD-013 (dated May 24, 2002); APCC Services, Inc. et al. 
v. Tekbilt World Communications, Inc., Letter from Warren 
Firschein, Attorney, Market Disputes Resolution Division, 
Enforcement Bureau, FCC, to Albert H. Kramer and Edward G. 
Modell, counsel for Complainants, and Carl Saling, President, 
Tekbilt World Communications, Inc, File No. EB-02-MD-011 (dated 
May 24, 2002); APCC Services, Inc. et al. v. Vertex Group, Letter 
from Warren Firschein, Attorney, Market Disputes Resolution 
Division, Enforcement Bureau, FCC, to Albert H. Kramer and Edward 
G. Modell, counsel for Complainants, and Anderson Lin, President, 
Vertex Group, File No. EB-02-MD-014 (dated May 24, 2002) (each 
stating that, in similar cases where defendant had not filed an 
answer and otherwise failed to make an appearance, ``Complainants 
must, on or before July 8, 2002 (forty-five (45) days from the 
date of this letter), either withdraw the complaint, or file a 
motion for default judgment, and that a failure to take either of 
these steps may result in a dismissal for failure to 
prosecute.''). 
13        APCC Services, Inc., et al., v. TS Interactive, Letter 
from Warren Firschein, Attorney, Market Disputes Resolution 
Division, Enforcement Bureau, to Allan C. Hubbard, Counsel for 
Complainants, and Douglas R. Hirsch, Counsel for TS Interactive, 
FCC, File No. EB-02-MD-012 (August 9, 2002).
14        APCC Services, Inc., et al., v. TS Interactive, Motion 
for Default Judgment with Supporting Memorandum of Law, File No. 
EB-02-MD-008 (September 6, 2002) (``Motion for Default 
Judgment''). 
15        47 C.F.R.  1.724(a).
16        47 C.F.R.  1.724(d).
17        Implementation of the Telecommunications Act of 1996, 
Amendment of Rules Governing Procedures to be Followed When 
Formal Complaints are Filed Against Common Carriers, Report and 
Order, 12 FCC Rcd 22497, 22610,  278 (1997) (``Formal Complaints 
Order''), recon. denied, 16 FCC Rcd 5681 (2001).  See 
Implementation of the Telecommunications Act of 1996, Amendment 
of Rules Governing Procedures to be Followed When Formal 
Complaints are Filed Against Common Carriers, Second Report and 
Order, 13 FCC Rcd 17018, 17054,  65 (1998) (``Formal Complaints 
Second Report and Order'').
18        See Philippine Long Distance Telephone Co. v. Dialback 
USA, Inc., Memorandum Opinion and Order, 12 FCC Rcd 12023 (Com. 
Car. Bur. 1997) (``Dialback''); Computer Phone Services, Inc. v. 
AT&T Corp., Memorandum Opinion and Order, 12 FCC Rcd 766 (Form. 
Compl. & Inv. Br.-Enf. Div., Com. Car. Bur. 1997); Texas Cable 
and Telecommunications Ass'n v. GTE Southwest Inc., Order, 14 FCC 
Rcd 2975 (Cable Serv. Bur. 1999).  We note that, at the time of 
the Dialback decision, section 1.724(b) of the Commission's rules 
explicitly indicated that a defendant's failure to file an answer 
in a formal complaint proceeding could result in an order entered 
against the defendant in accordance with the allegations 
contained in the complaint.  See 47 C.F.R.  1.724(b)(1996).  
Although this provision no longer appears explicitly in the 
Commission's rules, the general principle remains, as evidenced 
by GTE Southwest, Inc. (addressing a motion for default judgment 
in the context of a pole attachment complaint filed pursuant to 
section 224 of the Act), and the Commission's statements in the 
Formal Complaints Order and Second Report and Order.  See n.17, 
supra.  
19        Cf., Formal Complaints Order, 12 FCC Rcd at 22535,  85 
(formally adopting a rule similar to Fed.R.Civ.P. 26(a)(1) for 
section 208 formal complaint proceedings); Formal Complaints 
Second Report and Order, 13 FCC Rcd at 17052,  60 (adopting a 
rule similar to Fed.R.Civ.P. 26(a)(2)(B) for Accelerated Docket 
proceedings).
20        Fed.R.Civ.P. 55.
21        See 10a CHARLES A. WRIGHT, ARTHUR R. MILLER, & MARY K. 
KANE, FEDERAL PRACTICE AND PROCEDURE  2685 (1998).
22        Consistent with section 1.724(d) of the Commission's 
rules, we consider these facts to be admitted.  See para. 5, 
supra.
23        See, e.g., Bell-Atlantic-Frontier, Inc., et al., v. MCI 
Telecommunications Corp., Memorandum Opinion and Order, 2002 WL 
1842441 (F.C.C.) (released August 14, 2002) at n.31.  See also 47 
C.F.R.  64.1300 (2000).
24        Frontier Communications merged with Global Crossing, 
which later merged with Citizens Communications Company.  See 
Complaint at 2,  2 n.1; Joint Applications of Global Crossing 
Ltd., and Citizens Communications Company For Authority to 
Transfer Control of Corporations Holding Commission Licenses and 
Authorizations Pursuant to Sections 214 and 310(D) of the 
Communications Act and Parts 20, 22, 63, 78, 90, and 101 of the 
Commission's Rules, Memorandum Opinion and Order, 16 FCC Rcd 8507 
(Com. Car. Bur., Int. Bur., Cab. Serv. Bur., Wireless Telecom. 
Bur., 2001); Global Crossing Ltd. and Frontier Corporation, 
Memorandum Opinion and Order, 14 FCC Rcd 15911 (Wireless Telecom. 
Bur., Int. Bur., and Com. Car. Bur., 1999).
25        Complaint at Attachment 2.
26        APCC Services, Inc., et al., v. TS Interactive, Letter 
from Douglas R. Hirsch, counsel for TS Interactive, to Warren 
Firschein, Attorney, Market Disputes Resolution Division, 
Enforcement Bureau, FCC, File No. EB-02-MD-012 (May 15, 2002).
27        See, e.g., July 10 Letter at 2-3.
28        Motion for Default Judgment at 5.
29        We note that section 1.727(e) of the Commission's rules 
provides that a ``[f]ailure to oppose any motion may constitute 
grounds for granting of the motion.''  47 C.F.R.  1.727(e).  
Here, TS Interactive failed to respond to Complainants' motion 
for default judgment.  This failure provides further support for 
our decision to grant the Complainants' motion.
30        47 C.F.R.  1.722.
31        In particular, Complainants should discuss why an 
11.25% rate is appropriate in this case, given the Commission's 
recent ruling that the interest rate for payphone cases should 
match the IRS interest rate. Implementation of the Pay Telephone 
Reclassification and Compensation Provisions of the 
Telecommunications Act of 1996, Fourth Order on Reconsideration 
and Order on Remand, 17 FCC Rcd 2020 (2002).