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                           Before the
                Federal Communications Commission
                     Washington, D.C.  20554


In the Matter of                 )
                                )
Bell Atlantic-Delaware, Inc.,    )
et al.,                          )
                                )
            Complainants,        )
                                )    File No. E-98-49
v.                               )
                                )
MCI Telecommunications Corp.,    )
                                )
            Defendant.

                  MEMORANDUM OPINION AND ORDER

   Adopted:  August 1, 2002             Released:  August 14, 
2002

By the Commission:

I.   INTRODUCTION   

     1.   In this Order, we grant a Joint Request1 filed by the 
parties - Bell Atlantic-Delaware, Inc., et al. (``Verizon'')2 and 
MCI Telecommunications Corporation (``WorldCom'')3 - to this 
formal complaint proceeding concerning application of Commission 
payphone per-call compensation rules that were in effect until 
November 23, 2001.  The Commission recently revised the rules to 
require the first facilities-based interexchange carrier 
(``IXC'') to which a completed coinless access code or subscriber 
toll-free payphone call is delivered by a local exchange carrier 
(``LEC'') to compensate the payphone service provider (``PSP'') 
for the call.4  Because the events at issue in this proceeding 
transpired when the Commission's prior rules were in effect, 
however, we are constrained to apply the prior rules. 

     2.   In the Joint Request, Verizon and WorldCom ask the 
Commission to resolve a dispute between them regarding the Bell 
Atlantic Order, which the Commission released in this proceeding 
on April 5, 2001.  Specifically, the parties wish to know ``when, 
under that Order, the first facilities-based carrier, in this 
case WorldCom, is responsible for paying per-call compensation 
and when the facilities-based resellers of that carrier's 
services are responsible.''5

     3.   We hold - as we did in the Bell Atlantic Order - that 
WorldCom's obligation to compensate Verizon for toll-free calls 
under the Commission rules in effect during the relevant period 
extended to calls that WorldCom handed off to ``LECs'', but that 
WorldCom was not required to pay per-call compensation to Verizon 
for calls that WorldCom handed off to switch-based resellers.6  
In the latter case, WorldCom's obligation was limited during the 
period in question to identifying the reseller responsible for 
paying compensation to Verizon.

II.  BACKGROUND

     4.    Section 276 of the Communications Act of 1934, as 
amended (``Act''), requires the Commission to ``establish a per 
call compensation plan to ensure that all payphone service 
providers are fairly compensated for each and every completed 
intrastate and interstate call using their payphone....''7  In 
response, the Commission adopted rules governing payphone 
compensation.8  As a result of these rules, when payphone users 
place toll-free calls that are routed to ``IXCs'', the IXCs must 
compensate the PSPs``'' for completed calls.9

     5.   This compensation system becomes more complicated, 
however, when IXCs sell space on their networks to other IXCs, 
known as ``resellers.''10  Resellers can be divided into two 
categories - ``switchless'' and ``switch-based.''  Switchless 
resellers simply rename the underlying IXC service.11  Switch-
based resellers (``SBRs''), on the other hand, install their own 
switch to handle traffic.12

     6.   The Common Carrier Bureau ruled in the liability phase 
of this proceeding that Verizon properly had certified its 
eligibility to receive per-call compensation, and, upon review, 
we upheld this determination.13  Thereafter, Verizon and WorldCom 
settled all but one issue between them - i.e., which entity is 
responsible for paying per-call compensation for payphone calls 
that an IXC hands off to a SBR.14  In the damages phase, we 
resolved WorldCom's obligation to pay per-call compensation to 
Verizon for such calls, as well as WorldCom's duty to provide 
tracking information to Verizon regarding the calls.15  As part 
of the order resolving the damages phase (i.e., the Bell Atlantic 
Order), we directed the parties to attempt to resolve through 
negotiations the precise amount of damages owed.16  They were 
unable to do so.

     7.   On January 7, 2002, Verizon and WorldCom filed the 
Joint Request, which proposed that the parties submit additional 
briefs on the appropriate construction of the Bell Atlantic 
Order.17  As a result, we directed the parties to submit briefs 
regarding the respective obligations (under the Commission's 
prior rules) of first facilities-based carriers and facilities-
based resellers to pay per-call compensation.18

III.      ANALYSIS

     8.   The parties disagree about WorldCom's obligation to pay 
per-call compensation in the event that WorldCom transfers a call 
to a SBR.  Verizon argues that the Commission's rules clearly 
require WorldCom to compensate Verizon for such a call, and that 
WorldCom can avoid its payment obligation ``if, and only if, 
another carrier `identifies itself as being responsible for 
paying per-call compensation.'''19  As support for this 
proposition, Verizon cites the following sentence from the Bell 
Atlantic Order:  ``The logical construction of the language from 
the Coding Digit Waiver Order requires a first facilities-based 
carrier to pay unless the reseller has identified itself to the 
first facilities-based carrier as being responsible for 
compensation.''20  WorldCom, on the other hand, maintains that, 
until very recently, the Commission squarely placed 
responsibility for paying per-call compensation on a reseller, 
rather than an IXC, if the reseller maintained its own switching 
capability.21  According to WorldCom, the passage from the Bell 
Atlantic Order on which Verizon relies is dictum about a 
different aspect of the Coding Digit Waiver Order (i.e., the 
obligation to disclose information regarding the identity of 
switched-based resellers).22

     9.   We disagree with Verizon's interpretation of the Bell 
Atlantic Order.  Paragraph 14 of the Bell Atlantic Order 
addressed Verizon's characterization of a sentence in the Coding 
Digit Waiver Order.  In particular, Verizon argued that, in order 
for a first facilities-based carrier to be relieved of its 
obligation to pay per-call compensation for a call handed off to 
a reseller, the reseller must have identified itself to the PSP, 
rather than to the first facilities-based carrier.23  The Bell 
Atlantic Order rejected this characterization, finding that the 
Coding Digit Waiver Order contained no such limitation, and that 
such a limitation would not make sense:  ``The logical 
construction of the language from the Coding Digit Waiver Order 
requires a first facilities-based carrier to pay unless the 
reseller has identified itself to the first facilities-based 
carrier as being responsible for paying compensation.''24  Thus, 
a first-facilities based carrier does not have to pay per-call 
compensation if a reseller is responsible for payment.  Nothing 
about this statement from the Bell Atlantic Order is inconsistent 
with that order's general holding, which is articulated in 
paragraph 13:  A first facilities-based carrier must compensate 
PSPs for calls that the facilities-based carrier transfers 
directly to a terminating LEC or must identify the reseller 
responsible for paying per-call compensation if it transfers 
calls to a switch-based reseller.25  Consequently, like the 
Coding Digit Waiver Order, the Bell Atlantic Order held that a 
first facilities-based carrier that transfers calls to a switch-
based reseller does not have to pay per-call compensation.  Such 
carriers, however, do have to provide tracking information.26

     10.  This interpretation of WorldCom's obligations is 
consistent with other portions of the Bell Atlantic Order.27  In 
the first paragraph of the Bell Atlantic Order, which enunciated 
the order's holding, the Commission wrote:

          We hold that under the rules and orders that 
          are applicable to this case, the Defendants' 
          obligation to compensate Verizon for toll-
          free calls extends to calls that the 
          Defendants hand off to local exchange 
          carriers..., but that the Defendants are not 
          required to pay per-call compensation to 
          Verizon for traffic that they hand off to 
          switch-based resellers.  However, in the 
          latter situation, and upon Verizon's written 
          request, the Defendants must provide 
          information to Verizon that enables it to 
          identify any resellers responsible for 
          compensation.28

Similarly, in Paragraph 20 of the Bell Atlantic Order, the 
Commission summarized its holding:

          [W]e hold that the Commission's rules require 
          the Defendants to compensate Verizon for 
          toll-free calls transferred to terminating 
          LECs, but do not require the Defendants to 
          compensate Verizon for traffic transferred to 
          switch-based resellers.  Rather, with respect 
          to the latter traffic, the Defendants must 
          provide Verizon information that enables it 
          to identify resellers responsible for 
          compensation.29

Thus, the Bell Atlantic Order makes clear that, with respect to 
calls that WorldCom handed off to SBRs, WorldCom needed to do 
nothing more than provide tracking information to enable Verizon 
to identify the SBRs and attempt to collect payment.  The Bell 
Atlantic Order does not, as Verizon argues, require WorldCom to 
act as a guarantor for compensation in the event a PSP is unable 
to collect from an SBR.30  

     11.  We therefore reiterate that, under the rules and orders 
applicable to this case, WorldCom's obligation with respect to 
calls it handed off to SBRs was limited to providing tracking 
information to Verizon.  Specifically, for each call, WorldCom 
must provide the name of a contact person at the SBR, a telephone 
number for that person, and the SBR's last known address.3132

IV.  ORDERING CLAUSES

     12.  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, and 
sections 0.111, 0.311, 64.1300, and 64.1310 of the Commission's 
rules, 47 C.F.R.  0.111, 0.311, 64.1300, and 64.1310, that the 
Joint Request filed on January 7, 2002 is granted, consistent 
with this Order.

     13.  IT IS FURTHER ORDERED that this proceeding is 
terminated.



                         FEDERAL COMMUNICATIONS COMMISSION





                              Marlene H. Dortch                                                                                                               
                              Secretary

_________________________

1 Joint Request, File No.  E-98-49 (filed Jan. 7, 2002)  (``Joint 
Request'').
2 The original named complainants in this action were Bell 
Atlantic-Delaware, Inc.; Bell Atlantic-Maryland, Inc.; Bell 
Atlantic-New Jersey, Inc.; Bell Atlantic-Pennsylvania, Inc.; Bell 
Atlantic-Virginia, Inc.; Bell Atlantic-Washington, D.C., Inc.; 
Bell Atlantic-West Virginia, Inc.; New York Telephone Company; 
and New England Telephone and Telegraph Company.  These companies 
now are doing business as Verizon Communications.  See Bell 
Atlantic-Delaware, Inc., et al. v. Frontier Communications 
Services, Memorandum Opinion and Order, 16 FCC Rcd 8112, 8112 n.1 
(2001) (``Bell Atlantic Order'').  This order is binding on all 
named parties and their successors-in-interest.
3 MCI now is doing business as WorldCom, Inc. (``WorldCom'').  On 
July 25,  2002, WorldCom  filed a  Notice of  Stay, alerting  the 
Commission that WorldCom recently had filed a Voluntary  Petition 
under Chapter 11 of the United States Bankruptcy Code.  Notice of 
Stay, File No. E-98-49 (filed July 25, 2002).  Although  WorldCom 
maintains that its  bankruptcy filing stays  this proceeding,  we 
disagree.  First,  this Order  cannot  properly be  considered  a 
``continuation'' of  a proceeding.   See  11 U.S.C.    362(a)(1) 
(bankruptcy petition operates as a stay of the ``commencement  or 
continuation ... of a  judicial, administrative, or other  action 
or proceeding  against the  debtor that  was or  could have  been 
commenced before the commencement of  the case under this  title, 
or to recover a  claim against the debtor  that arose before  the 
commencement of  the case  under this  title'').  Rather,  it  is 
tantamount to a clarification  of a prior  order (i.e., the  Bell 
Atlantic Order) that  the Commission issued  prior to  WorldCom's 
bankruptcy  filing,   and  that   established  the   duties   and 
obligations of  the respective  parties prior  to the  bankruptcy 
filing.  Second, even assuming the automatic stay provision  were 
applicable,  the  regulatory  exception  to  the  stay  provision 
applies, because,  in clarifying  the  Bell Atlantic  Order,  the 
Commission is  acting  in  a regulatory  capacity  (i.e.,  it  is 
interpreting the statutory duties and obligations of a  regulated 
entity).  See 11 U.S.C.  362(b)(4) (bankruptcy petition does not 
operate as a  stay of  the ``commencement or  continuation of  an 
action or proceeding by a  governmental unit ... to enforce  such 
governmental  unit's   ...   regulatory  power,   including   the 
enforcement of a judgment other  than a money judgment,  obtained 
in an action or  proceeding by the  governmental unit to  enforce 
such governmental unit's ... regulatory power'').
4 See Pay Telephone Reclassification and Compensation Provisions 
of the Telecommunications Act of 1996: RBOC/GTE/SNET Payphone 
Coalition Petition for Clarification, Second Order on 
Reconsideration, 16 FCC Rcd 8098 (2001), Third Order on 
Reconsideration and Order on Clarification, 16 FCC Rcd 20922 
(2001).
5 Joint Request at 1.
6 The Commission recently revised its payphone compensation 
rules.  See Pay Telephone Reclassification and Compensation 
Provisions of the Telecommunications Act of 1996: RBOC/GTE/SNET 
Payphone Coalition Petition for Clarification, Second Order on 
Reconsideration, 16 FCC Rcd 8098 (2001), Third Order on 
Reconsideration and Order on Clarification, 16 FCC Rcd 20922 
(2001).  Because the events at issue in this proceeding 
transpired when the Commission's prior rules were in effect, 
however, we are constrained to apply those rules.
7 47 U.S.C.  276(b)(1)(A).  Section 276 exempts emergency calls 
and telecommunications relay service calls for hearing disabled 
individuals from the per-call compensation requirement.  Id.
8 See 47 C.F.R.  64.1300-64.1340.  See generally Implementation 
of the Pay Telephone Reclassification and Compensation Provisions 
of the Telecommunications Act of 1996, Report and Order, 11 FCC 
Rcd 20541 (1996) (``First Payphone Order''), on reconsideration, 
11 FCC Rcd 21233 (1996) (``Order on Reconsideration''), review 
granted in part and denied in part Illinois Public 
Telecommunications Ass'n v. FCC, 117 F.3d 555 (D.C. Cir.), 
clarified on reh'g, 123 F.3d 693 (D.C. Cir. 1997), cert. denied, 
523 U.S. 1046 (1998); Implementation of the Pay Telephone 
Reclassification and Compensation Provisions of the 
Telecommunications Act of 1996, Second Report and Order, 13 FCC 
Rcd 1778 (1997), review granted in part and denied in part MCI 
Telecommunications Corp. v. FCC, 143 F.3d 606 (D.C. Cir. 1998); 
Implementation of the Pay Telephone Reclassification and 
Compensation Provisions of the Telecommunications Act of 1996, 
Third Report and Order, and Order on Reconsideration of the 
Second Report and Order, 14 FCC Rcd 2545 (1999), review denied 
American Public Communications Council, Inc. v. FCC, 215 F.3d 51 
(D.C. Cir. 2000).
9 See 47 C.F.R.  64.1300(a) (``[E]very carrier to whom a 
completed call from a payphone is routed shall compensate the 
payphone service provider for the call....'') (amended Apr. 27, 
2001).
10 A reseller, in turn, may resell service to another reseller, 
and an IXC and several resellers may carry a single payphone call 
before the call is transferred to a LEC for completion.  See Bell 
Atlantic Order, 16 FCC Rcd at 8113, 3.
11 Because switchless resellers lack their own facilities and 
therefore do not have the ability to track calls, the Commission 
has held that facilities-based carriers should pay compensation 
to the PSP ``in lieu of a non-facilities based carrier that 
resells service,'' and that, if they so choose, the facilities-
based carriers may ``impose the payphone compensation amounts on 
[reseller] customers.''  First Payphone Order, 11 FCC Rcd at 
20586,  86-87.
12 Switch-based resellers also are known as ``facilities-based'' 
resellers.
13 See Bell Atlantic-Delaware, et al. v. Frontier Communications 
Services, Inc., et al., Memorandum Opinion and Order, 14 FCC Rcd 
16050 (Com. Car. Bur. 1999), and Ameritech Illinois, U S West 
Communications, Inc., et al. v. MCI Telecommunications 
Corporation, Memorandum Opinion and Order, 14 FCC Rcd 18643 (Com. 
Car. Bur. 1999), aff'd Bell Atlantic-Delaware, et al. v. Frontier 
Communications Services, Inc., et al., Order on Review, 15 FCC 
Rcd 7475 (2000), review denied Global Crossing 
Telecommunications, Inc. v. FCC, 259 F.3d 790 (D.C. Cir. 2001).  
See also Bell Atlantic Order, 16 FCC Rcd at 8115-17,  6-9.
14 Complainants' Initial Brief on the Reseller Issue, File No. 
98-49 (filed July 10, 2000) at 1.
15 Bell Atlantic Order, 16 FCC Rcd  8113,  1.
16 Bell Atlantic Order, 16 FCC Rcd at 8121,  19.  See 47 C.F.R. 
 1.722(i)(4) (following a Commission determination regarding a 
damages computation method or formula, the Commission may order 
the parties to submit, within thirty days of the release date of 
the damages order (1) a statement detailing the parties' 
agreement as to the amount of damages; (2) a statement that the 
parties are continuing to negotiate in good faith and a request 
that the parties be given an extension of time to continue 
negotiations; and (3) a statement detailing the bases for the 
continuing dispute and the reasons why no agreement can be 
reached).
17 Joint Request at 2.
18 Letter from David A. Strickland, Attorney Advisor, Market 
Disputes Resolution Division, Enforcement Bureau, to Gilbert E. 
Geldon, Verizon counsel, and Lisa R. Youngers and Lisa B. Smith, 
WorldCom counsel, File No. E-98-49 (dated Jan. 18, 2002) at 1.
19 Complainants' Memorandum on the Reseller Issue, File No. E-98-
49 (filed Jan. 25, 2002) (``Verizon Brief'') at 8.  See 
Complainants' Reply Memorandum on the Reseller Issue, File No. E-
98-49 (filed Feb. 20, 2002) (``Verizon Reply Brief'') at 1-4.
20 Bell Atlantic Order, 16 FCC Rcd at 8119,  14.  The Coding 
Digit Waiver Order refers to the Common Carrier Bureau's decision 
in Implementation of the Pay Telephone Reclassification and 
Compensation Provisions in the Telecommunications Act of 1996:  
AT&T Request for a Limited Waiver of the Per-Call Compensation 
Obligation, Memorandum Opinion and Order, 13 FCC Rcd 10893 (Com. 
Car. Bur. 1998), Petition for Reconsideration and Application for 
Review pending on other grounds (``Coding Digit Waiver Order''). 
21 Defendant's Memorandum on the Reseller Issue, File No. E-98-49 
(filed Feb. 6, 2002) (``WorldCom Brief'') at 3-4.
22 WorldCom Brief at 4-5.
23 Bell Atlantic Order, 16 FCC Rcd at 8119,  14.
24 Bell Atlantic Order, 16 FCC Rcd at 8119,  14.
25 Bell Atlantic Order, 16 FCC Rcd at 8118,  13 (``[T]he Coding 
Digit Waiver Order makes clear that a first facilities-based 
carrier need only identify the switch-based reseller responsible 
for paying compensation.'').
26 Bell Atlantic Order, 16 FCC Rcd at 8119,  15 (``[O]nce a PSP 
issues a written request for payment, the facilities-based IXC 
must provide tracking information.'').
27 Moreover, it is consistent with earlier Commission orders 
holding that carriers with switching capability must pay per-call 
compensation.  See note 11, supra.
28 Bell Atlantic Order, 14 FCC Rcd at 8113,  1.
29 Bell Atlantic Order, 14 FCC Rcd at 8121,  20.
30  See Verizon Brief at 7-9.  In addition, we reject WorldCom's 
assertion that paragraph 14 of the Bell Atlantic Order is 
``merely dicta.''  WorldCom Brief at 6.  As noted in paragraph 9 
of this Order, we find that the proper interpretation of 
paragraph 14 is consistent with the rest of the Bell Atlantic 
Order, and therefore constitutes part of the holding of that 
Order.  Similarly, we reject Verizon's argument that the 
Commission's orders subsequent to the Bell Atlantic Order 
contradict our holding in this case.  See Verizon Brief at 3, 7-
8; Verizon Reply Brief at 1-2. 
31 WorldCom also must indicate whether it and the SBR to which it 
is handing off calls have entered into a contract requiring the 
SBR to compensate Verizon.  To the extent WorldCom and an SBR 
have formed such a contract, Verizon could attempt to enforce the 
contract (under a third-party beneficiary theory) if the SBR 
fails to fulfill its payment obligation.  Verizon could not 
assert such a claim in this proceeding, however, because it would 
be beyond the scope of the damages complaint.  Alternatively, 
WorldCom could have agreed contractually with an SBR that 
WorldCom will pay per-call compensation on behalf of the SBR.  
Again, however, any claim by Verizon against WorldCom seeking to 
enforce such a contract would transcend the allegations of the 
damages complaint.
32 Cf. First Payphone Order, 11 FCC Rcd at ____,  110 (IXC must 
send to each PSP a statement indicating the number of toll-free 
and access code calls that the IXC has received from each PSP's 
payphone).