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


In the Matter of                 )
                                )
AudioText International, Ltd.,   )
                                )
                                        )
Complainant,                     )    File No. EB-03-MD-010
                                )
v.                               )
                                )
AT&T Corp.,                      )

                                          
Defendant.


                  MEMORANDUM OPINION AND ORDER

 Adopted:  February 13, 2004          Released:  February 13, 
2004

By the Commission:


I.   INTRODUCTION

     1.   In this Order, we grant in substantial part a formal 
complaint that AudioText International, Ltd. (``AudioText'') 
filed against AT&T Corporation (``AT&T'') under section 208 of 
the Communications Act of 1934, as amended (``Act'').1  AudioText 
filed its Complaint pursuant to an order of the United States 
District Court for the Eastern District of Pennsylvania referring 
certain issues to the Commission under the doctrine of primary 
jurisdiction.2  AudioText alleges in the Complaint that AT&T 
violated section 203(c)(3) of the Act by engaging in conduct that 
was not authorized by AT&T's governing tariff.3  Specifically, 
AudioText alleges that AT&T violated the terms of AT&T's tariff, 
and thus section 203(c)(3), by suspending service to AudioText,4 
refusing AudioText's requests for restoration of service,5 and 
demanding that AudioText pay AT&T a security deposit6 and current 
charges before they were due.7  As explained below, we conclude 
that AT&T violated section 203(c)(3) by suspending and refusing 
to restore AudioText's service, and by making demands for a 
security deposit and for payment of current charges in 
contravention of the governing tariff. 

II.  FACTUAL BACKGROUND

     II.A.     The Parties

     2.   AudioText is a Pennsylvania corporation, with its 
principal place of business in Narberth, Pennsylvania.8  At times 
relevant to this proceeding, AudioText bought and sold 
international long-distance telephone minutes to and from 
different carriers and different countries. 9 

     3.   AT&T, a New York corporation, is a national and 
international provider of long distance telephone services, as 
well as a provider of toll-free 800 services, Internet services, 
and transport for 900 services.10  

     II.B.     Contract Tariff 14363 

     4.   The dispute before us involves a long distance service 
agreement that AudioText and AT&T entered into on or about August 
17, 2000, which was filed as Contract Tariff No. 14363 (``CT 
14363'').11  Prior to entering into that agreement, the parties 
had operated under an earlier long distance service agreement, 
pursuant to which AudioText received service from AT&T beginning 
in February 2000.12  During the first several months of 2000, 
AudioText had disputed certain charges that AT&T had billed 
AudioText, and AT&T had corrected some billing errors in response 
to AudioText's inquiries.13  Although some billing disputes 
remained at the time AT&T and AudioText entered into CT 14363 in 
August 2000,14 AT&T's credit department approved the provision of 
service to AudioText under CT 14363.15    

     5.   Under CT 14363, AudioText agreed to purchase a minimum 
volume of international minutes from AT&T over a two-year term in 
exchange for, among other things, a discounted per-minute rate to 
the United Kingdom, where the bulk of AudioText's telephone calls 
terminated.16  With the discounts, the rate to the U.K. for 
dedicated access was $.058 per minute.17  CT 14363 provides that, 
except as otherwise provided in that contract tariff, the 
regulations set forth in AT&T Tariff FCC Nos. 1, 2, and 14 apply 
to service under CT 14363.18  AudioText began receiving service 
under CT 14363 on September 7, 2000.19 

     II.C.     Audiotext's Use Of AT&T's Service To Autodial PNS 
     Numbers In The U.K.

     6.   The dispute in this case concerns AudioText's use of 
the service it purchased from AT&T under CT 14363 to generate 
calls, by means of autodialers, to numbers in the U.K. that began 
with the prefix ``070.''  The 070 numbers (hereafter ``PNS 
numbers'')20 were associated with a premium service in the U.K. 
known as Personal Numbering Service (``PNS''), that enabled end-
users to be called, using a single telephone number, at virtually 
any telephone number including mobile numbers.21  The PNS numbers 
allowed an end-user who subscribed to PNS to have his/her calls 
forwarded from their place of initial receipt to any phone - 
mobile or land line - so that the calls were redirected to 
`follow' the subscriber traveling from place to place.22  
According to AT&T, the charge for calling a PNS number was higher 
than the charge for a normal call.23 

     7.   AudioText entered into agreements with three companies 
based in the U.K. (``U.K. Companies'') to originate calls from 
the United States that were routed over international 
telecommunications lines and terminated to PNS numbers in the 
U.K.24  AudioText programmed computer software to dial 
automatically the U.K. PNS numbers, and autodialed calls to as 
many as 5,000 U.K. PNS numbers, based on monthly volumes 
requested by the U.K. Companies.25  Many of the autodialed calls 
were to PNS numbers that were not associated with individual 
users but were, instead, directed to prerecorded messages.26  The 
U.K. Companies, who received revenues from the terminated PNS 
calls, paid AudioText an average rate of approximately $0.14 per 
minute for the calls that AudioText originated that terminated to 
one of the U.K. Companies' PNS numbers.27  Because AudioText had 
negotiated a discounted rate for international calls under CT 
14363, AudioText was required to pay AT&T only $.058 per minute 
for the calls that AudioText originated to the PNS numbers in the 
U.K.  AT&T, however, was required to pay a high access charge of 
approximately $.23 per minute for terminating calls to the PNS 
numbers.28  Thus, under this arrangement, AudioText made a profit 
on each minute of traffic that it originated to the PNS numbers 
over AT&T's service.  AT&T, on the other hand, suffered a loss on 
each minute of such traffic because the per minute rate that AT&T 
was required to pay to terminate the PNS traffic in the U.K. 
exceeded the per minute rate that AT&T agreed to charge AudioText 
for this traffic. 

     II.D.     AT&T's Suspension Of Audiotext's Service On 
     September 15, 2000

     8.   Eight days after AudioText began receiving service 
under CT 14363, AT&T suspended the service on September 15, 2000, 
and thereafter refused AudioText's requests to reinstate the 
service.  The record evidence regarding this suspension of 
service is summarized below. 

     9.   On September 14, 2000, Adam Panagia, a District Manager 
in AT&T's Global Fraud group, received information from another 
AT&T employee about a pattern of calls to PNS numbers in the U.K. 
that appeared to be similar to the traffic associated with a so-
called ``scam'' in south Florida that Panagia had first learned 
about in July 2000.29  The Florida traffic involved an individual 
who ordered high bandwidth services, such as T1 lines, from U.S.-
based telecommunications carriers, and then used autodialers to 
place a high volume of calls over the T1 circuits to PNS number 
ranges in the U.K.30  Upon investigating the Florida traffic, 
Panagia learned that the PNS range had a very high settlement fee 
for terminating calls; that persons in the U.K. would partner 
with persons in the U.S. who would negotiate with U.S. carriers, 
such as AT&T, to obtain low rates for traffic to the U.K.; and 
that the U.S. persons would use autodialers or other artificial 
stimulation to generate traffic to the initial point of receipt 
served by the PNS range.  The U.K. and U.S. persons then shared 
the revenue generated from the traffic to the PNS range.31    

     10.  On September 14, 2000, AT&T Labs ran an inquiry in 
AT&T's call database, which revealed that AudioText had generated 
the second highest volume of traffic to U.K. PNS numbers since 
May 1, 2000.32  Panagia then reviewed AudioText's call records on 
September 15, 2000, and detected the following patterns: (1) 
AudioText's international traffic was predominately to the U.K. 
PNS numbers; (2) the volume was estimated to be in excess of 
seven million minutes from the time AudioText began receiving 
service in February 2000; and (3) there were several very long 
calls, over 100 minutes, to the U.K. PNS numbers, and many short 
calls.33  Panagia conveyed this information to AT&T in-house 
counsel Andrew Schlafly.34

     11.  Panagia's group also ran a credit check on AudioText 
and conveyed the results to Schlafly.35  Schlafly received an e-
mail message from an employee in Mr. Panagia's group on September 
15, 2000 indicating that Dun & Bradstreet considered AudioText 
``a Low Credit Risk.''36  The message also advised Schlafly that 
AudioText had a current bill that was not yet due, and past due 
obligation of $22,946.88.37  

     12.  On Friday, September 15, 2000, Schlafly decided to 
suspend AudioText's service.  Schlafly made the decision before 
4:00 p.m. that day, after speaking with Panagia.38  The decision 
to suspend was based in part on the volume of the traffic 
AudioText had generated since February 2000 that had terminated 
to U.K. PNS numbers.39    

     13.  At about 4:30 p.m. on September 15, 2000, Panagia 
telephoned AudioText's president, Hausman, and asked if Hausman 
was aware that a substantial volume of AudioText's traffic was 
going to the U.K.  Hausman acknowledged awareness of that fact.40  
Panagia asked Hausman if he realized that the traffic was 
predominantly going to U.K. PNS or cellular numbers.  Hausman 
acknowledged that he did.41  Panagia and Hausman discussed 
whether the traffic was fraudulent, and Hausman said that it was 
not.42  AT&T suspended AudioText's service at about 4:45 PM on 
September 15, 2000.43  

     14.  Schlafly sent a certified letter to Hausman, dated 
September 15, 2000, stating that AT&T was suspending AudioText's 
service immediately because:

          AT&T has determined that Audiotext . . . is generating 
          an extra-ordinary volume of calls from its circuits 
          terminating on [PNS] numbers in the [U.K.]. . . ..

          Audiotext . . . currently has substantial unpaid 
          obligations to AT&T, some of which is [sic] past due.  
          Moreover, this traffic appears to us as though it may 
          include fraudulent use of telecommunication services.44  

     15.  Following the suspension of service, the parties 
exchanged a series of letters over a three-week period.45  In 
letters to AT&T, AudioText's president, Hausman, and its outside 
counsel, Stephen Burns, denied that AudioText was engaged in any 
fraud, asserted that AT&T's actions were without justification, 
and demanded that AT&T restore AudioText's service.46  AT&T sent 
letters to AudioText advising AudioText that its account was past 
due, and demanding that AudioText provide a security deposit and 
pay its current balance ``in full.''47  In response, AudioText 
denied that it had any unpaid obligations to AT&T, and accused 
AT&T of failing promptly to issue credits to AudioText for past 
overcharges.48  AudioText never provided a security deposit to 
AT&T, and AT&T never restored AudioText's suspended service.49  

     II.E.     The District Court's Referral

     16.  On October 4, 2000, AudioText filed a complaint against 
AT&T in the United States District Court for the Eastern District 
of Pennsylvania (``District Court'') charging AT&T with breach of 
contract and of the covenant of good faith and fair dealing.50  
AT&T answered the complaint and asserted the affirmative defense 
that its services to AudioText were governed by tariffs on file 
with the Commission and that its actions with respect to 
AudioText were authorized and lawful under those filed tariffs.51  
AT&T alleged that AudioText's claims were barred by its tariffs, 
the Act, and the filed tariff doctrine.52  AT&T asserted 
additional affirmative defenses, and counterclaimed for unpaid 
service bills.53  

     17.  In December 2001, AT&T filed a motion in the District 
Court to dismiss AudioText's complaint or, in the alternative, to 
dismiss it without prejudice to its submission to the Commission 
for disposition pursuant to the primary jurisdiction doctrine.54  
The District Court ordered that AudioText may submit its claims 
to the Commission, and stayed all further proceedings in the case 
pending completion of administrative proceedings before the 
Commission.55  In August 2002, AudioText filed a second complaint 
with the District Court charging that AT&T violated section 201 
of the Act and its tariff by terminating AudioText's services and 
blocking its traffic.56  In November 2002, the District Court 
consolidated AudioText's two suits and stayed both pending 
referral to the Commission for disposition.57  

     18.  AudioText filed the instant Complaint with the 
Commission on May 13, 2003.58  The Complaint originally contained 
twelve separate counts; however, following the initial status 
conference in this matter, AudioText withdrew Counts I, II, III, 
and XII from the Complaint.59  In the remaining counts, AudioText 
alleged that AT&T violated the terms of the governing AT&T tariff 
and, thus, section 203(c)(3) of the Act, by suspending 
AudioText's service without authorization (Counts IV and V);60 
refusing AudioText's requests for reinstatement of service 
(Counts VI);61 making an unauthorized demand for a security 
deposit (Counts VIII, IX, and X);62 and demanding payment of 
current charges that were not yet due (Count XI).63  AT&T filed 
an Answer denying all of the allegations in the Complaint, and 
asserting affirmative defenses.64

III.      DISCUSSION

     III.A.    AT&T's Suspension Of Audiotext's Service Was Not 
     Authorized By The  Tariff And Thus Violated Section 
     203(c)(3) Of The Act. 

     19.  In Counts IV and V of the Complaint, AudioText alleges 
that AT&T's suspension of AudioText's service on September 15, 
2000 violated section 203(c)(3) of the Act.65  Section 203(c)(3) 
provides, in pertinent part, that no carrier shall ``employ or 
enforce any classifications, regulations, or practices affecting 
[its] charges except as specified in [its filed tariff].''66  
AudioText claims that AT&T's suspension of service was not 
authorized by the terms of the applicable tariff, and thus 
constituted a violation of section 203(c)(3).67  AT&T disputes 
this claim, asserting that its suspension of AudioText's service 
was authorized by its tariff.68

     20.  Both parties rely on sections 2.9.6 and 2.2.4.B. of 
AT&T Tariff No. 1 to support their contentions as to the 
lawfulness of the suspension of service under section 
203(c)(3).69  Section 2.9.6., which is entitled ``Fraudulent Use 
Of LDMTS [long distance message telephone service] To Avoid 
Payment Of Tariffed Charges,'' provides that ``[i]n order to 
control fraud in any instance in which the Company has reason to 
believe that a Customer is using LDMTS in violation of Section 
2.2.4.B., the Company may, after complying with the requirements 
of this sub-section, immediately and upon written notice to the 
Customer . . . restrict, suspend, or discontinue providing the 
service.''70  

     21.  Section 2.2.4., entitled ``Fraudulent Use,'' states 
that the ``fraudulent use of, or the intended or attempted 
fraudulent use of LDMTS is prohibited,''71 and then lists 
``activities that constitute fraudulent use'' in separate 
subsections.72  Section 2.2.4.B. prohibits ``[u]sing or 
attempting to use'' AT&T's long distance services ``with the 
intent to avoid the payment, either in whole or in part, of any 
of [AT&T's] tariffed charges''73 by (1) ``[r]earranging, 
tampering with, or making connections'' not authorized by Tariff 
1 to ``any service components used to furnish'' long-distance 
service;74 or (2) ``[u]sing fraudulent means or devices, tricks, 
schemes, false or invalid numbers, false credit devices, or 
electronic devices, whether directed at the Company or 
others.''75  

          III.A.1.  AT&T Had No Basis To Conclude That Audiotext 
               Was Using The Service In Violation Of Section 
               2.2.4.B. Of The Tariff. 

     22.  By its plain terms, section 2.9.6. grants AT&T 
authority to suspend service only in instances where AT&T ``has 
reason to believe that a customer is using LDMTS in violation of 
Section 2.2.4.B. . . ..''76  In determining the lawfulness of 
AT&T's suspension of AudioText's service in September 2000, we 
must therefore examine whether AT&T had reason to believe that 
AudioText was using AT&T's service in violation of section 
2.2.4.B. at the time it suspended service. 

     23.  AT&T contends that it had reason to believe that 
AudioText was violating section 2.2.4.B., and was therefore 
authorized to suspend service under section 2.9.6., because 
AudioText's alleged increase in volume of usage and peculiar 
calling pattern suggested that AudioText, or one of its 
customers, ``was using a fraudulent trick or device in violation 
of the tariff.''77  For the following reasons, we disagree.  

     24.  Even if AudioText's use of autodialers to call PNS 
numbers could be considered a ``fraudulent trick or device,'' 
AT&T has not established that it had reason to believe that 
AudioText was ``using or attempting to use'' AT&T's long distance 
services ``with the intent to avoid the payment . . . of any of 
[AT&T's] tariffed charges,'' which is the only activity 
specifically prohibited by section 2.2.4.B.78  To the contrary, 
the evidence shows that AT&T believed that AudioText was using 
the autodialers as part of a scheme under which AudioText would 
profit from the difference between the tariffed charges it would 
pay AT&T for service under CT 14363, and its portion of the call 
termination fees that AudioText's partners in the U.K. collected 
and agreed to share with AudioText.  The record evidence shows 
that AT&T understood that, under this arrangement, AudioText had 
every incentive to continue paying AT&T for its tariffed 
services, because that was how AudioText would continue to profit 
from this arbitrage.

     25.  AT&T manager Adam Panagia testified that, after he 
learned of an emerging ``scam'' involving the PNS service in the 
U.K. in July of 2000,79 he investigated further and found that 

          the PNS range had a very high settlement fee (i.e., 
          access charge for terminating calls. . .) and that 
          operators in the U.K. would partner with people in the 
          U.S. who would approach U.S. carriers, like AT&T, MCI 
          WorldCom, and Sprint, and negotiate attractive (low) 
          rates for traffic to the U.K. and who then would use 
          autodialers or other false stimulation to create 
          excessive traffic to the initial point of receipt 
          served by the PNS range.  The U.K. and U.S. individuals 
          then share the revenue generated from the excessive 
          traffic to the PNS range.80 

When Panagia later notified an industry task force about this 
practice in November 2000, he described it as ``arbitrage'' to 
the U.K. and explained: ``The originator may be paying 5 cents a 
minute to the carrier and the PNS operator may be receiving 18 
cents a minute resulting in the carrier losing 13 cents a minute 
due to the higher settlement charges.''81  

     26.  The record does not establish that AT&T was concerned, 
at the time it terminated AudioText's service in September 2000, 
that the U.S. originators of the traffic to U.K. PNS numbers, 
such as AudioText, intended to avoid payment of tariffed 
charges.82  Indeed, an e-mail communication from AT&T manager 
Bill Robb,83 sent on the day AT&T suspended AudioText's service, 
shows that AT&T understood that the ``upside'' for AudioText in 
the PNS autodialing ``scam'' was the profit that AudioText stood 
to make from the difference between the rate AudioText was paying 
AT&T for long distance service and the portion of the 23 cent 
settlement fee that the U.K.-based companies returned to 
AudioText.84  

     27.  Although AT&T may have had legitimate concerns about 
AudioText's behavior, AT&T was still obligated to comply with its 
tariff.  The relevant provisions of the Tariff provide for 
termination of a customer's service only when AT&T has reason to 
believe that the customer is attempting to avoid the payment of 
tariffed charges, not when AT&T is concerned generally about 
fraud or arbitrage. 85  Because AT&T did not have a reason to 
believe that AudioText intended to avoid paying AT&T's tariffed 
charges, AT&T's termination of AudioText's service was not 
authorized by the tariff and, therefore, violated section 
203(c)(3). 

          III.A.2.  AT&T Cannot Justify Its Suspension Of Service 
               On The Ground That AudioText Was Allegedly Placing 
               An ``Extraordinarily High Volume Of Calls.'' 

     28.  We also reject AT&T's contention that its suspension of 
AudioText's service in September 2000 was authorized by 
subsection 2.9.6.A. because AudioText allegedly had placed an 
``extraordinarily high volume of calls'' at the time of the 
suspension.86  Section 2.9.6.A. of Tariff No. 1 sets forth 
requirements that must be met in order for AT&T to suspend 
service ``in instances where AT&T ``has reason to believe that a 
Customer is using LDMTS in violation of Section 2.2.4.B.''87  
Section 2.9.6.A. provides that AT&T may restrict or suspend 
service if it determines that a customer is placing an 
``extraordinarily high volume of calls'' and AT&T fails to 
receive ``satisfactory assurances'' from the customer that the 
customer ``is not using the service in violation of Section 
2.2.4.B.''88  An ``extraordinarily high volume of calls'' is 
defined as ``the volume of calls in any 24-hour period which, if 
continued at that rate for a period of one month, would exceed at 
least three times the Customer's estimated monthly usage charges 
for that service (as determined by the lower of the Customer's 
designated monthly minimum usage commitment for that service, if 
any, or the immediately preceding month's usage charges).''89   

     29.  AT&T's arguments based on subsection 2.9.6.A. fail for 
two independent reasons.  First, Section 2.9.6.A. applies only in 
instances where AT&T has reason to believe that a customer is 
using long distance service to avoid payment of tariffed charges 
in violation of Section 2.2.4.B.  This conclusion is evident from 
the title, ``Fraudulent Use Of LDMTS To Avoid Payment Of Tariffed 
Charges,'' that appears over section 2.9.6. and all of its 
subsections,90 and from the text of Section 2.9.6.A, which allows 
AT&T to suspend service only where it fails to receive 
``satisfactory assurances'' that the customer ``is not using the 
service in violation of Section 2.2.4.B.'' 91  Section 2.2.4.B., 
as we have noted, applies only to actions taken ``with the intent 
to avoid the payment, either in whole or in part, of any of 
[AT&T's] tariffed charges.''92  Because, as shown above, AT&T had 
no reason to believe that AudioText was engaged in activities 
that constituted fraudulent use of service under section 
2.2.4.B., it lacked authority to initiate the suspension of 
service procedures of section 2.9.6.A., regardless of the volume 
of calls. 

     30.  Moreover, an examination of the evidence concerning 
call volume provides us with a second, independent basis to 
conclude that AT&T's suspension of AudioText's service was not 
authorized by section 2.9.6.A.  There is no evidence in the 
record that AT&T ever determined that AudioText had placed ``an 
extraordinarily high volume of calls'' under section 2.9.6.A. at 
the time AT&T suspended AudioText's service.  AT&T has failed to 
show that, prior to suspending service, it examined calling data 
and found that AudioText had placed ``an extraordinarily high 
volume of calls'' under section 2.9.6.A., i.e., that ``the volume 
of calls [AudioText had placed] in any 24-hour period . . . if 
continued at that rate for a period of one month, would exceed at 
least three times [AudioText]'s estimated monthly usage charges 
for that service (as determined by the lower of [AudioText]'s 
designated monthly minimum usage commitment for that service, if 
any, or the immediately preceding month's usage charges).''93  
Although AT&T proffered sworn declarations from two witnesses who 
testified that they considered call records for AudioText at the 
time AT&T suspended AudioText's service,94 neither declarant 
provides evidence that AT&T determined, at the time it decided to 
suspend service, that AudioText's call volume in any 24-hour 
period met the test for ``an extraordinarily high volume of 
calls'' set forth in section 2.9.6.A.  

     31.  The undisputed evidence concerning AudioText's calling 
volume indicates that AT&T could not have satisfied the 
``extraordinarily high volume'' test set out in section 2.9.6.A., 
even if it had tried to do so.  In determining the calling volume 
that would have satisfied that test, we must measure AudioText's 
calling volume in a 24-hour period against the ``immediately 
preceding month's usage charges,'' because there was no minimum 
monthly usage commitment set forth in CT 14363.95  The parties 
agree that, in the billing period immediately preceding September 
15, 2000, which ran from August 7 to September 6, 2000, AT&T 
charged AudioText $118,760.92 for 1,679,991.616 minutes of use.96  
Accordingly, to place an ``extraordinarily high volume of calls'' 
within the meaning of section 2.9.6.A., AudioText would have had 
to incur charges totaling $11,876.09 (3  $118,760.92  30) 
and/or place at least 167,999.161 billable minutes during one 24-
hour period (3  1,679,991.616  30).  There is no evidence that 
such usage occurred.  In the nine days between September 7 and 
September 15, 2000, AudioText incurred 428,139.850 minutes of 
traffic for a usage charge of $39,567.38.97  If all days in that 
period saw an equal amount of traffic, AudioText incurred charges 
during that period at an average rate of $4,396.38 per day, for 
an average of 47,571.094 minutes of use per day.98  This is 
substantially less than the $11,876.09 and 167,999.161 minute 
threshold that AudioText would have had to meet under the 
``extraordinarily high volume'' test in section 2.9.6.A.99  

     32.  In sum, because AT&T did not determine that AudioText 
had placed an ``extraordinarily high volume of calls,'' it had no 
right under section 2.9.6.A. to contact AudioText and demand 
assurances that AudioText was ``not using the service in 
violation of Section 2.2.4.B.,''100 and then suspend service when 
it allegedly failed to receive such assurances.  By proceeding to 
suspend the service anyway, AT&T violated section 2.9.6. of 
Tariff No. 1 and thus section 203(c)(3) of the Act.

          III.A.3.  AT&T's Arguments Based On Sections 2.9.6.B. 
               And 2.9.6.D. Of The Tariff Also Lack Merit.  

     33.  AT&T's attempt to rely on sections 2.9.6.B. and 
2.9.6.D. of Tariff No. 1 to justify its suspension of AudioText's 
service is similarly unavailing.101  Under  2.9.6.B., AT&T may 
refuse to provide service if the customer's acts or the 
conditions on its premises are ``consistent with patterns of 
known fraudulent activity such as to indicate an intention to 
defraud [AT&T] once [service] is provided.''102  Section 2.9.6.D. 
permits AT&T temporarily to restrict access to its network from 
any specific line ``when a pattern of calling on that line is 
consistent with known patterns of fraudulent calling.''103  
Again, because section 2.9.6. applies only where AT&T has reason 
to believe there is a violation of section 2.2.4.B., the term 
``intention to defraud'' in section 2.9.6.B. and the term 
``fraudulent calling'' in section 2.9.6.D. refer to use of AT&T's 
service with the intent to avoid payment of AT&T's tariffed 
charges in violation of section 2.2.4.B.  As discussed above, 
AudioText's conduct did not indicate such intent. 

          III.A.4.  AT&T's Attempts To Vary Or Enlarge The Rights 
               Defined By Its Tariff Must Also Be Rejected.

     34.  AT&T cites a number of authorities purportedly holding 
that a carrier is permitted to block or suspend service where the 
carrier suspects that the customer is using the service in 
violation of the tariff, or in a manner indicative of fraud and 
abuse.104  AT&T's implicit suggestion is that its suspension of 
AudioText's service was authorized even if AudioText was not 
engaged in ``fraud'' as specifically defined in the tariff.  We 
are not permitted, however, to decide AudioText's section 203(c) 
claims based on common law, statutory, or other definitions of 
fraud that differ from the definition set forth in section 2.2.4. 
of Tariff No. 1.  As the Supreme Court affirmed in American Tel. 
& Tel. Co. v. Central Office Tel., under the filed tariff 
doctrine, ```the rights as defined by the tariff cannot be varied 
or enlarged by either contract or tort of the carrier.'''105  
Indeed, AT&T plainly acknowledges in another portion of the 
record that its tariffs ``define and limit AT&T's rights and 
obligations with respect to the provision of long-distance 
service, including AT&T's authority to block or suspend traffic 
from foreign countries in order to prevent suspected fraud or 
abuse, unlawful use, or the non-payment of services.''106  In 
this case, AT&T's authority to suspend traffic under section 
2.9.6. of the tariff is expressly limited by the definition of 
``fraudulent use'' set forth in section 2.2.4.B., and we have no 
discretion to re-write the tariff to make it cover conduct 
falling outside those limitations.  Accordingly, we find AT&T's 
cited authorities to be inapposite, because none involves the 
application of tariff provisions that specifically defined the 
circumstances under which AT&T could terminate service for 
fraud.107  

     35.  Although we by no means endorse the kind of business 
conduct that AudioText admittedly engaged in here, we have no 
authority to depart from the well-settled filed tariff doctrine 
simply because we wish to censure certain business conduct.  
Instead, the Act places the burden on carriers such as AT&T to 
protect themselves against customer conduct they deem unfair or 
undesirable by incorporating appropriate safeguards in their 
contract and/or tariff provisions.  In this case, AT&T failed to 
take such protective measures before contracting with AudioText.  
Accordingly, because we find that AT&T's suspension of 
AudioText's service on September 15, 2000 was not authorized 
under section 2.9.6. of the tariff, we rule in AudioText's favor 
on these counts. 

     III.B.    AT&T's Refusal To Reinstate Audiotext's Service 
     Violated The Tariff And Thus Section 203(c)(3) Of The Act.

     36.  In Count VI of the Complaint, AudioText alleges that 
AT&T's refusal to reinstate AudioText's service in September 2000 
was impermissible under section 2.9.6.A. of Tariff No. 1 and thus 
violated section 203(c)(3) of the Act. 108  Section 2.9.6.A. of 
Tariff No. 1 provides that, where a customer's service has been 
restricted, suspended, or discontinued, the service ``will be 
reinstated'' if AT&T ``receives satisfactory assurances within 
ten days'' that the customer was not using the service ``in 
violation of  2.2.4.B.,'' or if AT&T receives ``an appropriate 
deposit pursuant to Section 2.5.6.''109  

     37.  AudioText alleges that AT&T should have reinstated 
AudioText's service, because AudioText provided AT&T with 
assurances that it was not making fraudulent use of AT&T's 
service, and AT&T knew that AudioText was not using the service 
with the intent to avoid the payment of tariffed charges in 
violation of section 2.2.4.B.110  AT&T denies these 
allegations,111 arguing that the purported ``assurances'' it 
received from AudioText were in no way ``satisfactory'' within 
the meaning of the tariff.112  

     38.  Section 2.9.6.A. provides for reinstatement of service 
in instances where AT&T has suspended, restricted or discontinued 
service in accordance with the terms of that section.113  As 
discussed above, AT&T's suspension of AudioText's service was not 
authorized under section 2.9.6.A., because AT&T had no reason to 
believe that AudioText was using AT&T's service in violation of 
section 2.2.4.B. of the tariff.114  Consequently, AT&T was not 
authorized under section 2.9.6.A. to demand assurances that 
AudioText was not violating section 2.2.4.B. as a condition for 
reinstating AudioText's service.  Thus, we conclude that AT&T's 
refusal to reinstate AudioText's service violated section 
203(c)(3) of the Act,115 by imposing conditions on the service 
that were not specified in the tariff.116  

     III.C.    AT&T's Unauthorized Demand For A Security Deposit 
     And For Payment Of Current Charges Violated The Tariff And 
     Thus Section 203(c)(3) Of The Act. 

     39.  In Counts IX and XI of the Complaint, AudioText alleges 
that AT&T violated section 203(c)(3) of the Act by demanding that 
AudioText pay a security deposit,117 and pay current charges not 
yet due,118 when such demands were not authorized by the 
governing tariff.  For the reasons set forth below, we conclude 
that AT&T did in fact make unauthorized demands for a security 
deposit and for payment of current charges in violation of 
section 203(c)(3) of the Act.

     40.  The facts relevant to these claims are largely 
undisputed.  On September 20 and/or September 25, 2000, AT&T 
manager Adam Panagia faxed a letter to AudioText's president, 
James Hausman, informing AudioText that its account with AT&T had 
``a past due amount of $41,202.13 with current charges of 
$126,383.67,'' and stating that ``AT&T is requesting that the 
total $167,585.80 be paid in full to bring the account 
current.''119  The Demand Letter stated further: ``If it is your 
intention to continue to do business with AT&T, we are requesting 
a deposit of $828,923.00 based on the recent and unexpectedly 
large amount of traffic that AudioText . . . is generating.''120  
As both parties agree, the past due amount of $41,202.13 
identified in AT&T's letter was apparently inaccurate, since 
AT&T's records showed on September 20, 2000 that AudioText's 
account had a past due amount of either $22,946.88 or 
$24,077.13.121  

          III.C.1.  AT&T's Demand For A Security Deposit In The 
               Amount Of $828,923 Was Unauthorized.

     41.  We address first AT&T's demand for a security deposit 
of $828,923.00.  AT&T contends that its demand for a security 
deposit was authorized by section 2.5.6.A. of Tariff No. 1, and 
thus was just and reasonable under Section 203(c)(3) of the 
Act.122  Section 2.5.6.A. of Tariff No. 1 permits AT&T to require 
a security deposit from a customer ``(1) who has a proven history 
of late payments to the Company or (2) whose financial 
responsibility is not a matter of record . . . .''123  To 
determine the ``financial responsibility'' of a customer for 
purposes of 2.5.6.A., AT&T ``will rely on commercially reasonable 
factors to assess and manage the risk of nonpayment,''124 
including ``payment history for telecommunications service, the 
number of years in business, history of service with AT&T, 
bankruptcy history, current account treatment status, financial 
statement analysis, and commercial credit bureau rating.''125  
Section 2.5.6.A. further provides that the amount of the deposit 
``will not exceed three times the sum of the estimated average 
monthly usage charges and/or the monthly service charges.''126 

     42.  AudioText contends in Count IX that AT&T's demand for a 
deposit was unauthorized because section 2.5.6.A. of Tariff No. 1 
did not permit AT&T to demand a deposit in the amount of 
$828,923.127  As noted above, Section 2.5.6.A. provides that the 
amount of the deposit ``will not exceed three times the sum of 
the estimated average monthly usage charges and/or the monthly 
service charges.''128  AT&T concedes that, at the time it 
demanded a deposit of $828,923, AudioText's highest monthly usage 
and service charges totaled less than $119,000, which covered the 
period August 7 to September 6, 2000.129  Under the standards set 
forth in section 2.5.6.A., a demand for a deposit in the amount 
of $828,923 would have been justified only if AudioText's 
estimated average monthly usage and service charges totaled at 
least $276,307 ($828,923  3).130  AT&T admits that there is no 
basis on which it could have determined that the sum of 
AudioText's estimated average monthly usage and service charges 
was as high as $276,307.131  Thus, section 2.5.6.A. did not 
authorize AT&T to demand a deposit in the amount of $828,923.

     43.  AT&T nevertheless attempts to justify its demand for a 
deposit of $828,923 by arguing that this figure was 
``negotiable,'' and that AT&T ``was willing to consider a figure 
much lower'' than that amount.132  We reject this argument for at 
least two reasons.  First, we are not persuaded by AT&T's 
assertion that the amount of the security deposit was negotiable.  
That assertion, which is supported by a declaration from former 
AT&T in-house lawyer, Schlafly, 133 is undermined by the 
contemporaneous record of events.  Specifically, the letter that 
AT&T manager Adam Panagia sent to AudioText on September 20 
and/or September 25, 2000 indicated that payment of the $828,923 
deposit was a condition of restoring AudioText's suspended 
service, stating: ``If it is your intention to continue to do 
business with AT&T, we are requesting a deposit of $828,923.00 . 
. . .''134  Further, it is clear from AudioText's contemporaneous 
correspondence with AT&T that AudioText did not understand AT&T 
to have made a ``negotiable'' demand for a deposit.  A September 
25, 2000 letter that AudioText's counsel, Stephen Burns, sent to 
Schlafly recounted that ``on September 22nd . . . AT&T demanded a 
deposit of $828,923 as a condition of restoring service.''135  In 
response, Schlafly sent a letter to Burns the following day 
stating that AT&T had previously sent AudioText a ``demand'' for 
payment of ``a deposit based on the recent usage.''136  Nowhere 
in the letter did Schlafly indicate that the amount of the 
deposit was negotiable.137  On September 26, 2000, Burns sent 
Schlafly another letter in which he stated that AT&T's ``demand 
for a security deposit of $828,923 is patently ridiculous and 
impossible to comply with'' and asking Schlafly to provide ``some 
justification for this number. . . .''138  The record contains no 
responding letter from AT&T advising AudioText that the $828,923 
amount was negotiable, or explaining how it was calculated.139

     44.  More importantly, the tariff did not authorize AT&T to 
demand that AudioText pay a deposit amount that exceeds the 
dollar limits set forth in section 2.5.6.A., regardless of 
whether AT&T was willing to negotiate a lesser deposit in the 
event AudioText balked at paying the $828,923.  Indeed, to allow 
AT&T to demand that customers pay deposits in amounts that exceed 
the limits set forth in section 2.5.6.A. of Tariff No. 1, and 
then negotiate different deposit amounts that might or might not 
fall within the scope of the Tariff, would undermine the 
antidiscriminatory policy that lies at ``'the heart of the 
common-carrier section of the Communications Act.'''140  This we 
decline to do.  We therefore conclude that AT&T violated section 
203(c)(3) of the Act by demanding a deposit in the amount of 
$828,923, which could not be justified under the dollar limits 
set forth in section 2.5.6.A. of the Tariff.141  

          III.C.2.  AT&T's Demand For Payment Of Current Charges 
               Was Unauthorized.

     45.  In addition to requesting payment of a deposit of 
$828,923, the Demand Letter that AT&T sent to AudioText on 
September 20 and/or September 25, 2000 asked AudioText to pay 
$167,585.80 ``in full to bring [its] account current.''142  AT&T 
admits that, as of September 15, 2000, its counsel, Schlafly, 
knew that the current portion of AudioText's bill was 
$126,383.67, and that portion was not due until October 7, 
2000.143  AT&T further admits that its records showed on 
September 20, 2000 that AudioText's account had a past due amount 
of either $22,946.88 or $24,077.13.144   

     46.  Section 2.5.4. of Tariff No. 1 provides that ``any 
amounts for which payment has not been received within 30 
calendar days of the invoice date will be considered 
delinquent.''145 AudioText alleges in Count XI that AT&T did not 
act in accordance with the Tariff, and thus violated 203(c)(3) of 
the Act, when it demanded payment of $167,585.80 from AudioText 
when payment of that amount was not yet due.146  We agree.

     47.  In defense of Count XI, AT&T merely asserts that 
``[b]ecause AudioText had past charges due on September 15, 2000, 
AT&T was entitled under the tariff to require payment of past due 
charges on AudioText's account.''147  AT&T argues that ``neither 
Section 203(c)(3) of the Act or the tariff itself prohibit AT&T 
from `requesting' payments that are already overdue.''148  This 
argument, however, does not explain how AT&T's demand for 
immediate payment of $167,585.80 was authorized under the Tariff 
when, according to AT&T's own records, less than $25,000 of that 
amount was past due.  We therefore reject AT&T's defense to Count 
XI and find that AT&T violated section 2.5.4. of the Tariff, and 
thus section 203(c)(3) of the Act, by demanding immediate payment 
of $167,585.80, when most of that amount was not yet due. 

IV.  CONCLUSION

     48.  For the forgoing reasons, we conclude that AT&T 
violated section 203(c)(3) of the Act by suspending and refusing 
to restore AudioText's service in September 2000, and by 
demanding that AudioText provide a security deposit of $828,923, 
and pay current charges not yet due.  We find that these actions 
were not authorized or lawful under the Tariff then governing 
AT&T's provision of service to AudioText.149  

V.   ORDERING CLAUSES 

     49.  ACCORDINGLY, IT IS ORDERED, pursuant to sections 1, 
4(i), 4(j), 208 and 203 of the Communications Act of 1934, as 
amended, 47 U.S.C.  151, 154(i), 154(j), 208, and 203, that the 
formal Complaint filed by AudioText International, Ltd. against 
AT&T Corporation IS GRANTED in part as follows:

          a)   Counts IV, V, VI, IX and XI of the Complaint are 
          GRANTED; and 

          b)   Counts VII, VIII and X of the Complaint are 
          DISMISSED without prejudice.150

                         FEDERAL COMMUNICATIONS COMMISSION 



                                                  
                         Marlene H. Dortch
                         Secretary
_________________________

1    47 U.S.C.  208.  See Formal Complaint, File No. EB-03-MD-
010 (filed May 13, 2003) (``Complaint''). 
2    See Appendix to Complaint (``Complaint App.'') at 565-66; 
587; Joint Statement of the Parties, File No. EB-03-MD-010 (filed 
July 23, 2003) (``Joint Statement'') at 34-35,  181-93.   
3    47 U.S.C.  203(c)(3).
4    Complaint at 43-48,  269-303.  
5    Complaint at 48-49,  304-312.  AudioText also alleges that 
AT&T's refusal to grant AudioText's reasonable request for 
restoration of service violated section 201(a) of the Act, 47 
U.S.C.  201(a).  Complaint at 49-50,  313-320.  For the 
reasons discussed in Part III.B below, we conclude that we need 
not address AudioText's section 201(a) claim in this Order.
6    Complaint at 50-53,  321-46.
7    Complaint at 53-54,  347-59.
8    Joint Statement at 2,  1.
9    Joint Statement at 2,  6.  
10   Joint Statement at 3,  10-11.
11   AT&T and AudioText entered into an agreement, known as the 
Master Agreement, on or about August 17, 2000.  AT&T implemented 
the terms of the Master Agreement by filing with the Commission 
Contract Tariff No. 14363 (``CT 14363''), which became effective 
on August 25, 2000.  Joint Statement at 16-17,  96-100.  The 
Master Agreement and CT 14363 are hereafter collectively referred 
to as ``CT 14363.''  
12   See Joint Statement at 21,  128.  
13   See Joint Statement at 7-16,  42-95.
14   See Joint Statement at 16,  94-96.
15   Joint Statement at 18,  107.
16   AudioText agreed to a Voice Minimum Annual Revenue 
Commitment (``VMARC'') of $240,000 in gross international usage 
for the first year, and $480,000 in gross international usage for 
the second year of its two-year term, before the application of 
the discounts.  Joint Statement at 16,  96.  
17   Joint Statement at 17,  98.
18   Joint Statement at 30,  167; Exhibits To AT&T Answer Of 
AT&T Corp., File No. EB-03-MD-010 (filed June 16, 2003) (``AT&T 
Ex.'' 1 through 87) at AT&T Ex. 18.
19   Joint Statement at 17,  100.  
20   The 070 numbers were allocated by the U.K. regulatory 
authority, Oftel (Office of Telecommunications).  Joint Statement 
at 22-23,  131-32.  See AT&T Ex. 13.  Oftel has since been 
replaced by a new U.K. regulatory authority known as Ofcom 
(Office of Communications).
21   See AT&T Ex. 13 at 2.  
22   AT&T Ex. 40, Panagia Decl., at 2,  4.  See AT&T Ex. 13 at 
2, 9-10.  End-users in the U.K. received PNS from entities known 
as ``Personal Numbering Service Providers'' (PNSPs), which were 
not necessarily network operators.  AT&T Ex. 13 at 2, 10.  PSNPs 
allocated PNS numbers to individual end-users.  AT&T Ex. 13 at 2. 
23   Supplemental AT&T Answer of AT&T Corporation, File No. EB-
03-MD-010 (filed June 26, 2003) (``AT&T Answer'') at 4.  AT&T 
asserts that the charge was higher for the PNS calls in part 
because PNS service was expected to involve a mix of landline and 
mobile communications.  Id.  
24   Joint Statement at 2,  2; 24,  139.  
25   Joint Statement at 24,  139.
26   Joint Statement at 24,  139.  An AT&T manager who 
personally called some of the PNS numbers to which AudioText was 
sending traffic reported that he heard two prerecorded messages 
that, respectively, discussed adult entertainment and advertised 
watches for sale.  Both messages lasted no more than a few 
minutes, and then ``looped'' back and repeated the message.  AT&T 
Ex. 40, Panagia Decl., at 3-4,  8.  
27   Joint Statement at 2,  3; 24,  139.  It is not clear from 
the record whether the U.K. Companies who agreed to pay AudioText 
for originating calls to the PNS numbers collected revenues for 
the termination of calls to the PNS numbers directly, or through 
a sharing revenue arrangement with another U.K. entity, who 
collected revenues for the termination of these calls.  
28   AT&T Ex. 24; Joint Statement at 25-26,  148-49.  
29   AT&T Ex. 40, Panagia Decl., at 2-3,  3-7.  
30   AT&T Ex. 40, Panagia Decl., at 2,  3.
31   AT&T Ex. 40, Panagia Decl., at 2-3,  5.
32   AT&T Ex. 40, Panagia Decl., at 3,  7; Joint Statement at 
23,  134; AT&T Ex. 22.
33   AT&T Ex. 40, Panagia Decl., at 3-4,  8-9; Joint Statement 
at 23,  133.
34   AT&T Ex. 40, Panagia Decl., at 3-4,  9; Joint Statement at 
24,  141.
35   AT&T Ex. 40, Panagia Decl., at 4-5,  10; Complaint App. at 
453.
36   Complaint App. at 453; Joint Statement at 30,  166.
37   Complaint App. at 453.
38   Joint Statement at 27,  153; Complaint App. at 444.
39   Joint Statement at 24,  140.
40   AT&T Ex. 40,  12; Joint Statement at 25,  142.  
41   Joint Statement at 25,  143; AT&T Ex. 40,  12.  
42   Joint Statement at 25,  144; AT&T Ex. 40,  12.
43   Joint Statement at 24,  137-38; Complaint App. at 273.
44   Joint Statement at 27,  153; Exhibits To Supplemental AT&T 
Answer Of AT&T Corp., File No. EB-03-MD-010 (filed June 26, 2003) 
(``AT&T Ex.'' 88 through 94) 88, Schlafly Decl., at 2,  3; AT&T 
Ex. 47, at 34-37.
45   See Joint Statement at 26-30,  150-65.  
46   Joint Statement at 27,  154; 27-28,  157; Complaint App. 
at 312, 317-19.
47   Joint Statement at 27,  155; 29-30,  162, 164-65; 
Complaint App. at 309, 320, 322, 327, 335-38, 343-49, 353.  AT&T 
provided AudioText with conflicting information as to the amount 
by which its account allegedly was past due.  On September 18, 
2000, AT&T advised AudioText that it had a past due balance of 
$24,077.13.  Joint Statement at 27,  155; Complaint App. at 309.  
On September 20 and/or September 25, 2000, AT&T advised AudioText 
that its past due balance totaled $41,202.13.  Joint Statement at 
29-30,  164; Complaint App. at 320, 321.  These contradictory 
communications with AudioText are curious in view of AT&T's 
admission that its records showed on September 20, 2000 that 
AudioText's account had a past due amount of either $22,946.88 or 
$24,077.13.  Joint Statement at 29,  161.
48   Joint Statement at 27-28,  157; Complaint App. at 312, 317-
19, 323-25, 329, 332-33, 339-42, 351, 362-63.  
49   See Complaint at 49,  311; 50,  320; AT&T Answer at 127,  
390;  Complaint App. at 362-63.
50   Joint Statement at 34,  181.
51   Joint Statement at 34,  182.  
52   Joint Statement at 34,  182.
53   Joint Statement at 34,  182-83.
54   Joint Statement at 34,  186.
55   Joint Statement at 35,  191.
56   Joint Statement at 35,  192.  
57   Joint Statement at 35,  193.
58   Formal Complaint, File No. EB-03-MD-010 (filed May 13, 
2003).  
59   Letter from Andrew S. Kasman, Counsel for AudioText, to 
Christopher N. Olsen and Lisa J. Saks, Market Disputes Resolution 
Division, Enforcement Bureau, File No. EB-03-MD-010 (filed Aug. 
15, 2003) (stating that ``Audiotext [sic] hereby withdraws Counts 
I, II, III and XII from its Complaint in this matter''). 
60   Complaint at 43-48,  269-303.  
61   Complaint at 48-49,  304-312.  AudioText further alleges 
in Count VII that AT&T's refusal to grant AudioText's reasonable 
request for restoration of service violated section 201(a) of the 
Act.  Complaint at 49-50,  313-20.
62   Complaint at 50-53,  321-46.
63   Complaint at 53-54,  347-59.
64   See AT&T Answer.  
65   Complaint at 43-48,  269-303.
66   47 U.S.C.  203(c)(3).
67   Complaint at 46,  286; 
68   See AT&T Answer at 126,  389. 
69   See Complaint at 44-48,  274-86; 46-48,  288-303; AT&T 
Answer at 126,  389; AT&T Answer, Legal Analysis at 32-37,  
96-108.  
70   AT&T Ex. 58 2.9.6.
71   AT&T Ex. 51 2.2.4.
72   AT&T Ex. 51 2.2.4. 
73   AT&T Ex. 51 2.2.4.B. (emphasis added).
74   AT&T Ex. 51 2.2.4.B.1.
75   AT&T Ex. 51 2.2.4.B.2.
76   AT&T Ex. 58; Complaint App. at 11.  
77   AT&T Answer, Legal Analysis at 32,  98; 36,  105.  See 
also AT&T Answer at 126-27,  389.  AT&T does not claim it had 
reason to believe that AudioText was violating section 2.2.4.B.1 
by ``[r]earranging, tampering with, or making connections'' not 
authorized by Tariff No. 1.
78   AT&T Ex. 51 2.2.4.B. (emphasis added).
79   AT&T Ex. 40, Panagia Decl., at 1,  1; 2,  3.
80   AT&T Ex. 40, Panagia Decl., at 2-3,  5.
81   AT&T Ex. No. 38 (emphasis added); AT&T Ex. 40, Panagia 
Decl., at 6,  17.  See also AT&T Ex. 22 (internal AT&T e-mail 
communication dated September 14, 2000, from an employee of AT&T 
Labs reporting on investigation of the top ten originating 
numbers that generated the highest volume of traffic to U.K. PNS 
numbers and describing the situation as ``not really a fraud 
issue  - - - rather an arbitrage/opportunistic issue'');  Joint 
Statement at 23-24,  135.  
82   Indeed, on the day he decided to suspend AudioText's 
service, AT&T in-house lawyer, Schlafly, received an e-mail 
communication from an employee indicating that Dun & Bradstreet 
considered AudioText  to be a ``Low Credit Risk.''  Complaint 
App. at 453; Joint Statement at 30,  166.
     In a declaration submitted in this proceeding, Schlafly 
claims that, at the time AT&T suspended AudioText's service and 
demanded a security deposit, he was concerned about the risk of 
``closely held companies'' such as AudioText ``running up a large 
bill and then switching carriers,'' leaving AT&T ``with a 
substantial uncollectible.''  AT&T Ex. 88, Schlafly Decl., at  
14.  Schlafly asserts that this ``non-payment risk'' existed 
regardless of whether AudioText's traffic was legitimate, id. at 
 18, or whether AudioText itself, or one of its downstream 
customers, was engaged in ``stimulating false traffic over the 
network through the use of autodialers.'' Id. at  19.  This 
after-the-fact explanation is not corroborated by the 
contemporaneous record and, in any event, does not support the 
conclusion that AT&T had reason to believe that its ``Customer 
[AudioText] [was] using LDMTS in violation of Section 2.2.4.B.'' 
of the tariff, that is, ``with the intent to avoid the payment'' 
of ``[AT&T's] tariffed charges'' at the time AT&T suspended 
AudioText's service.  AT&T Ex. 58 2.9.6; AT&T Ex. 51 2.2.4.B. 
(emphasis added).  The scenarios that Schlafly describes, where a 
closely held corporate customer of AT&T runs up a large bill 
through legitimate activity, or through the ``false stimulation'' 
of traffic by a downstream customer, do not involve situations in 
which the AT&T customer uses AT&T's service ``with the intent to 
avoid the payment'' of AT&T's tariffed charges in violation of 
section 2.2.4.B. of the tariff.  
83   Joint Statement at 25,  146.
84   AT&T Ex. 24; Joint Statement at 25-26,  148-49.  Robb 
observed in the same e-mail that ``[t]he hitch is, AT&T's tariffs 
do not now, but soon will, include language precluding 
subscribers from using auto-dialers in this fashion.''  Id.    
85   Of, course, AT&T could have amended Tariff No. 1 to broaden 
its anti-fraud provisions in July 2000, when AT&T contends it 
first learned of ``an emerging scam involving the use of 
autodialers to place a high volume of calls . . . to a range of 
PNS numbers in the U.K.''  AT&T Answer, Legal Analysis at 35,  
104; AT&T Ex. 40, Panagia Decl., at 2  3.  Instead, AT&T waited 
until October 2000 to amend Tariff No. 1 to include an express 
ban on the artificial stimulation of traffic.  See AT&T Ex. 60  
2.2.3.D; Joint Statement at 33,  178.  We express no view on the 
legal effect of that amendment, or on the lawfulness of AT&T's 
conduct after the amendment, as those issues are not before us.  
86   AT&T Answer, Legal Analysis at 33-34,  99-102.  See also 
AT&T Answer at 126-27,  389.
87   AT&T Ex. 58 2.9.6.
88   AT&T Ex. 58 2.9.6.A.; Joint Statement at 31,  171.
89   AT&T Ex. 58 2.9.6.A.; Joint Statement at 32,  172.  
Section 2.9.6.A. further provides that the customer's service 
``will be reinstated'' if AT&T ``receives satisfactory assurances 
within ten days that the customer was not using the service in 
violation of  2.2.4.B.'' or if AT&T receives ``an appropriate 
deposit pursuant to Section 2.5.6.''  AT&T Ex. 58 2.9.6.A.; 
Joint Statement at 32,  173.
90   AT&T Ex. 58 2.9.6. (emphasis added).
91   AT&T Ex. 58 2.9.6.A.; Joint Statement at 31,  171.
92   AT&T Ex. 51 2.2.4.B.
93   AT&T Ex. 58 2.9.6.A.
94   AT&T Ex. 40, Panagia Decl., at 3,  7-9; AT&T Ex. 41, 
Schlafly Decl., at 2,  5; AT&T Ex. 88, Schlafly Decl., at 2,  
5.  Although Panagia testified that he reviewed AudioText's 
calling records on September 15, 2000, and determined that 
AudioText's calling volume, from the time it began receiving 
service in February 2000, exceeded 7 million minutes, there is no 
indication that Panagia made any attempt to measure calling 
volume during a 24-hour period in accordance with the test for 
``an extraordinarily high volume of calls'' set forth in 2.9.6.A.  
AT&T Ex. 40, Panagia Decl., at 3,  8.  See also AT&T Ex. 41, 
Schlafly Decl., at 2,  5 (making similar reference to 7 million 
minute figure); Joint Statement at 21-22,  128-29 (stipulation 
regarding monthly call volume billed to AudioText).
95   See Complaint App. at 250.  We reject AT&T's contention that 
AudioText was subject to a ``monthly minimum usage commitment'' 
of $20,000 under CT 14363.  AT&T Answer, Legal Analysis at 33-34, 
 100-02, and n.30.  Section 3.A. of CT 14363 plainly states 
that AudioText was subject to an annual revenue commitment, 
called a ``Voice Minimum Annual Revenue Commitment-
International'' or ``VMARC-I'' of $240,000 in the first year of 
the contract, and $480,000 in the second year of the contract.  
Complaint App. at 250.  See Joint Statement at 16,  96.  AT&T's 
attempt to convert this annual $240,000 revenue commitment into a 
$20,000 monthly commitment is unsupported by the language of CT 
14363.
96   Joint Statement at 21-22,  128-29.
97   Joint Statement at 21-22,  128-29; AT&T Answer at 100,  
293.
98   See AT&T Answer at 100,  293; Complaint at 47,  295.
99   Recognizing that the above calculations yield an average 
daily usage figure of 47,571.094 minutes for the period from 
September 7 to September 15, 2000, AT&T argues that AudioText 
does not deny that it ``may have'' used 167,999.012 minutes or 
more in one 24-hour period prior to September 15, 2000, thereby 
meeting the threshold for ``an extraordinarily high volume of 
calls'' under section 2.9.6.A., as measured by the prior month's 
usage.  AT&T Answer, Legal Analysis at 34, n.30.  This argument 
ignores the fact that section 2.9.6.A. requires AT&T to have made 
a determination that AudioText was placing ``an extraordinarily 
high volume of calls,'' i.e., 167,999.012 minutes in one 24-hour 
period, before it suspended AudioText's service.  There is no 
evidence that AT&T ever made such a determination before it 
suspended AudioText's service, and AT&T apparently is unable, 
even now, to demonstrate that AudioText's calling volume ever 
reached that threshold.
100  AT&T Ex. 58, 2.9.6.A.
101  See AT&T Answer, Legal Analysis at 34-35,  103.
102  AT&T Ex. 58 (emphasis added).
103  AT&T Ex. 58.
104  See AT&T Legal Analysis at 29-30,  91-92, citing In re 
Gerri Murphy Realty, Inc. 16 FCC Rcd 19134, at 19135-36,  4 
(2001); Buy This, Inc. v. MCI WorldCom Communications, 209 F. 
Supp. 2d 334, 336-37, 342 (S.D.N.Y. 2002); Communications Network 
Servs., Inc. v. MCI WorldCom Communications, Inc., 573 S.E.2d 
461, 463-65 (Ga. Ct. App. 2002); In re Black Radio Network, Inc. 
v. Public Serv. Comm'n, 253 A.D.2d 22, 23-26 (N.Y. App. Div. 
1999); AT&T Corp. v. FCC, 317 F.3d 227 (D.C. Cir. 2003).  See 
also Letter from Aryeh Friedman, Counsel for AT&T, to Christopher 
N. Olsen, Assistant Chief, Market Disputes Resolution Division, 
Enforcement Bureau, File No. EB-03-MD-010 (filed Sept. 18, 2003) 
(citing additional authorities).
105  American Tel. & Tel. Co. v. Central Office Tel., 524 U.S. 
214, 227 (1998) (citation omitted) (cited in AT&T Answer, Legal 
Analysis at 31,  94).  See Marcus v. AT&T Corp., 138 F.3d 46, 58 
(2d Cir. 1998) (``Application of the filed rate doctrine in any 
particular case is not determined by the culpability of the 
defendant's conduct or the possibility of inequitable results.'')
106  AT&T Answer, Legal Analysis at 31,  94.  
107  Although the facts in In re Gerri Murphy Realty, Inc., 16 
FCC Rcd 19134, cited in AT&T Answer, Legal Analysis at 29,  91, 
involved a situation in which the carrier had blocked fraudulent 
calls made on the customer's line without the customer's 
knowledge, the dispute did not concern the carrier's right to 
block the calls under the governing tariff, but whether the 
customer was required to pay for fraudulent calls made prior to 
the blocking. 
108  Complaint at 48-49,  304-312.
109  AT&T Ex. 58, 2.9.6.A.  See Joint Statement at 32,  173.
110  Complaint at 48-49,  306-09.
111  AT&T Answer at 105-06,  306-09. 
112  AT&T Answer, Legal Analysis at 46,  126.
113  AT&T Ex. 58, 2.9.6.A.  
114  See discussion at paragraphs 23-27, supra. 
115  47 U.S.C.  203(c)(3).
116  Because our ruling on Count VI provides AudioText with all 
the relief to which AudioText is entitled for AT&T's refusal to 
reinstate service, we need not address AudioText's claim in Count 
VII that AT&T's refusal to reinstate service also violated 
section 201(a) of the Act, 47 U.S.C.  201(a).  See Complaint at 
49-50,  313-20.  We therefore dismiss without prejudice 
AudioText's claim under Count VII of the Complaint.
117  See Complaint at 51-52,  333-40 (Count IX, alleging 
unauthorized demand for a security deposit in violation of 
section 203(c)(3) of the Act).  
118  See Complaint at 53-54,  347-59 (Count XI, alleging 
unauthorized demand for payment in violation of section 203(c)(3) 
of the Act).
119  Complaint App. at 320; 322 (``Demand Letter''); Joint 
Statement at 29-30,  164.  
120  Complaint App. at 320; 322; Joint Statement at 29-30,  164.  
See Complaint at 33,  197; AT&T Answer at 72,  197.  See also 
Complaint at 52,  337 (contains apparent typographical error 
identifying the deposit amount as $828,933 instead of $828,923); 
AT&T Answer at 112,  337 (same).
121  See Joint Statement at 29,  161; Complaint App. at 309, 
330, 332, 375.  
122  AT&T Answer at 127,  392.  
123  AT&T Ex. 59 2.5.6.A.; Joint Statement at 32,  175.
124  AT&T Ex. 59  2.5.6.A.1.; Joint Statement at 32,  176.
125  AT&T Ex. 59  2.5.6.A.1.; Joint Statement at 32-33,  176.
126  AT&T Ex. 59  2.5.6.A.; Joint Statement at 33,  177.
127  Complaint at 52,  335-39.
128  AT&T Ex. 59  2.5.6.A.; Joint Statement at 33,  177.
129  See Complaint at 52,  335; AT&T Answer at 112,  335.  See 
also Joint Statement at 21-22,  128-29.
130  See AT&T Ex. 59 2.5.6.A. (providing that the amount of the 
security deposit ``will not exceed three times the sum of the 
estimated average monthly usage charges and/or the monthly 
service charges.'')
131  Complaint at 52,  338; AT&T Answer at 113,  338.
132  AT&T Answer at 113,  338; see id. at 72,  198.
133  AT&T Ex. 88, Schlafly Decl. at 4,  15.
134  Complaint App. at 320; 322.  See Complaint at 33,  197; 
AT&T Answer at 72,  197.  Because AT&T made it clear that 
payment of a deposit of $828,923 was a condition for restoring 
service, we find no significance in the fact that the Demand 
Letter stated that AT&T was ``requesting'' a deposit of $828,923, 
rather than stating that AT&T was ``demanding'' such a deposit.  
Complaint App. at 320; 322.  The Demand Letter left no doubt that 
this was a ``request'' that AudioText could not refuse if it 
wished to continue doing business with AT&T.  Further, in a 
subsequent letter to AudioText, AT&T's own counsel referred to 
AT&T's prior ``demand'' for payment of a deposit, apparently 
finding no significance in the fact that the earlier letter 
referred to a `request.'  See Complaint App. at 327.
135  Complaint App. at 323-24.
136  Complaint App. at 327.  In view of Schlafly's September 26, 
2000 assertion that AT&T had sent AudioText a ``demand'' for 
payment of a deposit calculated based on the recent usage,'' it 
is unclear why Schlafly had earlier advised AudioText's counsel 
that ``AudioText needs to provide an estimate of its 
extraordinarily [sic] usage so that an adequate deposit amount 
may be established.''  Complaint App. at 321; Joint Statement at 
26,  150.  As AT&T apparently had its own records regarding 
AudioText's ``recent usage,'' we do not understand why AT&T would 
have needed AudioText to provide an estimate of its usage in 
order to establish an appropriate deposit amount. 
137  Complaint App. at 327.
138  Complaint App. at 329.
139  Further, nothing in the language of Section 2.5.6. of Tariff 
No. 1 would have suggested to AudioText that AT&T's demand for a 
$828,923 deposit was negotiable.  Section 2.5.6. states that 
``When a deposit is required, [AT&T] will provide a written 
notification of the amount of the deposit and an explanation of 
the reason(s) for the deposit requirement.''  Complaint App. at 
5.  The Tariff does not suggest that AT&T will notify a customer 
of the requirement to pay a deposit by proposing a deposit amount 
that will then be subject to negotiation.  
140  American Tel. & Tel. Co. v. Central Office Tel., 524 U.S. at 
223 (quoting MCI Telecommunications Corp. v. American Telephone & 
Telegraph Co., 512 U.S. 218, 229 (1994)).
141  Because our ruling on Count IX provides AudioText with all 
the relief to which AudioText is entitled for AT&T's unauthorized 
demand for a security deposit, we need not address AudioText's 
claims in Count VIII and X of the Complaint that AT&T was not 
authorized to demand a security deposit of any amount under 
Tariff No. 1 because AudioText did not have a proven record of 
late payments to AT&T, and its financial responsibility was a 
matter of record (Count VIII), and because the tariff did not 
permit AT&T to demand a deposit based upon the volume of traffic 
a customer generates (Count X).  See Complaint at 50-51,  321-
32; id. at 52-53,  341-46.  We therefore dismiss without 
prejudice AudioText's claims under Counts VIII and X of the 
Complaint.
142  Complaint App. at 320; 322; Joint Statement at 29-30,  164; 
Complaint at 33,  196; AT&T Answer at 72,  196.  As noted 
above, the Demand Letter also stated that AudioText's account was 
past due in the amount of $41,202.13.  This was apparently an 
error.  See supra at  40. 
143  Complaint at 54,  351; AT&T Answer at 116,  351.  
144  See Joint Statement at 29,  161.
145  Complaint App. at 5.
146  Complaint at 54,  359.  
147  AT&T Answer at 127,  393. 
148  AT&T Answer, Legal Analysis at 53,  139.  We find no legal 
significance in the fact the Demand Letter stated that AT&T was 
``requesting'' that AudioText pay $167,585.80 in full ``to bring 
the account current,'' rather than stating that AT&T was 
``demanding'' that AudioText pay that amount.  Complaint App. at 
320; 322.  Indeed, AT&T admitted, in response to AudioText's 
claim in Count XI, that it had ``demanded that AudioText bring 
its account current. . . .''  See AT&T Answer at 118,  356-57; 
Complaint at 54,  356-57.  
149  As noted supra at n.83, our ruling herein does not address 
the lawfulness of AT&T's conduct following amendment of Tariff 
No. 1 in October 2000.
150  We make no ruling on Counts I, II, III, and XII of the 
original Complaint because AudioText has withdrawn these counts.  
See supra at  18.