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Federal Communications Commission
Washington, D.C. 20554
In the Matter of
Alpine Communications, LLC, Clear Lake
) File No.: EB-12-MD-003
Independent Telephone Co., Mutual
Telephone Co. of Sioux Center, Iowa, )
Co., and Winnebago Cooperative Telephone
ORDER ON RECONSIDERATION
Adopted: December 20, 2012 Released: December 21, 2012
By the Commission:
1. This Order on Reconsideration dismisses on procedural grounds and, as
an alternative and independent basis for the decision, denies on the
merits certain issues raised in a petition for reconsideration filed
under section 1.106 of the Commission's rules by Alpine
Communications, LLC, Clear Lake Independent Telephone Company, Mutual
Telephone Company of Sioux Center, Iowa, Preston Telephone Company,
and Winnebago Cooperative Telecom Association (collectively, the Iowa
LECs). The Order further denies the remaining issues raised in the
Petition. The Iowa LECs seek reconsideration of the Commission's
Memorandum Opinion and Order granting a formal complaint filed by AT&T
Corp. (AT&T) against them under Section 208 of the Act. In the Order,
the Commission found that the Iowa LECs violated Sections 201(b) and
203 of the Communications Act of 1934, as amended (Act), by engaging
in an unlawful "mileage-pumping" scheme. As explained below, the
Petition is procedurally flawed and lacks merit, and we decline to
reconsider the Order.
2. The Iowa LECs are incumbent local exchange carriers (ILECs) that
provide local exchange telecommunications services in rural areas of
Iowa. AT&T is an interexchange carrier (IXC) furnishing
telecommunications services that enable customers from one local
exchange area to call customers in other local exchange areas. Iowa
Network Services (INS) is a statewide fiber-optic network and
switching system that "offers and provides" centralized equal access
(CEA) telecommunications services used to facilitate the delivery of
interstate (and intrastate) calls in Iowa. IXCs must deliver their
traffic to INS and typically do so by interconnecting with the INS
central access tandem switching system in Des Moines. INS delivers the
long-distance traffic received from IXCs over its fiber ring to one of
sixteen Points of Interconnection (POIs) located across the state and
bills IXCs at a flat, non-distance-sensitive rate for every minute of
traffic transported. At the POIs, the Iowa LECs connect with the INS
network and transport interstate switched access traffic between their
POIs and their end office switches.
3. The Iowa LECs initially established POIs with the INS network at toll
centers in close physical proximity to their operating territories.
Then, between 2001 and 2005, each of the Iowa LECs purported to change
its POI to Des Moines and began billing AT&T mileage-based transport
charges for carrying the traffic between their local exchanges and Des
Moines. This created a sizeable increase in the transport mileage used
to calculate the Iowa LECs' switched access charges without affording
corresponding benefits to end users or IXCs. The Iowa LECs contend
that the applicable tariffs permit them to alter their POIs and, as a
result, impose distance-sensitive charges for the transport of IXC
traffic that INS is required to provide at a flat,
4. In the Order, the Commission found, for three independent reasons,
that the Iowa LECs violated the NECA Tariff in contravention of
Sections 203 and 201(b) of the Act. First, the Commission determined
that the Iowa LECs billed AT&T mileage charges that are not authorized
under the NECA Tariff. The Commission concluded that the NECA Tariff
incorporates the INAD Tariff's terms regarding POI selection, because
the parties stipulated that INS is a "non telephone company provider"
of CEA. The Commission then noted that the INAD Tariff does not
describe how the POI is to be selected but rather defines the "Point
of Interconnection" as the "demarcation point or network interface, on
an Iowa Network premises at which Iowa Network's responsibility for
the provision of [CEA] ends." After considering AT&T's and the Iowa
LECs' equally "reasonable constructions of the term `responsibility,'"
the Commission concluded that the term is ambiguous, thereby rendering
the NECA Tariff ambiguous as well, and it construed the ambiguity
against the Iowa LECs. The Commission thus held that Des Moines was
not the POI for the Iowa LECs because INS retained "responsibility"
for transmission between Des Moines and the Iowa LECs' traditional
POIs. Second, the Commission found that three of the Iowa LECs
(Alpine, Mutual, and Preston) that billed AT&T for transport to and
from Des Moines (which is outside the LATAs in which they serve their
local customers and have local exchanges) violated provisions in the
NECA Tariff stating that access services may be provided only "in" or
"within a LATA." Third, the Commission held that, even assuming that
the POI had changed, four of the Iowa LECs (Alpine, Clear Lake,
Mutual, and Preston) failed to comply with the provision in the NECA
Tariff requiring that they give "reasonable notice" of
"service-affecting" activities, which encompassed changes in POIs that
resulted in substantial increases in access bills.
5. In the alternative, the Commission held that, if the NECA Tariff were
interpreted to allow the Iowa LECs to change their POIs for the sole
purpose of inflating mileage charges, the tariff is unreasonable in
violation of Section 201(b). The Commission explained that carriers do
not have "unbounded authority" to determine POIs and that any CEA
arrangement that "significantly increas[es] IXCs' operating costs
without significant increases in service choices or benefits to
subscribers" and IXCs would be unreasonable. The Commission relied on
the undisputed facts in the record establishing that the Iowa LECs'
purported changes to their POIs with INS (i) were designed to, and in
fact did, result in "net increases" to the LECs' billed access charges
to AT&T and thereby would have "increased" the LECs' net "revenues and
profits," and (ii) provided "no benefits" to end users or to AT&T.
6. The Iowa LECs offer five reasons the Commission should reconsider its
determination that they violated the NECA Tariff in contravention of
Sections 203 and 201(b) of the Act. Specifically, the Iowa LECs argue
that (1) INAD is the party to the INAD Tariff and did not possess the
facilities to provide the services in issue; (2) the POI changes did
not affect service, and sufficient proof was offered that AT&T
received actual and constructive notice of the POI changes; (3) INAD
removed the facilities leased by the Iowa LECs from their facilities
leased from INICD; (4) the Commission's conclusions should be applied
only prospectively, and AT&T should be estopped from the recovery of
damages or other retroactive relief; and (5) because AT&T paid several
years of invoices for switched access transport, it should be estopped
from the recovery of damages or other retrospective relief. We address
each of these arguments in turn.
A. The Commission Properly Concluded that the Iowa LECs Were Not
Responsible for Providing Service Between Des Moines and the
Traditional POIs Within the Meaning of the Tariff.
1. Because the Petition is Procedurally Defective, We Dismiss It.
7. In the Order, the Commission found that the NECA Tariff incorporates
the INAD Tariff's definition of "Point of Interconnection," which is
the "demarcation point or network interface, on an Iowa Network
premises at which Iowa Network's responsibility for the provision of
[CEA] ends." The Commission then construed the term "responsibility,"
considering each side's arguments about that word's meaning. AT&T
maintained that "responsibility" means "own[ing], control[ling],
operat[ing], and maintain[ing] the facilities that are used to provide
the CEA service." AT&T argued that, under that construction,
responsibility shifted from INS to the Iowa LECs at the traditional
POIs, because INS retained ownership and control of the facilities
between Des Moines and the traditional POIs, notwithstanding any
leases between the Iowa LECs and INS. The Iowa LECs, on the other
hand, asserted that "responsibility" means "accountability" for the
CEA service. They claimed that, by virtue of their "leases" with INS,
they acquired the means to transport the traffic and became
exclusively entitled to impose transport charges for that traffic. As
part of their argument, the Iowa LECs spent "considerable time . . .
making distinctions between two divisions of INS," asserting that one
division (INAD) "removed the facilities" used to transport traffic
from Des Moines to the traditional POIs from the facilities it leased
from another division (INICD) and that the Iowa LECs subsequently
became responsible for those facilities by virtue of their leases with
8. The Commission asked "whether the Iowa LECs, as opposed to any part of
INS, exercised `responsibility.'" In other words, for purposes of its
analysis, the Commission assumed that the Iowa LECs' assertions about
the internal leases were true and concluded that the Iowa LECs had
proffered one "reasonable construction of the term
`responsibility.'" Nevertheless, the Commission also found that AT&T
presented an equally plausible construction of the term
"responsibility." The resulting ambiguity led the Commission to
construe the language in the INAD Tariff and, in turn, the NECA Tariff
against the Iowa LECs.
9. Although the Order squarely considered and rejected the Iowa LECs'
argument about the significance of INS's internal divisions, the Iowa
LECs advance it a second time in their Petition, asserting that the
relationship between the INS divisions was "highly relevant" and that
the Order's "refusal to address" the issue resulted in an "internal
inconsistency." We dismiss this aspect of the Petition because it is
"settled Commission policy that petitions for reconsideration are not
to be used for the mere reargument of points previously advanced and
1. On Alternative and Independent Grounds, We Deny the Petition Because
It Lacks Merit.
10. As an alternative and independent basis for our decision, we deny the
argument on the merits because it is based on a mischaracterization of
the Order. The Iowa LECs contend that the Commission "apparently"
agreed that "INAD (by virtue of its lease of the facilities for
transport from INICD) obtained `responsibility' for the transport of
the traffic under the CEA relationship" and that the Iowa LECs
subsequently assumed that responsibility by virtue of their leases
with INICD. According to the Iowa LECs, it is "inconsistent" for the
Commission to conclude that "responsibility . . . can be conferred
from INICD to INAD by virtue of a lease, but to reject this
proposition . . . when the same type of leasing arrangement is
utilized and only the identity of the lessee is changed from INAD to
[the Iowa LECs]." To the extent the Iowa LECs believe the Commission
reached conclusions about the relative "responsibility" between INAD
and INICD under leases, however, they are mistaken. The record
contained no evidence regarding the substance of leases between INAD
and INICD, and the Commission made no findings about those leases.
11. The Iowa LECs further argue that, when faced with an ambiguity, the
Commission should have considered extrinsic evidence "to aid in tariff
interpretation." To begin, they cite a letter from INS indicating that
the Iowa LECs "provide and determine how to provide transport" and a
letter from NECA stating that the Iowa LECs "possess authority to
reconfigure their networks and provide transport." Neither of these
letters, however, addresses the precise question at hand-i.e., the
appropriate construction of the word "responsibility" as it is used in
the NECA Tariff. Rather, the letters express opinions about the Iowa
LECs' "rights" under the NECA Tariff based upon provisions of the
tariff that the Commission held are not relevant to determining the
locations of the POIs. Next, the Iowa LECs highlight decisions by the
Iowa Utilities Board and the Iowa Supreme Court that "conferred upon
[the Iowa LECs] the right to designate the POI and to provide
transport capacity." Yet those decisions similarly do not discuss the
meaning of the term "responsibility" in the NECA Tariff, which the
Commission held determines the POI location. Finally, the Iowa LECs
rely upon the "uncontroverted testimony of Robert Sherlock regarding
`responsibility' for delivery of the CEA traffic." Although
Mr. Sherlock's testimony is consistent with the Iowa LECs'
construction of the term "responsibility," it does nothing to undercut
AT&T's equally plausible construction of the term. Indeed,
Mr. Sherlock acknowledged that the leases between the Iowa LECs and
INS were "paper changes" that effected "no change with respect to
INS's control of the traffic" and that the "network is still
maintained by INS personnel." We thus conclude that none of these
arguments provide a basis for reconsidering the Order.
A. The Commission Properly Determined that the POI Changes Constituted
"Service-Affecting Activities" Under the NECA Tariff and that, with
the Exception of Winnebago, the Iowa LECs Did Not Provide Reasonable
Notice of the Changes as Required by the NECA Tariff.
12. In the Order, the Commission found that all but one of the Iowa LECs
violated the NECA Tariff's requirement that they provide customers
with "reasonable notification of service-affecting activities." In
particular, the Order highlighted the NECA Tariff's language
identifying "rearrangements" as an example of a "service-affecting
activity," noted the Iowa LECs' characterization of a POI as the
"location where the facilities of INAD meet the facilities of the
LEC," and explained that a "change in that location-especially when
accompanied by a significant increase in mileage charges" is
equivalent to a "rearrangement." The Order went on to find that
Winnebago alone provided AT&T with actual notice of the POI change,
and it rejected the Iowa LECs' assertions that AT&T otherwise received
constructive notice of the POI changes.
13. The Iowa LECs challenge the Order's conclusion that the change of POIs
is a "service-affecting activity." Although they acknowledge that POI
changes "may, arguably, be classified as a `rearrangement,'" the Iowa
LECs assert that the Order did "not provide any rationale for the
conclusion . . . that this activity `affected service.'" This
assertion is baseless. The Commission explained how this particular
rearrangement - which was intended to, and in fact did, drastically
increase the amount of mileage for which the Iowa LECs would bill
transport - affected the service AT&T received.
14. The Iowa LECs further claim that the Commission "failed to address" a
purported "inconsistency" between this conclusion and AT&T's argument
that the change of POIs "had no effect" upon the transport of AT&T's
traffic. There is no inconsistency, however. The argument AT&T made in
its Complaint is that the "leases" between INS and the Iowa LECs did
not bring about a true change of responsibility for handling the
traffic. In the portion of the Order dealing with the notice issue,
the Commission assumed that the Iowa LECs changed their POIs, and
examined whether the POI changes affected the Switched Access Service
AT&T received under the NECA Tariff. As explained above, the
Commission found that the service was altered as a result of the POI
changes (assuming there was a change), because the Iowa LECs
significantly increased the number of miles (an additional 79 to 135
miles) for which they imposed transport charges.
15. Next, the Iowa LECs argue that the Commission erroneously disregarded
expert witness affidavits and reports purportedly showing that AT&T
received "constructive and/or actual notice" of POI changes through
"adjustments made to the Local Exchange Routing Guide [LERG] . . . and
to NECA Tariff FCC No. 4." As the Order explained, the Iowa LECs did
not pinpoint the portions of the LERG or the NECA Tariff they contend
support their assertions, in violation of the Commission's rules
requiring parties to plead all facts in support of their claims and
defenses fully and with specificity. The Iowa LECs nonetheless argue
that Federal Rule of Evidence 703 relieved them of the obligation to
proffer information regarding the facts upon which their experts
relied. The Commission's formal complaint rules, rather than Rule 703,
apply here, however. The Iowa LECs have never identified the portions
of the NECA Tariff (which is thousands of pages long and frequently
updated), or the LERG (which is similarly voluminous) they contend
constituted "reasonable notification of [a] service-affecting
activit[y]," as required by the Commission's formal complaint rules.
16. Finally, the Iowa LECs object to the Commission's failure to "accept
the allegation of Preston's representative that he provided AT&T with
a letter informing it of the POI change," given that AT&T "never
claimed that it did not receive the letter." The Commission, the Iowa
LECs argue, "should have required satisfactory evidence from AT&T
(i.e., an affidavit) that it did not possess the letter before
concluding that there was a lack of evidence supporting the
assertion." As explained in the Order, however, the Commission
declined to credit Mr. Kilburg's testimony that he specifically
recalled sending a letter to each IXC eight years earlier without any
documentary evidence to support his recollection. The Commission was
well within its discretion "to refuse to accord evidentiary value to a
witness' uncontradicted testimony where such testimony was found to be
inherently improbable . . . ."
A. The Order Accurately Stated that AT&T Was Billed Twice for Transport.
17. The Iowa LECs object to the Order "to the degree that [it] can be read
to infer that AT&T was `double-billed' for transport." The phrase
"double-billed" appears nowhere in the Order. The Order does note that
AT&T is being billed for transport both by INS (at a flat rate) and by
the Iowa LECs (at a mileage-based rate). Those statements reflect,
nearly verbatim, the parties' stipulations and are in no way
A. The Iowa LECs' Remaining Assertions Pertain to Damages and Can Be
Addressed in Connection with Any Damages Complaint AT&T Files.
18. The Petition argues that AT&T should be "estopped from the recovery of
damages or other retrospective relief." According to the Iowa LECs, it
was "material error for the Commission to conclude that an award of
damages to AT&T was justified and appropriate" because they proffered
a "reasonable" interpretation of the NECA Tariff and, accordingly,
were not on "fair notice" that their actions were inconsistent with
their tariff. The Iowa LECs further contend that AT&T was aware of the
increase in transport charges resulting from the Iowa LECs' POI
changes and yet "never advised [the Iowa LECs] of any objection to the
increase . . . ." In their view, it was "inappropriate for the
Commission to conclude that an award of damages to AT&T was justified
and appropriate" because AT&T's "actions and inactions establish the
elements of equitable estoppel."
19. Nowhere in the Order did the Commission conclude that AT&T is entitled
to an award of damages. The Order ruled in AT&T's favor on issues of
liability, noted that AT&T had requested damages to be determined in a
separate proceeding, and stated that AT&T "may file with the
Commission a supplemental complaint for damages in accordance with 47
C.F.R. S: 1.722(e)." In response to any supplemental complaint for
damages that AT&T files, the Iowa LECs will have ample opportunity to
present and substantiate their estoppel defenses. After considering
those and any other defenses, the Commission will decide whether AT&T
is entitled to an award of damages.
IV. ORDERING CLAUSEs
20. Accordingly, IT IS ORDERED, pursuant to sections 1, 4(i), 4(j), 201,
203, 208, and 405 of the Communications Act of 1934, as amended, 47
U.S.C. S:S: 151, 154(i), 154(j), 201, 203, 208, and 405, and section
1.106 of the Commission's rules, 47 C.F.R. S: 1.106, that the
Defendants' Petition for Reconsideration of Memorandum Opinion and
Order is DISMISSED.
21. It is FURTHER ORDERED, pursuant to sections 1, 4(i), 4(j), 201, 203,
208, and 405 of the Communications Act of 1934, as amended, 47 U.S.C.
S:S: 151, 154(i), 154(j), 201, 203, 208, and 405, and section 1.106 of
the Commission's rules, 47 C.F.R. S: 1.106, that, as an alternative
and independent holding, the Defendants' Petition for Reconsideration
of Memorandum Opinion and Order is otherwise DENIED.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Defendants' Petition for Reconsideration of Memorandum Opinion and Order,
File No. EB-12-MD-003 (filed Oct. 11, 2012) (Petition).
47 C.F.R. S: 1.106.
AT&T Corp. v. Alpine Communications, LLC, Clear Lake Independent Telephone
Company, Mutual Telephone Company of Sioux Center, Iowa, Preston Telephone
Company, and Winnebago Cooperative Telecom Association, Memorandum Opinion
and Order, 27 FCC Rcd 11511 (2012) (Order).
Formal Complaint of AT&T Corp., File No. EB-12-MD-003 (filed Apr. 13,
47 U.S.C. S: 208.
47 U.S.C. S:S: 201(b), 203.
The Order contains a complete description of the facts underlying this
case, which we incorporate by reference. See Order, 27 FCC Rcd at
11512-17, paras. 2-17.
Order, 27 FCC Rcd at 11512, para. 3.
Order, 27 FCC Rcd at 11512, para. 2.
In states where multiple rural LECs each serve a separate rural area, the
Commission has approved CEA arrangements. Order, 27 FCC Rcd at 11512-13,
para. 5. CEA service provides presubscription and equal access
capabilities through a centralized switching system rather than through
each end office switch. Order, para. 5. The Commission approved the CEA
arrangement for Iowa in 1988. Order, 27 FCC Rcd at 11513, para. 6. See
Application of Iowa Network Access Division, Memorandum Opinion, Order,
and Certificate, 3 FCC Rcd 1468 (Com. Car. Bur. 1988).
Order, 27 FCC Rcd at 11513, para. 7. INS is a single legal entity with
three divisions. This case involves two of the divisions: INICD and INAD.
INICD owns the applicable INS facilities. INAD leases digital switching,
fiber optic transmission capacity, and certain related service from INICD
to provide CEA service. Order, 27 FCC Rcd at 11513, para. 7, n.19.
Order, 27 FCC Rcd at 11513, para. 7.
Order, 27 FCC Rcd at 11513-14, paras. 7, 9.
Order, 27 FCC Rcd at 11513, para. 7.
Complaint, Exhibit 3, Stipulations With Regard to Referred Matters in
Alpine et al. v. AT&T, at 9, para. 57 (Stipulations). Specifically, the
initial POIs were as follows: Alpine - Cedar Rapids - established in 1997;
Clear Lake - Mason City - established in 1989; Mutual - Sioux City -
established in 1989; Preston - Davenport - established in 1989; Winnebago
- Mason City - established in 1987. Stipulations at 9, para. 58.
Stipulations at 9, para. 60.
Order, 27 FCC Rcd at 11515, para. 11 & chart, para. 14.
Order, 27 FCC Rcd at 11514, paras. 8-9, 11. NECA Tariff F.C.C. No. 5 (NECA
Tariff) is the tariff under which the Iowa LECs provide switched access
service to IXCs (such as AT&T) and bill the IXCs for such service. Order,
27 FCC Rcd at 11514, para. 8. The Iowa LECs do not file individual
tariffs. Rather, they utilize the NECA Tariff. Order, 27 FCC Rcd at 11514,
n.26. Iowa Network Access Division Tariff F.C.C. No. 1 (INAD Tariff) is
the tariff under which INS provides CEA services to IXCs and bills IXCs
for such service. Order, 27 FCC Rcd at 11514, para. 9. The terms of the
INAD Tariff require IXCs to pay INS a flat, non-distance-sensitive charge
for every minute of traffic transported on the INS fiber ring to the POIs.
Order, 27 FCC Rcd at 11518-30, paras. 18-48.
Order, 27 FCC Rcd at 11518-23, paras. 18-30.
Order, 27 FCC Rcd at 11518-19, paras. 21-22 (citing Stipulations at 21,
para. 129). NECA Tariff Section 6.1.3(A) states "[w]hen service is
provided in cooperation with a non telephone company provider of
Centralized Equal Access, the SWC will be that wire center which would
normally provide dial tone to the telephone company point of
interconnection with the non telephone company provider of Centralized
Equal Access specified in the tariff of the Centralized Equal Access
provider." Order, 27 FCC Rcd at 11519, para. 22 (citing NECA Tariff S:
6.1.3(A), Original Page 6-7.3 (emphasis added)).
Order, 27 FCC Rcd at 11520, para. 23 (citing INAD Tariff S: 2.5, 1st Rev.
Page 62) (emphasis added).
Order, 27 FCC Rcd at 11520-23, paras. 23-30. The Commission further
explained that its construction was supported by the rules that tariffs
should be construed to avoid unfair/absurd results and to advance the
purpose for which the tariff was imposed. Order, 27 FCC Rcd at 11522,
para. 29 (noting the Iowa LECs' stipulations that moving their POIs to Des
Moines benefitted neither their end user customers nor IXCs and, in fact,
substantially increased access charges, in contravention of the Iowa CEA
arrangement's purpose (i.e., lowering transport costs)).
Order, 27 FCC Rcd at 11522, paras. 28-29.
Order, 27 FCC Rcd at 11523-24, paras. 31-34.
Order, 27 FCC Rcd at 11524-26, paras. 35-38.
Order, 27 FCC Rcd at 11528-30, paras. 44-48. Because this determination
afforded AT&T all the relief it sought in Count II of its Complaint, the
Commission did not reach AT&T's claims relating to "sham arrangements."
Order, 27 FCC Rcd at 11526, para. 39.
Order, 27 FCC Rcd at 11522, para. 29, 11528-29, para. 44 (citing
Application of Indiana Switch Access Div., Memorandum Opinion and Order, 1
FCC Rcd 634, 635, at para. 5 (1986) (Indian Switch)).
Order, 27 FCC Rcd at 11529, para. 45 (citing Stipulations at 11, para. 71,
17, para. 100, 19, para. 120).
Petition at 1-4.
Petition at 4-7.
Petition at 7-8.
Petition at 8-10.
Petition at 10-13. The Petition does not seek reconsideration of the
Order's finding that three of the Iowa LECs violated the NECA Tariff by
charging for transport service outside their local access and transport
AT&T filed its Opposition to the Iowa LECs' Petition on October 22, 2012.
Opposition of AT&T Corp. to Petition for Reconsideration, File No.
EB-12-MD-003 (filed Oct. 22, 2012) (Opposition). The Iowa LECs filed their
Reply to AT&T's Opposition on October 29, 2012. Reply to AT&T's Opposition
to Petition for Reconsideration of Memorandum Opinion and Order, File No.
EB-12-MD-003 (filed Oct. 29, 2012) (Reply to Opposition).
Order, 27 FCC Rcd at 11520, para. 23 (citing INAD Tariff S: 2.5, 1st Rev.
Page 62) (emphasis added).
Order, 27 FCC Rcd at 11523, para. 26.
Order, 27 FCC Rcd at 11520-21, para. 25.
Order, 27 FCC Rcd at 11521, n.96.
Id. The Iowa LECs stipulated that INS is a single legal entity.
Stipulations at 6, para. 37.
Order, 27 FCC Rcd at 11521-22, para. 27.
Id. It is undisputed that the Iowa LECs "utilize [the] NECA Tariff . . .
for their switched access services" and that they billed AT&T for those
services pursuant to the tariff. Stipulations at 3-4, paras. 14, 19, at
18-19, paras. 111-13, 119. Yet the Iowa LECs now suggest that, because
they are "merely concurring parties to the tariff's language," the
Commission should not have construed the NECA Tariff against them. Reply
to Opposition at 1. This argument is unconvincing. The NECA Tariff lists
all five Iowa LECs as "issuing carriers," which the Commission's rules
define as "a carrier subject to the Act that publishes and files a tariff
or tariffs with the Commission." 47 C.F.R. S: 61.3(u).
Order, 27 FCC Rcd at 11521, n.96.
Petition at 1-4 (citing Order paras. 23 and 27 and n.96). The Iowa LECs
contend that the first sentence of paragraph 27 of the Order is a
conclusion that constitutes material error. But that sentence is merely a
recitation of AT&T's argument, not a conclusion of the Commission.
Qwest Communications Company, LLC v. Northern Valley Communications, LLC,
Order on Reconsideration, 26 FCC Rcd 14520, 14522, para. 5 (2011) (citing
S&L Teen Hosp. Shuttle, Order on Reconsideration, 17 FCC Rcd 7899, 7900,
para. 3 (2002) (citations omitted)). Cf. 47 C.F.R. S: 1.106(p)(3) (a
Bureau may dismiss or deny a petition for reconsideration of a Commission
action that "plainly do[es] not warrant consideration by the Commission,"
including petitions that "[r]ely on arguments that have been fully
considered and rejected by the Commission within the same proceeding").
Petition at 2. Specifically, the Iowa LECs rely upon footnote 19 of the
Order, which cited the parties' stipulation that INAD "leases digital
switching, fiber optic transmission capacity, and certain related services
from INICD to provide CEA service." Order, 27 FCC Rcd at 11513, n.19
(citing Stipulations at 6, para. 37). The Iowa LECs maintain that the
stipulation contains an "inference" (which the Commission purportedly
"acknowledged" by citing to it) that "INAD had responsibility under the
[INAD] [T]ariff for the transport of CEA traffic." Reply to Opposition at
2-3. The Iowa LECs further contend that, because the Order cited the
definition of POI in the INAD Tariff, the Commission "has, either
expressly or implicitly . . . recognized that the lease between INAD and
INICD conferred `responsibility' under the tariff to INAD for the
transport of CEA traffic." Reply to Opposition at 3.
Petition at 3.
Reply to Opposition at 2.
Reply to Opposition at 2 (citing Defendants' Answer to Formal Complaint of
AT&T Corp, File No. EB-12-MD-003 (filed May 3, 2012) (Answer), Exhibit E).
With the exception of Alpine, the Iowa LECs were among the carriers that
formed INS, and they remain INS shareholders. Order, 27 FCC Rcd at 11513,
Reply to Opposition at 2 (citing Answer, Exhibit DD).
See Answer, Exhibit E (citing the first sentence of NECA Tariff S:
6.1.3(A)); Order, 27 FCC Rcd at 11519, para. 22 (holding that the first
sentence of NECA Tariff S: 6.1.3(A) is inapplicable because INS is a "non
telephone company" provider of CEA); Answer, Exhibit DD (citing NECA
Tariff S: 6.8.3); Order, 27 FCC Rcd at 11519, n.82 (holding that NECA
Tariff S: 6.8.3 "describes only the call path and not the designation of
the POI"). Although the Commission discussed section 2.1.9 of the NECA
Tariff (see Answer, Exhibit DD (citing NECA Tariff S: 2.1.9)), it was not
in the Order's analysis of how the POI is established. Rather, it was in
the Order's discussion of whether the Iowa LECs provided adequate notice
of the POI changes, assuming they had in fact changed their POIs. See
Order, 27 FCC Rcd at 11524-25, paras. 35-38 (holding that, with the
exception of Winnebago, the Iowa LECs violated NECA Tariff S: 2.1.9 by not
providing reasonable notice of purported POI changes).
Reply to Opposition at 2 (citing Answer, Exhibits P and Q, and Complaint,
Petition at 3-4. See Reply to Opposition at 4-5.
Stipulations at 15-16, paras. 92, 93. Cf. Stipulations at 16, para. 95
("INS remained responsible for the maintenance and operation of the leased
facilities."), para. 96 ("Plaintiffs' representatives acknowledged that
INS still `runs the show' with respect to the facilities leased to
Plaintiffs."), para. 98 ("Plaintiffs' representatives testified that they
had no knowledge about what happened to the traffic while it was on the
INS facilities subject to the lease other than it reached the desired
destinations."), 17, para. 99 ("Plaintiffs depended on INS to ensure that
the traffic was delivered between Des Moines and the Plaintiffs' prior
Order, 27 FCC Rcd at 11524-26, paras. 35-38 (citing Complaint Ex. 6, NECA
Tariff No. 5, S: 2.1.9).
Order, 27 FCC Rcd at 11524-25, para. 36.
Order, 27 FCC Rcd at 11525, para. 37.
Order, 27 FCC Rcd at 11525-26, para. 38.
Petition at 5; Reply to Opposition at 6.
Petition at 5. See also Reply to Opposition at 6 ("The Commission's Order
fails to address [the Iowa LECs'] contentions, instead assuming that
because the POI changes were a rearrangement, they must affect service.").
See paragraph 12.
Petition at 5 (citing unspecified portions of the Complaint); Reply to
Opposition at 6 (citing Answer at 7-8, para. 13, at 19-20, para. 63, at
40, para. 122).
See Complaint at 37, para. 95 ("Although the Iowa LECs claim to have oral
or written agreements with INS that, according to them, are `leases' of
the INS facilities, it is clear that those arrangements were, as INS has
admitted, merely `paper changes' that had no effect on INS's
responsibility or control over its fiber ring facilities"); 65, para. 153
("the so called `lease' arrangements between INS and each Iowa LEC had
little or no economic substance, cf. Total II, 317 F.3d at 233, and had no
effect whatsoever on the actual operation of the network facilities.").
The fact that the leases had no effect on the transport of AT&T's traffic
only highlights the unreasonableness of the Iowa LECs' scheme.
Order, 27 FCC Rcd at 11528-26, para. 38 ("Thus, even if the Iowa LECs
changed their POIs, those changes were done in violation of the NECA
Tariff . . . .").
Order, 27 FCC Rcd at 11524-25, para. 36.
Petition at 5; Reply to Opposition at 6-7.
Order, 27 FCC Rcd at 11525-26, para. 38, n.40. Contrary to the Iowa LECs'
assertion, the Commission's formal complaint rules relate to "substantive
evidence," Reply to Opposition at 7, because they require parties to file
"fact based" pleadings. See 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, 22529, para. 70 (1997) (Formal Complaints Order) ("The
Commission's rules have always required fact-based pleadings. That is, all
complaints, answers and related pleadings are required to contain complete
statements of fact, supported by relevant documentation and affidavits.").
Rule 1.720(h) applies to tariffs in particular. See 47 C.F.R. S: 1.720(h)
("Specific reference shall be made to any tariff provisions relied on in
support of a claim or defense. Copies of relevant tariffs or relevant
portions of tariff that are referred to or relied upon in a complaint,
answer, or other pleading shall be appended to such complaint, answer, or
Petition at 6 (citing Fed. R. Evid. 703) ("An expert may base an opinion
on facts or data in the case that the expert has been made aware of or
personally observed. If experts in the particular field would reasonably
rely on those kinds of facts or data in forming an opinion on the subject,
they need not be admissible for the opinion to be admitted . . . .").
Although the Commission consulted the Federal Rules of Civil Procedure for
guidance when revising its formal complaint rules, that guidance "was
limited by the many differences between federal court proceedings and
Commission proceedings." Formal Complaints Order, 12 FCC Rcd at 22535,
para. 85. The Commission has broad statutory authority to "conduct its
proceedings in such manner as will be conduce to the proper dispatch of
business and to the ends of justice." 47 U.S.C. S: 4(j). See also 47
U.S.C. S: 4(i) ("The Commission may . . . make such rules and regulations
. . . as may be necessary in the execution of its functions).
Opposition at 12, n.13.
Reply and Reply Legal Analysis of AT&T Corp., File No. EB-12-MD-003 (filed
May 10, 2012) at 24. Nor have the Iowa LECs shown when they purportedly
changed the NECA Tariff and LERG and linked those changes to the timing of
the POI changes. Although the NECA Tariff does not require a "specific
advance notification period," in order to constitute notice, the Iowa LECs
must have alerted AT&T in advance of the POI changes. See Complaint,
Exhibit 6, NECA Tariff, S: 2.1.9 ("The Telephone Company will work
cooperatively with the customer to determine reasonable notification
Even assuming that Rule 703 somehow applied here, that Rule still requires
identification of the "facts or data in the case" on which the Iowa LECs'
expert bases his opinion. See Fed. R. Evid. 703. Thus, the Iowa LECs have
not demonstrated that they even satisfied that standard (if it had
Petition at 6-7.
Order, 27 FCC Rcd at 11525, para. 37. Neither Preston nor AT&T produced a
copy of the purported Preston form notice letter. Stipulations at 10,
paras. 65, 66. Rather, Preston relied exclusively upon deposition
testimony of Mr. Kilburg, who testified regarding his general
understanding of the process that he believed would have occurred to
notify IXCs that Preston's POI had changed. See Answer, Exhibit U,
Deposition of Roger Kilburg at 42-43. Unlike the specific evidence
supporting Winnebago's assertion that it provided advance notice to AT&T
in a billing insert about its change and when it would be effective, Mr.
Kilburg did not testify about any of the specifics of Preston's purported
notice letter, including when and how it was sent, whether it was in
advance of any change, and whether Preston worked cooperatively with AT&T
regarding notice of the POI change. In the absence of any documentary
evidence supporting such details, the Commission declined to credit Mr.
Kilburg's purportedly detailed recollection about mailing a letter to each
IXC more than eight years ago. Nor did the Commission misapply the burden
of proof, as the Iowa LECs contend. See Petition at 7. As the carrier
attempting to enforce the terms of its tariff in the underlying
litigation, Preston, not AT&T, bears the burden of proving that it
complied with its tariff. See, e.g., Hi-Tech Furnace Systems, Inc. v. FCC,
224 F.3d 781, 787 (D.C. Cir. 2000) (affirming the Commission's decision to
impose the burden of proof on the complainant).
In re Applications of Henderson Broad. Co., Decision, 63 F.C.C.2d 149, 423
(1977). See also Application of Albert E. Gary Killington Broad.,
Memorandum Opinion and Order, 5 FCC Rcd 6235, 6236 (1990) ("[p]robative
evidence necessarily includes something more than the self-serving,
uncorroborated statement of the individual responsible for the
certification that he had taken steps to secure the needed funds").
Petition at 7 (citing Order, para. 20 & n.108).
Stipulations at 17, para. 101 ("INS continues to bill AT&T its flat,
distance-insensitive charge, which covers transport to any point on the
INS ring, regardless of distance."); at 9, para. 60 (listing the dates on
which each of the Iowa LECs "began billing AT&T mileage-based transport
charges"); at 22, para. 142 (discussing the Iowa LECs' switched access
invoices to AT&T, which included transport service charges between Des
Moines and the Iowa LECs' local switches). The Order also noted the
parties' stipulation that the INS rate excluded the facilities INICD
leased to the Iowa LECs and that INS has not quantified any reduction in
the rates IXCs pay as a result. Order, 27 FCC Rcd at 11516, n.54. See
Stipulations at 18, para. 109.
Petition at 8, 10-11. See also Reply to Opposition at 7-8.
Petition at 8-10 (citing Order, n.2 and paras. 39-45); Reply to Opposition
Petition at 10-12 (citing Order, paras. 11, 15, 37).
Petition at 12-13.
Order, 27 FCC Rcd at 11511, para. 1 & n.2.
The Commission recently granted the parties' joint motion to extend the
time period in which AT&T can file a supplemental complaint for damages to
90 days following the Commission's order resolving the Iowa LECs'
Petition. See Consent Motion of AT&T Corp. to Extend the Time to File a
Supplemental Complaint Regarding Damages, File No. EB-12-MD-003 (filed
Oct. 22, 2012), and Letter from Rosemary H. McEnery, FCC, to Counsel for
the Parties, File No. EB-12-MD-003 (filed Oct. 25, 2012).
See 47 C.F.R. S: 1.724(e).
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Federal Communications Commission FCC 12-163
Federal Communications Commission FCC 12-163