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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 ) HI-RIM COMMUNICATIONS, ) INCORPORATED, ) ) Complainant, ) ) ) v. ) File No. E-96-14 ) MCI TELECOMMUNICATIONS ) CORPORATION, ) ) Defendant. ) ) MEMORANDUM OPINION AND ORDER Adopted: March 27, 1998 ; Released: March 30, 1998 By the Chief, Common Carrier Bureau: I. INTRODUCTION 1. In this Memorandum Opinion and Order, we address a formal complaint filed by Hi- Rim Communications Incorporated (Hi-Rim) against MCI Telecommunications Corporation (MCI) pursuant to Section 208 of the Communications Act of 1934, as amended (the "Act"). Hi-Rim alleges that MCI changed the primary interexchange carrier (PIC) of Hi-Rim customers without proper authorization, and violated: (1) Section 201(b) of the Act; (2) Commission rules regarding changes of primary interexchange carriers ("PIC") and related Commission orders; (3) MCI Tariff F.C.C. No. 1; and (4) the parties' agreement for resale of interexchange carrier services. Hi-Rim seeks a Commission order declaring that it is entitled to recover damages from MCI for lost revenue and reserves its right to file a supplemental complaint to establish the precise amount of damages it alleges it is owed from MCI. For the reasons discussed below, we find in favor of Hi-Rim on its Section 201(b) allegation relating to the unauthorized change of its customers, and deny the remainder of its complaint. II. BACKGROUND 2. During a period ranging from February 1994 to May 1995, MCI and Hi-Rim entered into a series of agreements (collectively, "the Agreement") that provided for MCI's provision of long distance telephone service to Hi-Rim for resale to consumers. The Agreement indicates that Hi-Rim was to originate its interstate traffic via Hi-Rim's own carrier identification code (CIC). The Agreement also required Hi-Rim to provide to MCI, in writing, a report of all Hi-Rim customer automatic number identifications (ANIs) that should be included on MCI's underlying network. 3. In or around early April, 1995, Hi-Rim sent a series of orders to MCI to load Hi-Rim's CIC code into MCI's network system. Both parties agree that in April of 1995, Hi-Rim initially ordered that MCI be the underlying carrier for all Hi-Rim customers nationwide. Hi-Rim maintains that subsequent to this order, it requested that MCI not include in this order customers in the Phoenix, Arizona Local Access and Transport Area (LATA), which includes the areas of Flagstaff and Sedona, Arizona. MCI maintains that a "Hi-Rim employee . . . contradicted Hi-Rim's earlier order to load its CIC for the whole country." 4. Both parties agree that in April of 1995, MCI placed Hi-Rim's customers in the Phoenix, Arizona LATA on to MCI's underlying network. Both parties further agree that MCI billed all the Hi-Rim customers in the Phoenix LATA as if they were MCI customers. 5. On December 28, 1995, Hi-Rim filed the instant complaint against MCI alleging that MCI violated Section 201 of the Act, Section 64.1100 and 64.1150 of the Commission's rules, related Commission orders, and the parties' Agreement by changing the long distance service for over two hundred Hi-Rim customers in the Phoenix, Arizona LATA without proper authorization. Following resolution of procedural issues not relevant to the substance of the complaint, MCI filed an answer on April 3, 1996, denying Hi-Rim's allegations. After discovery, Hi-Rim and MCI filed briefs on March 20, 1997 and reply briefs on April 1, 1997 and April 10, 1997, respectively. III. DISCUSSION A. Section 201(b) 1. Contentions of the Parties 6. Hi-Rim claims that after MCI placed Hi-Rim's Phoenix, Arizona LATA customers on MCI's network, Hi-Rim notified MCI that MCI should not have loaded the Phoenix LATA. According to Hi-Rim, it chose to provide service for its Phoenix LATA through means other than MCI's network. Hi-Rim further alleges that even after it informed MCI that Hi-Rim's Phoenix LATA customers had been incorrectly included on MCI's network, MCI continued to direct that traffic to MCI's network. According to Hi-Rim, this activity continued for a period of approximately six months. Hi-Rim argues that MCI's continued practice of directing Hi-Rim traffic through MCI's network, in contravention of what Hi-Rim claims it ordered, is evidence that MCI changed the PIC of Hi-Rim customers without authorization. Hi-Rim contends that MCI's actions were unreasonable, and thus violate Section 201(b) of the Act. 7. Both parties rely extensively upon the deposition testimony of James Parker, an MCI Employee ("Deposition"); however, they differ in their interpretations of this testimony. Hi-Rim contends, based upon the Deposition, that although it ordered MCI not to move Hi-Rim's Phoenix LATA customers to MCI's underlying network, MCI nonetheless did so. MCI, conversely, argues that the Deposition "demonstrates that it was Hi-Rim's conduct which caused any confusion that may have existed concerning the billing of Hi-Rim's customers." 8. MCI's answer maintains that based upon the parties' Agreement, Hi-Rim was required to provide sufficient information to MCI to permit MCI to furnish network service for Hi-Rim. MCI contends that, in accord with Hi-Rim's instructions, MCI loaded Hi-Rim's CIC code into MCI's nationwide network to handle all originating interstate traffic generated by all Hi-Rim customers. The problem, according to MCI, was caused by a contradictory order from Hi-Rim. MCI asserts that "Hi-Rim submitted service orders to MCI which contained incomplete information" and "were mishandled by a serving local exchange carrier (LEC)." MCI admits, however, that the service orders, "in some instances, were not properly installed by MCI." MCI claims that it did not knowingly bill Hi-Rim's customers for interstate traffic that should have been routed to Hi-Rim and this error persisted for only a two-month period, not six months as maintained by Hi-Rim. Upon discovery of the billing problem, MCI asserts that it made attempts to resolve the matter with Hi- Rim. MCI alleges that it requested, but never received, information necessary to ascertain the number and identity of customers whose traffic was mistakenly routed through MCI's network and were billed by MCI. MCI contends that Hi-Rim failed to present any evidence or supporting documentation that MCI unlawfully converted Hi-Rim customers. MCI further argues that Hi-Rim has failed to meet the evidentiary burden required to substantiate a Section 208 complaint. 9. Finally, MCI claims that Hi-Rim abused the Commission's formal complaint process in an effort to force MCI to settle claims unrelated to the instant matter. MCI alleges that Hi-Rim is engaging in a pattern of switching between different IXCs without paying bills incurred to each successive IXC. In support of its allegation, MCI claims that Hi-Rim has failed to substantiate its allegations against MCI, and cites a prior Commission complaint proceeding in which Hi-Rim filed an action against IXC Carrier Group (IXCCG). Without elaboration, MCI alleges that the complaint filed against IXCCG serves as an example of a proceeding in which Hi-Rim utilized the Commission's complaint process as a dilatory tactic designed to force settlement, rather than as a method to resolve a legitimate dispute. 2. Decision 10. Section 201(b) of the Act provides that "[a]ll . . . practices . . . for and in connection with [a] communication service, shall be just and reasonable." Hi-Rim alleges that MCI's actions were unreasonable and violated Section 201(b). Although both parties agree that Hi-Rim initially ordered MCI to be the underlying network provider for Hi-Rim's customers on a nationwide basis, they disagree as to the impact and meaning of the subsequent request from Hi-Rim. The subsequent request from Hi-Rim to MCI was communicated via electronic mail messages. Hi-Rim claims that it clearly directed MCI not to include Hi-Rim customers located in the Phoenix LATA as part of Hi- Rim's service agreement. MCI, conversely, maintains that Hi-Rim's subsequent request was ambiguous, and because it contradicted the earlier order, MCI did not act unreasonably in following the original instructions to include the Phoenix LATA customers. 11. The deposition of James Parker, an employee of MCI, provides the only evidence on the record regarding Hi-Rim's request with respect to its customers in the Phoenix LATA and MCI's response. The deposition describes how Hi-Rim initially gave, and MCI received, instructions for MCI to provide the underlying network for Hi-Rim on a nationwide basis. The deposition also indicates that at a point subsequent to the first instruction, Hi-Rim gave MCI instructions not to include Hi-Rim customers in the Phoenix LATA. In the deposition, Mr. Parker states, "[m]y testimony would be that Deb Garwick instructed us to load the CIC code everywhere, and then later instructed us not to load the Phoenix area, so we complied with both of her orders." In response to a question of what MCI did after it received the instructions from Hi-Rim, Mr. Parker states that, "[w]e sent out orders based on Deb Garwick's instructions to load everywhere, and then when we received instructions from Deb Garwick not to load Phoenix, we implemented orders and tried to coordinate with the LEC to answer that request." In response to the question, "Was that second step before or after the CIC code got loaded?", MCI's employee responded, "I don't recall." 12. MCI argues that its actions were unintentional, that it only billed customers for a two- month period, and that it made attempts to resolve the matter with Hi-Rim. Mr. Parker acknowledged that "(t)he second request was to change that [initial] order and not load Phoenix, which we then began to coordinate with the LEC to see that [the subsequent] order was implemented." The second order, however, was apparently not carried out properly by MCI. Irrespective of how it happened, the ultimate result was that Hi-Rim customers were served and billed by MCI as if they were MCI customers, despite the fact that MCI was not their designated primary interexchange carrier. Mr. Parker acknowledged in his deposition that MCI was aware that it was actually receiving call revenues from Hi-Rim customers in the Phoenix LATA. Specifically, Mr. Parker identified his own electronic mail message which states, "(t)he loss of traffic and therefore revenue is serious enough. However, Hi-Rim just signed a three year, 36 million SCA with us. The prospect of telling them that we have lost their traffic, can't seem to find the problem, and perhaps they shouldn't use our product going forward due to this is not something I intend to do." Thus, Mr. Parker's deposition provides credible evidence that MCI was fully aware that it had switched the service of Hi-Rim customers in the Phoenix LATA without the customers' authorization. Mr. Parker's deposition also indicates that MCI delayed in notifying Hi-Rim of the problem and taking corrective action. 13. In its Answer, MCI further alleges that Hi-Rim's customers "in law and in fact are 'authorized users' of MCI service within the meaning of MCI Tariff FCC No. 1." Although not explicitly argued in its brief, MCI's appears to contend that as the facilities based provider of the long distance service, the customers at issue were, in fact, customers of MCI. As an initial matter, MCI's argument ignores the fact that Hi-Rim did not intend for the Phoenix LATA customers to receive service via MCI's underlying network. Therefore, MCI's argument is not applicable. Moreover, the Commission recently clarified the role of a switchless reseller in the PIC-selection process, finding that the PIC-selection rules and orders clearly contemplate that a switchless reseller such as Hi-Rim may serve as a customer's actual PIC. Therefore, contrary to MCI's assertion, the fact that Hi-Rim utilized MCI's underlying network does not transform Hi-Rim customers into MCI customers. Hi- Rim obtained signed LOAs from its customers which specified Hi-Rim as the customers' new carrier. Hi-Rim is the carrier that sets the rates for the interexchange services provided to these customers and Hi-Rim is the IXC with the proximate business relationship with these customers. In contrast, nothing in the record reveals that MCI had a contractual relationship with Hi-Rim's customers, nor did these customers choose MCI to serve as their PIC. The consumers were customers of Hi-Rim, the entity with whom they had contracted for service. Thus, Hi-Rim was the designated long distance carrier for the customers at issue. Because the customers never chose MCI as their PIC, MCI was not entitled to receive revenue from these customers. 14. MCI's actions resulted in the change of the designated primary interexchange carrier for Hi-Rim customers in the Phoenix LATA without the customers' authorization. MCI admits in its own pleadings that it served and billed Hi-Rim's customers for two months. MCI has apparently retained the revenues it received from Hi-Rim's Phoenix LATA customers. Although MCI argues that the PIC changes for Hi-Rim's Phoenix LATA customers were the result of confusion over loading orders, the fact remains that those customers' PICs were changed from Hi-Rim to MCI. MCI did not receive authorization from the Hi-Rim customers and offered no evidence to suggest that MCI either attempted to gain or received authority before making the changes. We conclude that MCI's failure to transfer the customers to Hi-Rim's network is an unjust and unreasonable practice. Thus, we find that MCI's actions violated Section 201(b) of the Act. B. Commission Rules and Orders 1. Contentions of the Parties 15. In addition to claiming that MCI violated Section 201(b) of the Act, Hi-Rim alleges that MCI's changing of the designated carrier of the customers at issue violated Sections 64.1100 and 64.1150 of the Commission's rules and related Commission orders. Hi-Rim argues that MCI's continued practice of directing Hi-Rim traffic through MCI's network, in contravention of what Hi- Rim claims it ordered, is evidence that MCI changed the PIC of Hi-Rim customers without authorization. 16. In response, although MCI admits that Hi-Rim's service orders, "in some instances, were not properly installed," MCI argues that Hi-Rim failed to present any evidence or supporting documentation that MCI unlawfully converted Hi-Rim customers and that it has not violated the Commission's PIC-change rules. 2. Decision 17. Sections 64.1100 and 64.1150 of the Commission's rules address different methods by which IXCs may confirm and verify that consumers wish to change their presubscribed long distance service. Section 64.1100 requires IXCs to institute one of four verification procedures before submitting PIC-change orders generated by telemarketing. Section 64.1150 governs an IXC's use of written letters of agency (LOAs), prescribing the information an IXC must include in a LOA, and requiring that the LOA be written in clear and unambiguous language. In the instant case, however, we find no violation of 64.1100 and 64.1150 because Hi-Rim has failed to allege facts or provide evidence that: (1) MCI attempted to generate PIC-change orders for the subscribers at issue via telemarketing solicitations; or (2) utilized LOAs to receive written authorization to change the PIC of the particular subscribers. The facts before us do not concern telemarketing solicitations or written LOAs. Rather, the facts concern MCI's failure to execute properly Hi-Rim's instructions. 18. Similarly, although Hi-Rim alleges that MCI violated the Commission's orders regarding PIC-changes, the cited orders do not address MCI's actions in the instant case. The Commission's orders address an IXC's requirement either to take steps to obtain a signed LOA from a customer to authorize a PIC-change, or to utilize the four verification procedures available for telemarketing solicitations. Hi-Rim has not alleged that MCI engaged in telemarketing or submitted LOAs, and as such, we find that the cited Commission orders are not applicable. Nonetheless, MCI did fail to segregate Hi-Rim's Phoenix LATA customers from other Hi-Rim long distance customers, which resulted in customer's being served by an unauthorized carrier. As noted above, we consider the failure to transfer the customers to Hi-Rim to be an unjust and unreasonable practice in violation of Section 201(b) of the Act. C. MCI Tariff FCC No. 1 19. Hi-Rim alleges that because MCI changed the PIC for Hi-Rim subscribers, MCI violated its own tariff, MCI Tariff F.C.C. No. 1. Hi-Rim does not provide any evidence to support this claim. It is well established that in a formal complaint proceeding pursuant to Section 208 of the Act, the complainant has the burden of proof. For the reasons discussed below, we conclude that Hi-Rim has failed to carry its burden for this allegation. 20. Under the Commission's general pleading and format requirements, formal complaints against common carriers must, inter alia, contain a complete statement of facts, which if true, are sufficient to constitute a violation of the Act or a Commission rule or order. The rules provide that facts must be supported by affidavit or other relevant documentation. The rules require complainants to describe "fully and clearly the specific act or thing complained of, together with such facts as are necessary to give a full understanding of the matter, including relevant legal and documentary support." 21. Hi-Rim failed to provide any evidence, supporting citations to the tariff, or even argument regarding how MCI's actions constitute a violation of the tariff. A finding of liability cannot be predicated upon unsupported assertions that require conjecture and hypothesis. Hi-Rim has not provided the requisite factual and documentary proof. Pursuant to the Commission's rules, Hi-Rim was required to submit relevant documentation to support this claim. Hi-Rim has not done so and has, therefore, failed to meet its burden of proof with respect to this allegation. D. Alleged Violation of the Parties Private Agreement 22. Hi-Rim also alleges that MCI violated the parties' Agreement for the resale of MCI long distance services, although Hi-Rim fails to specify which provision of the Agreement MCI violated. The Commission, however, is not the proper forum for carriers to request resolution of strictly private agreements. The Commission has held that carriers' private disputes which do not implicate a violation of the Act, Commission rules, or orders are beyond our regulatory jurisdiction and must be resolved in a court of competent jurisdiction. As Hi-Rim's allegation regarding the Agreement is not properly before the Commission, we decline to address this claim. IV. PROCEDURAL MATTERS 23. On June 17, 1996, MCI filed a Motion to Dismiss Hi-Rim's Complaint, arguing that Hi-Rim's complaint was without substantive merit and "was filed for the sole purpose of employing the Commission's formal complaint process to force MCI to settle its account with Hi-Rim" for less than amounts due. Hi-Rim filed its opposition to the motion on June 28, 1996. MCI's motion is made moot by our ruling on the merits. Accordingly, we dismiss the motion. V. DAMAGES 24. Hi-Rim requested that the Commission declare that it is entitled to recover damages from MCI equal to the revenue lost for each customer changed to MCI without authority. Hi-Rim noted its intent to file a supplemental complaint pursuant to Section 1.722(b) of the Commission's rules to establish the precise amount of damages it alleges it is owed from MCI. 25. Our finding that MCI's actions violated Section 201(b) of the Act provide the parties with a framework to reach a mutually satisfactory settlement of the damages issue. Consistent with these findings and conclusions, we hereby direct the parties to engage in good faith negotiations aimed at resolving issues regarding the amount of damages for a period of sixty days after the release of this order. At the close of the sixty-day period, the parties are further directed to provide the Commission with a joint statement regarding the result of their negotiations. 26. Having found that MCI has violated Section 201(b) of the Act, pursuant to Section 1.722 of the Commission's rules, Hi-Rim may file a supplemental complaint for damages if such negotiations do not yield a settlement of Hi-Rim's damages claim. VI. CONCLUSION 27. For the foregoing reasons, we find that MCI's actions violate Section 201(b) of the Communications Act of 1934. VII. ORDERING CLAUSES 28. Accordingly, IT IS ORDERED pursuant to Sections 1, 4(i), 4(j), 201(b), 208 of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 154(j), 201(b), 208, and the authority delegated under Sections 0.91, and 0.291 of the Commission's rules, 47 C.F.R.  0.91, 0.291, that the instant complaint filed on March 4, 1996, by Hi-Rim Communications, Incorporated against MCI Telecommunications Corporation IS GRANTED TO THE EXTENT INDICATED HEREIN AND IS OTHERWISE DENIED. 29. IT IS FURTHER ORDERED that the parties SHALL ENGAGE in negotiations aimed at resolving damages issues and SHALL REPORT to the Common Carrier Bureau's Enforcement Division within a period of sixty (60) days after the release of this Order. 30. IT IS FURTHER ORDERED that Hi-Rim Communications, Incorporated MAY FILE a supplemental complaint for damages within sixty (60) days pursuant to Section 1.722(b) of the Commission's rules, 47 C.F.R.  1.722(b). FEDERAL COMMUNICATIONS COMMISSION A. Richard Metzger, Jr. Chief, Common Carrier Bureau