Click here for Microsoft Word Version
********************************************************
NOTICE
********************************************************
This document was converted from
WordPerfect or Word to ASCII Text format.
Content from the original version of the document such as
headers, footers, footnotes, endnotes, graphics, and page numbers
will not show up in this text version.
All text attributes such as bold, italic, underlining, etc. from the
original document will not show up in this text version.
Features of the original document layout such as
columns, tables, line and letter spacing, pagination, and margins
will not be preserved in the text version.
If you need the complete document, download the
Word or WordPerfect version or Adobe Acrobat version (above).
*****************************************************************
1. Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
)
AirTouch Cellular, )
Complainant, ) File No. E-97-46
)
v. )
)
Pacific Bell, )
Defendant. )
MEMORANDUM OPINION AND ORDER
Adopted: June 27, 2001 Released: July 6, 2001
By the Commission: Commissioner Abernathy not participating.
I. INTRODUCTION
In this Memorandum Opinion and Order, we grant in part and deny
in part the complaint filed by AirTouch Cellular (``AirTouch'')
against Pacific Bell1 pursuant to section 208 of the
Communications Act of 1934, as amended (``Act'').2 In its
complaint, AirTouch alleges that Pacific Bell violated section
20.113 of the Commission's rules because Pacific Bell did not pay
mutual compensation to AirTouch, nor did the Interconnection
Agreement between AirTouch and Pacific Bell contain any
provisions for mutual compensation.4 We find that Pacific Bell
violated section 20.11 of the rules when it failed to pay mutual
compensation to AirTouch in connection with terminating traffic
that originated on Pacific Bell's facilities. We dismiss,
however, AirTouch's claim that the Interconnection Agreement
violated rule section 20.11 because the statute of limitations
has run on that claim.
II. BACKGROUND
2. During the period relevant to this complaint,
AirTouch controlled several cellular telephone
providers in California. Pacific Bell was an
incumbent local exchange carrier (``LEC'') that
provided local exchange and exchange access services
in California.5 In 1993, Pacific Bell began
negotiations with the cellular industry in
California, leading to interconnection agreements in
1994 between Pacific Bell and individual cellular
carriers.6 On April 28, 1994, AirTouch and Pacific
Bell entered into an Interconnection Agreement
governing the terms and conditions associated with
the exchange of traffic between AirTouch and Pacific
Bell.7 The Interconnection Agreement did not
provide ``cash compensation'' to AirTouch for the
termination of calls that originated on Pacific
Bell's network.8
3. On March 7, 1994, prior to the signing of the
Interconnection Agreement, the Commission adopted
rule section 20.11, which requires that ``local
exchange carriers and commercial mobile radio
service providers shall comply with principles of
mutual compensation.''9 Section 20.11 became
effective on July 18, 1994, approximately three
months after the parties signed the Interconnection
Agreement.10 During the time period in which the
Interconnection Agreement was effective, Pacific
Bell did not pay ``cash compensation'' to AirTouch
for terminating traffic that originated on Pacific
Bell's network.11 Almost three years later,
AirTouch and Pacific Bell entered into a new
contract for interconnection, effective March 25,
1997, that did provide for reciprocal
compensation.12 On September 19, 1997, AirTouch
filed this formal complaint, reserving the right to
file a supplemental complaint for damages after the
issuance of a Commission decision on the merits of
the instant complaint.13
III. DISCUSSION
4. In its Complaint, AirTouch appears to make several
different arguments. First, AirTouch alleges that
Pacific Bell's failure to ``provide for mutual
compensation in its then-existing interconnection
agreements with AirTouch [] resulted in Pacific Bell
violating Section 20.11(b) of the Commission's Rules
... .''14 AirTouch also alleges that, regardless of
the terms of the Interconnection Agreement, Pacific
Bell violated section 20.11(b) when it failed to pay
mutual compensation to AirTouch for terminating
traffic that originated on Pacific Bell's network.15
A. Claim that Terms of Interconnection Agreement Violated
Section 20.11(b)
5. AirTouch claims that Pacific Bell violated section
20.11(b) when it failed to provide for mutual
compensation in the 1994 Interconnection
Agreement.16 Pacific Bell asserts that AirTouch's
claim is barred by the statute of limitations set
forth in section 415 of the Act. AirTouch responds
that Pacific Bell's failure to comply with section
20.11(b) was a continuting violation and that the
statute of limitations began with each day that the
rule was violated. For this claim, however, we
agree with Pacific Bell that the statute of
limitations bars AirTouch's claim.
6. Under section 415(b) of the Act, ``[a]ll
complaints against carriers for the recovery of
damages not based on overcharges shall be filed with
the Commission within two years from the time the
cause of action accrues.''17 A cause of action
accrues for purposes of section 415(b) when the
carrier does the unlawful act or fails to do what
the law requires.18 We find that this cause of
action, which is based on the allegation that the
Interconnection Agreement violated section 20.11(b)
of the Commission's rules, accrued on July 18, 1994,
the date that section 20.11 became effective.19
AirTouch knew when it entered into the
Interconnection Agreement that it lacked mutual
compensation provisions.20 If section 20.11 required
Pacific Bell to take some action to amend the
preexisting Interconnection Agreement, then that
obligation came into being on July 18, 1994.21
Accordingly, AirTouch should have filed this claim
in a complaint on or before July 18, 1996 in order
to comply with the requirements of section 415(b).
Because this complaint was not filed until September
19, 1997, AirTouch's claim is time barred.
B. Claim that Pacific Bell Violated Section 20.11(b) by Failing
to Pay Mutual Compensation to AirTouch
1. Section 20.11(b) Applies to Intrastate Traffic
7. AirTouch next argues that regardless of the
absence of mutual compensation provisions in the
Interconnection Agreement, Pacific Bell violated
section 20.11(b) of the Commission's rules when it
failed to pay AirTouch mutual compensation for
terminating calls that originated on Pacific Bell's
network.22 Pacific Bell contends that, prior to the
enactment of the 1996 Act, the obligation to pay
mutual compensation under section 20.11 only applied
to interstate traffic.23 We disagree for the
reasons set forth below.24
8. The Commission adopted the CMRS Second Report and
Order in 1994 to implement sections 3(n) and 332 of
the Act, as amended by Section 6002(b) of the
Omnibus Budget Reconciliation Act of 1993.25 The
Budget Act changed the regulatory regime with
respect to mobile service providers, by, among other
things, (1) bringing all mobile service providers
under a comprehensive, consistent regulatory
framework; (2) giving the Commission flexibility to
establish appropriate levels of regulation for
mobile radio services providers; (3) mandating that
commercial mobile radio service (``CMRS'') providers
would be treated as common carriers; and (4)
preempting state regulation of entry and rates for
CMRS providers, but permitting states to petition
the Commission for authority to regulate CMRS rates
under some circumstances.26
9. In the CMRS Second Report and Order the Commission
adopted rule section 20.11, which states in relevant
part:
(b) Local exchange carriers and commercial mobile
radio service providers shall comply with
principles of mutual compensation.
(1) A local exchange carrier shall pay
reasonable compensation to a commercial mobile
service provider in connection with terminating
traffic that originates on facilities of the local
exchange carrier.27
10. In the text of the CMRS Second Report and Order,
the Commission stated that the mutual compensation
requirement is ``in keeping with actions we already
have taken with regard to Part 22 providers.''28
The Commission then cited to a 1987 proceeding that
affirmed principles of mutual compensation for
interstate switching costs between telephone
companies and cellular carriers.29 Pacific Bell
argues that because the CMRS Second Report and Order
cited to a proceeding that explicitly limited the
scope of mutual compensation to interstate traffic,
the scope of section 20.11 must be similarly limited
to interstate traffic. Pacific Bell states that the
Commission did not preempt the authority of the
states to regulate mutual compensation or other
aspects of interconnection rates.30
11. We find Pacific Bell's arguments unpersuasive and
conclude that the Commission intended the principles
of mutual compensation to apply to intrastate
interconnection between LECs and CMRS carriers.
First, nothing in the text of rule section 20.11
limits its coverage to interstate services. Section
20.11 states that a LEC ``shall pay reasonable
compensation to a commercial mobile service provider
in connection with terminating traffic that
originates on facilities of the local exchange
carrier.''31 The text of the rule contains no
limitations on its applicability to intrastate
traffic. In fact, to limit section 20.11 to only
interstate services would be nonsensical given that
the rule pertains to CMRS-bound traffic that
originates on the local exchange carrier which,
because of the Bell Operating Companies' prohibition
on the provision of interLATA services at the time,
would almost entirely be intrastate traffic.
12. Second, in the text of the CMRS Second Report and
Order, the Commission said that ``[t]he principle of
mutual compensation shall apply, under which LECs
shall compensate CMRS providers for the reasonable
costs incurred by such providers in terminating
traffic that originates on LEC facilities.''32 The
text does not impose any limitation on the scope of
the mutual compensation requirement. This is in
stark contrast to the very next paragraph, in which
the Commission specifically limits a pricing
requirement to interstate traffic only: ``[w]e
require that LECs shall establish reasonable charges
for interstate interconnection provided to
commercial mobile radio service licensees.''33 We
conclude that had the Commission intended to limit
the applicability of the mutual compensation
requirement to interstate traffic, it would have
clearly specified such a limitation.
13. Third, we find support for our conclusion in the
Commission's 1996 Local Competition First Report and
Order.34 In that order, the Commission stated that
[I]n many cases, incumbent LECs appear to
have imposed arrangements that provide little
or no compensation for calls terminated on
wireless networks, and in some cases imposed
charges for traffic originated on CMRS
providers' networks, both in violation of
section 20.11 of our rules.35
Based on this conclusion, the Commission ordered that CMRS
carriers be given the option to renegotiate existing
interconnection agreements to include reciprocal compensation
provisions. Once again, the Commission made no mention of any
intrastate restriction on the scope of section 20.11, or on the
scope of mutual or reciprocal compensation in general.
14. We note that the CMRS Second Report and Order does
state that the Commission ``will not preempt state
regulation of LEC intrastate interconnection rates
applicable to cellular carriers at this time.''36
This must be read in conjunction with the
nonrestrictive mutual compensation language in that
order. Accordingly, we conclude that the
Commission's intent was to mandate mutual
compensation for the termination of traffic that
originates on the LEC's network, but to not preempt
state regulation of the actual rate paid by CMRS
carriers for intrastate interconnection. Therefore,
although LECs were required to pay mutual
compensation to CMRS carriers for intrastate traffic
pursuant to Commission rules, the determination of
the actual rates charged for intrastate
interconnection would be left to the states. Based
on the reasoning above, we conclude that when the
Commission adopted the CMRS Second Report and Order,
it intended to apply the mutual compensation
provisions of rule section 20.11 to intrastate
traffic.
2. The Provision of Cost Data Is Not a Prerequisite for
Mutual Compensation
15. Pacific Bell argues that the Commission's mutual
compensation requirement ``required that each
carrier to record and segregate traffic by
originating carrier and provide cost data.''37
Pacific Bell contends that this requirement stems
from the Commission's 1989 statement that ``a mutual
compensation policy ... allows each cellular and
landline carrier to recover its actual costs of
switching traffic for the other party.''38 We agree
with AirTouch that section 20.11 does not require
CMRS carriers to provide such cost data to be
eligible for mutual compensation.39 The text of the
1994 CMRS Second Report and Order states merely that
``the principle of mutual compensation shall apply,
under which LECs shall compensate CMRS providers for
the reasonable costs incurred by such providers in
terminating traffic that originates on LEC
facilities.''40 Nor does the text of section 20.11
of the rules impose any requirement for the
provision of cost data to the originating carrier in
order to be eligible for mutual compensation. The
Commission's statement that mutual compensation
allows carriers to recover their ``actual costs''
does not itself reflect any substantive requirement,
but rather describes one possible outcome if the
Commission were to adopt a mutual compensation
regime. Accordingly, we find that section 20.11
does not require CMRS carriers to provide cost data
to the originating carrier as a prerequisite to
eligibility for mutual compensation.
3. AirTouch Did Not Waive Its Statutory Right to Mutual
Compensation
16. We conclude above that Pacific Bell should have
paid mutual compensation to AirTouch for terminating
traffic, pursuant to section 20.11, regardless of
the fact that the Interconnection Agreement was
silent regarding mutual compensation. Pacific Bell
contends, however, that AirTouch voluntarily traded
mutual compensation in exchange for other favorable
terms, such as an option for reverse toll billing at
a special rate.41 We acknowledge that parties may
modify some statutory obligations under certain
circumstances, such as through an express waiver of
statutory rights.42 Based upon our examination of
the record, however, we find that the parties did
not modify the section 20.11 obligation to pay
mutual compensation. The Interconnection Agreement
does not contain any provisions negating the mutual
compensation obligation.43 Pacific Bell failed to
offer any evidence that AirTouch expressly waived
its right to mutual compensation. Moreover,
AirTouch states repeatedly that it ``did not waive
any right to receive mutual compensation.''44
Accordingly, we conclude that AirTouch and Pacific
Bell did not agree to modify or negate the
obligation to pay mutual compensation for the
termination of traffic that originated on each
other's networks.
C. Equitable Defenses of Estoppel, Laches, Waiver
17. Pacific Bell argues that the equitable defenses of
estoppel, laches, and waiver bar AirTouch's
complaint.45 We find that these equitable defenses
do not operate to bar AirTouch's complaint. We
agree with AirTouch that Pacific Bell has failed to
provide specific authority for the availability of
equitable defenses in a section 208 complaint.46 In
any event, we reject Pacific Bell's defenses.
Pacific Bell failed to pay mutual compensation to
AirTouch as expressly required under section 20.11
of our rules and, therefore, we decline to accept
Pacific's Bell's invocation of equity to avoid
paying such compensation. Accordingly, we reject
Pacific Bell's argument that AirTouch's complaint is
barred by the equitable defenses of estoppel,
laches, and waiver.
IV. CONCLUSION
18. Based on our analysis above, we find that Pacific
Bell violated section 20.11 of the Commission's
rules when it failed to pay mutual compensation to
AirTouch for terminating traffic that originated on
Pacific Bell's network. We dismiss AirTouch's
claim, however, that Pacific Bell violated section
20.11 when it failed to include mutual compensation
provisions in the Interconnection Agreement, because
such claim is barred by the statute of limitations
contained in section 415(b) of the Act.47
V. ORDERING CLAUSES
19. Accordingly, IT IS ORDERED, pursuant to §§ 1,
4(i), 4(j), 207, 208, and 209 of the Act, 47 U.S.C.
§§ 151, 154(i), 154(j), 207, 208, and 209, and
section 20.11 of the Commission's rules, 47 C.F.R. §
20.11, that the formal complaint filed by AirTouch
Cellular against Pacific Bell is GRANTED to the
extent indicated herein.
20. IT IS FURTHER ORDERED that AirTouch Cellular,
pursuant to section 1.722 of the Commission's rules,
47 C.F.R. § 1.722, MAY FILE a supplemental complaint
concerning damages relating to our findings in this
Order within 60 days of the date of this decision.
FEDERAL COMMUNICATIONS COMMISSION
Magalie Roman Salas
Secretary
_________________________
1 Subsequent to the filing of this complaint, SBC Communications
acquired Pacific Bell.
2 47 U.S.C. § 208 (1991 & West Supp. 1999).
3 47 C.F.R. § 20.11.
4 AirTouch Complaint, filed September 19, 1997, at ¶¶ 4, 5
(``Complaint'').
5 Joint Stipulations of Disputed and Undisputed Facts, filed
February 25, 1998, Undisputed Fact No. 2 (``Joint
Stipulations'').
6 Opening Brief of Pacific Bell, filed April 27, 1998 at 13
(``Pacific Bell Brief''); Joint Stipulations, Undisputed Fact
Nos. 9, 12, 13, 20.
7 AirTouch Cellular's Opening Brief, filed April 27, 1998
(``AirTouch Brief'') at Exhibit A (Interconnection Agreement).
8 Joint Stipulations, Undisputed Fact No. 8.
9 In the Matter of Implementation of Sections 3(n) and 332 of
the Communications Act, Regulatory Treatment of Mobile Services,
Second Report and Order, 9 FCC Rcd 1411, 1498 at ¶ 232 (1994).
10 See Implementation of Sections 3(n) and 332 of the
Communications Act, Regulatory Treatment of Mobile Services, 59
FR 18493 (April 19, 1994).
11 See Joint Stipulations, Undisputed Fact No. 9.
12 Complaint at ¶ 6. The Commission stated in 1996 that ``[w]e
use the term `reciprocal compensation' and `mutual compensation'
synonymously.'' In the Matter of Implementation of the Local
Competition Provisions in the Telecommunications Act of 1996;
Interconnection between Local Exchange Carriers and Commercial
Mobile Radio Service Providers, Report and Order, 11 FCC Rcd
15499, 16045 at ¶ 1095, n. 2634 (1996) (``Local Competition
First Report and Order'') (subseq. history omitted).
13 Complaint at ¶ 12.
14 Complaint at ¶ 9.
15 Complaint at ¶ 6; Reply of AirTouch Cellular, filed November
19, 1997, at ¶ 28.
16 Complaint at ¶ 9.
17 47 U.S.C. § 415(b).
18 AT&T Corp. v. Bell Atlantic - Pennsylvania, Memorandum
Opinion and Order, 14 FCC Rcd 556, ¶ 12 (1998).
19 See Former Frigidaire Employees Association v. International
Union of Electrical Radio and Machine Workers, Local 801, 573
F.Supp. 59 (S.D. Ohio 1983). In Frigidaire, the plaintiff
employees alleged that the defendant union violated § 301 of the
Labor-Management Relations Act and the duty of fair
representation when the union ratified an agreement that failed
to include an extension of recall rights. The Court found that
the cause of action accrued when the agreement was ratified, and
that ``once the original damage is lodged, the mere fact that
the Defendants are `continuing' to implement allegedly improper
collective bargaining agreements does not convert Plaintiffs'
loss of jobs into a `continuing violation.''' Frigidaire, 573
F.Supp. at 62, citing Adkins v. General Motors Corp., 573
F.Supp. 1188, 1193 (S.D. Ohio 1982).
20 AirTouch Brief at 11, n.30.
21 We note that Pacific Bell argues that this cause of action
accrued on April 28, 1994, the date the parties entered into the
Interconnection Agreement. See, e.g., Pacific Bell Brief at 8.
We disagree that the cause of action accrued on this date.
AirTouch's claim is that the Interconnection Agreement was not
in compliance with section 20.11 of the Commission's rules,
which did not become effective until July 18, 1994, after the
Interconnection Agreement was signed.
22 AirTouch Brief at 7.
23 Pacific Bell Brief at 22.
24 This claim is not barred by the statute of limitations in
section 415(b). We agree with AirTouch that Pacific Bell's
failure to pay mutual compensation should be considered a
continuing violation of rule section 20.11, such that the
statute of limitations would begin with each day that the rule
was violated. We also agree with AirTouch that, although it
cannot recover damages dating back to the 1994 inception of the
Interconnection Agreement, it can recover damages for alleged
violations during the two year period from September 20, 1995
(two years back from the filing date of the complaint) to March
25, 1997 (the effective date of the new interconnection
agreement that included reciprocal compensation provisions).
Complaint at ¶ 6; AirTouch Brief at 6-7.
25 Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-
66, Title VI, § 6002(b)(2)(A), 6002(b)(2)(B), 107 Stat. 312, 392
(1993) (``Budget Act'').
26 Implementation of Sections 3(n) and 332 of the Communications
Act; Regulatory Treatment of Mobile Services, Second Report and
Order, 9 FCC Rcd 1411, 1417 at ¶¶ 11-12 (1994) (``CMRS Second
Report and Order'').
27 47 C.F.R. § 20.11(b).
28 CMRS Second Report and Order, 9 FCC Rcd at 1498, ¶ 22.
29 Id. (citing The Need to Promote Competition and Efficient Use
of Spectrum for Radio Common Carrier Services, Declaratory
Ruling, 2 FCC Rcd 2910, 2915 at ¶¶ 44-45 (1987) (``Declaratory
Ruling'')).
30 Pacific Bell Brief at 21-22.
31 47 C.F.R. § 20.11(b)(1) (emphasis added).
32 CMRS Second Report and Order, 9 FCC Rcd at 1498, ¶ 232.
33 Id. at ¶ 233 (emphasis added).
34 Local Competition First Report and Order, 11 FCC Rcd 15499
(1996).
35 Id. at ¶ 1094.
36 CMRS Second Report and Order, 9 FCC Rcd at 1498, ¶ 231.
37 Pacific Bell Brief at 19.
38 Pacific Bell Brief at 19, citing The Need to Promote
Competition and Efficient Use of Spectrum for Radio Common
Carrier Services (Cellular Interconnection Proceeding),
Memorandum Opinion and Order and Order on Reconsideration, 4 FCC
Rcd 2369, 2372 at ¶ 20 (1989).
39 See AirTouch Brief at 15.
40 CMRS Second Report and Order, 9 FCC Rcd at 1498, ¶ 232.
41 Pacific Bell Brief at 5, 12. Reverse Toll Billing permitted
Pacific Bell's subscribers to call CMRS providers' mobile
subscribers throughout the LATA without incurring toll charges.
Id. at 12-13.
42 See, e.g., Wright v. Universal Maritime Service Corp., 525
U.S. 70 (1998) (stating that waiver of a statutorily protected
right must be clear and unmistakable). See also Evans v. Jeff.
D., 475 U.S. 717 (1986) (stating that statutory rights are not
waivable if the waiver contravenes public policy).
43 See, e.g., Joint Stipulations, Undisputed Fact No. 8;
AirTouch Brief at 8.
44 See, e.g., AirTouch Brief at 19 (emphasis in original);
AirTouch Reply Brief at 5; Proffitt Declaration at 2.
45 Pacific Bell Brief at 7.
46 Letter from David A. Gross, attorney for AirTouch to Magalie
Roman Salas, Secretary of the Federal Communications Commission,
dated Jan. 19, 1999, at 1.
47 We note that the parties dispute the validity of the unsigned
Declaration of Peter Geiler, which was Exhibit I to AirTouch's
Reply Brief. See Letter from David A. Gross, attorney for
AirTouch to Magalie Roman Salas, Secretary of the Federal
Communications Commission, dated May 29, 1998; Letter from
Jeffrey B. Thomas, Senior Counsel for Pacific Bell to Magalie
Roman Salas, Secretary of the Federal Communications Commission,
dated June 3, 1998; Letter from David A. Gross, attorney for
AirTouch to Magalie Roman Salas, Secretary of the Federal
Communications Commission, dated June 24, 1998. We need not
address these disputes because the substantive issues in this
complaint were decided without reference to this particular
document.
We also note that the Reply Brief of Pacific Bell contained two
requests to strike certain assertions made in AirTouch's Brief.
See Reply Brief of Pacific Bell, filed May 18, 1998, at n.1,
n.13. We need not address these motions to strike because the
substantive issues in this complaint were decided without
reference to those particular assertions.