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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
)
COX VIRGINIA TELCOM, INC., )
)
Complainant, )
)
v. ) File No. EB-01-MD-006
)
VERIZON SOUTH INC., )
)
Respondent. )
MEMORANDUM OPINION AND ORDER
Adopted: May 2, 2002 Released: May 10, 2002
By the Commission:
I. INTRODUCTION
1. In this Order, we grant a formal complaint that Cox
Virginia Telcom, Inc. (``Cox'') filed against Verizon South Inc.1
(``Verizon South'') pursuant to sections 208 and 252(e)(5) of the
Communications Act of 1934, as amended (``Act'').2 In its
complaint, Cox seeks to recover, pursuant to an interconnection
agreement with Verizon South (``Agreement''), payment of
reciprocal compensation for the delivery of traffic bound for
Internet service providers (``ISPs'').
2. As discussed below, we conclude that the Agreement
obligates Verizon South to pay reciprocal compensation for the
delivery of ISP-bound traffic. We further find that, prior to
April 6, 2001, Verizon South waived its right to object to being
billed for end-office, rather than tandem, termination, and to
being charged reciprocal compensation for calls to customers that
have no physical presence in the local calling area associated
with the NXX code Cox has assigned.
II. BACKGROUND
A. The Parties and their Interconnection Agreement
3. Cox is a facilities-based competitive local exchange
carrier in Virginia.3 Verizon South is an incumbent local
exchange carrier in Virginia.4
4. Cox and Verizon South interconnect their networks to
enable an end user subscribing to one party's local exchange
service to place calls to and receive calls from end users
subscribing to the other party's local exchange service.5 In
March 1996, Cox initiated negotiations with Verizon South
regarding an interconnection agreement pursuant to section
252(a)(1) of the Act.6 During negotiations, the parties reached
an impasse over certain issues, which they then submitted to the
Virginia State Corporation Commission (``VSCC'') for arbitration
pursuant to section 252(b)(1) of the Act.7 At the conclusion of
arbitration, the VSCC approved the resultant Agreement pursuant
to section 252(e)(1) of the Act.8 Cox and Verizon South signed
the Agreement on March 25 and 27, 1997, respectively.9 The
parties dispute whether the Agreement remains in effect.10
5. The Agreement obligates the parties to ``reciprocally
terminate local exchange traffic . . . between each other's
networks,''11 and to pay reciprocal compensation to each other
for the delivery of ``Local Calls'' that are ``originated from
[one party] and terminated to [the other party's] end offices or
tandems.12 This obligation does not apply, however, until there
is an ``imbalance'' of ``Local Traffic'' that ``exceeds plus-or-
minus 10%.''13 The Agreement defines ``Local Exchange Traffic''
as ``any traffic that is defined by Local Calling Area.''14
``Local Calling Area,'' in turn, means ``Extended Area Service
(EAS) and Extended Local Service (ELS) calling area as defined in
[Verizon South's] local tariff at the date of this agreement.''15
During their negotiation of the Agreement, Cox and Verizon South
did not address specifically whether ISP-bound traffic
constituted ``local exchange traffic'' for purposes of the
Agreement's reciprocal compensation provisions.16
6. Two provisions of the Agreement address waiver of
rights. Paragraph XIX.AM., which is captioned ``Waiver,'' is the
more general of the two provisions. It states:
The failure of either Party to insist upon the
performance of any provision of this Agreement, or
to exercise any right or privilege granted to it
under this Agreement, shall not be construed as a
waiver of such provision or any provisions of this
Agreement, and the same shall continue in full
force and effect.17
Paragraph XIX.G.1. is entitled ``Dispute'' and falls under the
heading ``Billing and Payment.'' This paragraph, which is more
specific than Paragraph XIX.AM., provides:
If a Party disputes a billing statement, that
Party shall notify the other Party in writing
regarding the nature and the basis of the dispute
within thirty (30) calendar days from the bill
date or twenty (20) calendar days from the receipt
of the bill, whichever is later, or the dispute
shall be waived. The Parties shall diligently
work toward resolution of all billing issues.18
7. Paragraph XIX.G.5. of the Agreement establishes
the rights of the parties to perform an audit:
Each Party shall have a right to audit all bills
rendered by the other Party pursuant to this
Agreement, verifying the accuracy of items,
including but not limited to, the services being
provided on a wholesale basis pursuant to this
Agreement, usage recording and provisioning, and
nonrecurring charges.19 B. The Parties' Implementation of the Reciprocal
Compensation Provisions
8. In September 1997, Verizon South and Cox began to
exchange traffic in accordance with the Agreement.20 Cox sent
its first bill to Verizon South for reciprocal compensation in
November 1997,21 and, a month later, specifically notified
Verizon South that local traffic was out of balance by more than
10 percent.22 On December 29, 1997, Verizon South informed Cox
in writing that ``charges for local termination of traffic . . .
have been billed in error,'' because the parties allegedly had
agreed, in September 1997, ``to remain in a bill and keep
arrangement until January 1998.''23 Nevertheless, Cox continued
to bill Verizon South on a monthly basis for reciprocal
compensation.24
9. During a February 23, 1998 meeting, Verizon South
advised Cox that, due to technical limitations of the switch
through which Cox interconnected with Verizon South's network,
Verizon South could not measure traffic for purposes of
reciprocal compensation billing until Verizon South converted its
trunks from two-way trunks to one-way trunks.25 The parties
agreed to a March 6, 1998 conversion date.26 It was not until
August 14, 1998, however, that Verizon South installed and
converted the trunks.27
10. On August 17, 1998, Verizon South sent Cox a letter
disputing Cox's reciprocal compensation bills through August 1998
on the ground that the parties allegedly had agreed to a bill and
keep arrangement until Verizon South installed one-way trunks.28
Verizon South reiterated this view in October 16, 1998
correspondence, but nonetheless agreed to ``an earlier reciprocal
compensation billing start date of April 1, 1998,'' and asked Cox
to submit invoices for local traffic Cox terminated to Verizon
South from April 1, 1998 forward.29
11. In a December 7, 1998 letter, Verizon South complained
to Cox that there was ``an error in [Cox's] billing for the
reciprocal termination of local traffic as provided for in our
interconnection agreement. It appears Cox is billing [Verizon
South] for more than `Local Traffic' as defined in [the]
agreement.''30 Verizon South requested that the parties
``establish a discussion and work toward resolution of the
dispute as soon as possible.''31 Four days later, Cox and
Verizon South agreed to begin reciprocal compensation billing as
of March 6, 1998.32
12. In a January 6, 1999 letter to Cox, Verizon South
stated that it had ``determined the traffic to Cox is terminating
to Internet service providers, not to actual end users in the
local serving area and Internet traffic is not local in
jurisdiction.''33 Verizon South proposed that the parties agree
to withhold payment for such traffic until the ``FCC, the state
Commission or court of competent jurisdiction issues a final and
non appealable order regarding the compensation for Internet
traffic.''34 Cox responded to Verizon South in correspondence
dated February 3, 1999, which pledged that Cox would seek relief
from the VSCC if Cox did not receive payment of all outstanding
reciprocal compensation invoices by February 19, 1999.35 As
discussed below, Cox filed a complaint with the VSCC in March
1999.36
13. Throughout the remainder of 1999, the parties debated
Verizon South's obligation to pay reciprocal compensation for the
delivery of ISP-bound traffic.37 Prior to April 2000, Verizon
South did not pay any reciprocal compensation to Cox.38
Beginning in April 2000, and in each of the next four months,
Verizon South sent Cox payments for reciprocal compensation for
what Verizon South determined was ``bona fide local traffic.''39
This excluded what Verizon South estimated to be the volume of
ISP-bound traffic. Cox returned Verizon South's first two
checks, stating that the payments did not constitute the full
amount due.40 Verizon South ceased making reciprocal
compensation payments to Cox in August 2000.41
C. Proceedings Before the VSCC and this Commission
14. In March 1999, Cox filed a complaint with the VSCC
requesting an order ``declaring that local calls to ISPs
constitute local traffic under the terms of the Agreement and
that Cox and [Verizon South] are entitled pursuant to their
Agreement to reciprocal compensation for the completion of such
calls; and enforcing [Verizon South's] obligations under the
Agreement to make payments to Cox.''42 The VSCC refused to act
on Cox's complaint, citing concerns about issuing a ruling that
possibly would conflict with a subsequent decision by this
Commission regarding reciprocal compensation for the delivery of
ISP-bound traffic.43
15. On June 30, 2000, Cox filed a petition with this
Commission requesting preemption of the VSCC's jurisdiction over
Cox's reciprocal compensation complaint pursuant to section
252(e)(5) of the Act.44 In September 2000, the Commission
granted Cox's petition, stating that it would resolve the
following question: ``whether the existing interconnection
agreement between Cox and [Verizon South] requires [Verizon
South] to pay compensation to Cox for the delivery of ISP-bound
traffic.''45
16. On March 9, 2001, in accordance with the Preemption
Order, Cox filed a formal complaint against Verizon South
alleging that Verizon South violated the unambiguous reciprocal
compensation provisions of the Agreement by failing to pay Cox
for the delivery of ISP-bound traffic.46 The Complaint seeks an
order from the Commission (1) determining that all traffic
terminating to telephone numbers within the defined local calling
area, including traffic bound for ISPs, is local traffic for
reciprocal compensation purposes under the terms of the
Agreement; and (2) requiring Verizon South to pay compensation
for the transportation and termination of all local traffic,
including ISP-bound traffic, delivered to Cox, as well as local
interconnection facilities used to transport this traffic.47 In
the event the Commission does not construe the Agreement in Cox's
favor, the Complaint alleges that Cox is entitled to recover
under a quantum meruit theory for the value of the termination
services it rendered.48 Cox requests damages in the amount of
$4,372,047.84 for its transport and termination of traffic.49
17. On April 6, 2001, Verizon South filed an Answer to the
Complaint. The Answer asserts, inter alia, that ISP-bound
traffic is not eligible for reciprocal compensation under the
unambiguous terms of the Agreement, because, under an ``end-to-
end'' analysis, such traffic is jurisdictionally interstate.50
The Answer further argues that the Commission lacks jurisdiction
over Cox's quantum meruit and trunk facilities claims.51
18. On May 9, 2001, Commission staff bifurcated the issue
of liability from the issue of damages and ruled that the
liability issue would be adjudicated first.52 In doing so,
Commission staff explained that, during the liability phase of
this proceeding, rulings would be rendered regarding (1) whether
the Agreement requires the payment of reciprocal compensation for
the delivery of ISP-bound traffic; (2) if not, whether Cox is
entitled to some compensation under the doctrine of quantum
meruit; (3) whether Verizon South waived its right to object to
Cox's charges for reciprocal compensation for calls to customers
that have no physical presence in the local calling area
associated with the ``NXX code'' Cox has assigned;53 (4) whether
Verizon South waived its right to object to the rate of
compensation; and (5) whether Verizon South waived its right
under the Agreement to require an audit of Cox's bills for
reciprocal compensation.54
III. DISCUSSION
A. The Interconnection Agreement Determines the Parties'
Reciprocal Compensation Obligations for the Delivery of
ISP-Bound Traffic.
19. The Commission twice has held, and the parties do
not dispute, that during the period relevant here, carriers could
address in their interconnection agreements the issue of
compensation for the delivery of ISP-bound traffic.55 The
parties appear to agree that the Agreement does, in fact, address
and conclusively govern this compensation issue.56 Thus, the
first question we confront in this proceeding is whether the
Agreement entitles Cox to receive reciprocal compensation for the
delivery of ISP-bound traffic.
B. The ``Plain Meaning'' Rule under Virginia Law Governs
Our Interpretation of the Agreement.
20. In interpreting the Agreement, we stand in the
shoes of the VSCC.57 We agree with the parties that Virginia law
supplies the applicable rules of contract interpretation.58
Virginia adheres to the ``plain meaning'' rule: ``where the
terms of the contract are clear and unambiguous, we will construe
those terms according to their plain meaning.''59 Although the
cornerstone of a ``plain meaning'' analysis is a contract's
language,60 in ascertaining the parties' intent ``as expressed by
them in the words they have used,''61 a court also may examine
the ``surrounding circumstances, the occasion, and [the] apparent
object of the parties.''62 In particular, a court may consider
the legal context in which a contract was negotiated, because the
laws in force at the time a contract is made become ``as much a
part of the contract as if incorporated therein.''63 Moreover,
``custom and usage may be used to supplement or explain a
contract,'' as long as this type of evidence is not inconsistent
with the contract's express terms.64 Furthermore, course-of-
performance evidence can be considered to ascertain a contract's
meaning (but cannot ``create a new, additional contract
right'').65
21. Both parties invoke the ``plain meaning''
rule in support of their positions.66 According to Cox, as
interpreted under the ``plain meaning'' rule, the Agreement
clearly treats ISP-bound traffic as compensable local traffic.67
Verizon South similarly relies upon the ``plain meaning'' rule to
argue that the Agreement unambiguously does not require payment
of reciprocal compensation for the delivery of ISP-bound
traffic.68 For the reasons described below, applying Virginia's
rules of contract interpretation, we agree with the parties that
the Agreement is unambiguous regarding compensation for the
delivery of ISP-bound traffic. We further conclude that the
Agreement requires reciprocal compensation for the delivery of
ISP-bound traffic.
C. The Agreement Obligates Verizon South to Pay
Reciprocal Compensation to Cox for the Delivery of ISP-
Bound Traffic.
22. Under the terms of the Agreement, the parties must
pay reciprocal compensation for the delivery of ``local exchange
traffic'' that is ``originated from [one party] and terminated to
[the other party's] end offices or tandems,'' once there is an
``imbalance'' of such traffic that ``exceeds plus-or-minus
10%.''69 The Agreement defines ``Local Exchange Traffic'' as
``any traffic that is defined by Local Calling Area.''70 ``Local
Calling Area'' means the ``Extended Area Service (EAS) and
Extended Local Service (ELS) calling area for each exchange as
defined in [Verizon South's] local tariff at the date of [the]
Agreement.''71 Thus, the Agreement's definition of compensable
``local exchange traffic'' ultimately derives from the scope of
local traffic under Verizon's South's local tariff. Accordingly,
whatever traffic is ``local'' under the tariff is compensable
traffic under the Agreement.
23. The parties agree that ISP-bound traffic is
``local exchange traffic'' under the tariff. Specifically, the
parties stipulate that, when a Verizon South customer places a
call to the Internet through an ISP, using a telephone number
associated with the caller's local calling area, Verizon South
rates and bills that customer for a local call pursuant to the
terms of Verizon South's local tariff.72 Consequently, ISP-bound
traffic must constitute traffic defined by the tariff's ``Local
Calling Area.'' Accordingly, because the Agreement adopts the
tariff's conception of local exchange traffic, we conclude that
the Agreement plainly requires Verizon South to pay reciprocal
compensation for the delivery of ISP-bound traffic.73
24. Verizon South contends that it would be ``remarkably
unfair'' for the Commission to rely on Verizon South's manner of
billing for termination of ISP-bound traffic, because it merely
reflects Verizon South's adherence to the ``positive requirements
of federal law.''74 This objection is meritless, because Verizon
South voluntarily agreed to link the compensability of traffic
under the Agreement to the classification of traffic in the
tariff.
25. Verizon South further asserts that the parties intended
the Agreement to follow the requirements of federal law, by
distinguishing in the Agreement between ``local traffic'' on the
one hand and exchange access traffic on the other.75 According
to Verizon South, this difference mirrors the distinction that
the Commission drew in paragraph 1034 of the Local Competition
Order,76 where the Commission concluded that ``reciprocal
compensation obligations should apply only to traffic that
originates and terminates within a local area....''77 We
disagree. The Agreement does not track the language used by the
Commission to implement section 251(b)(5) of the Act.78 In
particular, the Agreement's definition of ``local exchange
traffic'' does not speak in terms of ``origination'' and
``termination'' of traffic. Moreover, although the Agreement
references ``Local Calling Area[s],'' it does so simply as a
means of incorporating Verizon South's tariff.79
26. Finally, in further support of its argument that the
parties intended the Agreement to track the requirements of
federal law,80 Verizon South relies heavily on a recent decision
by the United States Court of Appeals for the Fourth Circuit,
which found that ``many so-called `negotiated' provisions [of
interconnection agreements] represent nothing more than an
attempt to comply with the requirements of the 1996 Act.''81
AT&T v. BellSouth is inapposite, because the interconnection
provision at issue in that case (pertaining to unbundled network
elements) obligated BellSouth to offer a service that it clearly
was required to provide by then-controlling federal law. ``Where
a provision plainly tracks the controlling law,'' the Court said,
``there is a strong presumption that the provision was negotiated
with regard to the [Act] and the controlling law.''82 The Court
found that, where an interconnection agreement ``was clearly
negotiated with regard to the 1996 Act and law thereunder,'' the
contested provision could be reformed if there were a change in
controlling law.83 In this case, there was no controlling
federal law mandating a particular compensation arrangement for
ISP-bound traffic.84
27. In sum, given the Agreement's reference to the
tariff's conception of local traffic, whatever calls Verizon
South bills to its customers as local calls under the tariff must
be compensable local calls under the Agreement. Because it is
undisputed that Verizon South bills ISP-bound traffic as local
calls under the tariff, such calls are compensable under the
Agreement. Thus, Verizon South must pay reciprocal compensation
to Cox for the delivery of ISP-bound traffic.85
D. Prior to April 6, 2001, Verizon South Waived Its Right
to Object to Being Billed Reciprocal Compensation at
the Tandem Served Rate and to Being Billed Reciprocal
Compensation for Calls to Customers that Have No
Physical Presence in the Local Calling Area Associated
with the NXX Code Cox Assigned.
28. We must address two waiver issues.86 The first
issue is whether Verizon South waived its right to object to
being billed reciprocal compensation at the ``tandem served''
rate.87 The second issue is whether Verizon South waived its
right to object to being billed reciprocal compensation for calls
to customers that have no physical presence in the local calling
area associated with the NXX code Cox assigned.88 Cox contends
that Verizon South waived both of these objections, because the
first time Verizon South raised them in writing was in its Answer
in this proceeding, which was filed on April 6, 2001.89
According to Cox, neither of these objections ``was made in any
notice provided to Cox in accordance with the requirements of the
dispute provision or, for that matter, in any notice at all prior
to the Answer.''90
29. As explained above, the Agreement contains two
waiver provisions. Paragraph XIX.AM. generally disfavors a
finding of waiver,91 while paragraph XIX.G.1. requires a precise
reservation of rights to preserve a billing objection.92 Verizon
South argues that paragraph XIX.AM. ``clearly establishes a
background rule against finding that a party has waived its right
under the agreement.''93 Verizon South maintains that paragraph
XIX.G.1., read in conjunction with paragraph XIX.AM., does not
require a party to raise all of its potential disputes with a
bill simultaneously, and that a pending dispute between the
parties regarding billing subsumes any subsequent billing
objections.94 Verizon South contends, therefore, that it did not
waive its rate and NXX code objections, because it notified Cox
as early as December 7, 1998 that it disputed the contents of
Cox's reciprocal compensation bills.95
30. We disagree. Paragraph XIX.G.1. specifies how
parties must preserve their rights regarding billing disputes.
Although Paragraph XIX.AM. expresses a general rule against
waiver, we view paragraph XIX.G. as an exception to that rule in
the context of billing matters. Our conclusion is consistent
with Virginia law holding that specific contract language
controls over more general contract language.96 Moreover, were
we to construe paragraph XIX.AM. as broadly as Verizon South
posits, objecting to one aspect of a bill would enable a party at
any time to object to any aspect of the bill. This would
undermine the Agreement's directive that the parties ``diligently
work toward resolution of all billing issues.''97 Accordingly,
in order to preserve its rate and NXX code objections to Cox's
reciprocal compensation bills, Verizon South had to ``notify
[Cox] in writing regarding the nature and the basis'' of those
disputes within 20-30 days of the challenged bill.''98
31. We find that Verizon South raised the tandem
served rate and NXX code objections for the first time in its
Answer filed in this proceeding on April 6, 2001.99 Prior to
that date, Verizon South sent nothing in writing to Cox making
Cox aware of the ``nature and the basis'' of a dispute regarding
these issues. More specifically, Verizon South never previously
questioned in writing whether Cox was billing reciprocal
compensation for calls to customers located outside the local
calling area associated with the NXX code Cox assigned; and the
only occasion on which Verizon South ever even mentioned end-
office (versus tandem) switching to Cox in writing was an April
14, 2000 letter stating that Verizon South ``calculated the
payment amount [for ``bona-fide local traffic''] using the end
office switching . . . rates contained in the current
interconnection contract.''100 This April 14, 2000
correspondence neither suggested that Verizon South disputed
Cox's use of the tandem switching rate nor, assuming such a
dispute then existed, explained Verizon South's basis for the
dispute.101 Accordingly, prior to April 6, 2001, Verizon South
waived its rate and NXX code objections to Cox's bills.102
V. CONCLUSION AND ORDERING CLAUSES
37. For the above reasons, we find that the Agreement
between Cox and Verizon South requires Verizon South to pay
reciprocal compensation to Cox for the delivery of ISP-bound
traffic. In addition, we find that, prior to April 6, 2001,
Verizon South waived its right to object to being billed
reciprocal compensation at the tandem served rate and to being
billed reciprocal compensation for calls to customers that have
no physical presence in the local calling area associated with
the NXX code Cox assigned.
38. Accordingly, IT IS ORDERED, pursuant to sections
1, 4(i), 4(j), 208, and 252(e)(5) of the Communications Act of
1934, as amended, 47 U.S.C. §§ 151, 154(i), 154(j), 208, and
252(e)(5), that the formal complaint filed by Cox against Verizon
South is hereby GRANTED.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
_________________________
1 Verizon South Inc. formerly was known as GTE South
Incorporated. Joint Statement of Cox Virginia Telcom, Inc. and
Verizon South, Inc., File No. EB-01-MD-006 (filed Apr. 19, 2001)
(``Joint Statement'') at 1-2, ¶ 2.
2 47 U.S.C. §§ 208, 252(e)(5).
3 Joint Statement at 1, ¶ 1.
4 Joint Statement at 1-2, ¶ 2.
5 Joint Statement at 5, ¶ 23.
6 Joint Statement at 2, ¶ 4; 47 U.S.C. § 252(a)(1).
7 Joint Statement at 4, ¶ 17; 47 U.S.C. § 252(b)(1).
8 Joint Statement at 2, ¶ 5; 47 U.S.C. § 252(e)(1).
9 Joint Statement at 2, ¶ 5. From the record, it does not appear
that either party appealed the Agreement pursuant to section
252(e)(6) of the Act. 47 U.S.C. § 252(e)(6).
10 See Initial Brief of Cox Virginia Telcom, Inc., File No. EB-
01-MD-006 (filed July 11, 2001) (``Cox Brief'') at 34-37; Verizon
South Inc.'s Opening Brief on the Merits, File No. EB-01-MD-006
(filed July 11, 2001) (``Verizon South Brief'') at 38; Reply
Brief of Cox Virginia Telcom, Inc., File No. EB-01-MD-006 (filed
July 20, 2001) (``Cox Reply Brief'') at 18-20; Verizon South
Inc.'s Reply Brief, File No. EB-01-MD-006 (filed July 20, 2001)
(``Verizon South Reply Brief'') at 19-20. If necessary, we will
address in a subsequent damages proceeding whether the Agreement
still governs.
11 Formal Complaint, File No. EB-01-MD-006 (filed Mar. 9, 2001)
(``Complaint''), Exhibit B (Interconnection Agreement), ¶ V.A.
12 Complaint, Exhibit B (Interconnection Agreement), ¶ V.C.
13 Complaint, Exhibit B (Interconnection Agreement), Exhibit B
(Detailed Schedule of Itemized Charges), ¶¶ A.1.a., B.1.a.
Exhibit B of the Agreement establishes call termination rates for
``Local Traffic.'' Joint Statement at 5, ¶ 21; Complaint, Exhibit
B (Interconnection Agreement), Exhibit B (Detailed Schedule of
Itemized Charges). The Agreement does not define the terms
``Local Calls'' or ``Local Traffic.'' The parties apparently
consider those terms to be interchangeable with the defined term
``local exchange traffic'' (see Joint Statement at 3-4, ¶ 12),
and nothing in the Agreement leads us to conclude that such an
understanding is incorrect.
14 Joint Statement at 4, ¶ 19; Complaint, Exhibit B
(Interconnection Agreement), ¶ II.49.
15 Joint Statement at 4-5, ¶ 20; Complaint, Exhibit B
(Interconnection Agreement), ¶ II.46.
16 Joint Statement at 4, ¶ 13. Nor did the parties raise this
issue during arbitration of the Agreement before the VSCC. Joint
Statement at 4, ¶ 18.
17 Complaint, Exhibit B (Interconnection Agreement), ¶ XIX.AM.
18 Joint Statement at 6, ¶ 30; Complaint, Exhibit B
(Interconnection Agreement), ¶ XIX.G.1.
19 Complaint, Exhibit B (Interconnection Agreement), ¶ XIX.G.5.
20 Joint Statement at 5, ¶ 23; Complaint at 7, ¶ 14; at 12, ¶ 41;
Answer of Verizon South, Inc., File No. EB-01-MD-006 (filed Apr.
6, 2001) (``Answer'') at 18, ¶ 51; at 23, ¶ 80.
21 Joint Statement at 5, ¶ 24.
22 Joint Statement at 5, ¶ 24; Complaint at 12, ¶ 42; Answer at
23, ¶ 81.
23 Answer, Exhibit F (Letter dated December 29, 1997 from
Kimberly Tagg, Support Manager - Emerging Markets, GTE Network
Services, to Jill Butler, Director Regulatory, Cox Fibrenet);
Joint Timeline at 1. Cox and Verizon South stipulate that
Verizon South mailed the letter on the date reflected on its
face, and that Cox received the letter. Joint Statement at 2, ¶
3.
24 Joint Statement at 5, ¶ 27.
25 Complaint, Exhibit G (Letter dated August 17, 1998 from
Cynthia Lamb, Support Manager - Emerging Markets, GTE Network
Services, to George Cozens, Cox Fibrenet); Exhibit H (Letter
dated October 16, 1998, from Cynthia Lamb, Support Manager -
Emerging Markets, GTE Network Services, to Jill Nickel Butler,
Director, Regulatory Affairs Southeast, Cox Communications, Inc.)
at 1; Answer, Exhibit C (Declaration of Cynthia Lamb) at 2-3, ¶
10; Answer, Exhibit D (Declaration of Kimberly Tagg) at 1, ¶ 3;
Timeline for Cox/Verizon South Reciprocal Compensation Dispute,
File No. EB-01-MD-006 (filed Apr. 27, 2001) (``Joint Timeline'')
at 2.
26 Joint Timeline at 2; Complaint, Exhibit H (Letter dated
October 16, 1998, from Cynthia Lamb, Support Manager - Emerging
Markets, GTE Network Services, to Jill Nickel Butler, Director,
Regulatory Affairs Southeast, Cox Communications, Inc.) at 2.
27 Complaint, Exhibit G (Letter dated August 17, 1998 from
Cynthia Lamb, Support Manager - Emerging Markets, GTE Network
Services, to George Cozens, Cox Fibrenet) at 1; Answer, Exhibit C
(Declaration of Cynthia Lamb) at 2-3, ¶ 10; Joint Timeline at 2.
28 Complaint at Exhibit G (Letter dated August 17, 1998 from
Cynthia Lamb, Support Manager - Emerging Markets, GTE Network
Services, to George Cozens, Cox Fibrenet); Joint Timeline at 2.
29 Complaint, Exhibit H (Letter dated October 16, 1998 from
Cynthia Lamb, Support Manager - Emerging Markets, GTE Network
Services, to Jill Nickel Butler, Director, Regulatory Affairs
Southeast, Cox Communications, Inc.); Joint Timeline at 3.
30 Complaint, Exhibit I (Letter dated December 7, 1998 from
Cynthia Lamb, Support Manager - Emerging Markets, GTE Network
Services, to Jill Nickel Butler, Director, Regulatory Affairs
Southeast, Cox Communications, Inc.); Joint Timeline at 3.
31 Complaint at 15, ¶ 53; Exhibit I (Letter dated December 7,
1998 from Cynthia Lamb, Support Manager - Emerging Markets, GTE
Network Services, to Jill Nickel Butler, Director, Regulatory
Affairs Southeast, Cox Communications, Inc.). See Joint Timeline
at 3.
32 Joint Timeline at 3; Joint Statement at 5, ¶ 26.
33 Answer, Exhibit G (Letter dated January 6, 1999 from Ann
Lowery, Manager-Interconnections/ Negotiations, GTE Network
Services, to Jill Nickel Butler, Director, Regulatory Affairs
Southeast, Cox Communications, Inc.). See Joint Timeline at 3.
34 Answer, Exhibit G (Letter dated January 6, 1999 from Ann
Lowery, Manager-Interconnections/ Negotiations, GTE Network
Services, to Jill Nickel Butler, Director, Regulatory Affairs
Southeast, Cox Communications, Inc.). See Joint Timeline at 3.
35 Complaint, Exhibit K (Letter dated February 3, 1999 from John
D. Sharer, counsel for Cox, to Richard D. Gary, counsel for
Verizon South); Joint Timeline at 3. The next day, Verizon South
acknowledged receipt of Cox's letter. Complaint, Exhibit L
(Letter dated February 4, 1999 from Richard D. Gary, counsel for
Verizon South, to John D. Sharer, counsel for Cox); Joint
Timeline at 3.
36 See paragraph 14, infra.
37 Joint Timeline at 4.
38 Joint Statement at 5, ¶ 28.
39 Complaint, Exhibit O (Letter dated April 14, 2000, from Laura
Schneider, Manager - Contract Compliance, GTE Network Services,
to Accounts Payable, Cox Fibrenet); Joint Timeline at 4-5; Joint
Statement at 5-6, ¶ 28.
40 Joint Statement at 5-6, ¶ 28.
41 Joint Statement at 5-6, ¶ 28.
42 Joint Statement at 2, ¶ 6 (citing Answer, Exhibit J [Cox
Virginia Telcom, Inc. v. GTE South, Inc., Petition of Cox
Virginia Telcom, Inc. for Enforcement of Interconnection
Agreement for Reciprocal Compensation for the Termination of
Local Calls to Internet Service Providers, Case No. PUC 99046
(filed Mar. 18, 1999)]).
43 Joint Statement at 2, ¶ 7.
44 Joint Statement at 3, ¶ 8; 47 U.S.C. § 252(e)(5) (``If a State
commission fails to act to carry out its responsibility under
this section in any proceeding or other matter under this
section, then the Commission shall issue an order preempting the
State commission's jurisdiction of that proceeding or matter
within 90 days after being notified (or taking notice) of such
failure, and shall assume the responsibility of the State
commission under this section with respect to the proceeding or
matter and act for the State commission.'').
45 Joint Statement at 3, ¶ 9; Cox Virginia Telecom, Inc. Petition
for Preemption of Jurisdiction of the Virginia State Corporation
Commission Pursuant to Section 252(e)(5) of the
Telecommunications Act of 1996, Memorandum Opinion and Order, 15
FCC Rcd 17958, 17960, ¶ 6 (2000) (``Preemption Order'').
46 Complaint at 1-2.
47 Complaint at 1-2. The parties subsequently settled Cox's
claim that Verizon South failed to compensate Cox for local
interconnection trunks used to transport ISP-bound traffic. See
Letter dated January 24, 2002, from J.G. Harrington, counsel for
Cox, to Magalie Roman Salas, Secretary, Federal Communications
Commission, File No. EB?01?MD?006 (filed Jan. 24, 2002).
48 Complaint at 38-42, ¶¶ 128-39.
49 Complaint at 42, ¶ 141.
50 Answer at 56-66.
51 Answer at 52-54, ¶¶ 195-201.
52 Letter dated May 9, 2001 from David Strickland, Attorney
Advisor, Market Disputes Resolution Division, Enforcement Bureau,
to J.G. Harrington and Laura Rocklein, counsel for Cox, and
Lawrence W. Katz, Aaron M. Panner and Scott G. Angstreich,
counsel for Verizon South, File No. EB-01-MD-006 (filed May 9,
2001) at 1. See 47 C.F.R. § 1.722(c).
53 The NXX code is the three-digit switch entity indicator that
is defined by the ``D,'' ``E'' and ``F'' digits of a 10-digit
telephone number within the North American Numbering Plan. Each
NXX code contains 10,000 station numbers. Complaint, Exhibit B
(Interconnection Agreement), ¶ II.62.
54 Letter dated May 24, 2001, from David Strickland, Attorney
Advisor, Market Disputes Resolution Division, Enforcement Bureau,
to J.G. Harrington and Laura Gallagher, counsel for Cox, and
Lawrence W. Katz, Aaron M. Panner and Scott H. Angstreich,
counsel for Verizon South, File No. EB-01-MD-006 (filed May 24,
2001) at 2-3.
55 See Implementation of the Local Competition Provisions in the
Telecommunications Act of 1996; Intercarrier Compensation for
ISP-Bound Traffic, Order on Remand and Report and Order, 16 FCC
Rcd 9151, 9160, ¶ 16 (2001) (``Order on Remand''), appeal
pending, WorldCom Inc. v. FCC, Case No. 01-1218 (D.C. Cir.)
(citing Implementation of the Local Competition Provisions in the
Telecommunications Act of 1996; Intercarrier Compensation for
ISP-Bound Traffic, Declaratory Ruling in CC Docket No. 96-98 and
Notice of Proposed Rulemaking in CC Docket No. 99-68, 14 FCC Rcd
3689, 3703, ¶ 22 (1999) (``Declaratory Ruling''), vacated and
remanded sub nom. Bell Atlantic Tel. Cos. v. FCC, 206 F.3d 1
(D.C. Cir. 2000) (``Bell Atlantic Remand Order'')). On April 27,
2001, the Commission adopted an interim compensation mechanism
pertaining to the exchange and delivery of ISP-bound traffic.
See Order on Remand, 16 FCC Rcd at 9151. The established regime,
however, ``applies as carriers renegotiate expired or expiring
interconnection agreements. It does not alter existing
contractual obligations, except to the extent that parties are
entitled to invoke contractual change-of-law provisions.'' Id.,
16 FCC Rcd at 9189, ¶ 82. Neither party argues that the
interconnection agreement involved in the instant proceeding
contains change of law provisions that would be triggered by the
Order on Remand.
56 Complaint at 26-27, ¶¶ 87-94; Answer at 56-67; Cox Brief at 8-
11; Verizon South Brief at 7-21; Cox Reply Brief at 6-10; Verizon
South Reply Brief at 3-12.
57 See 47 U.S.C. § 252(e)(5); Preemption Order, 15 FCC Rcd 17958,
17960, ¶ 6.
58 See Complaint at 30, ¶ 112; Answer at 57 n.10; Cox Brief at 5
n.9; Verizon South Brief at 7 n.4. See also Complaint, Exhibit B
(Interconnection Agreement), ¶ XIX.R. (``This Agreement shall be
governed by and construed in accordance with the laws of the
Commonwealth of Virginia and shall be subject to the exclusive
jurisdiction of the courts therein. In addition, insofar as and
to the extent federal law may properly apply, federal law will
control.''). See generally Southwestern Bell Tel. Co. v. PUC of
Tex., 208 F.3d 475, 485 (5th Cir. 2000) (applying Texas law in
construing reciprocal compensation provisions of interconnection
agreements).
59 American Spirit Ins. Co. v. Owens, 261 Va. 270, 275, 541
S.E.2d 553, 555 (2001). See Berry v. Klinger, 225 Va. 201, 208,
300 S.E.2d 792, 796 (1983).
60 See, e.g., Lerner v. Gudelsky Co., 230 Va. 124, 132, 334
S.E.2d 579, 584 (1985) (``The writing is the repository of the
final agreement of the parties.''); Berry v. Klinger, 225 Va. at
208, 300 S.E.2d at 796 (a court must construe a contract's
``language as written'').
61 Ames v. American Nat'l Bank, 163 Va. 1, 38, 176 S.E. 204, 216
(1932).
62 Flippo v. CSC Assoc. III, L.L.C., 262 Va. 48, 64, 547 S.E.2d
216, 226 (2001) (quoting Christian v. Bullock, 215 Va. 98, 102,
205 S.E.2d 635, 638 (1974)).
63 Marriott v. Harris, 235 Va. 199, 215, 368 S.E.2d 225, 232
(1988); Paul v. Paul, 214 Va. 651, 653, 203 S.E.2d 123, 125
(1974).
64 Chas. H. Tompkins Co. v. Lumbermans Mut. Cas. Co., 732 F.
Supp. 1368, 1374 (E.D. Va. 1990) (applying Va. law) (``Chas. H.
Tompkins Co.''). See Piland Corp. v. REA Constr. Co., 672 F.
Supp. 244, 247 (E.D. Va. 1987); Va. Code Ann. § 8.1- 205(4)
(``The express terms of an agreement and an applicable course of
dealing or usage of trade shall be construed wherever reasonable
as consistent with each other; but when such construction is
unreasonable express terms control both course of dealing and
usage of trade and course of dealing controls usage of trade.'').
65 Chas. H. Tompkins Co., 732 F. Supp. at 1375. See also Va.
Code Ann. § 8.2- 208(2) (``The express terms of the agreement and
any course of performance, as well as any course of dealing and
usage of trade, shall be construed whenever reasonable as
consistent with each other; but when such construction is
unreasonable, express terms shall control course of performance
and course of performance shall control both course of dealing
and usage of trade.'').
66 Complaint at 31-32, ¶¶ 112-14; Cox Brief at 8-11; Cox Reply
Brief at 6; Answer at 56-57; Verizon South Brief at 7-8; Verizon
South Reply Brief at 3-4. We note, however, that a contract is
not rendered ambiguous simply because each side argues that the
contract plainly means the opposite of what the other side
contends. Dominion Savings Bank, FSB v. Costello, 257 Va. 413,
416, 512 S.E.2d 564, 566 (1999) (citing Ross v. Craw, 231 Va.
206, 212-13, 343 S.E.2d 312, 316 (1986)).
67 Complaint at 32, ¶ 114. See also Cox Brief at 8-9; Cox Reply
Brief at 6.
68 Answer at 56-57; Verizon South Brief at 7-8; Verizon South
Reply Brief at 3-4.
69 Joint Statement a 3-4, ¶ 12; Complaint, Exhibit B
(Interconnection Agreement), ¶¶ V.A., V.C.; Exhibit B (Detailed
Schedule of Itemized Charges), ¶¶ A.1.a., B.1.a.
70 Joint Statement at 4, ¶ 19; Complaint, Exhibit B
(Interconnection Agreement), ¶ II.49.
71 Joint Statement at 4, ¶ 20; Complaint, Exhibit B
(Interconnection Agreement), ¶ II.46.
72 Joint Statement at 8, ¶ 48.
73 The language of the Agreement resembles the language of an
interconnection agreement between Verizon South and another
competitive local exchange carrier that we recently interpreted
in a similar fashion. See Starpower Communications, LLC v.
Verizon South Inc., Memorandum Opinion and Order, File No. EB-00-
MD-19, 2002 WL 518062, ¶¶ 42-49 (F.C.C. Apr. 8, 2002).
74 Answer at 66; Verizon South Brief at 20-21; Verizon South
Reply Brief at 10-11.
75 Answer at 57-58; Verizon South Brief at 9-10, 17-18; Verizon
South Reply Brief at 4-6.
76 Verizon South Brief at 9-10, 17-18 (citing Implementation of
the Local Competition Provisions in the Telecommunications Act of
1996, First Report and Order, 11 FCC Rcd 15499 (1996) (subsequent
history omitted) (``Local Competition Order'')). See also Answer
at 57; Verizon South Reply Brief at 4.
77 Local Competition Order, 11 FCC Rcd at 16013, ¶ 1034.
78 47 U.S.C. § 251(b)(5).
79 Joint Statement at 4, ¶ 20; Complaint, Exhibit B
(Interconnection Agreement), ¶ II.46.
80 Answer at 58; Verizon South Brief at 10; Verizon South Reply
Brief at 4-5.
81 AT&T Communications of S. States, Inc. v. BellSouth
Telecommunications, 223 F.3d 457, 465 (4th Cir. 2000) (``AT&T v.
BellSouth''). See Answer at 58-60; Verizon South Brief at 10;
Verizon South Reply Brief at 4-5.
82 AT&T v. BellSouth, 223 F.3d at 465.
83 AT&T v. BellSouth, 223 F.3d at 465.
84 See Declaratory Ruling, 14 FCC Rcd at 3703, ¶ 22.
85 We emphasize that, in issuing this decision, we stand in the
shoes of the VSCC. Thus, although we determine an aspect of
Verizon South's reciprocal compensation obligations, we do so
solely as a matter of contract interpretation, and do not
establish any requirements regarding reciprocal compensation for
ISP-bound traffic that are applicable generally to all carriers.
86 A third waiver issue - whether Verizon South waived the right
to object to the inclusion of ISP-bound traffic in Cox's
reciprocal compensation bills - is moot. Complaint at 28-29, ¶¶
100-103; Answer at 67-68; Cox Brief at 7-8; Verizon Brief at 23-
24; Cox Reply Brief at 4; Verizon Reply Brief at 12-14.
Specifically, even if Verizon South had preserved such an
objection, it would be meritless in light of our holding that the
Agreement requires Verizon South to pay reciprocal compensation
for the delivery of ISP-bound traffic.
87 According to Verizon South, Cox does not perform a tandem
switching function in delivering traffic to its customers,
because Cox's switch has no subtending end offices. Answer at
69-70. Verizon South argues that Cox's switch cannot be
characterized as a ``Tandem Office Switch'' under the Agreement.
Answer at 70 (citing Complaint, Exhibit B (Interconnection
Agreement), ¶ II.86). See Verizon South Inc.'s First Set of
Interrogatories to Cox Virginia Telcom, Inc., File No. EB-01-MD-
006 (filed Apr. 6, 2001) (``Verizon South's Interrogatories''),
Interrogatory No. 4. Consequently, Verizon South asserts that it
violates the Agreement for Cox to bill Verizon South for the use
of Cox's access tandem, for transport between the tandem switch
and the end office, and for end office switching. Answer at 69.
See Verizon South Interrogatories, Interrogatory No. 3.
88 Answer at 70. See Verizon South Interrogatories,
Interrogatory Nos. 5, 6. Verizon South maintains that, under the
Agreement, such calls do not terminate in the same local calling
area in which they originate, and, accordingly, that Cox is not
entitled to reciprocal compensation for such calls. Answer at
70.
89 Cox Brief at 6; Cox Reply Brief at 2-4.
90 Cox Brief at 6.
91 Complaint, Exhibit B (Interconnection Agreement), ¶ XIX.AM.
(``The failure of either Party to insist upon the performance of
any provision of this Agreement, or to exercise any right or
privilege granted to it under this Agreement, shall not be
construed as a waiver of such provision or any provisions of this
Agreement, and the same shall continue in full force and
effect.'').
92 Joint Statement at 6, ¶ 30; Complaint, Exhibit B
(Interconnection Agreement), ¶ XIX.G.1 (``If a Party disputes a
billing statement, that Party shall notify the other Party in
writing regarding the nature and the basis of the dispute within
thirty (30) calendar days from the bill date or twenty (20)
calendar days from the receipt of the bill, whichever is later,
or the dispute shall be waived. The Parties shall diligently
work toward resolution of all billing issues.'').
93 Verizon South Brief at 22. See Verizon South Reply Brief at
14 n.15.
94 Answer at 68-69; Verizon South Brief at 22; Verizon South
Reply Brief at 13.
95 Answer at 68-69; Verizon South Brief at 22-24; Verizon South
Reply Brief at 12-13.
96 Chantilly Constr. Corp. v. Department of Highways & Transp.,
6 Va. App. 282, 294, 369 S.E.2d 438, 445 (1988) (``[A]ny apparent
inconsistency between a clause that is general and broadly
inclusive in character, and a clause that is more specific in
character, should be resolved in favor of the latter.''); see
generally Restatement (Second) of Contracts § 203(c) (1979).
97 Complaint, Exhibit B (Interconnection Agreement), ¶ XIX.G.1.
98 Complaint, Exhibit B (Interconnection Agreement), ¶ XIX.G.1.
99 We find that these objections were effective even though they
were not sent to the individuals specified in the notice
provision of the Agreement. See Complaint, Exhibit B
(Interconnection Agreement), ¶ XIX.Z. But see Cox Brief at 8
n.15; Cox Reply Brief at 4 n.6. Because Verizon South made the
objections during the course of heated litigation between the
parties, we have little doubt that Cox is fully aware of them.
See Akers v. James T. Barnes of Washington, D.C., Inc., 227 Va.
367, 370-71, 315 S.E.2d 199, 201 (1984) (where the conditions of
a contract have been deviated from in ``trifling particulars,''
there nonetheless is substantial compliance if the deviations do
not materially detract from the benefit the other party would
derive from a literal performance).
100 Complaint, Exhibit O (Letter dated April 14, 2000, from Laura
Schneider, Manager - Contract Compliance, GTE Network Services,
to Accounts Payable, Cox Fibrenet).
101 See Cox Brief at 6 n.13. Verizon South asserts that it has
the right under paragraph XIX.G.5. of the Agreement to audit
Cox's bills for the purpose of determining ``whether those bills
include non-local calls for reasons independent of Cox's improper
inclusion of Internet-bound traffic.'' Answer at 70. In
particular, Verizon South wants to investigate its tandem served
rate and NXX code concerns. Verizon South Brief at 24; Verizon
South Reply Brief at 14. We believe Verizon South has a right to
audit Cox's bills under paragraph XIX.G.5. of the Agreement,
which, unlike paragraph XIX.G.1., contains no time limitation
within which a party must assert the right. Complaint, Exhibit B
(Interconnection Agreement), ¶ XIX.G.5. (``Each Party shall have
a right to audit all bills rendered by the other Party pursuant
to this Agreement, verifying the accuracy of items, including but
not limited to, the services being provided on a wholesale basis
pursuant to this Agreement, usage recording and provisioning, and
nonrecurring charges.''). However, because we find that, prior
to April 6, 2001, Verizon South waived its tandem served rate and
NXX Code objections, any audit of bills received before that date
cannot be used to gather information relating to those
objections.
102 Verizon South argues that it had no obligation under the
Agreement to dispute contemporaneously particular components of
Cox's bills prior to December 11, 1998, because before that date
the parties had operated under a bill and keep arrangement.
Answer at 67-68; Verizon South Brief at 22-23; Verizon South
Reply Brief at 13 n.14. We need not reach this issue. As
discussed above, the record demonstrates that Verizon South did
not raise its tandem served rate and NXX code objections until
April 6, 2001. Consequently, even assuming Verizon South
correctly characterizes the date on which its obligation to
``flyspeck'' Cox's bills began, Verizon South did not timely
raise these two objections after that date.