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Before the
Federal Communications Commission
Washington, D.C. 20554
)
)
)
)
In the Matter of
)
Center for Communications Management
Information, Econobill Corporation, and On )
Line Marketing Inc.,
)
Complainants, File No. EB-04-MD-008
)
v.
)
AT&T Corporation,
)
Defendant.
)
)
)
)
MEMORANDUM OPINION AND ORDER
Adopted: July 18, 2008 Released: July 23, 2008
By the Commission:
I. INTRODUCTION
1. In this Memorandum Opinion and Order, we deny a formal complaint that
Center for Communications Management Information, Econobill
Corporation, and On Line Marketing Inc. (collectively, "CCMI" or
"Complainants") filed against AT&T Corporation ("AT&T") pursuant to
section 208 of the Communications Act of 1934, as amended
("Communications Act" or "Act"). In particular, we deny CCMI's claims
that AT&T violated section 42.10 of the Commission's rules and section
201(b) of the Act by posting on its website insufficiently detailed
and untimely information regarding the rates, terms, and conditions
contained in its individually negotiated agreements for interstate,
interexchange services.
II. BACKGROUND
A. The Parties
2. Complainants provide telecommunications consulting services to
business clients. They help their clients identify, select, negotiate,
and/or manage telecommunications arrangements with selected carriers.
3. When the Complaint was filed, AT&T was a non-dominant interexchange
carrier providing interstate and intrastate interexchange services
throughout the United States. AT&T maintains an Internet web site on
which it posts varying types and amounts of information about the
rates, terms, and conditions of each of the regulated interstate
interexchange services that it offers.
A. The Governing Standards
4. Section 201(b) of the Act provides, in pertinent part, that all
"practices ... in connection with ... communication service, shall be
just and reasonable, and any such ... practice ... that is unjust or
unreasonable is ... unlawful." Section 42.10 of the Commission's rules
provides, in relevant part:
A nondominant interexchange carrier (IXC) shall make available to any
member of the public ... information concerning its current rates, terms
and conditions for all of its international and interstate, domestic,
interexchange services. Such information shall be made available in an
easy to understand format and in a timely manner.... In addition, a
nondominant IXC that maintains an Internet website shall make such rate
and service information ... available on-line at its Internet website in a
timely and easily accessible manner, and shall update this information
regularly.
A. AT&T's Posting Practices
5. In its effort to comply with rule 42.10, AT&T maintains an Internet
website with varying amounts of information about the rates, terms,
and conditions of its numerous kinds of interstate, interexchange
offerings. AT&T's website provides precise and detailed descriptions
of all of the specific rates, terms, and conditions of all of the
plans that AT&T offers to mass market customers (i.e., individual
consumers). AT&T's website also provides precise and detailed
descriptions of all of the specific rates, terms, and conditions of
all of the pre-packaged plans that AT&T makes available to business
customers, including over 70 standard "business offers" and "a number"
of "generic contract offers." In addition, AT&T's website describes
the individually negotiated agreements into which AT&T enters with a
small percentage of its business customers, which agreements
"customize," or vary, some of the generally available rates, terms,
and conditions.
6. From January 2001 to April 2003, AT&T posted on its website its
individually negotiated agreements in full, with the customer's name
omitted. Starting in May 2003, AT&T stopped posting such agreements in
full, and instead posted summaries of such agreements' rates, terms,
and conditions.
7. From May 2003 to July 2004, AT&T executed individually negotiated
agreements with approximately 2,000 business customers. During roughly
that same period of time, AT&T had over 4 million business customers
in total.
8. Regarding the timing of AT&T's website disclosures, AT&T posts
information on new rates, terms, and conditions before any customer
receives a bill reflecting those new circumstances. With respect
specifically to an individually negotiated agreement, AT&T usually
posts information about such an agreement more than 24 hours after the
agreement has been signed by both parties, but before AT&T has
completed the changes to back-office billing and provisioning systems
necessary to compose a bill effectuating the agreement's rates, terms,
and conditions. AT&T's standard practice is to keep the information
posted on its website for approximately 30 days.
9. In CCMI's view, AT&T's disclosures regarding the rates, terms, and
conditions of its individually negotiated contracts do not provide
sufficient information to allow a productive comparison of AT&T's
offerings with those of other carriers. Moreover, according to CCMI,
AT&T does not post its summaries with sufficient speed to allow a
timely comparison of AT&T's offerings with those of other carriers. On
those bases, CCMI alleges that AT&T's posting practices with respect
to individually negotiated agreements violate sections 201(b) and rule
42.10.
A. Regulatory Background
10. In adopting rule 42.10, the Commission sought to balance carriers'
need for substantial flexibility in the highly competitive long
distance market, with consumers' need for sufficient information about
carriers' long distance offerings to enable, inter alia, comparison
shopping. To help achieve that balance, the Commission repeatedly and
expressly refrained from iterating minimum content requirements or
specifying either a level of detail that carriers must disclose or a
particular disclosure format that carriers must use. The Commission
stated, instead, that in order to "minimize the burden on nondominant
interexchange carriers of complying with" rule 42.10, "carriers have
flexibility in complying with the public disclosure requirement." The
Commission also stated that Internet informational postings must be
"updated no later than 24 hours after the effective date of a change
in the rates, terms, or conditions of a detariffed service."
III. DISCUSSION
A. The Content of AT&T's Website Disclosures Regarding Its
Individually Negotiated Agreements Satisfies Rule 42.10.
11. As explained below, we deny CCMI's claim that the contents of AT&T's
website disclosures regarding individually negotiated agreements
violate rule 42.10. To ascertain how best to interpret rule 42.10, we
must examine the rule's text, history, purpose, and structure. Towards
that end, it is instructive to recognize at the outset that, although
rule 42.10 establishes disclosure requirements to facilitate
comparison-shopping, the rule was adopted as part of the Commission's
detariffing program, which was implemented to replace regulation with
competitive market forces as the primary constraint on carriers'
conduct. Indeed, in affirming the Commission's detariffing order, the
D.C. Circuit aptly observed:
As we read the Commission's decision the essence of its reasoning was a
desire to put the interexchange carriers under the same market conditions
as apply to any other nonregulated provider of services in our economy.
12. Consistent with that de-regulatory "essence," the Commission crafted
rule 42.10 with a careful eye towards "minimiz[ing] the burden on
nondominant interexchange carriers of complying with this [information
disclosure] requirement," and maximizing carriers' "flexibility in
complying with the public disclosure requirement." The Commission
believed and understood that, absent some unanticipated market
failure, the highly competitive nature of the market for interstate
interexchange services would operate to promote consumer welfare.
Consequently, by design, the rule does not specify (i) a level of
detail that must be disclosed, (ii) a particular time within which the
information must be disclosed, or (iii) a format for disclosing
information. The rule simply states that carriers must disclose
"information concerning [their] current rates, terms and conditions
... in an easy to understand format and in a timely manner."
13. To decide what the requirements of rule 42.10 entail here, we must
first determine what market evidence to consider, if any. According to
CCMI, we need not examine any market characteristics unique to the
segment of individually negotiated agreements, because the Commission
has held that rule 42.10 applies to all segments of the market for
interstate interexchange services, including individually negotiated
agreements. We disagree with CCMI's argument.
14. CCMI is correct (and AT&T does not dispute) that rule 42.10 applies to
individually negotiated agreements. Nevertheless, in determining how
the rule applies to individually negotiated agreements, we cannot
accept CCMI's argument that we ignore evidence regarding any
variations across market segments in the utility of detailed
disclosures. What constitutes sufficiently useful "information
concerning ... rates, terms and conditions" of individually negotiated
agreements might not constitute sufficiently useful information
regarding mass market or standard business arrangements, or vice
versa, depending on whether there are material characteristics
particular to each market segment. Therefore, we need not and should
not reflexively adopt a wooden, one-size-fits-all construction of rule
42.10. Here, as in most instances of textual analysis, context
matters.
15. Taking into account the varying characteristics of different market
segments is common Commission practice. Indeed, with respect to the
subject of disclosing information about interstate interexchange
services, the Commission has recognized the need to apply different
approaches to different market segments. Accordingly, in deciding
whether, under rule 42.10, AT&T's website discloses sufficiently
detailed information regarding the rates, terms, and conditions of
AT&T's individually negotiated agreements, we now examine rule 42.10
in the context of the salient characteristics of the market for
individually negotiated agreements.
16. According to CCMI, because AT&T does not disclose all of the
particulars of each specific rate, term, and condition of every
individually negotiated agreement, "CCMI cannot adequately provide
details to its clients about available services and their [AT&T's]
rates, terms, and conditions. Consequently, CCMI's clients (and their
end user customers) may be paying AT&T more for their
telecommunications services than they would pay if they had full
knowledge of the rates, terms and conditions of the needed services."
CCMI provides little market evidence to support this statement,
however. By contrast, we find that AT&T has provided substantial and
persuasive evidence to support its opposite assertion that the
disclosures provided on AT&T's website supply ample information to
permit the market for individually negotiated agreements to function
well. We describe that evidence below.
17. As noted above, the market segment for individually negotiated
agreements is small in comparison to the market segment for standard
business offerings, and even smaller in comparison to the market for
all offerings. This minor market segment primarily consists of
relatively large business customers with the savvy, sophistication,
experience, incentive, and wherewithal to exercise significant
bargaining power. Consequently, the record establishes that these
businesses do not rely on AT&T's website as an important source of
potential contract information. Instead, these businesses usually
engage in some form of proposal solicitation and negotiation process
with multiple carriers that depends little, if at all, on comparisons
to the details of others' contracts. This is especially true because
individually negotiated agreements (i) are designed to meet the
specific, and often unique, needs of particular customers, and (ii)
increasingly include a mix/bundle of both regulated and non-regulated
services. Consequently, if used for comparison purposes, even detailed
disclosures regarding the rates, terms, and conditions of the
regulated services provided in an individually negotiated agreement
might be uninformative, at best, and misleading, at worst. In
addition, any potential business customer that may wish to use AT&T's
agreements with other customers as a starting point or benchmark for
negotiations can look not only to the website's information regarding
individually negotiated agreements, but also to the website's detailed
disclosures of the specific rates, terms, and conditions of over 70
standard business plans and numerous generic contract offerings, which
form the basis of AT&T's agreements with millions of business
customers.
18. The foregoing record evidence strongly indicates that requiring AT&T
to disclose each specific rate, term, and condition of every
individual transaction in the interstate interexchange market -
including transactions involving a mix of regulated and non-regulated
services and highly customized offerings designed to meet the
particular needs of a single customer - is not necessary to provide
useful information to the public. The information disclosed by AT&T
does not preclude productive participation by prospective business
customers in the market for individually negotiated agreements.
Consequently, with respect to its individually negotiated agreements,
we conclude that AT&T complies with rule 42.10 by disclosing (i) the
services covered; (ii) the length of the contract; (iii) the minimum
revenue commitment, if any; (iv) the credits given, if any; (v) the
waiver policy, if any; (vi) the discontinuance policy, if any; (vii)
the range of applicable rates for each covered service; and (viii) the
range of applicable discounts for covered services. Such disclosures
constitute "information concerning [AT&T's] current rates, terms and
conditions ... made available in an easy to understand format" within
the meaning of rule 42.10.
19. This conclusion is further supported by CCMI's failure to present
evidence of any market failure or other ill effect arising from AT&T's
practice of disclosing less than all of the specific rates, terms, and
conditions of every individually negotiated agreement. For example,
CCMI has adduced no evidence that fewer businesses enter into
individually negotiated agreements with AT&T now than when AT&T
disclosed such agreements in full. Indeed, the record evidence shows
the absence of any marketplace problems. According to unchallenged
evidence presented by AT&T, prices in the interstate, interexchange
market have continued to fall; and AT&T has continued to engage in
detailed discussions with any potential customer who shows meaningful
interest in AT&T's business services.
20. Moreover, in a market segment where the customers are expecting to
negotiate with the carriers, requiring carriers to make detailed
disclosures of every rate, term, and condition of every custom
contract could actually harm those customers in the long run. In
particular, detailed disclosure requirements in this unique context
could unduly interfere with market-based negotiations and create a
"ratcheting effect" that chills the offering of discounts and
specialized terms. For example, detailed disclosure requirements could
unduly "plac[e] a thumb on the negotiating scales" by forcing only one
party to the negotiation to "state its reservation price, so that
bargaining begins from there," thereby prompting carriers to reduce
the frequency and/or scale of discounting and special arrangements.
21. The two cases on which CCMI relies do not support its position. In
Southwestern Bell Corp. v. FCC, the court reversed the Commission's
pre-forbearance determination that section 203 of the Act permitted
tariffs to contain ranges of rates rather than the specific rates
themselves. That decision is inapposite here, because the court relied
solely on the specific language and history of section 203 of the Act.
Section 203 applies only to tariffs, and not to any other modes of
disclosure; moreover, the pertinent language in section 203 -
"schedules showing all charges" - has no close corollary in rule
42.10. In any event, it would be unusual, at best, to apply a court's
construction of section 203 to a rule adopted by the Commission in
conjunction with forbearing from applying section 203 to interstate
interexchange services.
22. Similarly, in Review of Policies and Rules Concerning Unauthorized
Charges of Consumer's Long Distance Carriers, the Commission held that
a carrier acquiring another carrier's subscriber base must provide
advance notice to the acquired subscribers of "detailed" information
on the rates, terms, and conditions of the services the acquiring
carrier will provide. That case, too, is inapposite, because the
Commission required detailed disclosures due to the "involuntary
nature" of the carrier/subscriber relationship (from the subscriber's
point of view), and the possibility that the subscriber might wish to
terminate its relationship with the disclosing carrier. Here, by
contrast, rule 42.10 applies to precisely the opposite situation -
where the customer is voluntarily seeking to initiate a relationship
with the disclosing carrier. The information disclosure needs in the
former situation have no bearing on the information needs in the
latter.
23. In sum, the content of AT&T's website disclosures regarding the rates,
terms, and conditions of its individually negotiated agreements is
lawful. Thus, CCMI's claims that the content of those disclosures
violates rule 42.10 and section 201(b) are denied.
A. The Timing of AT&T's Website Disclosures Regarding Its Individually
Negotiated Agreements Satisfies Rule 42.10.
24. We also deny CCMI's claim that the timing of AT&T's website postings
regarding individually negotiated agreements violates rule 42.10 and
section 201(b). AT&T acknowledges that its individually negotiated
agreements typically indicate on their face that their "effective
date" is the date the agreement is signed by both parties. AT&T also
acknowledges that it rarely, if ever, posts on its website information
regarding the rates, terms, and conditions of an individually
negotiated agreement within 24 hours of the date the agreement is
signed by both parties. Based on those undisputed facts, CCMI asserts
that AT&T fails to post its disclosures in a "timely" manner under
rule 42.10, because the Commission has construed "timely" to mean "no
later than 24 hours after the effective date of a change in the rates,
terms, or conditions of a detariffed service."
25. We disagree with CCMI. Even assuming, arguendo, that a "24-hour"
standard is applicable, AT&T's posting practices do not violate it,
for the following reasons.
26. The resolution of this issue hinges on when the 24-hour clock begins
to run. The applicable orders state that the clock starts running on
the "effective date of a change" in the terms of service. The
applicable orders neither define nor explain that phrase, however. In
addition, rule 42.10 does not mention that phrase or provide a
specific deadline for disclosing information. The rule itself simply
states that disclosures must be "timely." Therefore, here we determine
what is the "effective date of a change" based on, inter alia, how the
specific circumstances attendant to individually negotiated agreements
affect how fast information can and should be disclosed.
27. CCMI asserts that the "effective date of a change" is the effective
date specified in the agreement, which usually is the date by which
both parties have signed the agreement. We disagree. Although AT&T's
individually negotiated agreements usually refer to an "effective
date," and tie such date to execution of the agreement, this is not
the kind of "effective date" referenced by our orders. The orders
refer not to the effective date of a contract, but rather to the
effective date of a "change" in rates, terms, and conditions of a
carrier's service. Here, the rates, terms, and conditions do not
actually change until adjustments are made in AT&T's back-office
billing and provisioning systems such that the new rates, terms, and
conditions can be reflected in a customer's bill. Consequently, with
respect to rates, terms, and conditions contained in an individually
negotiated agreement, the "effective date of a change" is the date on
which new contract rates, terms, and conditions are actually
implemented in AT&T's back-office billing and provisioning systems.
28. Applying that standard to the facts here, CCMI has failed to meet its
burden of proving that the timing of AT&T's disclosures violates rule
42.10. Specifically, CCMI has not shown by a preponderance of the
evidence that AT&T's postings occur after AT&T makes the requisite
changes in its back-office billing and provisioning systems. Although
CCMI submitted with its Complaint a "Posting History" chart purporting
to indicate that AT&T took on average 30 days to post disclosures,
once AT&T acknowledged in its Answer that postings occur more than 24
hours after an agreement is signed, CCMI stated that verification of
the chart to establish its accuracy was not imperative to a resolution
of the parties' dispute. Moreover, AT&T submitted two affidavits
declaring that it posts its summaries before it has completed
necessary changes to back-office billing and provisioning systems.
Accordingly, CCMI's claims that the timing of those postings violates
rule 42.10 and section 201(b) are denied.
IV. conclusion
29. In sum, we deny CCMI's complaint in its entirety. Examining the text,
history, purpose, and structure of rule 42.10, we interpret it as
imposing only the least restrictive requirements needed to ensure that
carriers provide useful information to the public. CCMI has presented
no persuasive evidence that the disclosures on AT&T's website fail to
provide sufficient information to permit the market for individually
negotiated contracts to function properly. Thus, CCMI's claims that
the content of those disclosures violate rule 42.10 and section 201(b)
are without merit. Moreover, because AT&T's practice is to post
changes in rates, terms and conditions before those changes are
actually implemented, we deny CCMI's claims that the timing of AT&T's
postings violates rule 42.10 and section 201(b).
V. ORDERING CLAUSE
30. ACCORDINGLY, IT IS ORDERED, pursuant to sections 4(i), 4(j), 201(b),
and 208 of the Communications Act of 1934, as amended, 47 U.S.C. S:S:
154(i), 154(j), 201(b), 208, and sections 1.720-1.736, and 42.10 of
the Commission's rules, 47 C.F.R. S:S: 1.720-1.736, 42.10, that the
formal complaint filed by the Center for Communications Management
Information, Econobill Corporation, and On Line Marketing Inc. is
DENIED, and this proceeding is hereby TERMINATED.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
Formal Complaint of Center for Communications Management Information,
Econobill Corporation, and On Line Marketing Inc., File No. EB-04-MD-008
(filed May 26, 2004) ("Complaint").
47 U.S.C. S: 208.
47 C.F.R. S: 42.10 ("rule 42.10").
47 U.S.C. S: 201(b).
Joint Statement of Stipulated Facts, Disputed Facts and Key Legal Issues
at 2, P:P: 1-3, File No. EB-04-MD-008 (filed Jul. 16, 2004) ("Joint
Statement"); Complaint at 2-3, P:P: 3-4.
See, e.g., id.
Joint Statement at 2, P: 4. See SBC Communications Inc. and AT&T Corp.
Applications for Approval of Transfer of Control, Memorandum Opinion and
Order, 20 FCC Rcd 18290 (2005).
Joint Statement at 2, P: 5.
47 U.S.C. S: 201(b).
47 C.F.R. S: 42.10.
Joint Statement at 2, P: 5. See Amended Answer of AT&T Corp. ("Answer") at
Attachment 1, Declaration of Richard Kurth ("Kurth Decl."), P: 4, File No.
EB-04-MD-008 (filed July 2, 2004).
See, e.g., Joint Statement at 2, P: 6; Kurth Decl. at P: 5.
See, e.g., Joint Statement at 2-3, P:P: 6-7; Kurth Decl. at P:P: 6, 8-19;
Answer at Attachment 1, Declaration of Frederick Girouard ("Girouard
Decl."), P: 6; Answer at Attachment 1, Declaration of Stephen Sobolevitch
("Sobolevitch Decl."), P: 15. "Generic contract offers" are offers to
business customers that are more specific than AT&T's standard business
plans, but still general enough to appeal to more than one end user.
Typically, between 10 and a few hundred customers subscribe to a single
generic contract offer, most of which offers are described in precise
detail on AT&T's website. Kurth Decl. at P:P: 17-19.
See, e.g., Joint Statement at 2-3, P: 7; Kurth Decl. at P:P: 16, 20-22.
Complaint at 8, P: 13; Joint Statement at 3, P: 8.
Joint Statement at 3, P: 9.
See, e.g., Joint Statement at 3, P: 10; Kurth Decl. at P: 20; Sobolevitch
Decl. at P: 16; Girouard Decl. at P: 3.
See Reply Brief of Complainants at 8, n.15, File No. EB-04-MD-008 (filed
Sept. 28, 2004) ("CCMI Reply Brief"). See generally Girouard Decl. at P:P:
3, 6-7; Sobolevitch Decl. at P:P: 15-16; Kurth Decl. at P: 20; Initial
Brief of AT&T Corp. at 28, File No. EB-04-MD-008 (filed Aug. 31, 2004)
("AT&T Brief"). See also AT&T Corp. Form 10-K Annual Report, Part 1 (Mar.
31, 2003), available at 2003 WL 03626846 ("AT&T Business Services . . .
offer[] a variety of global communications services to over 4 million
customers..."); "What's Old is New; AT&T Spins Off Cable Unit and Returns
to its Telephone Roots," The Bergen County, N.J. Record (Nov. 19, 2002),
available at 2002 WLNR 11715614 (stating that AT&T has about 4 million
corporate customers).
Kurth Decl. at P:P: 27-30; AT&T Brief at Supplemental Declaration of
Frederick Girouard ("Supp. Girouard Decl."), P:P: 12-13.
Kurth Decl. at P:P: 27-32; Supp. Girouard Decl. at P:P: 12-13. Although
the record contains conflicting evidence about exactly how many days it
usually takes for AT&T to post information about its individually
negotiated agreements, compare Complaint at 10, n.21, Ex. 6, and
Attachment C, Declaration of David Rosenthal ("D. Rosenthal Decl."), P: 9,
with Kurth Decl. at P:P: 27-32; Supp. Girouard Decl. at P:P: 12-20, CCMI
does not take much issue with AT&T's evidence that AT&T's practice is to
post such information before it has completed the changes to back-office
billing and provisioning systems. See Complainants' Reply to the Amended
Answer of AT&T Corp. at 7 n.21, File No. EB-04-MD-008 (filed July 8, 2004)
("Reply") ("Establishing the accuracy of all of the data in Exhibit 6 [of
the Complaint] . . . is not imperative to resolving this dispute," given
AT&T's admission that it usually posts summaries more than 24 hours after
the effective date of the agreement).
Joint Statement at 3, P: 10.
See, e.g., Complaint at P:P: 9-10, 16, 18; Reply at P:P: 1, 4-7, 18,
21-23, 37, 39-41, 45-46, 48, 62, 71, 74, 76; CCMI Reply Brief at 2-4.
See, e.g., Complaint at P:P: 19-21; Reply at P:P: 7-9.
See, e.g., Complaint at P:P: 22-29. CCMI does not challenge the content or
timing of AT&T's website disclosures regarding the rates, terms, and
conditions of the numerous plans applicable to AT&T's individual
customers. Reply at 18, n.61. CCMI also does not challenge the content or
timing of AT&T's website disclosures regarding the rates, terms, and
conditions of the many standard plans and generic contract offerings
applicable to AT&T's business customers. See generally Reply at Appendix
B, P: 10. CCMI only challenges the content and timing of AT&T's website
disclosures regarding the rates, terms, and conditions of individually
negotiated agreements.
See 2000 Biennial Regulatory Review, Report and Order, 16 FCC Rcd 10647,
10669-70, P: 47 (2001) ("Biennial Review Order"); In the Matter of Policy
and Rules Concerning the Interstate, Interexchange Marketplace, Second
Order on Reconsideration, 14 FCC Rcd 6004, 6015-16, P: 18 (1999)
(subsequent history omitted) ("Second Order on Reconsideration"); In the
Matter of Policy and Rules Concerning the Interstate, Interexchange
Marketplace, Second Report and Order, 11 FCC Rcd 20730, 20777, P:P: 84, 86
(1996) (subsequent history omitted) ("Second Report and Order"). See also
Policy and Rules Concerning the Interstate, Interexchange Marketplace,
Order, 15 FCC Rcd 22321, 22328-29, P:P: 19, 21 (Com. Car. Bur. 2000)
("Bureau Detariffing Order").
Second Report and Order, 11 FCC Rcd at 20777, P: 86.
Biennial Review Order, 16 FCC Rcd at 10669-70, P: 47.
Bureau Detariffing Order, 15 FCC Rcd at 22328, P: 17 (emphasis added),
incorporated by, Biennial Review Order, 16 FCC Rcd at 10670, P: 48.
For purposes of this Order only, we assume, without deciding, that a
violation of rule 42.10 would constitute a violation of the Act cognizable
under section 208 of the Act. See generally Global Crossing
Telecommunications, Inc. v. Metrophones Telecommunications, Inc., 127
S.Ct. 1513 (2007); Alexander v. Sandoval, 532 U.S. 275, 284 (2001). AT&T
argues strenuously to the contrary, see, e.g., Reply Brief of AT&T Corp.
at 1-13, File No. EB-04-MD-008 (filed Sept. 28, 2004), but we need not and
do not reach AT&T's argument, because we rule in AT&T's favor on other
grounds.
See, e.g., Bell Atlantic Tel. Cos. v. FCC, 131 F.3d 1044, 1047 (D.C. Cir.
1997).
MCI Worldcom v. FCC, 209 F.3d 760, 765 (D.C. Cir. 2000) (emphasis in
original).
Second Report and Order, 11 FCC Rcd at 20777, P: 86.
Biennial Review Order, 16 FCC Rcd at 10669-70, P: 47.
Biennial Review Order, 16 FCC Rcd at 10669-70, P: 47; Second Report and
Order, 11 FCC Rcd at 20777, P: 86; Bureau Detariffing Order, 15 FCC Rcd
at 22328-29, P:P: 19, 21.
47 C.F.R. S: 42.10.
See, e.g., Complaint at P:P: 8, 10; Reply at P:P: 15, 21-23, 28; CCMI
Reply Brief at 13-16.
See Biennial Review Order, 16 FCC Rcd at 10670; Second Order on
Reconsideration, 14 FCC Rcd at 6015, n.60; Bureau Detariffing Order, 15
FCC Rcd at 22329.
See generally Orloff v. FCC, 352 F.3d 415 (D.C. Cir. 2003) (affirming the
Commission's consideration of market conditions in deciding whether
certain conduct violates section 201(b)).
See, e.g., Bell Atlantic Tel. Cos. v. FCC, 131 F.3d 1044, 1047 (D.C. Cir.
1997) (stating that "textual analysis is a language game played on a field
known as `context'").
See, e.g., AT&T Corp. v. BellSouth Corp., Memorandum Opinion and Order, 14
FCC Rcd 8515, 8528, P: 27, and 8533-34, P: 37 (1999) (BellSouth did not
violate the prohibition against selling in-region interLATA service prior
to section 271 approval when it sold pre-paid calling cards because it
only offered them to a "unique and limited portion of the
telecommunications market"); Review of the Section 251 Unbundling
Obligations of Incumbent Local Exchange Carriers, Implementation of the
Local Competition Provisions of the Telecommunications Act of 1996,
Deployment of Wireline Services Offering Advanced Telecommunications
Capability, Report and Order and Order on Remand and Further Notice of
Proposed Rulemaking, 18 FCC Rcd 16978, 17061, P:P: 123-24, and 17062-63,
P: 126 (2003) (subsequent history omitted); Application of WorldCom and
MCI Comm. for Transfer of Control of MCI Comm. to WorldCom, Memorandum
Opinion and Order, 13 FCC Rcd 18025, 18040-41, P: 26 (1998) (for merger
reviews, mass market consumers are distinguishable from larger business
consumers because of the types of services and volume discounts that
larger business customers demand).
Bureau Detariffing Order, 12 FCC Rcd at 22323, P: 4 (establishing a
shorter detariffing transition period for contract services than for all
other services, because "the likelihood of confusion with respect to
business customers using such services is much less of a concern"); 22329,
P: 22 (reiterating "the need for carriers to provide this information in a
format which is `easy to understand' by consumers in the business and
especially the residential mass market") (emphasis added).
Complaint at Attachment A, Declaration of William Goddard ("Goddard
Decl."), P: 6. See Complaint at P:P: 17-18, 21; Attachment B, Declaration
of Nissan Rosenthal ("N. Rosenthal Decl."), P:P: 4, 10 ; D. Rosenthal
Decl. at P:P: 3, 6; Attachment D, Declaration of Roderick Cordiner
("Cordiner Decl."), P:P: 4, 5; Ex. 9, Declaration of Tom Garvey ("Garvey
Decl."), P:P: 2, 4, 5; Ex. 11.
See, e.g., CCMI Reply Brief at 8, n.15; AT&T Brief at 28; Girouard Decl.
at P:P: 3, 6-7; Sobolevitch Decl. at P:P: 15-16; Kurth Decl. at P: 20.
CCMI argues that the affected market consists of not just the few thousand
customers with individually negotiated agreements, but rather "all
business customers, especially small-to-medium sized business customers
... that would potentially be interested in and benefited by these custom
arrangements if they were adequately disclosed." CCMI Reply Br. at 5-6.
See id. at 8. CCMI's argument lacks merit, because CCMI fails to adduce
any evidence that (i) more small-to-medium sized business customers
negotiated individual agreements when AT&T disclosed such agreements in
their entirety, or (ii) potential customers cannot obtain meaningful
information from AT&T through the negotiation process.
See, e.g., Girouard Decl. at P:P: 3, 9-11, 13; Sobolevitch Decl. at P: 9;
Kurth Decl. at P: 26; Supp. Girouard Decl. at P:P: 4-8 and Ex. A. The
parties present conflicting evidence about just how big these business
customers generally are. Compare id. with Reply at Appendix A,
Supplemental Declaration of David Rosenthal ("Supp. D. Rosenthal Decl.");
Appendix E; Appendix F; CCMI Reply Brief at Ex. 1, Second Supplemental
Declaration of David Rosenthal (Second Supp. D. Rosenthal Decl."), P:P:
7-11. The best read of such evidence is that most of AT&T's customers with
individually negotiated agreements purchase annually at least hundreds of
thousands of dollars of services from AT&T, and a significant percentage
of them purchase millions of dollars of services.
See Girouard Decl. at P:P: 5, 16-17; Sobolevitch Decl. at P:P: 9, 17;
Supp. Girouard Decl. at P: 9.
See Girouard Decl. at P:P: 4, 10, 14, 16-17; Answer at Attachment 1,
Declaration of Susan M. Gately ("Gately Decl."), at P:P: 27-28;
Sobolevitch Decl. at P:P: 17, 21 26, 28-29; Supp. Girouard Decl. at P: 9.
CCMI presents some evidence suggesting that the phenomenon of a
prospective business customer simply opting in to the custom agreement of
an existing business customer - without any solicitation or negotiation
process - is not as rare as AT&T avers. See Second Supp. D. Rosenthal
Decl. at P:P: 3-6. We credit AT&T's evidence, however, for two reasons.
First, CCMI did not submit its evidence until its Reply Brief, which
deprived AT&T of an opportunity to respond. Second, CCMI's evidence is
derived by extrapolation from a sample of CCMI's clients with AT&T custom
agreements, whereas AT&T's evidence rests on its employees' experience
with all AT&T custom agreements.
See, e.g., Girouard Decl. at P: 9; Sobolevitch Decl. at P:P: 19, 29;
Gately Decl. at P:P: 4, 11-22. The parties agree, correctly, that rule
42.10 does not require disclosures regarding non-regulated services, even
if such services are provided pursuant to a contract concerning regulated
services, as well. See, e.g., Reply at 19, n.66.
See Gately Decl. at P:P: 4, 8-21; Sobolevitch Decl. at P: 29; Answer at
Ex. 1, Declaration of Michael Pelcovits ("Pelcovits Decl."), P:P: 32-33.
See Sobolevitch Decl. at P: 25; Kurth Decl. at P:P: 21-22.
See Girouard Decl. at P:P: 3, 7; Sobolevitch Decl. at P:P: 10-11, 15, 25;
Kurth Decl. at P: 22.
47 C.F.R. S: 42.10.
See generally Gately Decl. at P:P: 3, 6; Pelcovits Decl. at P:P: 8-11;
Sobolevitch Decl. at P: 7; Girouard Decl. at P:P: 11-14; Section 272(d)
Biennial Audit of Verizon Comm., Memorandum Opinion and Order, 18 FCC Rcd
25496, 25501, P: 15 (2003) (the long distance market is highly
competitive); Section 272(b)(1)'s "Operate Independently" Requirement for
Section 272 Affiliates, Report and Order, 19 FCC Rcd 5102, 5120, P: 28
(2004) (the long distance market is substantially competitive).
See Girouard Decl. at P: 12; Gately Decl. at P:P: 3, 7; Sobolevitch Decl.
at 5, 13-14, 27; Pelcovits Decl. at P: 11. See generally "Trends in
Telephone Service," Federal Communications Commission, Industry Analysis
and Technology Division, Wireline Competition Bureau at 9-1 and Table 9-4
(May 2004), available at www.fcc.gov/wcb/iatd/trends.html.
See, e.g., Sobolevitch Decl. at P:P: 10-11, 20, 26. The foregoing evidence
also refutes Complainants' assertions that AT&T's conduct diminishes their
ability to assist clients meet their telecommunications needs. See, e.g.,
Goddard Decl. at P: 6; N. Rosenthal Decl. at P:P: 4,10; D. Rosenthal Decl.
at P:P: 3, 6; Cordiner Decl. at P:P: 4, 5; Garvey Decl. at P:P: 2,4-5;
Complaint at Ex. 11. See also Answer at 27, n.27; AT&T Brief at 27, n.25;
Gately Decl. at P:P: 11, 27-28.
See Answer at 38-39; Pelcovits Decl. at P:P: 32-35. See generally Orloff
v. FCC, 352 F.3d at 421.
Wisconsin Bell v. Bie, 340 F.3d 441, 444 (7th Cir. 2003).
Complaint at P: 10; Reply at 5, n.12; Complainants' Opening Brief at 9-11,
File No. EB-04-MD-008 (filed Aug. 31, 2004).
Southwestern Bell Corp. v. FCC, 43 F.3d 1515 (D.C. Cir. 1995).
Review of Policies and Rules Concerning Unauthorized Charges of Consumer's
Long Distance Carriers, First Order on Reconsideration, 16 FCC Rcd 11218
(2001), aff'd, Fourth Order on Reconsideration, 19 FCC Rcd 13432 (2004).
See 47 C.F.R. S: 64.1120(e)(3).
See, e.g., AT&T Brief at 9-11.
See, e.g., Answer at 42-43, 48; AT&T Brief at 5, 7.
Bureau Detariffing Order, 15 FCC Rcd at 22328, P: 17. See Biennial Review
Order, 16 FCC Rcd at 10670, P: 48. See also Reply at P:P: 7-8, 19.
AT&T asserts, as a defense, that the 24-hour requirement, if applied to
individually negotiated agreements involving domestic services, was
adopted with insufficient notice and comment under the Administrative
Procedure Act. See, e.g., AT&T Brief at 15-18. We need not reach that
defense, however, because we rule in AT&T's favor on other grounds, as
described above.
See Complaint, Exhibit 6.
Answer at 41, n.38 ("Particularly in light of the fact that Complainants
did not raise the timeliness argument prior to filing the complaint, AT&T
has not had the opportunity to investigate fully the validity and accuracy
of this attachment or the dates on which these thousands of disclosures
were posted.... AT&T should be permitted to supplement its answer after
discovery and further investigation of the [Posting History chart].");
Reply at 7, n.21 ("Establishing the accuracy of all of the data in Exhibit
6 [of the Complaint] . . . is not imperative to resolving this dispute,"
given AT&T's admission that it usually posts summaries more than 24 hours
after the effective date of the agreement).
Kurth Decl. at P:P: 27-32; Supp. Girouard Decl. at P:P: 12-13.
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Federal Communications Commission FCC 08-167
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Federal Communications Commission FCC 08-167