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Before the
Federal Communications Commission
Washington, D.C. 20554
)
)
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In the Matter of
)
APCC Services, Inc.,
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Complainant,
)
v.
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CCI Communications, LLC; File No. EB-09-MD-005
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CCI Communications, Inc.;
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Creative Communications, Inc.; and
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Link Systems, Inc. ,
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Defendants.
)
)
)
memorandum opinion and order
Adopted: June 28, 2010 Released: June 29, 2010
By the Chief, Enforcement Bureau:
I. introduction
1. This Memorandum Opinion and Order grants in part a formal complaint
that APCC Services, Inc. ("APCC") filed against CCI Communications,
LLC ("CCI") and other defendants under section 208 of the
Communications Act of 1934, as amended ("Act"). As explained below,
because CCI is a "Completing Carrier" under rule 64.1300(a), it owes
per-call compensation for all calls it completed. Following the
approach used by the Commission in APCC v. Radiant, we conclude that
APCC is entitled to per-call compensation from CCI in the amount of
$1,868,451, plus interest.
II. BACKGROUND
A. Per-Call Payphone Compensation
2. Section 276 of the Act directed the Commission to establish a per-call
compensation plan to ensure that all payphone service providers
("PSPs") are fairly compensated for "each and every completed
intrastate and interstate call using their payphone." Included among
the calls subject to this mandate are certain categories of coinless
payphone calls - known as "dial-around calls" - where the caller makes
a coinless call using a carrier other than the payphone's
presubscribed long distance carrier. The Commission's implementing
rules place the responsibility for paying dial-around compensation -
currently set at a default rate of $.494 per call - on the "Completing
Carrier," which is the "long distance carrier or switch-based long
distance reseller that completes a coinless access code or subscriber
toll-free payphone call."
B. The Parties
3. APCC is a corporation established to serve as a clearinghouse for the
billing and collection of dial-around compensation on behalf of
certain PSPs ("Represented PSPs"). CCI is a common carrier providing
interexchange telecommunications services and switch-based resale.
Significantly, CCI admits that it is a Completing Carrier with respect
to the calls at issue under the Commission's payphone compensation
rules.
C. The Litigation
4. In its Complaint, APCC alleged that CCI failed to pay per-call
compensation for calls made during the period beginning July 1, 2004,
and ending September 30, 2008 (3Q2004-3Q2008), in violation of
sections 201(b) and 276(b) of the Act and sections 64.1300 and 64.1310
of the Commission's rules. The Complaint further asserted that CCI
failed to comply with the Commission's payphone call tracking and
reporting requirements, in violation of sections 201(b) and 276(b) of
the Act and sections 64.1310 and 64.1320 of the Commission's rules.
5. In addition to requesting an order requiring CCI to come into
compliance with rules 64.1300-64.1320, the Complaint sought damages
for two categories of calls: (1) calls reported as delivered to CCI by
an Intermediate Carrier ("Intermediate Carrier Reported Calls"); and
(2) calls carried by CCI for which the 8yy (toll-free) numbers were
translated into local POTS numbers before the calls were routed to
CCI's network ("POTS Translated Calls"). With respect to the
Intermediate Carrier Reported Calls, APCC argued that the number of
completed calls should be "the number of dial-around calls delivered
to Defendant each quarter by Intermediate Carriers from the
Represented PSPs' payphones" (i.e., all calls reported as delivered,
regardless of their duration). APCC subsequently abandoned its claim
to compensation for the POTS-Translated Calls.
6. In the Answer, CCI admitted that (1) it is a Completing Carrier;
(2) as such, it is liable for compensation for a portion of the calls
at issue; and (3) it did not comply with the Commission's system audit
and CFO certification requirements. The Answer further argued that the
completed calls for which CCI is liable should be calculated using a
120 second timing proxy (i.e., only calls lasting more than 120
seconds should be deemed "completed"). According to the Answer, CCI's
situation is unique because "almost all of the calls made using its
prepaid calling cards are international to Mexico and South America,"
and the international nature of the calls poses barriers that prevent
the calls from connecting quickly. In particular, the Answer asserted
that the delays in connecting users result from "inferior quality of
the telecommunications infrastructure," instructions being presented
in "languages different from the users' native tongue," and "variable
government regulations affecting the telecommunications
infrastructure."
7. In its Reply, APCC argued that, because CCI conceded that all of the
Intermediate Carrier Reported Calls were sent to its switch, the
Commission need only decide how many calls CCI "completed." According
to APCC, CCI's data concerning completed calls is unreliable, because
CCI has never performed a payphone system audit as required by the
Commission's rules, and CCI's assumption that only calls over 120
seconds are completed is unfounded. APCC further urged the Commission
to require CCI to produce data showing the number of calls lasting 30
seconds or longer and then to apply the damages calculation used by
the Commission in APCC v. Radiant.
8. On June 22, 2009, the parties submitted their Joint Statement. CCI
acknowledged that "it is the liable Completing Carrier" for the calls
at issue in this proceeding and that, for the period 3Q2004 to 4Q2007,
CCI received 6,321,578 calls that originated from the represented PSP
payphones. Although the Joint Statement noted the parties'
disagreement regarding the appropriate length of a completed call
proxy, CCI subsequently admitted that, of the total stipulated calls
it received from Intermediate Carriers, 1,991,771 were of 30 seconds
duration or longer.
9. On February 4, 2010, APCC filed its Request for Resolution, arguing
that no material disputes remain, in either fact or law, and urging
the Commission to rule on the Complaint based on the parties'
pleadings. Specifically, APCC explained that it has abandoned all
claims against CCI except for its claim for compensation for those
calls as to which CCI has stipulated liability, plus interest.
According to APCC, the only remaining issue is determining the number
of "completed calls," which can be accomplished by applying the
reasoning of APCC v. Radiant. CCI did not respond to the Request for
Resolution.
III. DISCUSSION
10. As the Request for Resolution correctly notes, the key facts are not
in dispute. There has been a complete and inclusive pleading cycle:
CCI submitted an Answer to the Complaint and responses to
interrogatories, and it developed a Joint Statement with APCC. In
those documents, CCI acknowledged that it is a Completing Carrier,
stipulated to liability for the 6,321,578 calls it received from
Intermediate Carriers to the extent those calls were completed, and
provided the number of those calls that lasted more than 30 seconds.
For its part, APCC has "waived all of its claims for damages except
for those calls for which CCI has explicitly conceded liability."
11. The issue, then, is how to calculate the portion of the 6,321,578
calls that were "completed," thus triggering CCI's compensation
obligation. APCC urges the Commission to apply the rationale of APCC
v. Radiant. In that case, APCC argued that the defendant should be
liable for all calls delivered to its switch because it failed to
track calls to completion, and the defendant maintained that the
Commission should use a 30 second timing proxy to determine which
calls were completed. Faced with the two sets of unaudited data, the
Commission adopted a "middle view," finding that "in order to ensure
that the represented PSPs are adequately compensated," it was
appropriate to hold the defendant liable not only for calls lasting 30
seconds or longer, but also for "a significant portion" of those calls
lasting less than 30 seconds. Consequently, the Commission required
the defendant to compensate APCC for all calls of 30 seconds duration
or longer, and for half of all calls of lesser duration. The
Commission noted that its approach - although "not perfect" - was
necessary because of the defendants' "willful failure to comply with
rules that, when followed by Completing Carriers, ensure that the
mandates of Section 276 are achieved."
12. CCI urges the Commission to utilize a 120 second proxy - rather than a
30 second proxy - because the majority of the calls at issue are
international and, therefore, purportedly do not connect quickly.
International calls, however, also were at issue in APCC v. Radiant,
and the Commission nonetheless found that a 30 second proxy was
reasonable. Indeed, the Commission noted that even a 30 second proxy
undercounts the number of completed calls. We see no reason not to
apply the analysis of APCC v. Radiant. Here, as in APCC v. Radiant, we
are presented with unaudited data including the number of calls
received from Intermediate Carriers and the number of calls lasting
more than 30 seconds. Here, as in APCC v. Radiant, the defendant
acknowledges liability for completed calls and admits that it has not
complied with the Commission's requirements regarding audits of its
tracking system or submission of a CFO certification. Further, CCI's
decision not to respond to the Request for Resolution is noteworthy.
13. Accordingly, we find that CCI must compensate APCC for all calls that
lasted 30 seconds or longer (1,991,771), and for half of the calls
that lasted less than 30 seconds (1,416,135, half of the difference
between the 1,991,771 calls that were over 30 seconds and the
6,321,578 stipulated Intermediate Carrier calls), minus the calls for
which CCI already has paid (374,384), for a total of 3,782,290 calls.
At the per-call rate of $.494, the total compensation owed is
$1,868,451, plus interest. As we stated in APCC v. Radiant, interest
in unpaid dial-around compensation cases during the period in question
accrues at an annual rate of 11.25 percent, starting on the first day
of the quarter that is one quarter after the one in which the billed
call was made. Thus, we accept the interest calculation offered by
APCC in Exhibit 5 of its Request for Resolution.
IV. ordering clauses
14. Accordingly, IT IS ORDERED, pursuant to sections 1, 4(i), 4(j), 201,
208, and 209 of the Communications Act of 1934, as amended, 47 U.S.C.
S:S: 151, 154(i), 154(j), 201, 208, and 209, and sections 1.727 and
64.1300-64.1320 of the Commission's rules, 47 C.F.R. S:S: 1.727,
64.1300-64.1320, and the authority delegated by sections 0.111 and
0.311 of the Commission's rules, 47 C.F.R. S:S: 0.111 and 0.311, that
the Request for Resolution on the Pleadings IS GRANTED.
15. IT IS FURTHER ORDERED, pursuant to sections 1, 4(i), 4(j), 208, and
209 of the Communications Act of 1934, as amended, 47 U.S.C. S:S: 151,
154(i), 154(j), 208, and 209, and sections 1.720-1.736 and
64.1300-64.1320 of the Commission's rules, 47 C.F.R. S:S: 1.720-1.736,
64.1300-64.1320, and the authority delegated by sections 0.111 and
0.311 of the Commission's rules, 47 C.F.R. S:S: 0.111 and 0.311, that
the Formal Complaint IS GRANTED to the extent discussed herein, and is
otherwise denied.
16. IT IS FURTHER ORDERED, pursuant to sections 1, 4(i), 4(j), 201, 208,
and 209 of the Communications Act of 1934, as amended, 47 U.S.C. S:S:
151, 154(i), 154(j), 201, 208, and 209, and sections 1.720-1.736 and
64.1300-64.1320 of the Commission's rules, 47 C.F.R. S:S: 1.720-1.736,
64.1300-64.1320, and the authority delegated by sections 0.111 and
0.311 of the Commission's rules, 47 C.F.R. S:S: 0.111 and 0.311, that,
within 90 days of the release of this Order, CCI Communications, LLC
shall pay APCC Services, Inc. damages in the amount of $1,868,451,
together with interest on such damages at the rate of 11.25 percent,
accruing on the first day of the quarter that is one quarter after the
one in which the billed call was made.
FEDERAL COMMUNICATIONS COMMISSION
P. Michele Ellison
Chief, Enforcement Bureau
Formal Complaint, File No. EB-09-MD-005 (filed Mar. 26, 2009)
("Complaint").
47 U.S.C. S: 208. One of the original defendants, CCI Network Services,
Inc. ("CNS"), reached a settlement with APCC resulting in the dismissal of
the claims against CNS. See Order Dismissing Defendant CCI Network
Services, Inc., File No. EB-09-MD-005 (rel. Aug. 13, 2009). CCI
Communications, Inc., Creative Communications, Inc., and Link Systems,
Inc., never entered an appearance in this proceeding. On April 19, 2010,
APCC moved to dismiss the claims against those defendants. See Motion to
Dismiss, File No. EB-09-MD-005 (filed Apr. 19, 2010) ("Motion to
Dismiss"). The Motion to Dismiss was unopposed, and the Commission granted
it on April 29, 2010. See Order Dismissing Certain Defendants, File No.
EB-09-MD-005 (rel. Apr. 29, 2010). As a result, CCI remains the lone
defendant.
47 C.F.R. S: 64.1300(a).
47 C.F.R. S: 64.1300(b) ("[A] Completing Carrier that completes a coinless
access code or subscriber toll-free payphone call from a switch that the
Completing Carrier either owns or leases shall compensate the payphone
service provider....").
APCC Services, Inc. v. Radiant Telecom, Inc., Memorandum Opinion and
Order, 23 FCC Rcd 8962 (2008) ("APCC v. Radiant").
47 U.S.C. S: 276(b)(1)(A).
See, e.g., Request to Update Default Compensation Rate for Dial-Around
Calls from Payphones, Report and Order, 19 FCC Rcd 15636, 15638, P: 3 &
n.9 (2004).
47 C.F.R. S: 64.1300(a)-(b), (d).
Joint Statement, File No. EB-09-MD-005 (filed June 22, 2009) ("Joint
Statement") at 2, P: 1.
Joint Statement at 2, P:P: 4, 5.
Joint Statement at 2, P: 6.
See, e.g., Complaint at 3, P: 5, 9, P:P: 22-23. See 47 U.S.C. S:S: 201(b),
276(b); 47 C.F.R. S:S: 64.1300, 64.1310.
See, e.g., Complaint at 3, P: 6, 10, P:P: 28-29. See 47 U.S.C. S:S:
201(b), 276(b); 47 C.F.R. S:S: 64.1300, 64.1310, 64.1320. Commission rule
64.1310 requires Completing Carriers to establish a call tracking system
that accurately tracks coinless access code or subscriber toll-free
payphone calls to completion; to submit to PSPs sworn statements by the
Completing Carrier's Chief Financial Officer that payments are accurate
and complete; and to furnish to PSPs quarterly reports showing numbers
dialed and completed, volume of calls for each number, and other essential
data. See 47 C.F.R. S: 64.1310(a)(1), (3), (4). Commission rule 64.1320
requires independent third party audits of the Completing Carrier's
tracking system and annual audit reports to the Commission and to each of
the Completing Carrier's PSPs. See 47 C.F.R. S: 64.1320.
Complaint at 60, P: 231.
The Commission's rules define an Intermediate Carrier as "a
facilities-based long-distance carrier that switches payphone calls to
other facilities-based long-distance carriers." 47 C.F.R. S: 64.1310(b).
Complaint at 3-4, P: 7, 60, P: 231.
Complaint at 43, P: 166 ("In the absence of any specific cognizable
evidence as to the percentage of completed calls, the Commission must
require payment on all calls, or it risks PSPs being under-compensated in
violation of the statutory mandate.").
See Request for Resolution on the Pleadings, File No. EB-09-MD-005 (filed
Feb. 4, 2010) ("Request for Resolution") at 2, 6.
CCI Communications, LLC's Revised Answer to Formal Complaint, File No.
EB-09-MD-005 (filed May 21, 2009) ("Answer") at 5, P: 6, 26-27, P: 18,
144, P:P: 51-53. See note 13, above.
Answer, Legal Analysis at 32-34.
Answer, Legal Analysis at 33.
Answer, Legal Analysis at 33.
Reply, File No. EB-09-MD-005 (filed June 12, 2009) ("Reply") at 5, P: 11.
See 47 C.F.R. S: 64.1320.
Reply at 5-6, P: 13.
Reply at 6, P: 13, 13, P: 32 (citing APCC v. Radiant, 23 FCC Rcd at
6971-72, P: 30).
Joint Statement. See 47 C.F.R. S:S: 1.732(h), 1.733(b)(1)(v), 1.733(b)(2).
Joint Statement at 3, P: 16, 4, P:P: 17, 20.
Joint Statement at 4, P:P: 18-19.
CCI Communications, LLC's Responses to Complainant's (1) Initial
Interrogatories and Requests for Production and (2) Second Set of
Interrogatories, File No. EB-09-MD-005 (filed Jan. 19, 2010) ("CCI's
Interrogatory Responses") at 10. In addition to providing the number of
calls at a 30-second proxy, CCI noted that it already had paid
compensation to APCC for 374,384 of those calls. Id.
Request for Resolution at 1.
Request for Resolution at 2, 5-6. Thus, APCC no longer seeks compensation
for calls during the 1Q2008-3Q2008 period.
Request for Resolution at 2 ("APCC is also waiving some of the interest to
which it is entitled"), 7-8.
Request for Resolution at 7-8.
See 47 C.F.R. S: 1.727(e) (providing that oppositions to motions may be
filed and served within five business days after the motion is filed and
served and not after).
Request for Resolution at 1, 5, 7-8; Joint Statement at 4, P: 20.
Request for Resolution at 5, 7; Joint Statement at 3, P: 16, 4, P:P: 17,
20.
Request for Resolution at 6, 7; CCI's Interrogatory Responses at 10.
Request for Resolution at 2.
APCC v. Radiant, 23 FCC Rcd at 8971, P: 28.
APCC v. Radiant, 23 FCC Rcd at 8971, P: 30.
APCC v. Radiant, 23 FCC Rcd at 8971-72, P: 30.
APCC v. Radiant, 23 FCC Rcd at 8972, P: 30.
Answer, Legal Analysis at 33.
Revised Answer to Formal Complaint, APCC Services, Inc. v. Radiant
Telecom, Inc., Intelligent Switching and Software, LLC, and Radiant
Holdings, Inc., File No. EB-05-MD-016 (filed Oct. 7, 2005) at 2 n.4
("Radiant is primarily in the calling card business. The vast majority of
its end-user customers use the cards to place international calls.").
APCC v. Radiant, 23 FCC Rcd at 8971, P: 29 ("Clearly, application of the
30 second proxy as proposed would exclude any completed call that lasted
fewer than 30 seconds.").
47 C.F.R. S: 1.727(e) (providing that "[f]ailure to oppose any motion may
constitute grounds for granting of the motion.")
APCC v. Radiant, 23 FCC Rcd at 8974, P: 34.
Federal Communications Commission DA 10-1192
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Federal Communications Commission DA 10-1192