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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of AT&T Corp., Complainant, v. All American Telephone Co.,
e-Pinnacle Communications, Inc., ChaseCom, Defendants. ) ) ) ) ) ) ) ) ) )
) ) File No.: EB-09-MD-010
MEMORANDUM OPINION AND ORDER
Adopted: March 22, 2013 Released: March 25, 2013
By the Commission:
I. INTRODUCTION
1. On April 30, 2010, AT&T Corp. (AT&T) filed a formal complaint against
All American Telephone Co. (All American), e-Pinnacle Communications,
Inc. (e-Pinnacle), and ChaseCom (ChaseCom) (collectively, Defendants)
under Section 208 of the Communications Act of 1934, as amended
(Act).^ Count I of the Complaint alleges that Defendants violated
Sections 203 and 201(b) of the Act by billing AT&T for access services
that were not properly provided pursuant to valid or applicable
tariffs.^ Count II of the Complaint alleges that Defendants violated
Section 201(b) of the Act by undertaking sham arrangements to inflate
billed access charges to AT&T and other long distance carriers.^
Because the evidence shows that Defendants participated in an access
stimulation scheme designed to collect in excess of eleven million
dollars of improper terminating access charges from AT&T, we grant
Counts I and II of the Complaint.^
II. BACKGROUND
A. Parties
2. AT&T is an interexchange carrier (IXC) providing interstate
telecommunications service (also known as long-distance service)
throughout the United States.^ In order to originate and terminate
long distance calls, IXCs such as AT&T must use the facilities of
local exchange carriers (LECs).^
3. As discussed in more detail below, Defendants were formed and
certificated by state commissions to be competitive local exchange
carriers (CLECs). Rather than serving and competing to serve a broad
range of customers in its local area, however, All American provided
services in Nevada and Utah only to a single chat line/conferencing
service provider (CSP), Joy Enterprises, Inc.^ Similarly, ChaseCom and
e-Pinnacle provided services in Utah exclusively to a few CSPs.^
A. Important Non-Parties
4. In addition to the parties, several other entities figure prominently
in this litigation. First, Beehive Telephone Company, Inc., Nevada,
and Beehive Telephone Company, Inc., Utah (collectively, Beehive) are
incumbent local exchange carriers (ILECs) that serve approximately 800
to 1,000 access lines in rural territories in Nevada and Utah.^
5. Second, Joy Enterprises, Inc. (Joy) is a Nevada corporation with its
principal place of business in Nevada.^ Joy is a CSP that shares the
same business address with All American.^ Joy and All American also
have common directors, officers, and ownership.^
6. Finally, CHR Solutions, Inc. (CHR) is a Texas telecommunications
consulting company that drafts and effectuates regulatory filings on
behalf of its clients.^ CHR provided regulatory services to Beehive
and Defendants and drafted and filed the tariffs at issue.^
A. The Commission's Tariff Regime
7. The Commission regulates access charges that LECs apply to interstate
calls.^ As a general matter, ILECs must file and maintain tariffs with
the Commission for interstate switched access services.^ Commission
rules provide rate-of-return LECs (such as Beehive) with alternate
means for filing individual interstate access tariffs.^ One option is
to participate in the traffic-sensitive pool managed by the National
Exchange Carrier Association (NECA) and in the traffic-sensitive
tariff filed annually by NECA.^ The rates in the traffic-sensitive
tariff are set based on the projected aggregate costs (or average
schedule settlements) and demand of all pool members and are targeted
to achieve an 11.25 percent return.^ Each participating carrier
historically received a settlement from the pool based on its costs
plus a pro rata share of the profits, or based on its settlement
pursuant to the average schedule formulas.^ Stated differently, all
NECA pool members share revenues in excess of costs.
8. Alternatively, a rate-of-return carrier that has 50,000 or fewer
access lines in a study area may elect to file its access tariffs in
accordance with Section 61.39 of the Commission's rules,^ which the
Commission adopted in the Small Carrier Tariff Order.^ A carrier
choosing to proceed under this rule (Section 61.39 Carrier) must file
access tariffs in odd numbered years to be effective for a two-year
period.^ Section 61.39 Carriers base their initial rates on historical
costs (or average schedule settlements) and associated demand for the
preceding year.^ They base their subsequent rates on their costs and
traffic volumes for the prior two year period.^ Section 61.39 Carriers
do not pool their costs and revenues with any other carrier. Thus, if
demand increases, Section 61.39 Carriers retain the revenues to the
extent they exceed any cost increases.
9. The Commission considers CLECs (such as Defendants) to be nondominant
carriers subject to minimal rate regulation.^ During the relevant
period, CLECs had two means by which to provide and charge IXCs for
functionally equivalent interstate access services. A CLEC generally
may tariff interstate access charges if the charges are no higher than
the rate charged for such services by the competing ILEC (the
benchmarking rule).^ Alternatively, a CLEC must negotiate and enter
into agreements with IXCs to charge rates higher than those permitted
under the benchmarking rule.^
A. The Access Stimulation Scheme
1. Beehive Becomes a Section 61.39 Carrier and Enters Into a
Revenue-Sharing Agreement with Joy.
10. Prior to March 31, 1994, Beehive participated in the NECA
traffic-sensitive tariff.^ In 1994, Beehive withdrew from the NECA
pool and became a Section 61.39 Carrier.^ Because Beehive operates in
sparsely-populated areas, its historic traffic volumes at that time
were low, thereby allowing it to charge relatively high access rates
in its individual tariff.^
11. Around the same time that Beehive became a Section 61.39 Carrier,
Beehive and Joy entered into an access revenue-sharing arrangement in
which Beehive paid Joy a portion of Beehive's tariffed access charges
for every minute of long distance traffic routed to Joy's assigned
telephone numbers.^ The agreement with Joy resulted in Beehive's
interstate local switching minutes of use growing exponentially. For
example, between 1994 and 2005, Beehive's traffic increased
approximately one hundredfold, from 3.6 million minutes of use in 1994
to 313.5 million minutes of use in 2005.^
1. Beehive Reenters the NECA Pool.
12. As a result of the significant increase in traffic, Beehive was
required to reduce its end office switching element rate between 2001
and 2005 from 4.59 cents per minute to 1.02 cents per minute.^ AT&T
estimates that Beehive's local switching rate would have declined even
further (to 0.25 cents per minute by 2007), if Beehive continued to be
the entity that charged terminating access.^ In order to avoid these
additional rate reductions, however, Beehive reentered the NECA pool
in mid-2007.^ As explained above, participation in the NECA pool
tariff meant that Beehive no longer was able to retain for itself--and
would have to share with all pool members--revenues in excess of its
costs.^
1. Beehive Creates Defendants.
13. Rather than dismantling the access stimulation scheme, Beehive set
about creating the Defendants to assume its role as terminating access
carrier for certain end-users. As noted above, CLECs may tariff
switched access services at rates that are "benchmarked" against the
competing ILEC's rates.^ Unlike ILECs, however, during the period
relevant to this complaint, CLEC rates were not subject to reduction
as a result of large increases in traffic volume.^ Although Defendants
provided the termination services, Beehive continued to charge the
IXCs for tandem switching and transport of the stimulated traffic.^
14. Beehive directed its consultant--CHR--to assist Defendants in
preparing and filing tariffs,^ and Beehive paid CHR for its work.^
Similarly, at no cost to All American, Beehive's attorney (who also
was an employee and director of Beehive) worked on All American's
behalf to obtain regulatory approval for All American to become a CLEC
in Utah.^
15. Defendants then applied for Certificates of Public Convenience and
Necessity (CPCN) to operate as CLECs in Utah, representing to the Utah
PSC that they did not intend to operate or provide services in
Beehive's territory.^ Beehive publicly supported and assisted
Defendants' efforts in filings it made with the Utah PSC.^ When the
Utah PSC issued Defendants' CPCNs, it expressly precluded them from
providing public telecommunications services in "local exchanges of
less than 5,000 access lines of incumbent telephone corporations with
fewer than 30,000 access lines."^ In other words, Defendants were not
permitted to compete against Beehive or provide service in its service
territory.^ Nonetheless, after obtaining CPCNs from the Utah PSC,
Defendants filed interstate switched access tariffs with this
Commission that benchmarked their tariffed rates for access services
in Utah against Beehive's Utah tariffed rates.^ All American's Nevada
CPCN did not have similar territorial restrictions to its Utah CPCN,
and its Nevada interstate tariff benchmarked its rates against
Beehive's Nevada tariffed rates.^
1. Beehive Coordinates Defendants' Operations.
16. In order to position Defendants to step in as LECs, Beehive assisted
them with setting up their initial operations.^ It chose a location
for Defendants' equipment that enabled Beehive to maximize the amount
of transport mileage that it could charge for the stimulated traffic
(which it continued to carry, even though Defendants ostensibly
terminated the traffic).^ At no cost to Defendants, Beehive installed
and maintained their equipment (which was collocated in Beehive's
facilities),^ coordinated and managed their billing and collection
services,^ and provided power and other services as needed by
Defendants.^ Moreover, Beehive assigned to Defendants, and allowed
them to continue to use at no cost, the telephone numbers that
previously had been used for Defendants' conferencing and chat line
services.^ Further, Beehive advised CHR regarding when to file revised
tariffs for Defendants after Beehive increased its own rates,^
advanced money to and acted as a co-lessee of Defendants' equipment,^
and decided whether Defendants could relocate their equipment.^
17. Despite becoming CLECs, none of the Defendants marketed local exchange
services to residents or businesses generally in Utah or Nevada.^
Rather, Defendants designed and engineered their operations to provide
services to CSPs exclusively.^ Specifically, All American's operations
in Nevada and Utah solely supported its affiliate Joy's chat line and
conferencing services.^ All American never had its own operating
switch in Nevada,^ and traffic to telephone numbers associated with
its Nevada operations terminated to Joy's equipment located at
Beehive's facilities in Utah not in Nevada.^ Nor did All American have
a switch in Utah until one was installed sometime in 2008.^ That
switch, however, was connected to the Internet and was not physically
connected to Joy's equipment in Utah.^ ChaseCom and e-Pinnacle
provided conferencing services on their conference bridge equipment.^
ChaseCom served five CSPs, which included its own conferencing
services under its own brand,^ and e-Pinnacle served four CSPs.^ The
only equipment that ChaseCom and e-Pinnacle owned was conference
bridge equipment.^ They did not own or lease any switches that are
typically used to provide competitive LEC services to the public.^
18. Defendants no longer operate as CLECs in Nevada or Utah. All American
ceased operating in Utah and Nevada during the summer of 2010.^
ChaseCom and e-Pinnacle ceased operating in Utah during the summer of
2007.^ Although Defendants had Section 214 authorizations from this
Commission, they did not comply with the Commission's discontinuation
of service rules, which require obtaining approval for and notifying
customers of the discontinuation of service.^
A. The Utah PSC Revocation Proceeding
19. On April 26, 2010, the Utah PSC revoked All American's CPCN and
ordered All American to withdraw from the state.^ Characterizing All
American as a "mere shell company," the Utah PSC found that All
American lacked the technical, financial, and managerial resources to
serve the customers it represented it would and could serve when
applying for its CPCN.^ All American, the Utah PSC determined,
misrepresented its intent to provide all forms of resold local
exchange service,^ when, in fact, it never planned to serve any
customers other than Joy.^ The Utah PSC concluded that All American's
maintenance of a CPCN was not in the public interest.^ Refusing to
condone All American's "blatant legal violations,"^ the Utah PSC
explained that All American operated illegally in Utah "for about
three years prior to even obtaining its CPCN," that "[i]t operated
illegally in Beehive territory while it was applying for a CPCN," and
that "[f]rom the date it was granted its CPCN explicitly prohibiting
it from entering Beehive territory, it was already operating there
illegally" and continued to do so.^ In other words, All American
never intended to--nor did it ever--comply with its Utah
authorization.^
20. The Revocation Order emphasized the "collusion" between All American
and Beehive,^ which profited from All American's operations,^
determining that "Beehive was a party to [All American's] scheme and
materially aided it in operating illegally."^ The Utah PSC highlighted
the following evidence:
The record shows Beehive helped [All American] obtain its CPCN improperly
and helped it operate illegally. [All American] operated illegally at
least two years prior to applying for its CPCN. . . . [All American's]
petition in the Original Certificate Proceeding, and subsequent amended
petitions, were all prepared and filed by Beehive's former counsel. In
those petitions . . . [All American] represented to us that they would not
serve in Beehive's territory. We granted the CPCN based on this
representation. Despite that affirmation that it would not serve in
Beehive territory, Beehive's counsel then drafted the interconnection
agreement which it claimed would purportedly allow it to compete in
Beehive territory. Beehive knew that [All American] was not authorized to
serve in its territory. . . . All the while, Beehive . . . provided
management services, consulting services, and serviced equipment belonging
to [All American].^
"Promot[ing] competition . . . and prevent[ing] anti-competitive
behavior," the PSC observed, is what "Beehive and [All American] do not
want."^
21. The Utah PSC concluded that All American's CPCN should be rescinded
because it "does not merit" the "concomitant privileges" obtained from
a CPCN, including "the right to levy access charges" and "order number
blocks."^ It further ordered All American to cease operating in Utah
within 30 days.^ Although All American sought review and rehearing of
the Revocation Order (and Beehive filed a request for reconsideration
and vacatur of the Revocation Order), the Utah PSC declined to reverse
its findings.^ It further ordered that All American would be assessed
a $2,000 per day penalty for each day it continued operating.^
A. The Primary Jurisdiction Referral
22. On February 5, 2007, Defendants sued AT&T in the United States
District Court for the Southern District of New York.^ The federal
court complaint, as amended on March 6, 2007, asserted four claims:
(i) a collection action for amounts AT&T allegedly owed Defendants for
access services provided pursuant to interstate tariffs; (ii) a claim
that AT&T violated Section 201(b) of the Act by invoking "self-help"
and failing to pay for the tariffed access services; (iii) a claim
that AT&T violated Section 203(c) of the Act by failing to pay for the
tariffed services; and (iv) a claim for compensation under quantum
meruit for the telecommunications services allegedly provided.^ AT&T
filed an answer and counterclaims, asserting federal law claims that
Defendants violated Sections 201(b) and 203 of the Act, as well as
state law fraud, civil conspiracy, and unjust enrichment claims.^
Specifically, AT&T alleged that Defendants did not provide "switched
access services consistent with the terms of their tariffs."^ AT&T
also claimed that, regardless of whether Defendants provided access
services pursuant to tariff, they committed unreasonable practices
through "sham" arrangements designed for the purpose of inflating
access charges.^
23. The First Court Referral Order, issued on March 16, 2009, referred
AT&T's "sham entity" counterclaim to the Commission.^ AT&T effectuated
this referral by filing an informal complaint with the Commission on
April 15, 2009,^ which it converted into a formal complaint on
November 16, 2009.^ Thereafter, Defendants requested that the Court
refer additional issues to the Commission, which the Court did on
February 5, 2010.^ At Commission staff's direction, AT&T filed an
Amended Complaint to effectuate certain issues in the Second Court
Referral Order.^ At the same time, Defendants filed their own formal
complaint to effectuate the remaining issues in the Second Court
Referral Order,^ which the Commission has already resolved.^
III. DISCUSSION
A. Defendants Violated Section 201(b) of the Act by Operating as Sham
CLECs With the Apparent Purpose and Effect of Inflating Their Billed
Access Charges to Levels That Could Not Otherwise Be Obtained by
Lawful Tariffs.
24. We find, based on the totality of the record, that Defendants were
"sham" CLECs created to "capture access revenues that could not
otherwise be obtained by lawful tariffs,"^ ^ and that billing AT&T for
access charges in furtherance of this scheme constitutes an unjust and
unreasonable practice in violation of Section 201(b) of the Act. The
extensive record in this case overwhelmingly supports our
determination.^
25. Defendants had no intention at any point in time to operate as bona
fide CLECs or provide local exchange service to the public at large.^
Although they obtained CPCNs, Defendants neither owned nor leased
facilities, nor did they purchase unbundled network elements typically
used by CLECs to provide any telecommunications services to the
public.^ Defendants' entire business plan was to generate access
traffic exclusively to a handful of CSPs,^ and to bill for that
traffic at tariffed rates that were benchmarked to Beehive's NECA
rates.^ Defendants did this even though they represented to the Utah
PSC that they would not operate as CLECs in Beehive's territory,^ and
their Utah CPCNs specifically prohibited them from doing so.^ Indeed,
All American admits that it knew of the limitation in its Utah CPCN
and nonetheless operated in contravention of it.^ ChaseCom and
e-Pinnacle similarly admit that they intended all along to provide
service in prohibited Beehive service areas; nonetheless, they turned
a blind eye to the limitations of their CPCNs.^
26. Beehive masterminded the sham. Although ostensibly "competing" with
each other, Beehive and Defendants were in no sense vying for
customers.^ On the contrary, Beehive engaged--at its own
expense--consultants and attorneys to assist Defendants in obtaining
CPCNs.^ Beehive then supported Defendants' operations in numerous
ways, from directing the installation and maintenance of Defendants'
collocated equipment and acting as a co-lessee/guarantor of equipment,
to operating Defendants' billing and collection services, allowing
Defendants to use Beehive's telephone numbers for their conferencing
and chat line services, and advancing Defendants money.^
27. Creation of Defendants allowed the access stimulation arrangements to
continue at rates that would have been unsustainable had Beehive
remained a Section 61.39 Carrier. Under the Commission's Small Carrier
Tariff Rules, Beehive's rates declined over time (as its volume of
calls to CSPs increased) and would have continued to decline every two
years.^ Beehive, accordingly, re-entered the NECA pool, where its
rates increased to between 2.44 cents per minute and 3.30 cents per
minute for the local switching rate elements.^ Beehive, however, was
then subject to NECA's requirement that revenues from the stimulated
traffic in excess of Beehive's costs be distributed among the pool
members. In contrast, Defendants--which are CLECs not subject to
NECA's requirements or any other rate-of-return regulation--could
"benchmark" their rates to the "competing" ILEC and continue to bill
IXCs for interstate switched access pursuant to tariffs. Other than
the rates, however, nothing in substance changed when Defendants began
"providing" these access services.^ Callers dialed the same telephone
numbers to reach chat or conference lines, and their calls were routed
over the same Beehive facilities and equipment.^ Beehive even
continued to generate the access bills--at no cost to Defendants.^
28. Beehive still made money. It charged the IXCs for tandem switching and
transport of the stimulated traffic, which benefited Beehive "roughly
within an order of magnitude" of what had been Beehive's take of the
terminating access profits.^ When asked in deposition what Beehive
gained from remaining part of the access stimulation relationship,
Beehive's Chief Executive Officer explained:
All American had a miraculous ability to generate enormous volumes of
telephone calls inbound to Beehive. Beehive charged by the minute and by
the mile in some cases -- well, almost all cases. Our access billables
were huge. That's what we were getting out of it . . . a lot of money.^
Moreover, it appears that Beehive held for itself a share of the
terminating access charges, limiting the CLECs to "a set number of cents
per minute" that did not change after Defendants became CLECs.^
29. Defendants contend that AT&T's sham entity claim lacks both legal and
factual support. First, according to Defendants, conduct is
unreasonable under Section 201(b) of the Act only if it was taken to
further a goal that is prohibited by the Act or the Commission's rules
or policies.^ AT&T, Defendants say, has failed to meet its burden of
proving that their conduct violated any Commission rule or any
provision of the Act.^ The Commission's authority to determine whether
a carrier's conduct violates Section 201(b), however, is not limited
in the manner Defendants suggest. For example, in lieu of directly
regulating CLEC access rates, the Commission has stated repeatedly
that it will ensure just and reasonable rates through the Section 208
complaint process.^ Moreover, the Commission has awarded damages (or
permitted the complainant to seek damages) under Section 208 for
violations of Section 201(b), even where no independent violation of a
particular rule was found.^
30. Defendants further maintain that AT&T's "sham entity" claim is
premised upon a single Commission order--Total Telecom^--that cannot
be squared with the facts in this case and does not support AT&T's
claim.^ In Total Telecom, the Commission found that an entity formed
by a LEC solely to enable the LEC to charge, indirectly, rates that it
could not continue to charge via its existing tariff "deserved to be
treated as a sham."^ AT&T filed a complaint challenging the lawfulness
of the sham entity's charges, which the Commission granted, holding
that "if accepted . . . [Total's position] would enable every ILEC to
avoid dominant carrier regulation by mere artifice."^ Defendants in
this case argue that Total Telecom involved a different regulatory
scheme that the Commission since has eliminated, rendering the
decision irrelevant.^ They assert that CLECs now must charge the same
rate as the competing ILEC,^ and that AT&T's claim fails because there
is no dispute that Defendants' access charges accurately reflect
Beehive's tariffed rates.^ We disagree. Total Telecom was not
dependent upon the regulatory scheme then in place, but rather upon an
analysis of Total Telecom's actions to avoid the regulations necessary
to ensure just and reasonable rates.^ The decision thus not only
remains relevant precedent; it supports our conclusion here. But for
the creation of Defendants, Beehive's scheme would have ended because,
under the Commission's rules, Beehive itself no longer could charge
high rates and retain the resultant revenue.^
31. Defendants' assertion that their billings to AT&T were lawful because
they benchmarked their rates in compliance with Section 61.26(b)(1)^
of the Commission's rules is irrelevant.^ Even assuming that
Defendants were authorized to compete against Beehive and that Beehive
is the "competing" ILEC under the Commission's rules,^ Defendants were
not competing with Beehive in any real sense. On the contrary, Beehive
and Defendants collaborated with each other at every turn. As
discussed above, we find that Defendants' conduct violates Section
201(b) because they operated as sham entities in an effort to
circumvent the Commission's CLEC access charge and tariff rules, which
would have brought the access stimulation scheme to an end.
32. Next, Defendants contend that the Commission categorically rejected
AT&T's similar challenges to revenue-sharing arrangements between LECs
and CSPs, including a complaint AT&T filed against Beehive that
"feature[ed] Joy extensively."^ We disagree. In Jefferson Telephone,
the Commission "emphasize[d] the narrowness of [its] holding" and
found "simply that, based on the specific facts and arguments
presented," AT&T failed to demonstrate that Jefferson's
revenue-sharing agreement violated the Act.^ The Commission
"expresse[d] no view on whether a different record could have
demonstrated that the revenue-sharing agreement at issue in this
complaint (or other revenue-sharing agreements between LECs and end
user customers) ran afoul of sections 201(b), 202(a), or other
statutory or regulatory requirements."^ Because the facts and claims
in Jefferson Telephone are different from those of this case, it is
not determinative of AT&T's sham entity claim.
33. Finally, Defendants argue that AT&T actually is attacking Beehive's
rates.^ Although, unquestionably, Beehive is integral to this
regulatory arbitrage, Defendants miss the point. The gravamen of the
Complaint is that Defendants violated Section 201(b) of the Act by
operating as sham entities for the purpose of inflating access charges
that AT&T and other IXCs had to pay.^ And so it is Defendants'
conduct, not Beehive's rates, that is at issue.^ Upon reviewing the
extensive record (developed here, in the Court, and at the Utah PSC),
we have little difficulty concluding--as AT&T alleges--that Defendants
engaged in an unjust and unreasonable practice. We therefore grant
Count II of AT&T's Complaint.
A. Defendants Violated Sections 201(b) and 203 of the Act by Billing for
Services that They Did Not Provide Pursuant to Valid and Applicable
Tariffs.
34. In addition to operating as sham CLECs in violation of Section 201(b)
of the Act, we find that Defendants violated Sections 203 and 201(b)
of the Act by billing AT&T for access services that they did not
provide pursuant to valid and applicable interstate tariffs.^
Accordingly, we grant Count I of AT&T's Complaint as well.
1. None of the Defendants Had Valid and Applicable Interstate Tariffs
for the Traffic Billed to AT&T.
35. All American's F.C.C. Tariff No. 1 (the Nevada Tariff)^ specifically
applied to interstate exchange access services used to send traffic to
or from an end user in Nevada.^ All American's Nevada traffic,
however, terminated at its affiliate Joy's equipment located in
Beehive's facilities in Utah and not in Nevada.^ By billing under that
tariff for interstate traffic terminated in Utah, Defendants violated
Sections 201(b) and 203 of the Act.
36. All American's F.C.C. Tariff No. 2, ChaseCom's F.C.C. Tariff No. 1,
and e-Pinnacle's F.C.C. Tariff No. 1 (collectively, Utah Tariffs)^
also do not support billing for the Utah traffic because the Utah PSC
did not authorize Defendants to provide local telecommunications
services in the areas of Utah where they operated. ChaseCom's and
e-Pinnacle's tariffs apply to services provided within their
"Operating Territory" "in the State of Utah,"^ and All American's
Tariff No. 2 applies to services provided "[w]ithin the Operating
Territory of All American."^ Under the terms of the Tariffs,
"Operating Territory" plainly refers to the geographic area where the
Utah PSC authorized Defendants to provide local telecommunications
services.^ All of the bills to AT&T for Utah traffic related to
services Defendants provided in geographic areas of Utah where they
were not authorized by the Utah PSC to provide services (i.e., in
Beehive's territory).^ Thus, billing under the Utah Tariffs also
violates Sections 201(b) and 203 of the Act.
37. None of Defendants' arguments persuade us otherwise. Defendants
incorrectly assert that their authorization under Section 214 of the
Act conveys the unfettered ability to provide interstate services
nationwide, regardless of limitations in any applicable tariffs.^
CLECs have blanket Section 214 authority under Section 63.01 of our
rules to provide domestic, interstate communications services,^ but
the blanket authority extends only to entry certification requirements
for initial operating authority; it does not impact CLECs' obligations
under any other section of the Act^ or Commission rules.^ Accordingly,
until a CLEC files valid interstate tariffs under Section 203 of the
Act or enters into contracts with IXCs for the access services it
intends to provide,^ it lacks authority to bill for those services. In
addition, Defendants' assertion that the geographic scope of their
tariffs is merely "illustrative" and "not binding if the carrier
actually provides the service in territory not identified in its
interstate tariff"^ is inconsistent with Section 203 and the "filed
tariff" doctrine.^ Finally, contrary to Defendants' characterization,
the geographic limitations in their tariffs were not mere "technical
defects" or "ministerial errors."^ Rather, they are terms fundamental
to whether the access tariffs apply at all. Defendants have offered no
justification for deviating from Section 203 and the filed tariff
doctrine, and they may not simply pick and choose the provisions of
their Tariffs with which they will comply.^
1. Defendants Did Not Terminate Calls to "End Users" Within the Meaning
of Their Interstate Switched Access Tariffs.
38. Similarly, we conclude that Defendants also did not terminate calls to
"end users" within the meaning of their tariffs. The definition of
Switched Access Service in all of the relevant tariffs requires calls
to originate from or terminate to "end users" on Defendants'
networks.^ The tariffs define "end users" as "[u]sers of local
telecommunications carriers services who are not carriers."^ As
demonstrated above, however, Defendants were sham entities that did
not provide local telecommunications services or terminate calls to
any "user" of local telecommunications services.^ In addition,
Defendants concede that (1) they have no written agreements for local
services with any customers, and did not provide local services to any
customers pursuant to tariffs;^ (2) the CSPs to which they provided
service never ordered local telecommunications service from Defendants
and Defendants never entered the CSPs into their accounting, billing
or ordering systems;^ (3) Defendants never billed the CSPs any amounts
for local telecommunications services or any charges for any
subscriber line charge, universal service fee, or carrier common line
charge; and (4) the CSPs never paid any such amounts.^ Consequently,
Defendants did not have any "end users" as defined in their tariffs,
and therefore could not properly bill for access services under the
terms of their tariffs.^
39. We disagree with Defendants' contention that the Utah PSC's findings
are irrelevant to our analysis.^ The Utah PSC conducted extensive
proceedings into All American's operations, and its findings are
credible and independently supported by the record. Nor do we find any
factual basis for concluding that All American's Nevada operations or
ChaseCom's and e-Pinnacle's Utah operations differed in any material
respect from All American's Utah operations.
40. Further, there is no merit to Defendants' assertion that Farmers^ has
no bearing on this case because the tariff in that case defined "end
users" in terms of "subscribers" of services, while Defendants'
tariffs define "end users" as "users of local telecommunications
services."^ Even if, as Defendants contend, "user" is a broader term
than "subscriber,"^ the CSPs were not "users of local
telecommunications services" provided by Defendants, as would be
required under the tariffs.^
41. Finally, we disagree that All American's revisions to its Tariff No. 1
somehow obviate the "end user" requirement.^ All American's Tariff No.
1 applied to interstate traffic terminated in Nevada, not Utah, and
the revisions did nothing to alter that fact.^ And even if revised
Tariff No. 1 applied to both Nevada and Utah, it defines "end user" as
"[a]ny . . . entity . . . which uses the service of [All American]
under the terms and conditions of this tariff."^ Because, as All
American admits, its only customer did not use its services under the
terms and conditions of any Tariff,^ All American had no "end users"
of its services, as defined in its Revised Tariff No. 1.^
A. Defendants' Procedural Arguments Are Baseless.
42. Defendants complain that they were "irreparably prejudiced" by
"flawed" decisions relating to the effectuation of the Court Referrals
and management of the complaint proceeding.^ Defendants previously
requested reconsideration of rulings relating to the manner in which
the Commission chose to hear the issues referred by the Court,^ which
staff denied.^ Thereafter, Defendants sought permission to file a
surrebuttal to AT&T's Reply, arguing that such a filing would "cure"
any prejudice.^ Staff granted their request.^ Later, Defendants sought
reconsideration of several rulings made by staff during a
discovery/status conference,^ which staff denied.^
43. The Commission has broad discretion to structure its proceedings to
maximize fairness, promote efficiency, and conserve the resources of
the parties and the Commission.^ Defendants offer no new arguments as
to why the Commission should revisit any of these matters. In any
event, we find that the procedural rulings in the case were
well-reasoned and appropriate,^ and that Defendants have suffered no
prejudice as a result.^
IV. ORDERING CLAUSEs
44. Accordingly, IT IS ORDERED, pursuant to Sections 1, 4(i), 4(j), 201,
203, 206, and 208 of the Communications Act of 1934, as amended, 47
U.S.C. SS 151, 154(i), 154(j), 201, 203, 206, 208, that Counts I and
II of the Complaint are GRANTED.
45. IT IS FURTHER ORDERED, pursuant to Sections 1, 4(i), 4(j), 201, 203,
206, and 208 of the Communications Act of 1934, as amended, 47 U.S.C.
SS 151, 154(i), 154(j), 201, 203, 206, 208, that Count III will be
addressed in connection with any damages complaint filed by AT&T.
46. IT IS FURTHER ORDERED, pursuant to Sections 1, 4(i), 4(j), 201, 203,
206, and 208 of the Communications Act of 1934, as amended, 47 U.S.C.
SS 151, 154(i), 154(j), 201, 203, 206, 208, and the Commission's rules
1.720-1.736, 47 C.F.R. SS 1.720-1.736, that Defendants' Request for
Declaratory Ruling is DENIED.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
^ See Amended Formal Complaint of AT&T Corp., File No. EB-09-MD-010 (filed
Apr. 30, 2010) (Complaint); 47 U.S.C. S 208. The litigation arises from a
primary jurisdiction referral from the United States District Court for
the Southern District of New York (the Court). The Commission directed the
parties to effectuate the Court's referral by filing two formal
complaints. See Letter Ruling from Lisa B. Griffin, Deputy Division Chief,
EB, MDRD, to James F. Bendernagel, Jr., Counsel for AT&T, and Jonathan
Canis, Counsel for Defendants, File No. EB-09-MD-010 (filed Apr. 2, 2010)
(April 2 Letter Ruling). The parties did so, and the Commission previously
resolved Defendants' complaint. See All American v. AT&T Corp., Memorandum
Opinion and Order, 26 FCC Rcd 723 (2011).
^ Complaint at 66-69, paras. 123-30; 47 U.S.C. SS 201(b), 203.
^ Complaint at 69-71, paras. 131-37; 47 U.S.C. S 201(b).
^ AT&T also alleged in Count III of its Complaint that Defendants are
unable to collect any compensation for access services under a quantum
meruit, quasi-contract, constructive contract, or any other state law
theory. Complaint at 71, paras. 138-42. Under Section 1.722(d) of the
Commission's rules, AT&T elected to bifurcate its liability and damages
claims. Complaint at 4, para. 8 (citing 47 C.F.R. S 1.722(d) (setting
forth the requirements a complainant must satisfy if it "wishes a
determination of damages to be made in a proceeding that is separate from
and subsequent to the proceeding in which the determinations of liability
and prospective relief are made")). Commission staff subsequently ruled
that the issues raised in Count III of the Complaint will be addressed in
AT&T's damages proceeding, if any. Letter Ruling from Lisa B. Griffin,
Deputy Division Chief, EB, MDRD, to James F. Bendernagel, Jr., Counsel for
AT&T, and Jonathan Canis, Counsel for CLECs, File No. EB-09-MD-010 (filed
July 28, 2010) (Status Conference Order). Because this Order finds in
AT&T's favor on liability, AT&T may file with the Commission a
supplemental complaint for damages in accordance with 47 C.F.R. S 1.722(e)
("If a complainant proceeds pursuant to paragraph (d) of this section . .
. the complainant may initiate a separate proceeding to obtain a
determination of damages by filing a supplemental complaint . . . . ").
^ Complaint at 6, para. 10.
^ See generally United States Tel. Ass'n v. FCC, 188 F.3d 521, 523-24
(D.C. Cir. 1999).
^ Complaint at 6, para. 11; All American Telephone Co., e-Pinnacle
Communications, Inc., and ChaseCom's Answer to AT&T Corp.'s Amended Formal
Complaint, File No. EB-09-MD-010 (filed June 14, 2010) (Answer) at 6-7,
para. 11; Joint Statement of Stipulated Facts, Disputed Facts, and Key
Legal Issues, File Nos. EB-09-MD-010 and EB-10-MD-003 (July 16, 2010)
(Joint Statement) at 2, Stipulation 2. CSPs generate very high volumes of
incoming calls for which local exchange carriers (LECs) charge terminating
access. See Connect America Fund, WC Docket No. 10-90 et al., Report and
Order and Further Notice of Proposed Rulemaking, 26 FCC Rcd 17663, 17874,
para. 656 (2011) (USF/ICC Transformation Order), pets. for review pending
sub nom. In re: FCC 11-161, No. 11-9900 (10th Cir. filed Dec. 8, 2011).
^ Complaint at 7-8, paras. 12-13; Answer at 7-8, paras. 12-13; Joint
Statement at 2-3, Stipulations 3-4.
^ Joint Statement at 3, Stipulation 6.
^ Id., Stipulation 7.
^ Answer at 8, para. 16; Joint Statement at 4, Stipulation 8; see AT&T Ex.
79, Consideration of the Rescission, Alteration, or Amendment of the
Certificate of Authority of All American to Operate as a Competitive Local
Exchange Carrier Within the State of Utah, Public Service Commission of
Utah, Pre-Filed Direct Testimony of David W. Goodale on Behalf of All
American Telephone Company, Inc., at 11-12 (Feb. 26, 2010) (All American
Utah PSC Hearing Direct Testimony); see also AT&T Corporation v. Beehive
Telephone Company, Inc. and Beehive Telephone, Inc. Nevada, Memorandum
Opinion and Order, 17 FCC Rcd 11641, 11644, para. 6 (2002) (AT&T v.
Beehive).
^ Joint Statement at 4, Stipulation 8.
^ Joint Statement at 4, Stipulation 10.
^ Id.
^ See 47 C.F.R. SS 69.1-69.2.
^ See 47 U.S.C. S 203.
^ See Establishing Just and Reasonable Rates for Local Exchange Carriers,
Notice of Proposed Rulemaking, 22 FCC Rcd 17989, 19992-93, paras. 6-8
(2007) (2007 Access Charge NPRM); Investigation of Certain 2007 Annual
Access Tariffs, Order Designating Issues for Investigation, 22 FCC Rcd
16109, 16111-12, paras. 4-6 (Wireline Comp. Bur. 2007). Rate-of-return
carriers may earn no more than a Commission-prescribed return on the
investments they make in providing exchange access services. General
Communication, Inc. v. Alaska Communications Systems, Memorandum Opinion &
Order, 16 FCC Rcd 2834, 2836, para. 5 (2001), review granted in part and
denied in part and case remanded, ACS of Anchorage, Inc. v. FCC, 290 F.3d
403 (D.C. Cir. 2002).
^ 2007 Access Charge NPRM, 22 FCC Rcd at 17992, para. 6.
^ Id.
^ Id.; 47 C.F.R. SS 69.601-69.612.
^ 47 C.F.R. S 61.39.
^ Regulation of Small Telephone Companies, Report and Order, 2 FCC Rcd
3811 (1987) (Small Carrier Tariff Order); 2007 Access Charge NPRM, 22 FCC
Rcd at 17992-93, paras. 7-8.
^ 47 C.F.R. S 69.3(f)(2).
^ 47 C.F.R. S 61.39(b).
^ 47 C.F.R. S 61.39(a).
^ See Tariff Filing Requirements for Non-Dominant Common Carriers,
Memorandum Opinion and Order, 8 FCC Rcd 6752, 6754, para. 9 (1993) (CLECs
are non-dominant carriers because they have not been previously declared
dominant), vacated and remanded in part on other grounds, Southwestern
Bell Corp. v. FCC, 43 F.3d 1515 (D.C. Cir. 1995); on remand, 10 FCC Rcd
13653 (1995).
^ See 47 C.F.R. S 61.26; Access Charge Reform, Reform of Access Charges
Imposed by Competitive Local Exchange Carriers, Seventh Report and Order
and Further Notice of Proposed Rulemaking, 16 FCC Rcd 9923, 9925, para. 3
(2001) (CLEC Access Reform Order). In 2011, the Commission adopted rules
requiring a CLEC engaged in "access stimulation" (discussed below) to
reduce its tariffed interstate switched access rates to the rates of the
price cap LEC in the state with the lowest rates, rather than the
presumably higher rates of the competing ILEC. See 47 C.F.R. S 61.26(g);
USF/ICC Transformation Order, 26 FCC Rcd at 17874-90.
^ CLEC Access Reform Order, 16 FCC Rcd at 9925, para. 3.
^ Joint Statement at 6-7, Stipulation 23.
^ Id.
^ See Beehive Telephone Company, Inc. Beehive Telephone Company, Inc.
Nevada, Order on Reconsideration, 13 FCC Rcd 11795, 11806, para. 24 (1998)
(Beehive Reconsideration Order).
^ Joint Statement at 7, Stipulation 24. This payment arrangement changed
over time to a fixed monthly fee. Id.
^ See Joint Statement at 7-8, Stipulation 25, 29.
^ Joint Statement at 8, Stipulation 30. During this same period, the
Commission was investigating Beehive's revenue-sharing arrangements, its
relationship with Joy, and its high access rates. See AT&T Ex. 130,
Deposition of Charles McCown at 38-39, 157-59 (McCown First Deposition).
See generally Beehive Telephone Company, Inc., Beehive Telephone, Inc.
Nevada, Suspension Order, 12 FCC Rcd 11695 (Com. Car. Bur. 1997) (Beehive
Suspension Order); Beehive Telephone Company, Inc., Beehive Telephone,
Inc. Nevada, Memorandum Opinion and Order, 13 FCC Rcd 2736 (1998) (Beehive
First 1997 Rate Investigation Order); Beehive 1997 Rate Reconsideration
Order; Beehive Telephone Company, Inc., Beehive Telephone, Inc. Nevada,
Memorandum Opinion and Order, 13 FCC Rcd 12275 (1998) (Beehive Second 1997
Rate Investigation Order).
^ Joint Statement at 22, para. 46 (AT&T Disputed Fact); Complaint Ex. A,
Expert Report of David I. Toof, PhD (Toof Report), at 6, para. 16.
^ See AT&T Ex. 130, McCown First Deposition at 56, 158; Defendants' Ex. 4,
Deposition of Charles McCown at 106-07 (McCown Second Deposition); Joint
Statement at 9, Stipulation 34.
^ Moreover, the enormous quantity of terminating minutes that Beehive was
receiving by virtue of its arrangement with Joy would have reduced
Beehive's per-minute costs, risking the possibility that Beehive would
have been forced into a lower NECA rate band. See, e.g., AT&T Legal
Analysis at 37-38; AT&T Reply to Formal Complaint, File No. EB-09-MD-010
(filed Jan. 29, 2010) at 15 and n.31 (AT&T Reply); AT&T Ex. A, Toof Report
at 4-6, paras. 12-16.
^ See paragraph 9 above.
^ See USF/ICC Transformation Order, 26 FCC Rcd at 17885-86, para. 689;
Establishing Just and Reasonable Rates for Local Exchange Carriers, Notice
of Proposed Rulemaking, 22 FCC Rcd 17989, 18003, para. 34 (2007); see also
note 27 above.
^ AT&T Ex. 130, McCown First Deposition at 159; Defendants' Ex. 4, McCown
Second Deposition at 120; AT&T Ex. 23, Email from Chuck McCown at Beehive
to CHR (explaining that Beehive will bill the IXCs for tandem switched
termination, tandem switching, and tandem switched transport along with a
portion of the local switching to make it whole).
^ ChaseCom's Answers to AT&T's Amended First and Second Requests for
Interrogatories, File No. EB-09-MD-010, at 4 (filed Aug. 27, 2010)
(ChaseCom's Interrogatory Responses); e-Pinnacle Communications, Inc.'s
Answers to AT&T's Amended First and Second Requests for Interrogatories,
File No. EB-09-MD-010 (filed Aug. 27, 2010) (e-Pinnacle's Interrogatory
Responses) at 4; All American's Answers to AT&T's Amended First and Second
Requests for Interrogatories, File No. EB-09-MD-010 (filed Aug. 27, 2010)
(All American Interrogatory Responses) at 3. See AT&T Ex. 138, Deposition
of Brian Kofford (Kofford Deposition) at 53; AT&T Ex. 139, Deposition of
Herb Levitin, at 64 (Levitin Deposition). See also AT&T Ex. 54, Email
exchange between CHR and Beehive; AT&T Ex. 55, CHR email; AT&T Ex. 56, CHR
Email; AT&T Ex. 57, Email from Beehive to CHR; AT&T Ex. 58, Email from
e-Pinnacle to CHR; AT&T Ex. 59, CHR Email; AT&T Ex. 60, Email from
e-Pinnacle to CHR; AT&T Ex. 61, Email from e-Pinnacle to CHR.
^ Joint Statement at 9, Stipulation 31; see also AT&T Ex. 52, Email from
CHR to Beehive; AT&T Ex. 53, Email from Beehive to All American,
e-Pinnacle and ChaseCom; AT&T Ex. 135, Deposition of Kelly Atkinson
(Atkinson Deposition) at 24; AT&T Ex. 128, Deposition of David Goodale
(Goodale First Deposition) at 210-12; AT&T Ex. 139, Levitin Deposition at
63; e-Pinnacle's Interrogatory Responses at 4.
^ AT&T Ex. 128, Goodale First Deposition at 212-16; AT&T Ex. 136,
Deposition of David Goodale at 160-61 (Goodale Second Deposition); AT&T
Ex. 130, McCown First Deposition at 177-79; Joint Statement at 15,
Stipulation 73.
^ AT&T Ex. 5, Application of All American Telephone Company, Inc. for a
Certificate of Public Convenience and Necessity to Provide Local Exchange
Services Within the State of Utah, Report and Order, para. 3 (March 7,
2007) (All American Utah CPCN); AT&T Ex. 9, Application of e-Pinnacle
Communications, Inc. for a Certificate of Public Convenience and Necessity
to Provide Local Exchange Services Within the State of Utah, Report and
Order, para. 2 (Oct. 20, 2004) (e-Pinnacle CPCN); AT&T Ex. 12, Application
of ChaseCom for a Certificate of Public Convenience and Necessity to
Provide Local Exchange Services Within the State of Utah, Report and
Order, para. 2 (July 13, 2005) (ChaseCom CPCN).
^ See Joint Statement at 9, Stipulation 37; AT&T Ex. 124, Consideration of
the Rescission, Alteration, or Amendment of the Certificate of Authority
of All American to Operate as a Competitive Local Exchange Carrier within
the State of Utah, Order on Application for Review and Rehearing and
Request for Reconsideration at 21-23 (July 6, 2010) (Utah PSC Revocation
Reconsideration Order); AT&T Ex. 79, All American Utah PSC Hearing Direct
Testimony at 5; ChaseCom Interrogatory Responses at 4; e-Pinnacle
Interrogatory Responses at 4.
^ Joint Statement at 2-3, Stipulations 2, 3, 4, 6; see also Utah Code
Section 54-8b-2.1 (specifying the process for excluding competition within
a local exchange with fewer than 5,000 access lines and the obligations
that may be imposed on carriers obtaining authorization to provide public
telecommunications services to any customer or class of customers who
requests service within such exchanges).
^ Joint Statement at 3, Stipulation 6 ("Each of Beehive's local exchanges
in Utah have less than 5,000 access lines, and Beehive serves fewer than
30,000 access lines in Utah."). See AT&T Ex. 5, All American Utah CPCN,
Exhibit A; AT&T Ex. 9, e-Pinnacle CPCN, Exhibit A; AT&T Ex. 12, ChaseCom
CPCN, Exhibit A. Indeed, in response to opposition to its initial CPCN
application, which included Beehive's territory, All American revised its
application to remove the areas served by Beehive. AT&T Ex. 96,
Consideration of the Rescission, Alteration, or Amendment of the
Certificate of Authority of All American to Operate as a Competitive Local
Exchange Carrier Within the State of Utah, Public Service Commission of
Utah, Docket No. 08-2469-01, Report and Order at 4-5 (Apr. 26, 2010) (Utah
PSC Revocation Order).
^ As noted above, a CLEC may benchmark its rates to those of a competing
LEC, but Defendants were not authorized to compete with Beehive in Utah.
Joint Statement at 10, Stipulation 45; AT&T Legal Analysis at 13-14; see
also AT&T Ex. 75, All American F.C.C. Tariff No. 2, Original Pages 89-92
(stating that All American's rates shall be "no higher than the Incumbent
Local Exchange Carrier's equivalent rates in whose serving area [All
American] is providing service"); AT&T Ex. 29, ChaseCom Tariff No. 1 at
Pages 91-94 (stating that ChaseCom's rates "are in accordance with"
Beehive's Tariff); AT&T Ex. 30, e-Pinnacle Tariff No. 1 at Pages 92-95
(stating that e-Pinnacle's rates "are in accordance with" Beehive's
Tariff).
^ AT&T Ex. 5, Application of All American Telephone Company for Authority
to Operate as a Competitive Provider of Telecommunications Services,
Providing Resold and Facilities-Based Interexchange and Basic Services
within the State of Nevada, Order (Mar. 5, 2001) (All American Nevada
CPCN). AT&T Ex. 28, All American F.C.C. Tariff No. 1, at 89-92. ChaseCom
and e-Pinnacle were not authorized to operate as CLECs in Nevada.
^ Joint Statement at 9, Stipulation 31. See ChaseCom's Interrogatory
Responses at 4; e-Pinnacle's Interrogatory Responses at 4; All American's
Interrogatory Responses at 3; see also AT&T Ex. 139, Levitin Deposition at
64.
^ See AT&T Ex. 130, McCown First Deposition at 223-24; AT&T Ex. 138,
Kofford Deposition at 77-78.
^ See ChaseCom's Interrogatory Responses at 3-4; e-Pinnacle Interrogatory
Responses at 3-4; All American Interrogatory Responses at 3; Defendants'
Ex. 4, McCown Second Deposition at 120-21; Joint Statement at 10, 14,
Stipulations 47 and 70.
^ Joint Statement at 9, Stipulation 36. Prior to April 2006, Beehive
billed AT&T under Beehive's name for calls that terminated on Defendants'
equipment. Beginning April 1, 2006, the bills AT&T received were in
Defendants' names. Joint Statement at 12, Stipulations 53 and 55; All
American's Interrogatory Responses at 5; ChaseCom's Interrogatory
Responses at 3-4; e-Pinnacle's Interrogatory Responses at 4, 6; AT&T Ex.
139, Levitin Deposition at 93-95; AT&T Ex. 138, Kofford Deposition at
68-69. Beehive, however, continued to generate the invoices and collect
charges until Defendants ceased operating. But see All American
Interrogatory Responses at 5 (between June 1, 2006 and August 1, 2007,
Beehive resumed billing AT&T under Beehive's name for traffic that
terminated to Joy's conference bridge equipment in Utah); see also AT&T
Ex. 136, Goodale Second Deposition at 52.
^ See Joint Statement at 14, Stipulation 70; ChaseCom's Interrogatory
Responses at 4; e-Pinnacle's Interrogatory Responses at 3-4; All
American's Interrogatory Responses at 3, 6; AT&T Ex. 130, McCown First
Deposition at 162-64; Defendants' Ex. 4, McCown Second Deposition at
120-21; AT&T Ex. 138, Kofford Deposition at 55-58; AT&T Ex. 136, Goodale
Second Deposition at 65; AT&T Ex. 139, Levitin Deposition at 54.
^ Joint Statement at 9, Stipulation 36; All American's Interrogatory
Responses at 3, 6; ChaseCom's Interrogatory Responses at 4; e-Pinnacle's
Interrogatory Responses at 4; AT&T Ex. 138, Kofford Deposition at 59-60;
AT&T Ex. 139, Levitin Deposition at 67-68; AT&T Ex. 136, Goodale Second
Deposition at 54-57.
^ See, e.g., AT&T Ex. 56, CHR Email (noting that Beehive directed CHR to
contact Defendants to ask if they wanted their tariffs changed to reflect
Beehive's increased rate changes).
^ e-Pinnacle's Interrogatory Responses at 4-6.
^ See, e.g., AT&T Ex. 138, Kofford Deposition at 47.
^ Joint Statement at 13, Stipulations 62, 65. See also AT&T Ex. 96, Utah
PSC Revocation Order at 14-16, 18, 26-28; AT&T Ex. 139, Levitin Deposition
at 84, 123; AT&T Ex. 138, Kofford Deposition at 71, 110.
^ Defendants were established as UNE-P CLECs. See AT&T Exs. 25, 48, 49;
see also AT&T Ex. 135, Allison Deposition at 33. They did not, however,
obtain any unbundled network elements that would have enabled them
independently to provide local telecommunications services to the public.
See, e.g., AT&T Ex. 140, Beehive's Response to Sprint's Third Set of
Interrogatories and Document Requests at 10; AT&T Ex. 138, Kofford
Deposition at 59; AT&T Ex. 139, Levitin Deposition at 66-67.
^ AT&T Ex. 97, Consideration of the Rescission, Alteration, or Amendment
of the Certificate of Authority of All American to Operate as a
Competitive Local Exchange Carrier Within the State of Utah, Public
Service Commission of Utah, Transcript of Hearing, Docket No. 08-2469-01,
at 123 (Mar. 3, 2010) (Utah PSC Transcript); AT&T Ex. 100, Consideration
of the Rescission, Alteration, or Amendment of the Certificate of
Authority of All American to Operate as a Competitive Local Exchange
Carrier Within the State of Utah, Public Service Commission of Utah,
Pre-Filed Rebuttal Testimony of David W. Goodale on Behalf of All American
Telephone Company, Inc., at 7 (Feb. 26, 2010).
^ All American maintains that it purchased a switch for use in Nevada. As
of October 27, 2010, however, it had not been installed. AT&T Ex. 132,
Deposition of Doug Wingrove at 8, 18-20, 39-40; see AT&T Initial Brief at
8-9. The testimony All American cites to the contrary is from individuals
who lacked direct knowledge regarding the switch. See Defendants' Reply
Brief at 6-7; AT&T Ex. 128, Goodale First Deposition at 54; AT&T Ex. 136,
Goodale Second Deposition at 49-50, 105; AT&T Ex. 130, McCown First
Deposition at 69-70; AT&T Ex. 131, Deposition of John Brewer at 103-04.
Consequently, calls in Nevada continued to be routed and terminated in the
same manner over Beehive's equipment. AT&T Ex. 132, Deposition of Doug
Wingrove at 40-41.
^ AT&T Ex. 132, Deposition of Doug Wingrove at 11-12, 14-17, 22-26, 33-34
(testifying that Joy's conference bridge equipment was located in Utah and
that all calls to telephone numbers associated with Joy's operation were
routed to its equipment located in Utah).
^ All American's assertion that it leased switches from Beehive prior to
purchasing and installing its own switches in Nevada or Utah is
unsupported. See AT&T Ex. 130, McCown First Deposition at 105; AT&T Ex.
97, Utah PSC Transcript at 69; AT&T Ex. 128, Goodale Deposition at 122-24.
See, e.g., AT&T Ex. 140, Beehive's Response to Sprint's Third Set of
Interrogatories and Document Requests at 10.
^ AT&T Ex. 132, Deposition of Doug Wingrove at 37-38 (testifying that All
American's Utah switch was connected to a router, which was then connected
to the Internet, and that the switch was not physically connected to any
conferencing equipment).
^ AT&T Ex. 139, Levitin Deposition at 73, 88, 123; AT&T Ex. 138, Kofford
Deposition at 71-72.
^ AT&T Ex. 139, Levitin Deposition at 41-49.
^ AT&T Ex. 138, Kofford Deposition at 83.
^ Joint Statement at 9, Stipulation 38; AT&T Ex. 139, Levitin Deposition
at 66-67; AT&T Ex. 138, Kofford Deposition at 78-80.
^ AT&T Ex.139, Levitin Deposition at 66-67; ChaseCom Interrogatory
Responses at 6-7. Although e-Pinnacle described its conference bridges as
"switches" (AT&T Ex. 138, Kofford Deposition at 58), other evidence in the
record contradicts this unsubstantiated claim (such as e-Pinnacle's
admission that it did not provide dialtone or telecommunications
services). See Joint Statement at 13, Stipulation 65; see also AT&T Ex.
138, Kofford Deposition at 110. Thus, although Defendants provided some
CLEC services, they did not do so to the public at large (nor, as
discussed below, did they do so in accordance with the terms of their
tariffs).
^ See discussion regarding the Utah PSC revocation proceeding below in
paragraphs 19-21. See also AT&T Ex. 128, Goodale First Deposition at 48.
^ See AT&T Ex. 138, Deposition of Brian Kofford, at 24-25; AT&T Ex. 139,
Deposition of Herb Levitin at 64-65.
^ See 47 C.F.R. S 63.71.
^ See AT&T Ex. 96, Consideration of the Rescission, Alteration, or
Amendment of the Certificate of Authority of All American to Operate as a
Competitive Local Exchange Carrier within the State of Utah, Report and
Order (Apr. 26, 2010) (Utah PSC Revocation Order). All American filed with
the Utah PSC a petition to amend its CPCN retroactively to March 7, 2007
(the date the CPCN was issued), which would have authorized All American
to operate as a CLEC in the area certificated to Beehive. See AT&T Ex. 71,
Petition of All American Telephone Co., Inc. for a Nunc Pro Tunc Amendment
of its Certificate of Authority to Operate as a Competitive Local Exchange
Carrier within the State of Utah, Report and Order (June 16, 2009) at 2-3,
14, 18-19. The Utah PSC, sua sponte, expanded the proceeding to consider
whether to rescind All American's CPCN.
^ AT&T Ex. 96, Utah PSC Revocation Order at 18, 23, 24.
^ Id. at 14, 28.
^ Id. at 14, 27-29.
^ Id. at 25.
^ Id. at 29.
^ AT&T Ex. 96, Utah PSC Revocation Order at 34 (emphasis omitted); see
also id. at 28 (despite All American's verified representations in its
application for a CPCN, Mr. Goodale admitted that "`from the time [All
American] first considered operating in Utah, the company's intent was to
operate in Beehive's territory in the manner in which it is currently
operating'").
^ AT&T Ex. 96, Utah PSC Revocation Order at 33.
^ AT&T Ex. 124, Utah PSC Revocation Reconsideration Order at 17.
^ AT&T Ex. 96, Utah PSC Revocation Order at 26 (All American represented
in a post-hearing brief that its operations "provide revenue to Beehive").
As it did when All American was applying for its CPCN, Beehive supported
All American in its efforts to dissuade the Utah PSC from revoking All
American's CPCN. See AT&T Ex. 124, Utah PSC Revocation Reconsideration
Order at 1.
^ AT&T Ex. 124, Utah PSC Revocation Reconsideration Order at 23.
^ Id. at 21-22 (citations omitted).
^ Id. at 19 (emphasis added).
^ Id. at 11.
^ Id. at 35.
^ AT&T Ex. 124, Utah PSC Revocation Reconsideration Order at 23.
^ Id. at 23.
^ Joint Statement at 4, Stipulation 11.
^ Id.
^ Joint Statement at 4-5, Stipulation 12.
^ Id.
^ Id.
^ AT&T Ex. 1, All American Telephone Company, Inc. v. AT&T, Inc.,
Memorandum & Order, 07-Civ 861, at *3-4 (WHP) (Mar. 16, 2009) (First Court
Referral Order).
^ AT&T Ex. 34, Informal Complaint, File No. EB-09-MDIC-003 (Apr. 15,
2009).
^ Complaint at 2, para. 2, n.4. See Formal Complaint of AT&T, File No. EB
09-MD-010 (filed Nov. 16, 2009). Count II of AT&T's Complaint implements
the First Court Referral Order.
^ AT&T Ex. 94, All American Telephone Company, Inc., et al. v. AT&T, Inc.,
Memorandum & Order, 07-Civ 861, at 2-4 (WHP) (Feb. 5, 2010) (Second Court
Referral Order). Count I of AT&T's Complaint implements Issues 1a to 1e
and Count III effectuates issues 2, 3, 5a, 5c, 5d, and 5e of the Second
Court Referral Order.
^ See April 2 Letter Ruling.
^ Formal Complaint and Motion for Declaratory Ruling of All American
Telephone Co., e-Pinnacle Communications, Inc., and ChaseCom, File No.
EB-10-MD-003 (filed May 7, 2010).
^ See All American v. AT&T Corp., Memorandum Opinion and Order, 26 FCC Rcd
723 (2011).
^ Complaint Legal Analysis at 29-53; AT&T Reply at 14-17; AT&T Reply to
Amended Formal Complaint, File No. EB-09-MD-010 (filed July 6, 2010) at
24-28 (AT&T Amended Reply); AT&T Initial Brief at 18-24.
^ The record exceeds 7,000 pages, including pleadings, discovery
responses, deposition transcripts, court exhibits, Utah PSC exhibits, and
other miscellaneous documents.
^ See paragraphs 17, 19-21 above.
^ See, e.g., AT&T Ex. 140, Beehive's Response to Sprint's Third Set of
Interrogatories and Document Requests at 10; AT&T Ex. 138, Kofford
Deposition at 56, 59; AT&T Ex. 139, Levitin Deposition at 66-67.
^ All American served Joy, its parent-affiliate CSP. Joint Statement at 8,
Stipulation 28; AT&T Ex. 96, Utah Revocation Order at 6. In addition to
its own conferencing service, ChaseCom served three CSPs. AT&T Ex. 139,
Levitin Deposition at 44-45, 48. e-Pinnacle also served three CSPs. AT&T
Ex. 138, Kofford Deposition at 83.
^ 47 C.F.R. S 61.26.
^ AT&T Ex. 5, All American Utah CPCN, at 2-3; AT&T Ex. 9, e-Pinnacle CPCN,
at para. 3; AT&T Ex. 12, ChaseCom CPCN, at para. 3.
^ AT&T Ex.6, All American CPCN at Exhibit A; AT&T Ex. 96, Utah PSC
Revocation Order, at 29, 33-34; AT&T Ex. 9, e-Pinnacle CPCN at para. 2;
AT&T Ex. 12, ChaseCom CPCN at para. 2. We disagree with the CLECs'
contention that the status of their CPCNs is irrelevant to whether they
operated as sham entities and to their ability to lawfully provide
interstate switched access service under the terms of their respective
tariffs. See Complaint at 16, para. 29; Answer at 15, para. 29; paragraph
39 below.
^ AT&T Ex.128, Goodale Deposition at 216; AT&T Ex. 96, Utah PSC Revocation
Order at 34.
^ The owners of ChaseCom and e-Pinnacle expressed a complete lack of
familiarity with a telecommunications company's operations and were
unaware of the limitations in the Utah CPCNs. AT&T Ex. 138, Kofford
Deposition at 68; AT&T Ex. 139, Levitin Deposition at 56-58. Beehive
similarly disregarded the CPCN limitations, encouraging All American to
enter into an interconnection agreement with Beehive. See AT&T Ex. 130,
McCown First Deposition at 177-82; AT&T Ex. 124, Utah PSC Revocation
Reconsideration Order at 21-22.
^ AT&T Ex. 96, Utah PSC Revocation Order at 6, 27-28; see, e.g., AT&T Ex.
138, Kofford Deposition at 71; AT&T Ex. 139, Levitin Deposition at 88.
^ See paragraphs 13-15, 20 above.
^ See paragraph 16 and notes 53 and 55 above; e-Pinnacle's Interrogatory
Responses at 4-6; ChaseCom's Interrogatory Responses at 3-4; All
American's Interrogatory Responses at 3; AT&T Ex. 130, McCown First
Deposition at 126, 174.
^ Between 2001 and 2005, Beehive's rates for the end office switching rate
element of switched access services declined from 4.59 cents per minute to
1.02 cents per minute. Joint Statement at 8, Stipulation 30. AT&T
estimates that Beehive's rate would have dropped to as low as 0.25 cents
per minute if it had continued filing its own 61.39 tariff. Joint
Statement at 22, AT&T Disputed Fact 46; Complaint Ex. A at 6, para. 16.
^ Joint Statement at 21-22, AT&T's Disputed Fact 45.
^ See Complaint at 30, para. 56, 37-38, para. 66; Complaint Legal Analysis
at 5; AT&T Ex. 130, McCown First Deposition at 105; AT&T. Ex.138, Kofford
Deposition at 34-37; AT&T Ex. 139, Levitin Deposition at 94-95.
^ See Complaint at 34-35, para. 61; Complaint Legal Analysis at 5; AT&T
Ex. 136, Goodale Second Deposition at 40, 54-55; AT&T Ex. 138, Kofford
Deposition at 33-36.
^ See Defendants' Ex. 4, McCown Second Deposition at 116-18, 120-21; AT&T
Ex. 139, Levitin Deposition at 36, 94; AT&T Ex. 138, Kofford Deposition at
34-35.
^ AT&T Ex. 130, McCown First Deposition at 159.
^ AT&T Ex. 130, McCown First Deposition at 87 (emphasis added).
^ AT&T Ex. 138, Kofford Deposition at 36-37 (testifying that, although
e-Pinnacle was nominally the CLEC billing AT&T, it continued sharing
revenue with Beehive in exactly the same way it had when Beehive was
billing AT&T); see also AT&T Ex. 139, Levitin Deposition at 30 (testifying
that, after becoming a CLEC, ChaseCom and Beehive would share revenue).
^ Defendants' Reply Brief at 8 (citing Global Crossing Telecommunications
Inc. v. Metrophones Telecommunications, Inc., 550 U.S. 45, 53 (2007)
(Global Crossing v. Metrophones); see 47 U.S.C. S 201(b) ("All charges,
practices, classifications, and regulations for and in connection with
such communication service, shall be just and reasonable, and any such
charge, practice, classification, or regulation that is unjust and
unreasonable is hereby declared to be unlawful . . . .")).
^ Defendants' Reply Brief at 8.
^ See Access Charge Reform; Price Cap Performance Review for Local
Exchange Carriers; Transport Rate Structure and Pricing; End User Common
Line Charges, CC Docket Nos. 96-262, 94-1, 91-213, 95-72, First Report and
Order, 12 FCC Rcd 15982, 16141, para. 363 (1997) ("[I]f an access
provider's service offerings violate section 201 or section 202 of the
Act, we can address any issue of unlawful rates through the exercise of
our authority to investigate and adjudicate complaints under section
208."); Hyperion Telecommunications, Inc. Petition for Forbearance,
Memorandum Opinion and Order and Notice of Proposed Rulemaking, 12 FCC Rcd
8596, 8597, para. 2, 8609, para. 25 (1997) (same).
^ See, e.g., AT&T Corp. v. YMax Communications Corp., Memorandum Opinion &
Order, 26 FCC Rcd 5742, 5761, paras. 52-53 & n.147 (2011) (concluding that
Commission's finding that carrier charges were unlawful under Sections
203(c) and 201(b) obviated the need to reach claims stated in remaining
counts of complaint alleging violations of particular Commission rules and
orders); AT&T v. Business Telecom Inc., Order on Reconsideration, 16 FCC
Rcd 21750, 21755, para. 9 (2001) (noting that "the Commission has on
several occasions awarded damages for violations of section 201(b), even
in the absence of specific rules applicable to the conduct at issue");
Total Telecomms. Servs., Inc. v. AT&T Corp., Memorandum Opinion & Order,
16 FCC Rcd 5726, 5733, para. 16 (2001) (holding that creation of sham
entity designed to extract inflated access charges from interexchange
carriers violated Section 201(b) despite absence of Commission rule
directly on point); Ascom v. Sprint, Memorandum Opinion and Order, 15 FCC
Rcd 3223 (2000) (holding that a carrier's failure to properly provide
service to its customer and for bills issued to a non-customer were unjust
and unreasonable practices); ASC Telecom, Inc. d/b/a AlternaTel, Notice
of Apparent Liability for Forfeiture, 17 FCC Rcd 18654, 18656 n.18 (2002)
(noting that even though a Commission rule did not apply to non-operator
service calls, the practice of charging a called party for a rejected
collect call nevertheless constitutes a 201(b) violation); People's
Network Inc. v. AT&T, Memorandum Opinion & Order, 12 FCC Rcd 21081, 21089,
para. 17 (Com. Car. Bur. 2007) (holding that carrier's billing delays
constituted an unreasonable practice under section 201(b) notwithstanding
absence of Commission rule addressing the issue); Rainbow v. Bell
Atlantic, Memorandum Opinion and Order, 15 FCC Rcd 11754 (CCB 2000)
(holding that a carrier's failure to make necessary software available to
a customer to access the carrier's platform was an unjust and unreasonable
practice); Hi-Rim Communications, Inc. v. MCI Telecommunications Corp.,
Memorandum Opinion and Order, 13 FCC Rcd 6551 (Com. Car. Bur. 1998)
(holding that a carrier's change of customer's designated primary
interexchange carrier without authorization, and subsequent failure to
transfer the customer back to the original carrier's network was an unjust
and unreasonable practice).
^ Total Telecommunications Services, Inc. v. AT&T Corp., Memorandum
Opinion and Order, 16 FCC Rcd 5726 (2001) (Total Telecom) aff'd in part
and remanded in part, 317 F.3d 227 (D.C. Cir. 2003).
^ Answer Legal Analysis at 16-19.
^ Total Telecom, 16 FCC Rcd at 5734, para. 18.
^ AT&T Corporation v. FCC, 317 F.3d 227, 233 (D.C. Cir. 2003).
^ Answer Legal Analysis at 17.
^ Answer Legal Analysis at 18.
^ Answer Legal Analysis at 16-18; Defendants' Initial Brief at 19-20;
Surrebuttal of All American, e-Pinnacle, and ChaseCom, File No.
EB-09-MD-010, at 5-6 (filed Aug. 4, 2010) (Surrebuttal).
^ See Total Telecom, 16 FCC Rcd at 5733, para. 16 ("Atlas created Total as
a sham entity designed solely to extract inflated access charges from
IXCs, [and] this artifice constitutes an unreasonable practice in
connection with the provision of access services.").
^ Nor do we find persuasive Defendants' reliance on a settlement agreement
between AT&T and Beehive, which involved a claim pre-dating the period at
issue here. See Defendants' Initial Brief at 21-22.
^ 47 C.F.R. S 61.26(b)(1).
^ Answer Legal Analysis at 19-20, 41-44, Defendants' Initial Brief at
20-21.
^ A "competing ILEC" is the "incumbent local exchange carrier . . . that
would provide interstate exchange access service . . . to the extent that
those services would not be provided by the [Defendants]." 47 C.F.R. S
61.26(a)(2).
^ Answer Legal Analysis at 15 (citing AT&T Corporation v. Jefferson
Telephone Company, 16 FCC Rcd 16130 (2001) (Jefferson Telephone); AT&T
Corp. v. Frontier Communications of Mt. Pulaski, Inc., 17 FCC Rcd 4041
(2002) (relying upon Jefferson Telephone and deciding issues identical to
those in that case and reaching the same conclusion); AT&T Corporation v.
Beehive Telephone Company, Inc., 17 FCC Rcd 11641 (2002) (same)).
^ Unlike here, in Jefferson Telephone AT&T argued that Jefferson's revenue
sharing agreement was inconsistent with a common carrier's duty to carry
traffic indifferently in violation of section 201(b) and that the
agreement violated Section 202(a)'s restriction on "undue or unreasonable
preferences." Jefferson Telephone, 16 FCC Rcd at 16137, para. 16.
^ Id.
^ Answer Legal Analysis at 13-16, 62-63; Defendants' Reply Brief at 8-9.
^ AT&T Amended Reply at 25-26.
^ Joint Statement at 9, Stipulation 35.
^ See Complaint at 42-63, paras. 73-113; Complaint Legal Analysis at 9-29;
AT&T Initial Brief at 5-8.
^ All American filed F.C.C. Tariff No. 1 on June 29, 2005, and revised the
tariff on June 16, 2008. Joint Statement at 10, Stipulations 40, 42.
^ See AT&T Ex. 28, Tariff No. 1, Original Title Page ("Regulations Rates
and Charges Applying . . . Within the Operating Territory of [All
American] in the State of Nevada"); Application of Tariff, section 1.1
("This tariff sets forth the regulations, rates, and charges . . . within
. . . Nevada"); Scope, section 2.11 ("Service(s) and the furnishing of
interstate transmission of information originating and terminating in . .
. Nevada"). Prior to filing Tariff No. 1, All American made modifications
specifying that the tariff was limited to services provided within Nevada.
See AT&T Ex. 73 (email from All American to Beehive changing reference
from Texas to Nevada); see also AT&T Ex. 134, Deposition of Dorothy Young
at 29-30 (Young Deposition); AT&T Ex. 97, Utah PSC Hearing Transcript at
85-86. In addition, when All American filed its Tariff No. 2 to cover
services provided in states other than Nevada, it made it clear that it
did not want its Tariff No. 2 to affect its Nevada operations and tariff.
See AT&T Ex. 134, Young Deposition at 71-79; AT&T Ex. 74 (email from CHR
noting that All American's first tariff was for its Nevada operations).
^ See paragraph 17 and note 63 above.
^ ChaseCom and e-Pinnacle filed their tariffs--both captioned F.C.C.
Tariff No. 1--on October 12, 2005. Joint Statement at 10, Stipulations
43-44. All American filed its F.C.C. Tariff No. 2 on April 18, 2008. Joint
Statement at 10, Stipulation 41.
^ AT&T Ex. 29, e-Pinnacle Tariff No. 1, Original Title Page; AT&T Ex. 30,
ChaseCom Tariff No. 1, Original Title Page.
^ AT&T Ex. 75, All American Tariff No. 2, Original Title Page.
^ See AT&T Ex. 75, All American Tariff No. 2, Original Page 11, Access;
Original Page 12, Exchange; AT&T Ex. 29, e-Pinnacle Tariff No. 1, Original
Page 11, Access; Original Page 12, Exchange; AT&T Ex. 30, ChaseCom Tariff
No. 1, Original Page 10, Access; Original Page 11, Exchange. Even if we
found the term "Operating Territory" ambiguous, we would construe it
against the drafter and conclude that it refers to the geographic area in
which Defendants were authorized by the Utah PSC to provide services. See
AT&T Corp. v. Ymax Communications Corp., Memorandum Opinion and Order, 26
FCC Rcd 5742, 5755, para. 33 (2011) (citing Associated Press v. FCC, 452
F.2d 1290, 1299 (D.C. Cir. 1971); Qwest Commc'ns Corp. v. Farmers &
Merchants Mut. Tel. Co., Memorandum Opinion and Order, 24 FCC Rcd 14801,
14810, n.83 (2009), recon. denied, 25 FCC Rcd 3422 (2010), pet. for review
denied, Farmers & Merchants Mut. Tel. Co. v. FCC, 668 F.3d 714 (D.C. Cir.
2011); American Satellite Corp. v. MCI Telecommunications Corp.,
Memorandum Opinion and Order, 57 FCC2d 1165, 1167, para. 6 (1976)).
^ See Joint Statement at 12, Stipulation 57 and paragraph 15 and footnotes
44 and 46 above. The Utah PSC concluded that "[a]t no time while it
operated in Utah has [All American] operated legally." AT&T Ex. 96, Utah
PSC Revocation Order at 34.
^ Answer at 32; Answer Legal Analysis at 22-23; Defendants' Reply Brief at
2.
^ 47 C.F.R. S 63.01.
^ See 47 U.S.C. S 203 (no carrier shall provide service unless it files
and publishes schedules in accordance with the Act and the Commission's
regulations).
^ Implementation of Section 402(b)(2)(A) of the Telecommunications Act of
1996; CC Docket No. 97-11, Petition for Forbearance of the Independent
Telephone & Telecommunications Alliance, AAD File No. 98-43, Report and
Order in CC Docket No. 97-11 and Second Memorandum Opinion and Order in
AAD File No. 98-43, 14 FCC Rcd 11364, 11372-75, paras. 12-18 (1999).
Defendants' reliance upon Vonage Holdings Corporation, Petition for
Declaratory Ruling Concerning an Order of the Minnesota Public Utilities
Commission, Memorandum Opinion and Order, 19 FCC Rcd 22404 (2004) (Vonage
Declaratory Ruling) is misplaced. Answer Legal Analysis at 23;
Defendants' Reply Brief at 2. The Vonage Declaratory Ruling addressed a
state commission's attempt to regulate VoIP interstate services. In this
case, it is the Utah Tariffs--not any determination by the Utah PSC--which
limit Defendants' ability to provide the services in question.
^ See CLEC Access Reform Order, 16 FCC Rcd at 9923, 9925, para. 3; 47
C.F.R. S 61.26.
^ Answer Legal Analysis at 22-23.
^ See MCI WorldCom Network Servs. v. PaeTec Commc'ns, Inc, 204 Fed Appx
272, n.2 (4^th Cir. 2006) ("under the filed rate doctrine, a carrier is
expressly prohibited from collecting charges for services that are not
described in its tariff").
^ Answer Legal Analysis at 22-23; Defendants' Reply Brief at 2-4 (citing
Norwest Transportation. Inc. v. Horn's Poultry, Inc., 23 F.3d 1151 (7th
Cir. 1994) (holding that shipper's tariffed charges were not invalid
because shipper failed to change its name on tariff after the ICC approved
the name change)).
^ See Complaint Legal Analysis at 10-12, 16.
^ AT&T Ex. 75, All American Tariff No. 2, Section 6.1 at Original Page 67;
AT&T Ex. 30, ChaseCom Tariff No. 1, Section 6.1 at Original Page 70; AT&T
Ex. 29, e-Pinnacle Tariff No. 1, Section 6.1 at Original Page 71 (stating
that Switched Access Services provides for "the use of common switching,
terminating, and trunking facilities between a Customer Designated
Premises and an end-users premises for originating and terminating
traffic").
^ AT&T Ex. 75, All American Tariff No. 2 at Original Page 11; AT&T Ex. 30,
ChaseCom Tariff No. 1 at Original Page 11; AT&T Ex. 29, e-Pinnacle Tariff
No. 1 at Original Page 12.
^ See paragraphs 24-33 above; AT&T Ex. 96, Utah PSC Revocation Order at
13-16.
^ Joint Statement at 13, Stipulations 59-61, 71; AT&T Ex. 141, Letter
dated March 8, 2010, from Jonathan E. Canis, Counsel for All American, to
The Honorable Henry A. Waxman, Chairman, Committee on Energy and Commerce,
House of Representatives at 5 (stating that All American's sole customer
"does not take services pursuant to tariff," but rather "per a unique,
oral agreement") (All American Congressional Responses). There also is no
evidence that Defendants filed tariffs with the appropriate state
regulatory authority to provide local telecommunications services. See,
e.g., Ex. 96, Utah PSC Revocation Order at 23-25 (All American operated
"without a local exchange tariff filed in Utah - in violation of Utah
[law]").
^ Joint Statement at 13, Stipulations 63-64.
^ Joint Statement at 13-14, Stipulations 67-68.
^ See, e.g., Qwest Communications Corporation v. Farmers and Merchants
Mutual Telephone Company, Second Order on Reconsideration, 24 FCC Rcd
14801, 14805-08, paras. 10-16 (2009).
^ Answer Legal Analysis at 23-24.
^ See Qwest Communications Corp. v. Farmers and Merchants Mutual Telephone
Company, Third Order on Reconsideration, 25 FCC Rcd 3422 (2010) (Farmers),
review denied, Farmers and Merchants Mutual Telephone Company v. FCC, 668
F.3d 714 (D.C. Cir. 2011) (Farmers v. FCC); see also Answer Legal Analysis
at 25-28.
^ Answer Legal Analysis at 26-28.
^ Answer Legal Analysis at 26.
^ Moreover, contrary to Defendants' characterization, Answer Legal
Analysis at 27, Farmers was not "premised entirely on the Commission's
finding that Farmers acted improperly by back-billing its conference
operators." See Farmers v. FCC, 668 F.3d at 719-21 (describing the
multiple factors the Commission considered in its analysis).
^ Answer Legal Analysis at 26, n.46.
^ See paragraph 35 above. See also AT&T Ex. 77, Letter from Katherine
Marshall, Counsel for All American, to Marlene Dortch, FCC Secretary
(filing All American Revised F.C.C. Tariff No. 1); AT&T Exhibit 77, Tariff
Check Sheet and First Revised Page No. 1 (noting that the Original Title
Page and sections 1 and 2 were not revised).
^ AT&T Ex. 77, Revised Tariff No. 1, First Revised Page No. 12 (emphasis
added). See AT&T Legal Analysis at 24-25.
^ AT&T Ex. 141, All American Congressional Responses at 5 (stating that
All American's sole customer "does not take services pursuant to tariff,"
but rather "per a unique, oral agreement"); AT&T Ex. 36, All American's
Second Interrogatory Responses at 3 (stating that services provided to its
sole customer "were provided on an untariffed basis"); AT&T Ex. 98, All
American Answers to Data Requests at 5.3 ("Charges to [All American's only
customer] are not governed by a price list or tariff; but rather pursuant
to an oral agreement between the parties"); AT&T Ex. 99, All American
Answers to Data Requests at 2 ("All American's business relationship with
[its only customer] is governed by an oral agreement").
^ Because we find that Defendants did not terminate calls to "end users"
within the meaning of their tariffs, we need not address AT&T's arguments
that the calls were not terminated to "end user premises" or over the
Defendants' common facilities. See Complaint at 59-61, paras. 106-09;
Complaint Legal Analysis at 25-27; AT&T Initial Brief at 15-17. Moreover,
having found that Defendants did not bill pursuant to applicable tariffs
and that they did not, in any event, provide access services within the
meaning of their tariffs, we do not need to address whether Defendants'
tariffs also violate the Commission's rules requiring tariffs to clearly
establish a rate. See Complaint at 45-47, paras. 79-80, nn.162, 165;
Complaint Legal Analysis at 13-15; AT&T Initial Brief at 6-8; AT&T Reply
Brief at 6-7. For the same reasons, we also need not address whether All
American's multiple tariff filings violate the Commission rules. See
Complaint at 44-47, paras. 78-80; AT&T Legal Analysis at 40.
^ See Answer Legal Analysis at 2-9, 64-66; Defendants' Initial Brief at
1-18.
^ See Letter from Jonathan Canis, Counsel for All American, to Lisa B.
Griffin, Deputy Division Chief, EB/MDRD and Anthony J. DeLaurentis,
Special Counsel, EB/MDRD, File No. EB-09-MD-010 (filed Apr. 13, 2010).
^ Letter from Lisa B. Griffin, Deputy Division Chief, EB/MDRD to Jonathan
Canis, Counsel for All American, and James F. Bendernagel, Jr., Counsel
for AT&T, File No. EB-09-MD-010 (filed Apr. 27, 2010) (April 27th Letter
Ruling) (concluding that "relevant factors of law, policy, and
practicality" supported the procedural rulings). Defendants subsequently
requested that the Commission issue a declaratory ruling, at the same time
that it issues its liability ruling in this case, to address several
issues referred by the Court (see footnote 4 above) that have been
bifurcated into any supplemental damages proceeding that may be filed
after the liability ruling. Letter from Jonathan E. Canis, Counsel for
Defendants, to Lisa B. Griffin, FCC, EB, Deputy Chief of MDRD, Rosemary
McEnery, FCC, EB, Deputy Chief of MDRD, Anthony J. DeLaurentis, FCC, EB,
Special Counsel, File No. EB-09-MD-010 (filed Mar. 15, 2012). We deny
Defendants' request for the reasons explained below in paragraph 43. See
also 5 U.S.C. S 554(e) (An agency "in its sound discretion, may issue a
declaratory order to terminate a controversy or remove uncertainty."); 47
U.S.C. S 154(j) ("The Commission may conduct its proceedings in such
manner as will best conduce to the proper dispatch of business and to the
ends of justice").
^ See Answer Legal Analysis at 2-9, 64; All American, e-Pinnacle, and
ChaseCom's Motion Requesting Permission to File Surrebuttal, File No.
EB-09-MD-010 (filed July 14, 2010) at 2-4; see also Surrebuttal at 1.
^ Letter from Lisa B. Griffin, Deputy Division Chief, EB/MDRD to Jonathan
Canis, Counsel for All American, and James F. Bendernagel, Jr., Counsel
for AT&T, File No. EB-09-MD-010 (filed July 28, 2010) (July 28th Status
Conference Order).
^ Letter from Jonathan Canis, Counsel for All American, to Lisa B.
Griffin, Deputy Division Chief, EB/MDRD and Anthony J. DeLaurentis,
Special Counsel, EB/MDRD, File No. EB-09-MD-010 (filed Aug. 19, 2010).
^ Letter from Lisa B. Griffin, Deputy Division Chief, EB/MDRD to Jonathan
Canis, Counsel for All American, and James F. Bendernagel, Jr., Counsel
for AT&T, File No. EB-09-MD-010 (filed Sept. 2, 2010) (September 2nd
Letter Ruling); see Opposition of AT&T Corp. to Request for
Reconsideration, File No. EB-09-MD-010 (filed Aug. 27, 2010).
^ See 47 U.S.C. SS 4(i), 4(j), 208 ("[I]t shall be the duty of the
Commission to investigate the matters complained of in such manner and by
such means as it shall deem proper."); Implementation of the
Telecommunications Act of 1996, Amendment of Rules Governing Procedures to
Be Followed When Formal Complaints Are Filed Against Common Carriers,
Report and Order, 12 FCC Rcd 22497, 22501, para. 5 (1997) (Formal
Complaints Order) ("Commission staff retains considerable discretion under
the new rules to, and is indeed encouraged to, explore and use alternative
approaches to complaint adjudication designed to ensure the prompt
discovery of relevant information and the full and fair resolution of
disputes in the most expeditious manner possible."); id. at 22510, n.68
("We emphasize again that the staff retains considerable discretion to use
alternative approaches and techniques designed to promote fair and
expeditious resolution of complaints."); Public Notice: Primary
Jurisdiction Referrals Involving Common Carriers, 15 FCC Rcd 22449 (Com.
Car. Bur., Enf. Bur., Int'l Bur., Wir. Tele. Bur. 2000) ("The procedures
by which the Commission handles a common carrier matter referred by a
court pursuant to the primary jurisdiction doctrine may vary according to
the nature of the matter referred.").
^ See April 27th Letter Ruling (concluding among other things that
"relevant factors or law, policy, and practicality" supported the
procedural rulings).
^ See April 27th Letter Ruling; July 28th Status Conference Order;
September 2nd Letter Ruling. This applies as well to Defendants' mistaken
assertion that they have been prejudiced by any purported failure of the
Commission to resolve this case within five months. Answer Legal Analysis
at 64-66, Defendants' Initial Brief at 10-13; see Farmers v. FCC, 668 F.3d
at 718 ("But even if the Commission had missed the 90-day deadline, it
would not have lost jurisdiction to issue Farmers II because Congress
established no consequence for failing to meet that deadline.").
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Federal Communications Commission FCC 13-38
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Federal Communications Commission FCC 13-38