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 Federal Communications Commission FCC 17-148 
 
Before the 
Federal Communications Commission 
Washington, D.C.  20554 
 
 
In the Matter of 
 
AT&T Corp.,  
 
     Complainant, 
 
v. 
 
Iowa Network Services, Inc. d/b/a  
Aureon Network Services, 
 
     Defendant. 
 
) 
) 
) 
) 
) 
) 
) 
) 
) 
) 
) 
) 
 
 
 
 
 
 
Proceeding Number 17-56 
Bureau ID Number EB-17-MD-001 
 
MEMORANDUM OPINION AND ORDER 
 
Adopted:  November 7, 2017 Released:  November 8, 2017 
 
By the Commission: 
 
  
I. INTRODUCTION  
1. Complainant AT&T Corp. (AT&T) alleges that Iowa Network Services, Inc. d/b/a 
Aureon Network Services (Aureon) violated Sections 201(b) and 203 of the Communications Act of 
1934, as amended (Act), in charging AT&T for Centralized Equal Access (CEA) service on traffic 
destined for competitive local exchange carriers (CLECs) engaged in “access stimulation.”1  In this 
Memorandum Opinion and Order, we grant AT&T’s Complaint in part.  We conclude that Aureon is 
subject to the Commission’s rate cap and rate parity rules and that it violated those rules by filing tariffs 
containing rates exceeding those prescribed by the Commission.  We will determine in the damages phase 
of this proceeding what Aureon’s rates should have been and whether refunds to AT&T are warranted.2  
We further order Aureon to revise its tariff to file rates that comply with the Commission’s rules.  We 
otherwise disagree with AT&T’s assertions that Aureon acted unlawfully.   
II. BACKGROUND 
A. Parties 
2. AT&T provides communications and other services, including interexchange or long 
distance services.3  As a long distance telephone company—otherwise known as an interexchange carrier 
                                                     
1 Formal Complaint of AT&T Corp., Proceeding Number 17-56, Bureau ID Number EB-17-MD-001 (filed June 8, 
2017) (Complaint).  See paragraph 10 below. 
2 Under Section 1.722(d) of the Commission’s rules, AT&T elected to bifurcate its liability and damages claims.  
Complaint at 9, para. 20 (citing 47 CFR § 1.722(d)).   
3 Complaint at 12, para. 25, Iowa Network Services, Inc. d/b/a Aureon Network Services Answer to the Formal 
Complaint of AT&T Corp., Proceeding Number 17-56, Bureau ID Number EB-17-MD-001 (filed June 28, 2017) 
(Answer) at 15, para. 25. 
 Federal Communications Commission FCC 17-148  
 
2 
(IXC)—AT&T provides telecommunications services enabling customers from one local exchange area 
to call customers in other local exchange areas.4  In general, AT&T offers its long distance telephone 
service to the public for a fee, collects revenue from the customers that place calls, and in some 
circumstances, pays a charge to other carriers for the use of their facilities.5 
3. One such carrier is Aureon.  AT&T is a customer of Aureon and uses Aureon’s network 
to complete certain calls for AT&T’s customers.6  A group of small, rural incumbent local exchange 
carriers (ILECs) founded Aureon in 1988 to provide CEA service.7  Aureon’s various divisions provide a 
wide variety of telecommunications, advanced, and other services.8  Aureon provides its CEA service 
through its Access Division.9   
B. CEA Service 
4. Local exchange carriers have traditionally been required to provide “equal access” 
service to long distance carriers.10  “Equal access” refers to a “class of service whereby all long distance 
service providers receive equivalent connections to the local exchange carrier’s network.”11  “1+ dialing” 
is an equal access feature that automatically directs all long distance numbers to the customer’s chosen (or 
“presubscribed”) long distance carrier.12  Historically, equal access was not available because all 1+ calls 
were routed to AT&T, the then-dominant long distance provider.13  Imposed as part of the 1982 
divestiture of AT&T, equal access obligations promoted long distance competition by enabling customers 
to reach AT&T’s competitors by dialing the same number of digits needed to reach AT&T.14   
5. In the 1980s, many switches of small, rural ILECs could not provide service to more than 
one long distance carrier on a 1+ basis.15  These small, rural ILECs claimed that they lacked the financial 
ability to upgrade or replace their existing switches to provide equal access.16  They further maintained 
that, because of the low volume of traffic from each individual ILEC, IXCs would be unwilling to incur 
high costs to construct the facilities needed to interconnect long distance networks directly to ILECs’ end 
                                                     
4 Joint Statement of Stipulated Facts, Disputed Facts, and Key Legal Issues, Proceeding Number 17-56, Bureau ID 
Number EB-17-MD-001 (filed July 20, 2017) (Joint Statement) at 2, Stipulated Fact 2. 
5 Joint Statement at 2, Stipulated Fact 3. 
6 Joint Statement at 2, Stipulated Fact 5. 
7 Joint Statement at 2, Stipulated Facts 6, 7. 
8 Joint Statement at 3, Stipulated Facts 10, 11.  These services include (a) voice services (VoIP, IP Fax, hosted 
PBX); (b) dedicated Internet access; (c) cloud and data storage; (d) IT support (technology planning, help desk, 
disaster recovery, IT security); (e) human resources (administrative services, staffing, leadership development, 
senior living services); and (f) call centers.  Id. at 3, Stipulated Fact 11. 
9 Joint Statement at 2, Stipulated Fact 6. 
10 See United States v. Am. Tel. & Tel. Co., 552 F. Supp. 131, 196 (D.D.C. 1982), aff’d sub nom. Maryland v. United 
States, 460 U.S. 1001 (1983) (U.S. v. AT&T); see also 47 U.S.C. § 251(g).   
11 See Complaint, Exh. 10, FCC, Distribution of Equal Access Lines and Presubscribed Lines, 1997 WL 677407 
(C.C.B. Nov. 3, 1997).   
12 Complaint at 13, para. 31; Answer at 17, para. 31. 
13 See In re Applications of Iowa Network Access Div., Memorandum Opinion, Order and Certificate, 3 FCC Rcd 
1468 (1988) (INS Section 214 Order), para. 3.  
14 See U.S. v. AT&T, 552 F. Supp. at 196-98. 
15 Joint Statement at 4, Stipulated Fact 18. 
16 Id. 
 Federal Communications Commission FCC 17-148  
 
3 
office switches.17  In some states, groups of small, rural ILECs sought to address these issues by forming 
entities to provide CEA service.18  CEA service enables IXCs to complete their customers’ long distance 
telephone calls, without building their own networks, by connecting the IXCs’ facilities to a centralized 
switch and network operated by the CEA provider.19  The CEA provider, in turn, connects with local 
exchange carrier (LEC) networks at various points of interconnection (POIs).20  
6. In 1988, the Commission authorized Aureon to provide CEA service for both originating 
and terminating traffic in Iowa.21  Aureon does not serve end users.22  Rather, it serves IXCs, enabling 
them to deliver long distance traffic to approximately 200 LECs that subtend Aureon’s network.23  In 
accordance with routing guidelines provided by LECs, AT&T sends traffic to Aureon’s network for 
routing to LECs connected to Aureon’s network.24  Not every LEC operating in Iowa subtends Aureon’s 
network, however.25  Where a LEC does not subtend Aureon’s network, AT&T sends calls to that LEC’s 
Iowa customers through a network provider other than Aureon.26  
C. The Commission’s Access Tariff Regime and Intercarrier Compensation Reforms 
7. The Commission’s tariff regime for switched access charges differs for dominant carriers 
and non-dominant carriers, ILECs and CLECs.27  ILECs, as dominant carriers,28 are required to file and 
maintain tariffs either as rate-of-return or price-cap carriers.29  Rate-of-return dominant carriers can 
participate either in the traffic-sensitive tariff filed annually by the National Exchange Carriers 
Association (NECA)30 or file their own tariffs under rule 61.38 or 61.39.31  Historically, such carriers 
                                                     
17 Joint Statement at 4, Stipulated Fact 19. 
18 Joint Statement at 4, Stipulated Fact 20. 
19 Joint Statement at 4, Stipulated Fact 21.   
20 Id.; Complaint at 14-15, para. 33. 
21 Joint Statement at 4, Stipulated Fact 22; INS Section 214 Order.  The Commission also has authorized the 
provision of CEA service in Indiana, South Dakota, and Minnesota.  Complaint at 15, para. 34. 
22 Joint Statement at 4, Stipulated Fact 26. 
23 Joint Statement at 4, Stipulated Fact 25. 
24 Joint Statement at 5, Stipulated Fact 29. 
25 Joint Statement at 4, Stipulated Fact 27. 
26 Joint Statement at 5, Stipulated Fact 28. 
27 Compare 47 CFR §§ 61.19-61.26, with 61.31-61.59.  See All Am. Tel. Co., Inc. v. FCC, 867 F.3d 81, 84 (D.C. Cir. 
2017) (“When it comes to determining the amount of that access charge, however, not all local carriers are the same 
… federal law divides local carriers into ‘incumbent local exchange carriers’ and ‘competitive local exchange 
carriers.’”). 
28 The Commmision developed the dominant/nondominant dichotomy in the Competitive Carrier First Report & 
Order, designating AT&T, independent telephone companies, Western Union, domestic satellite carriers (Domsats), 
Domsat resellers, and what were known as miscellaneous common carriers (providers of relay video signals and 
their corresponding audio components by terrestrial microwave links) as dominant.  Policy and Rules Concerning 
Rates for Competitive Common Carrier Services and Facilities Authorizations Therefor, First Report and Order, 85 
FCC 2d 1, 10-11, para. 26 (1980) (Competitive Carrier First Report & Order).  All other carriers were classified as 
nondominant.  Id., 85 FCC 2d at 11, para. 27. 
29 See 47 U.S.C. § 203.   
30 Establishing Just and Reasonable Rates for Local Exchange Carriers, Notice of Proposed Rulemaking, 22 FCC 
Rcd 17989, 17992, para. 6 (2007). 
31 See 47 CFR §§ 61.38-61.39.   
 Federal Communications Commission FCC 17-148  
 
4 
have set their tariffed interstate switched access rates at a level designed to give carriers an opportunity to 
recover their operating costs plus an authorized rate of return on the regulated rate base (plant in service 
minus accumulated depreciation).32  Competitive access providers were classified as nondominant,33 and, 
as such, are not required to file cost support.34 
8. The Telecommunications Act of 1996 created its own dichotomy of local exchange 
carriers—ILECs and CLECs.35  Carriers (including all ILECs) that were subject to dominant carrier 
regulation remained as such and new entrants in the exchange access market (including most CLECs) 
were subject to nondominant regulation.36  Responding to substantial disputes regarding nondominant 
carrier switched access charges, the Commission in 2001 held that non-dominant CLECs could provide 
an IXC with, and charge for, interstate switched access services in one of two ways.37  First, a CLEC may 
tariff interstate switched exchange access charges if its rates are no higher than the rates charged for such 
services by the competing ILEC (the benchmark rule).38  Second, as an alternative to tariffing switched 
exchange access services, a CLEC may negotiate and enter into an agreement with an IXC to charge rates 
higher than those permitted under the benchmark rule.39 
9. In 2011, the Commission comprehensively reformed and modernized its intercarrier 
compensation regime to facilitate the transition to Internet Protocol-based networks and curtail wasteful 
arbitrage.40  In particular, the Commission adopted a uniform national bill-and-keep framework as the 
ultimate end state for all telecommunications traffic exchanged with a LEC.41  Under a bill-and-keep 
arrangement, carriers look first to their subscribers to cover the costs of the network, then to explicit 
universal service support where necessary.42  The Commission immediately capped all interstate switched 
access rates, as well as many intrastate rates, effective as of the date of the rules,43 and mandated that 
                                                     
32 Connect America Fund et al., Report and Order, Order and Order on Reconsideration and Further Notice of 
Proposed Rulemaking, 31 FCC Rcd 3087, 3215, para. 337 (2016) (Rate-of-Return Reform Order). 
33 See Competitive Carrier First Report and Order, 85 FCC 2d at 11, para. 27; Tariff Filing Requirements for Non-
Dominant Common Carriers, Memorandum Opinion and Order, 8 FCC Rcd 6752, 6754 (1993), vacated and 
remanded in part on other grounds, Southwestern Bell Corp. v. FCC, 43 F.3d 1515 (D.C. Cir. 1995). 
34 Our rules requiring the filing of cost support, such as Rules 61.38 and 61.39, apply only to dominant carriers.  47 
CFR §§ 61.38, 61.39. 
35 See 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, 9926, para. 8 (2001) 
(CLEC Access Charge Reform Order). 
36 See Access Charge Reform, Notice of Proposed Rulemaking, Third Report and Order, and Notice of Inquiry, 11 
FCC Rcd 21354, 21475-76, para. 278 (1996). 
37 See CLEC Access Charge Reform Order, 16 FCC Rcd at 9925, para. 3. 
38 See 47 CFR § 61.26(b), (c).  The Commission exempts a narrow class of rural CLECs from its benchmark rule 
permitting qualifying carriers to file tariffs containing rates “at the level of those in the NECA access tariff.”  47 
CFR § 61.26(a)(6) and (e).    
39 CLEC Access Charge Reform Order, 16 FCC Rcd at 9925, para. 3, 9938, para. 40.  
40 Connect America Fund et al., Report and Order and Further Notice of Proposed Rulemaking, 26 FCC Rcd 17663 
(2011) (USF/ICC Transformation Order), pets. for review denied, In re FCC 11-161, 753 F.3d 1015 (10th Cir. 
2014). 
41 USF/ICC Transformation Order, 26 FCC Rcd at 17904-956, paras. 736-846. 
42 See USF/ICC Transformation Order, 26 FCC Rcd at 17904, para. 737. 
43 USF/ICC Transformation Order, 26 FCC Rcd at 17932-34, paras. 798, 800-01 (“We also take measures today to 
start reforming other elements as well by capping all interstate switched access rates in effect as of the effective date 
(continued ….) 
 Federal Communications Commission FCC 17-148  
 
5 
LECs reduce their terminating intrastate access rates to the level of their interstate rates by July 1, 2013.44  
For CLECs, the Commission reaffirmed benchmarking as the main means of ensuring reform.45  The 
Commission also established a schedule by which many interstate and intrastate terminating access rates 
would be reduced to bill-and-keep.46  The Commission imposed these caps and prescribed reductions 
regardless of the resulting rate of return on investment relating to the affected services.47 
10. In addition, the Commission promulgated new rules to address access stimulation.48  
Access stimulation occurs when a LEC with high switched access rates (1) enters into an arrangement 
with a provider of high call volume operations—typically, “free” chat line or conference calling 
companies (FCPs)—to stimulate the access minutes terminated to the LEC; and (2) shares a portion of the 
increased access revenues resulting from the increased demand, or some other benefit, with the FCP.49  
The Commission concluded that access stimulation is an arbitrage scheme that is wasteful, imposes undue 
costs on consumers, and harms competition.50  To curtail this practice, the Commission adopted a rule that 
prohibits CLECs engaged in access stimulation from filing a tariff for their interstate exchange access 
services above the rate prescribed in the access tariff of the price cap ILEC with the lowest switched 
access rates in the state.51 
D. Aureon’s CEA Tariff and Proposed High-Volume Tariff 
11. Aureon’s Access Division provides CEA service and, as to that service, Aureon is 
classified as a dominant carrier.52 Aureon filed its tariffed rates for CEA service under Section 61.38 of 
the Commission’s rules.53  Specifically, INAD Tariff F.C.C. No. 1 (Tariff) is captioned “Centralized 
Equal Access Service” and contains the “regulations, rates and charges applicable to the provision of 
Switched Access Services and other miscellaneous services … provided by [Aureon] … to customers.”54    
Although the Tariff capitalizes the phrase “Centralized Equal Access Service” and uses it on the title page 
and as a caption on each page of the Tariff, the Tariff does not define the term.55  Aureon charges for 
(Continued from previous page)                                                            
of the rules, including originating access and all transport rates.”), 17934, para. 801 (“Thus, at the outset of the 
transition, all interstate switched access and reciprocal compensation rates will be capped at rates in effect as of the 
effective date of the rules.  We cap these rates as of the effective date of the rules.”). 
44 USF/ICC Transformation Order, 26 FCC Rcd at 17936-37, para. 805 (“The transition imposes a cap on all 
intrastate rates for price cap carriers [and CLECS that benchmark access rates to price cap carriers], and all 
terminating intrastate access rates for rate-of-return carriers [and CLECS that benchmark access rates to rate-of-
return carriers]).  The Commission also required LECs to reduce their intrastate originating dedicated transport rates 
to interstate levels.  See USF/ICC Transformation Order, 26 FCC Rcd 17934-35, para. 801. 
45 USF/ICC Transformation Order, 26 FCC Rcd at 17937, para. 807 (“Application of our access reforms will 
generally apply to competitive LECs via the CLEC benchmarking rule.”). 
46 USF/ICC Transformation Order, 26 FCC Rcd 17934-36, para. 801, Figure 9. 
47 See Rate-of-Return Reform Order, 31 FCC Rcd at 3129, para. 229 n.500. 
48 47 CFR § 61.26(g); USF/ICC Transformation Order, 26 FCC Rcd at 17874-90, paras. 656-701.   
49 USF/ICC Transformation Order, 26 FCC Rcd at 17874, para. 656.  See Joint Statement at 6, Stipulated Fact 47;  
see generally All American Tel. Co., Inc. v. FCC, 867 F.3d 81, 85 (D.C. Cir. 2017). 
50 USF/ICC Transformation Order, 26 FCC Rcd at 17676, para. 33, 17873, para. 649, 17875-77, paras. 663-66. 
51 47 CFR § 61.26(g)(1); USF/ICC Transformation Order, 26 FCC Rcd at 17886, para. 690. 
52 Joint Statement at 4, Stipulated Fact 24. 
53 Id. 
54 Joint Statement at 5, Stipulated Fact 34.  See Complaint, Exh. 3, INAD Tariff F.C.C. No. 1, § 1.1, 2nd Revised 
Page 16 (issued Oct. 27, 2000).   
55 Joint Statement at 5, Stipulated Fact 35. 
 Federal Communications Commission FCC 17-148  
 
6 
interstate CEA service using a single tariff rate called the “switched transport rate,” which is non-distance 
sensitive and recovers the costs of both transport and tandem switching.56  When Aureon first filed the 
Tariff on August 10, 1988,57 the switched transport rate was $0.0117 per minute.58  On December 29, 
2011, when the Commission’s rate cap went into effect, the switched transport rate was $0.00819 per 
minute.59  Aureon reduced the per-minute rate to $0.00623 in June 2012, and increased the rate to its 
current level of $0.00896 in June 2013.60  
12. In April 2017, Aureon proposed providing a separate, high-volume contract tariff 
service.61  This service would be subject to a lower rate ($0.00649 per minute), and purchasers would be 
required to sign a separate contract with Aureon and agree not to challenge any of Aureon’s rates.62  
According to Aureon’s filing, “additional terms and conditions that are not applicable to [CEA service]” 
would govern the high-volume service.63  Aureon delayed the effective date of its proposed high-volume 
tariff filing until the Commission could review the proposal.64  One month later, Aureon filed an 
application for special permission to withdraw the proposed service and to substitute a new “volume 
discount” plan that would have the same rate as the proposed high-volume contract service and similarly 
would require execution of a separate service agreement.65  The volume discount plan became effective 
on May 20, 2017.66  Aureon has not negotiated an access services agreement with AT&T, however.67 
E. The Parties’ Dispute   
13. AT&T provides long-distance services to customers in Iowa and purchases Aureon’s 
services to complete calls.68  In recent years, AT&T has seen a greatly increasing amount of alleged 
access stimulation traffic traverse its network in Iowa, for which it must pay access charges both to 
                                                     
56 Joint Statement at 5, Stipulated Fact 37.  The Commission recently requested that parties refresh the record 
regarding tandem switching and transport services in the intercarrier compensation reform proceedings.  See Parties 
Asked to Refresh the Record on Intercarrier Compensation Reform Related to the Network Edge, Tandem Switching 
and Transport, and Transit, Public Notice, DA 17-863, 2017 WL 3953397 (Sept. 8, 2017).  Specifically, the 
Commission sought comments on “what steps [it] should take to transition the remaining elements associated with 
tandem switching and transport to bill-and-keep.”  Id.  This request implicates carriers such as Aureon that provide 
tandem switching and transport, but are not terminating carriers. 
57 Joint Statement at 5, Stipulated Fact 34. 
58 Joint Statement at 9, Stipulated Fact 80. 
59 Joint Statement at 8, Stipulated Fact 59. 
60 Joint Statement at 8, Stipulated Facts 60, 61.  Aureon’s present tariffed intrastate rate is $0.0114 per minute for 
CEA switching services plus $0.003 per minute, per mile for transport, and it has been at the level since the early 
1990s.  Joint Statement at 8, Stipulated Fact 69. 
61 Joint Statement at 5, Stipulated Fact 38. 
62 Id. 
63 Joint Statement at 6, Stipulated Fact 39. 
64 Joint Statement at 6, Stipulated Fact 40. 
65 Joint Statement at 6, Stipulated Fact 41. 
66 Joint Statement at 6, Stipulated Fact 42. 
67 Id. 
68 Joint Statement at 9, Stipulated Facts 73, 74.  Depending on the choices made by the end user’s provider (i.e., 
whether it subtends Aureon’s network), AT&T must connect to that provider through Aureon.  See 47 U.S.C. 
§ 251(a) (“Each telecommunications carrier has the duty … to interconnect directly or indirectly with the facilities 
and equipment of other telecommunications carriers.”).  
 Federal Communications Commission FCC 17-148  
 
7 
Aureon (for tandem and transport services to the subtending LECs’ POIs),69 and to the subtending LECs 
(for transport from their POIs to their switches and for end office switching services)70 that terminate the 
calls.71  Aureon estimates that, over time, traffic owing to its subtending LECs engaged in access 
stimulation has amounted to roughly [BEGIN CONFIDENTIAL]  [END CONFIDENTIAL] of its 
total switched access service traffic.72 
14. Aureon has sent monthly invoices to AT&T for access service.73  AT&T fully paid 
Aureon’s August 2013 invoice and previous invoices for access service.74  In October 2013, AT&T 
disputed Aureon’s billed access service charges and began withholding payment on access charges it 
claims were being improperly billed by Aureon.75  AT&T has not fully paid Aureon’s September 2013 
invoice and subsequent invoices.76 
15. On May 30, 2014, Aureon filed a complaint against AT&T in the United States District 
Court for New Jersey alleging that AT&T breached Aureon’s federal and state tariffs.77  AT&T filed 
counterclaims against Aureon alleging various violations of the Act.78  On July 6, 2015, AT&T filed a 
letter with the District Court raising the issue of the primary jurisdiction doctrine.79  In an Order dated 
October 14, 2015, the District Court stayed the case and referred it to the Commission pursuant to that 
doctrine.80  In August 2016, the parties notified the Commission of the District Court’s referral.81  In a 
September 27, 2016, Letter Ruling, the Commission ordered AT&T to file a Formal Complaint to 
effectuate the District Court’s referral.82 
                                                     
69 Joint Statement at 5, Stipulated Fact 37. 
70 See AT&T Corp. v. Alpine Communications, LLC, Memorandum Opinion and Order, 27 FCC Rcd 11511, 11513-
14, paras. 6-8.  See also AT&T Corp. v. Great Lakes Communication Corp, Proceeding No. 16-170, Bureau ID No. 
EB-16-MD-001 (filed Aug. 16, 2016), Complaint, Legal Analysis at 13 (AT&T v. Great Lakes Complaint).  
71 Principal among these access-stimulating LECs is Great Lakes Communication Corporation, against which AT&T 
has filed a formal complaint that is pending before the Commission.  See footnote 70 above; see also Joint Statement 
of Stipulated Facts, Disputed Facts, Key Legal Issues, and Discovery and Scheduling, Proceeding Number 16-170, 
Bureau ID Number EB-16-MD-001 (filed Oct. 17, 2016) at 4, Stipulated Fact 24 (“GLCC is engaged in “access 
stimulation” as defined under the Commission’s rules.”).  
72 Joint Statement at 6-7, Stipulated Fact 48. 
73 Joint Statement at 9, Stipulated Fact 75. 
74 Id. 
75 Joint Statement at 9, Stipulated Fact 76. 
76 Joint Statement at 9, Stipulated Fact 77. 
77 Joint Statement at 3, Stipulated Fact 12. 
78 Complaint at 29, para. 60; Complaint, Exh. 45, Defendant’s Answer and Counterclaims, Iowa Network Services v. 
AT&T Corp., No. 14-3439 (D.N.J. Aug. 4, 2014); Answer at 32, para. 60. 
79 Joint Statement at 3, Stipulated Fact 13. 
80 Joint Statement at 3, Stipulated Fact 14.  On October 28, 2015, Aureon filed a motion asking the District Court to 
reconsider its October 14, 2015, Order.  Joint Statement at 3, Stipulated Fact 15.  The District Court denied 
Aureon’s motion for reconsideration on December 8, 2015.  Joint Statement at 3, Stipulated Fact 16.   
81 Letter to Marlene H. Dortch, Secretary, FCC, from James U. Troup, Counsel for Aureon (Aug. 5, 2016); Letter to 
Christopher Killion, Chief, Market Disputes Resolution Division, FCC Enforcement Bureau, from Michael J. 
Hunseder, Counsel for AT&T (Aug. 12, 2016). 
82 Joint Statement at 3, Stipulated Fact 17.  See Letter from Lisa B. Griffin, Deputy Chief, Markets Dispute 
Resolution Division, FCC Enforcement Bureau, to James F. Bendernagel, Counsel for AT&T, and James U. Troup, 
Counsel of Aureon, Proceeding Number 17-56, Bureau ID Number EB-17-MD-001 (Sept. 27, 2016).   
 Federal Communications Commission FCC 17-148  
 
8 
16. On June 8, 2017, AT&T filed its Complaint with the Commission.83  The Complaint 
asserts two counts:  Count I, for violation of Section 201 of the Act,84 and Count II, for violation of 
Section 203 of the Act.85  Specifically, AT&T argues that (1) the Tariff applies only to CEA service, 
which it argues does not include access stimulation traffic;86 (2) Aureon violated the Commission’s rate 
cap and rate parity rules by raising its CEA tariffed rate in 2013 and by not ever lowering its intrastate 
CEA rate;87 (3) Aureon is engaged in access stimulation but has not filed revised tariffs to conform its 
rates to the lower levels that the Commission has required for such traffic;88 and (4) Aureon manipulated 
its CEA rates through a variety of improper accounting measures.89  Aureon filed an answer on June 28, 
2017, denying the allegations of wrongdoing and asserting various affirmative defenses.90  AT&T 
submitted a Reply to the Answer on July 5, 2017.91 
III. DISCUSSION 
A. Aureon Did Not Violate Sections 203 and 201(b) of the Act by Billing at its CEA 
Tariff Rate for Traffic Terminating with Access Stimulators. 
17. AT&T contends that Aureon violated Section 203 of the Act and committed an 
unreasonable practice in contravention of Section 201(b) of the Act by billing AT&T for access 
stimulation traffic, because access stimulation traffic is not CEA traffic under the Tariff.92  The Tariff is 
titled “Centralized Equal Access Service,” and that phrase appears as a caption throughout the Tariff.93  
Nonetheless, the Tariff does not define the term.94  AT&T argues that the Commission should infer the 
                                                     
83 Consistent with the September 27, 2016, Letter Ruling, the Complaint addressed the affirmative defenses and 
counterclaims that AT&T raised in the District Court and that the District Court referred to the Commission.  The 
District Court did not refer Aureon’s collection action claims against AT&T, and they remain pending with the 
Court.  Although Aureon requests that the Commission address its claims against AT&T, we decline to do so in this 
proceeding.  See Initial Brief of Iowa Network Services, Inc. d/b/a Aureon Network Services, Proceeding Number 
17-56, Bureau ID Number EB-17-MD-001 (filed Aug. 21, 2017) (Aureon Initial Brief) at 1-4.  Aureon’s claims 
against AT&T would be “cross-complaints” in this case, which the Commission’s formal complaint rules prohibit.  
47 CFR § 1.725 (prohibiting cross-complaints—including counterclaims—seeking relief against a carrier that is a 
party to a proceeding). 
84 Complaint at 64-68, paras. 134-46. 
85 Complaint at 68-70, paras. 147-54. 
86 Complaint, at 30-40, paras. 62-80; Complaint, Legal Analysis at 4-28; AT&T’s Reply to the Answer, Response to 
Affirmative Defenses, and Information Designation, Proceeding Number 17-56, Bureau ID Number EB-17-MD-001 
(filed July 5, 2017) (Reply), Legal Analysis at 5-22. 
87 Complaint at 44-51, paras. 86-101; Complaint, Legal Analysis at 28-38; Reply, Legal Analysis at 22-31. 
88 Complaint at 51-57, paras. 102-17; Complaint, Legal Analysis at 38-48; Reply, Legal Analysis at 31-38. 
89 Complaint at 57-64, paras. 118-33; Complaint, Legal Analysis at 48-62; Reply, Legal Analysis at 38-58; Final 
Brief of AT&T Corp., Proceeding Number 17-56, Bureau ID Number EB-17-MD-001 (filed Aug. 21, 2017) (AT&T 
Initial Brief) at 3-9; Final Reply Brief of AT&T Corp., Proceeding Number 17-56, Bureau ID Number EB-17-MD-
001 (filed Aug. 28, 2017) at 5-10 (AT&T Reply Brief). 
90 See footnote 78 above. 
91 See Reply. 
92 Complaint at 30-43, paras. 62-85, at 64-70, paras. 134-54; see, e.g., Complaint, Legal Analysis at 1-2, 13-15; 
Reply, Legal Analysis at 5-22.  AT&T has paid Aureon’s charges for traffic that transits to and from LECs that 
AT&T does not contend are access stimulators.  Joint Statement at 9, Stipulated Facts 76 and 77; AT&T Answer to 
Interrogatory No. 4; Aureon Initial Brief at 2; AT&T Initial Brief at 3-4. 
93 Joint Statement at 5, Stipulated Facts 34, 35. 
94 Joint Statement at 5, Stipulated Fact 35. 
 Federal Communications Commission FCC 17-148  
 
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term’s definition from other authority, and that the definition must exclude the provision of access 
services on access stimulation traffic.95  We are unpersuaded by AT&T’s arguments.  As discussed below, 
we conclude that the service Aureon provided to AT&T is the service that the Tariff describes.  
Therefore, Aureon appropriately billed AT&T under the Tariff.96   
18. Section 1 of the Tariff states that it contains the “regulations, rates and charges applicable 
to the provision of Switched Access Services and other miscellaneous services … provided by [Aureon] 
… to customers.”97  The Tariff provides that “Switched Access Service, when combined with the services 
offered by Exchange Telephone Companies, is available to Customers.”98  The Tariff later describes the 
technical characteristics of Switched Access Service as follows: 
[Aureon] provides a two-point electrical communications path between a 
point of interconnection with the transmission facilities of an Exchange 
Telephone Company at a location listed in Section 8 following and Iowa 
Network’s central access tandem where the Customer’s traffic is 
switched to originate or terminate its communications.  It also provides 
for the switching facilities at [Aureon’s] central access tandem.99 
Although the provisions of Section 1 of the Tariff are captioned “Application of Tariff,” AT&T contends 
that they “do not address the scope of [Aureon’s] Tariff.”100  Rather, AT&T says that Section 1 “merely 
confirms that CEA service is a type of switched access service and describes the functions that [Aureon] 
will perform in connection with legitimate CEA traffic.”101  However, nothing in the language of the 
Tariff restricts its application to what AT&T calls “legitimate” CEA traffic (i.e., access traffic that is not 
bound for access stimulators).102  Indeed, there is no mention at all of traffic being categorized in the way 
AT&T suggests.  Nor do the references to “Centralized Equal Access Service” on the Tariff’s title page 
and on the individual pages of the Tariff render the scope of the Tariff any different from that described 
with particularity in the “Application of Tariff” provisions.  The specific provisions of the Tariff prevail 
                                                     
95 Complaint at 31-75, paras. 63-75; see, e.g., Complaint, Legal Analysis at 6-7 (citing AT&T Corp. v. YMax 
Commc’ns Corp., 26 FCC Rcd 5742, 5748, para. 12 (2011) (AT&T v. YMax)); Reply, Legal Analysis at 5-15. 
96 See, e.g., AT&T Corp. v. All Am. Tel. Co., Memorandum Opinion and Order, 28 FCC Rcd 3477, 3492-96, at 
paras. 34–41 (2013); AT&T v. YMax, 26 FCC Rcd at 5748, para. 12 (“Consistent with these statutory provisions [in 
Section 203], a carrier may lawfully assess tariffed charges only for those services specifically described in its 
applicable tariff.”); MCI WorldCom Network Servs. v. PaeTec Commc’ns, Inc., 204 Fed. Appx. 271, 272 n.2 (4th 
Cir. 2006) (“[A] carrier is expressly prohibited from collecting charges for services that are not described in its 
tariff.”); CoreTel Va., LLC v. Verizon Va., LLC, 752 F.3d 364, 374 (4th Cir. 2014) (A carrier “must provide its 
services in exactly the way the carrier describes them in th[e] tariff.” (emphasis added)). 
97 See Complaint, Exh. 3, INAD Tariff F.C.C. No. 1, § 1.1, 2nd Revised Page 16 (issued Oct. 27, 2000).  The Tariff 
also states that “[s]witched access services provided under this tariff cover only the use of [Aureon’s] central access 
tandem, the switched transport between an [Aureon] premises and such central access tandem, and the use of the 
[Aureon]/ONVOY Common Channel Signaling Access Network.”  Id. 
98 See Complaint, Exh. 3, INAD Tariff F.C.C. No. 1, § 6.1, 4th Revised Page 88 (issued Jan. 18, 2012).   
99 See id.  
100 Reply, Legal Analysis at 8. 
101 See Reply, Legal Analysis at 8. 
102 Nor did the Commission find in the USF/ICC Transformation Order that “traffic directed to access stimulators 
should not be subject to tariffed access charges in all cases.”  USF/ICC Transformation Order, 26 FCC Rcd at 
17879, para. 672 (rejecting arguments that the Commission should prohibit the collection of switched access charges 
for traffic sent to access stimulators).  Rather, the Commission chose to adopt a specific set of access stimulation 
rules as part of comprehensive intercarrier compensation reform to “address remaining incentives to engage in 
access stimulation.”  Id. 
 Federal Communications Commission FCC 17-148  
 
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over general provisions and headings.103  Aureon indisputably provided Switched Access Service in the 
manner delineated in the Tariff when it routed the calls AT&T sent to the LECs that subtend Aureon’s 
network.104  Consequently, Aureon did not violate Section 201(b) or 203 of the Act when it charged 
AT&T under the Tariff for the traffic Aureon delivered.105 
19. AT&T argues that CEA service “was approved for the limited purpose of facilitating the 
provision of equal access service to small, rural LECs carrying very low traffic volumes”106 and that 
“access stimulation traffic has virtually nothing in common with legitimate CEA traffic.”107  As an initial 
matter, AT&T overstates its claim concerning the “limited purpose” of the CEA service.  The order 
authorizing a CEA network in Iowa states—and subsequent authority reaffirms—that Aureon’s CEA 
network also would serve to “speed the availability of high quality varied competitive services to small 
towns and rural areas.”108  Further, AT&T’s allegation that CEA networks were intended to carry low 
traffic volumes is of little weight since, as a Section 61.38 carrier, Aureon’s calculated rates should 
decrease to reflect the increase in the volume of traffic.109  In any event, we acknowledge that, at the time 
the Commission authorized Aureon to operate its CEA network, the Commission could not have 
anticipated the subsequent emergence and rapid growth of access stimulation arrangements.  But in this 
adjudication, we must evaluate Aureon’s conduct under existing rules and orders, along with the terms of 
its Tariff.  Regardless of how access stimulation traffic compares in character and volume to the types of 
traffic that were originally anticipated for CEA service, we find that Aureon has acted lawfully and 
consistently with its Tariff in transporting access stimulation traffic.  AT&T claims that Aureon’s recent 
filing of a proposed high-volume traffic contract tariff shows that the Tariff does not cover access 
stimulation traffic.110  But, as AT&T acknowledges, Aureon withdrew this filing,111 and we will not rely 
on its language to circumscribe the scope of Aureon’s existing Tariff.  In any event, Aureon’s proposed 
tariff did not purport to apply to high volumes of access traffic except in specific circumstances not 
present here.  For example, the proposed tariff required the presence of a contract and a buyer who had 
                                                     
103 CoreTel Virginia, LLC v. Verizon Virginia, LLC, 752 F.3d 364, 375 (4th Cir. 2014) (holding that the more 
specific usage of language in a tariff prevails over general usage); Associated Press v. FCC, 452 F.2d 1290, 1296 
(D.C. Cir. 1971) (referring to “the accepted principle that provisions under a specific tariff designation prevail over 
those included under a more general heading”). 
104 Joint Statement at 5, Stipulated Facts 29-31. 
105 Because Aureon’s tariff applies to access stimulation traffic, it did not violate Section 203 of the Act by not filing 
a new tariff or modifying its existing Tariff to specifically cover access stimulation traffic.  Cf. Complaint, Legal 
Analysis at 6-15; Reply, Legal Analysis at 14-15, 21-22.   
106 Complaint, Legal Analysis at 7 (capitalization omitted). 
107 Id. at 10 (capitalization omitted). 
108 INS Section 214 Order, 3 FCC Rcd. at 1468, para 4; id. at 1474, para 38; Answer, Exh. 28, Iowa Network Access 
Division, Final Decision and Order, Docket No. RPU-88-2, 1988 Iowa PUC Lexis 1, slip op. at 10 (IUB Oct. 18, 
1988); Nw. Bell Tel. Co. v. Iowa Utils. Bd., 477 N.W.2d 678, 681 (Iowa 1991). 
109 See 47 CFR § 61.38; Answer, Exh. B, F. Hilton Decl. at 12, para. 19.  Cf. In re FCC 11-161, 753 F.3d 1015, 
1144-45 (10th Cir. 2014) (quoting USF/ICC Transformation Order, 26 FCC Rcd at 17874, para. 657). 
110 See Complaint at 35-36, paras. 74-75; Complaint, Legal Analysis at 13-15; Reply, Legal Analysis at 10, n.8; 
AT&T Initial Brief 14-15; Complaint, Exh. 46, INS April 2017 Revised Tariff Filing, § 7.1.1, Original Page 146.1 
(filed Apr. 14, 2017). 
111 Complaint, Legal Analysis at 13 n.18; Joint Statement at 6, Stipulated Fact 41.  On May 17, 2017, the Wireline 
Competition Bureau granted Aureon special permission to withdraw the filing.  See Iowa Network Access Division 
Application for Special Permission No. 8 (filed May 16, 2017), and granted under Special Permission No. 17-06 
(May 17, 2017). 
 Federal Communications Commission FCC 17-148  
 
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not previously purchased CEA service.112  Here, neither AT&T nor Aureon alleges that a relevant contract 
exists between them, and AT&T has purchased CEA service from Aureon for many years. 
20. Contrary to AT&T’s contention, changes in the nature of Aureon’s network traffic and 
customer base over time have not exceeded the scope of Aureon’s Section 214 authorization.113  Aureon’s 
original Section 214 authorization required Aureon to obtain “Section 214 authority prior to acquiring and 
operating any interstate lines of communications” and denied Aureon’s general request for “Section 214 
authority to serve ITCs [independent telephone companies] that may choose to utilize its services in the 
future.”114  In 1999, however, the Commission enacted revised rules conferring Section 214 authorization 
for new lines of all domestic carriers, so that no applications need be filed, and “codif[ied] the statutory 
exemptions” from Section 214 requirements for line extensions.115  The Section 214 Blanket Certification 
Order expressly permitted Aureon to operate new domestic lines, regardless of the type of traffic that 
transits them.116  The breadth of the blanket authority conferred on all carriers, expressly restricted only 
with regard to radio services not at issue here, rendered unnecessary the prior requirement that Aureon 
file an application to enter and provide service to ITCs.  It follows, a fortiori, that as a result of the 
Section 214 Blanket Certification Order, Aureon similarly could use its existing, authorized lines to 
transmit any type of traffic, including access stimulation traffic.117   
21. AT&T also argues that Aureon’s billing of CEA rates for access stimulation traffic is 
unreasonable because it “is not economically justifiable” and because other transport methods exist that 
are significantly more efficient.118  We are not persuaded by AT&T’s arguments.  We have found that 
Aureon properly billed for services under the terms of the Tariff, and none of the alternatives that AT&T 
suggests are services that the Tariff offers.119  In any event, AT&T’s real dispute is that it wants to bypass 
Aureon completely and directly interconnect with the subtending CLECs engaged in access 
                                                     
112 See Complaint, Exh. 46, INS April 2017 Revised Tariff Filing (filed Apr. 14, 2017), Transmittal No. 33, 
Description and Justification Cost Support Material, Introduction, (stating that the tariff “is based upon a contract 
that was negotiated with and voluntarily agreed to by an interexchange carrier that has not previously purchased 
centralized equal access [] service” and that INS is thereby “making the same contract rate, terms, and conditions 
generally available to similarly situated interexchange carriers that execute the same contract”).   
113 See Complaint, Legal Analysis at 7-9, 20, n. 33; Reply, Legal Analysis at 14; see also Complaint at 13-17, paras 
31-36. 
114 See INS Section 214 Order, 3 FCC Rcd at 1469, para. 9, at 1468, para. 2 & n.6.  Independent telephone 
companies are telephone companies that are not affiliated with the Bell operating companies.  See MTS and WATS 
Market Structure, Phase III, Notice of Proposed Rulemaking, 94 FCC 2d 292, 304 (1983), para. 27. 
115 See In the Matter of Implementation of Section 402(B)(2)(A) of the Telecommunications Act of 1996, Report and 
Order and Memorandum Opinion and Order, 14 FCC Rcd 11364, 11372, para. 12, 11377, para. 23 (1999) (Section 
214 Blanket Certification Order). 
116 See Section 214 Blanket Certification Order, 14 FCC Rcd at 11372, para. 12.  The Commission stated, “blanket 
authority for domestic telecommunications carriers is a deregulatory measure that allows carriers to construct, 
operate, or engage in transmission over lines of communication without filing an application with the Commission 
for ‘entry’ certification under section 214.”  Implementation of Further Streamlining Measures for Domestic Section 
214 Authorizations, Report and Order, 17 FCC Rcd 5517, 5520, para. 4 and n.7 (2002).  The Commission codified 
this authority in Section 63.01 of its rules, which states that “any party that would be a domestic interstate 
telecommunications common carrier is authorized to provide domestic, interstate services to any domestic point and 
to construct or operate any domestic transmission line, as long as it obtains all necessary authorizations from the 
Commission for use of radio frequencies.”  47 CFR § 63.01 (emphasis added). 
117 Cf. Complaint, Legal Analysis at 14, nn.21, 20. 
118 Complaint at 37-40, paras. 76-80, at 65-66, para. 138; Complaint, Legal Analysis at 43-48. 
119 See paragraphs 17-18 above.   
 Federal Communications Commission FCC 17-148  
 
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stimulation.120  In fact, AT&T has filed with the Commission a complaint against the most prominent 
access stimulator, Great Lakes Communication Corporation (GLCC), alleging that GLCC has violated 
Section 201(b) of the Act by unreasonably refusing to provide AT&T a direct connection to GLCC at 
rates charged by CenturyLink, which has the lowest rates for switched access service of any price-cap 
ILEC in Iowa.121 
22. Finally, we reject AT&T’s assertion that Aureon’s Section 214 authorization does not 
apply to access stimulation traffic, which is predominantly interstate, because its Section 214 application 
assumed that the majority of Aureon’s costs would be recovered from intraLATA toll calls.122  Aureon’s 
original Section 214 approval was contingent on Aureon obtaining state agency approval without change 
to the fundamental assumption that Aureon would substantially recover its costs through revenue from 
intraLATA toll calls.123  But this condition was satisfied, and Aureon did in fact obtain Section 214 
approval.124   
B. Aureon Violated Sections 201(b) and 203 of the Act by Raising Its CEA Tariffed 
Rate in 2013 and by not Lowering Its Intrastate CEA Rate. 
23. AT&T argues that Aureon violated Sections 201(b) and 203 of the Act by raising its 
interstate access rates and by not reducing its intrastate access rates in contravention of the Commission’s 
rate cap and rate parity rules, respectively.125  We agree.  In the USF/ICC Transformation Order, the 
Commission capped “all interstate switched access rates in effect as of [December 29, 2011], including 
originating access and all transport rates.”126  Rule 51.905(b) caps interstate “tariff rates [at] no higher 
than the default transitional rate,”127 i.e., the interstate rates effective December 31, 2011.  In addition, “to 
reduce the disparity between intrastate and interstate terminating end office rates,” the Commission 
required that the rates be brought “to parity within two steps, by July 2013.”128  Specifically, the 
Commission promulgated Rule 51.911, which requires a “Competitive LEC” (1) to cap its intrastate rates 
that were in effect on December 29, 2011; (2) beginning on July 3, 2012, to move those intrastate rates 
halfway to the level of its capped interstate rates; and (3) beginning on July 1, 2013, to reduce its 
intrastate and interstate rates to those of the competing ILEC, which would be at parity at such time.129   
                                                     
120 See Complaint at 37, para. 77. 
121 See AT&T v. Great Lakes Complaint at 40-41, para. 86. 
122 See Complaint at 35, para. 73; Complaint, Legal Analysis at 8, nn.10, 12, 25, 57. 
123 See INS Section 214 Order, 3 FCC Rcd. at 1473, para. 32. 
124 See In re the Application of Iowa Network Access Division, Memorandum Opinion and Order, 4 FCC Rcd 2201, 
2201, para. 7 (1989) (“[W]e conclude INAD’s [the Access Division’s] state authority satisfies our condition.”).  
Indeed, the assumption concerning intraLATA toll calls remained valid until 20 years after the INS Section 214 
Order.  See Complaint, Rhinehart Decl. para. 29, Table G (showing that, prior to 2008, intrastate CEA service 
supplied most of the Access Division’s overall revenue requirement).  It was only after the Section 214 Blanket 
Certification Order, which imposed no conditions concerning intraLATA cost recovery, that Aureon’s interstate 
traffic began to exceed intrastate traffic.  See id. 
125 Complaint at 44-51, paras. 86-101. 
126 USF/ICC Transformation Order, 26 FCC Rcd at 17933, para. 800 (emphasis added).  The Commission declined 
to adopt a “future date” for carriers to comply with the rate cap directive “to ensure that carriers cannot make 
changes to rates or rate structures to their benefit in light of the reforms adopted in this Order.”  Id., 26 FCC Rcd at 
17934-35, para. 801.    
127 47 CFR § 51.905(b). 
128 USF/ICC Transformation Order, 26 FCC Rcd at 17676-77, para. 35. 
129 47 CFR §§ 51.911(a)-(c). 
 Federal Communications Commission FCC 17-148  
 
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24. We find that Aureon violated the interstate rate cap requirement when, in June 2013, it 
raised its interstate switched access rate from to $0.00896 per minute—$0.00077 above its $0.00819 
cap.130  We further conclude that Aureon violated Rule 51.911(b) because it did not lower its intrastate 
switched access rates halfway to the level of its interstate rates.  Aureon’s intrastate rate for CEA 
switching services has remained unchanged since the early 1990s at $0.0114 per minute plus $0.0003 per 
minute, per mile for transport, well above its interstate rate.131  In light of these violations, we find the 
rates contained in Aureon’s 2013 tariff filing and in Aureon’s intrastate tariff to be unlawful.  We do not 
reach the issue of whether Aureon’s rates violate Rule 51.911(c) because we do not have an adequate 
record to determine the pertinent benchmark rate.  To the extent that Aureon’s rates exceed this 
benchmark, however, the rates in Aureon’s intrastate or interstate tariff would also be unlawful under 
Rule 51.911(c).132  
25. Aureon claims it did not violate the rate cap and rate parity requirements for several 
reasons, none of which we find convincing.  To begin, Aureon claims that it is not subject to the 
Transitional Access Service Pricing rules because it is a dominant carrier under Rule 61.38.  Aureon 
characterizes the statement in the USF/ICC Transformation Order capping all interstate switched access 
rates as “words of inordinately general connotation” that do not supersede “regulations dealing with a 
narrow, precise, and specific subject, such as the dominant carrier rate regulations in Section 61.38.”133  
According to Aureon, the rules the Commission enacted in the USF/ICC Transformation Order capped 
only the rates of ILECs and CLECs.  Aureon contends it is neither.  But that is incorrect.  For purposes of 
the USF/ICC Transformation Order and the attendant rules,134 Aureon is a CLEC.  First, Aureon is a LEC 
under Rule 51.5 because it “provi[des] . . . exchange access.”135  And Aureon has conceded as much.136  
Second, Aureon is not an ILEC under Rule 51.5 because it neither provided “telephone exchange service” 
on February 8, 1996, nor was it a member of NECA on February 8, 1996, (or a successor to a member).137  
Nor does Aureon anywhere claim it is an ILEC.  Third, Aureon must therefore be a CLEC for purposes of 
the rules adopted by the USF/ICC Transformation Order because a “competitive local exchange carrier is 
                                                     
130 Joint Statement at 8, Stipulated Facts 59, 61. 
131 Joint Statement at 8, Stipulated Fact 69.  It is not possible, based on the current record, to calculate the precise 
cap on Aureon’s intrastate rates under Rule 51.911(b) due to the difference in intrastate and interstate rate structures 
– that is, the separation of switching and transport rate elements.  Nevertheless, because Aureon’s intrastate 
switching rate, alone, is so far above its all-inclusive interstate rate, we can determine with certainty that some 
reduction in the rates for one or both of Aureon’s intrastate rate elements was necessary.   
132 We intend to develop such facts in the damages phase of this proceeding.  Because Rule 51.911(b) concerns the 
initial step toward rate parity, our reference to the rate parity requirement pertains to both subsections (b) and (c) of 
Rule 51.911.  See 47 CFR § 51.911(b), (c).  
133 Answer, Legal Analysis at 16-19. 
134 See 47 CFR §§ 51.901-51.919.  
135 47 CFR § 51.5.  See 47 U.S.C. § 153(20). 
136 See Complaint, Exh. 53, Letter from James U. Troup and Brian D. Robinson (Counsel for Aureon) to Sherly 
Todd (FCC), dated Apr. 30, 1998 (“INS provides exchange access services to interexchange carriers and therefore 
meets the definition of a local exchange carrier.”) (emphasis added); Complaint, Exh. 55, Opening Brief of Plaintiff 
Iowa Network Services, Inc. In Opposition to Motion of Qwest Corporation for Summary Judgment, Iowa Network 
Servs., Inc. v. Qwest Corp., No. 02-40156, at 7 (S.D. Iowa Aug. 11, 2004) (“INS provides exchange access in 
conjunction with the many rural LECs which formed INS . . . . Because INS provides exchange access, it is a 
LEC.”).  See also Iowa Network Servs. v. Qwest Corp., 385 F. Supp. 2d 850, 897 (S.D. Iowa 2005) (“INS is, 
however, a LEC”). 
137 47 CFR § 51.5. 
 Federal Communications Commission FCC 17-148  
 
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any local exchange carrier, as defined in [Section] 51.5, that is not an incumbent local exchange 
carrier.”138   
26. Aureon argues that the rate cap and rate parity rules “must give way” to Section 61.38,139 
because the two sets of rules are inconsistent.140  We disagree.  The two sets of rules do not conflict; 
rather, they complement each other.  To begin, a dominant carrier such as Aureon must comply with 
Section 61.38 and supply “supporting … material” justifying its rates.141  If the underlying cost studies 
and other material support the rate filed in a dominant carrier’s tariff, then the tariff usually will go into 
effect.  Aureon acknowledges that it is subject to this obligation,142 and, in fact, it has consistently filed 
cost support for its tariffed rates.143  Next, like all LECs, Aureon is subject to additional obligations.  As a 
CLEC, Aureon must comply with the rate cap and rate parity rules, which apply “[n]otwithstanding any 
other provision of the Commission’s rules.”144  Under those rules, regardless of how a CLEC calculates its 
rates (e.g., via a non-dominant carrier’s benchmarking or the procedures of Section 61.38), the rates may 
not exceed the specified cap.145  Stated differently, Aureon must comply with the 61.38 rules to support its 
rates at or below the cap and therefore Section 61.38 is not superfluous.146  But if the rates it calculates 
exceed the rate caps, as they did in Aureon’s June 2013 tariff filing, Aureon must lower them.   
27. Nothing in the Commission’s 2016 Technology Transitions Order alters this 
conclusion.147  In that Order, the Commission stated in a footnote that “non-dominant status does not 
extend to [CEA] providers because such carriers do not provide service to end users.”148  Aureon claims 
that the Commission’s rate caps do not apply to CEA providers because the Commission has declined to 
extend non-dominant status to CEA providers.149  As explained above, however, Aureon’s status as a 
dominant carrier does not excuse it from the Commission’s rate cap obligations—the rate caps depend on 
whether Aureon is a LEC and a CLEC, not non-dominance.  In any event, Aureon misconstrues the 
Technology Transitions Order.  A non-dominance determination (i.e., a determination that a carrier lacks 
market power) involves an examination of many factors concerning the market for the services in 
question.150  Consistent with this approach, in the Technology Transitions Order, the Commission 
                                                     
138 47 CFR § 51.903(a).   
139 Answer, Legal Analysis at 14. 
140 See Answer, Legal Analysis at 10-14. 
141 47 CFR § 61.38. 
142 Joint Statement at 4, Stipulated Fact 24. 
143 Joint Statement at 15, Aureon Disputed Fact 36. 
144 47 CFR § 51.905.   
145 See USF/ICC Transformation Order, 26 FCC Rcd at 17932-936, paras. 798-801; 47 CFR §§ 51.911(a)-(c). 
146 We note that Aureon’s reliance on legal precedent relating to the “implied repeal” of statutes (see Answer, Legal 
Analysis at 10) is misplaced, as those cases do not address the lawfulness of an agency’s discretion to interpret its 
own orders and rules.  See Global NAPs, Inc. v FCC, 247 F.3d 252, 257-58 (D.C. Cir. 2001) (Global NAPs v. FCC), 
Capital Network System, Inc. v FCC, 28 F.3d 201, 206 (D.C. Cir. 1994).   
147 See Technology Transitions, Declaratory Ruling, Second Report and Order, and Order on Reconsideration, 31 
FCC Rcd 8283 (2016) (Technology Transitions Order).   
148 See Technology Transitions Order, 31 FCC Rcd at 8290, para. 19 n.43.   
149 Answer, Legal Analysis at 6-7 (“The rate caps were the sole reason the Commission reclassified ILECs as non-
dominant.”). 
150 See, e.g., Technology Transitions Order, 31 FCC Rcd at 8287, para. 11 (“To determine whether a carrier 
possesses market power and is thus dominant, the Commission historically has examined ‘clearly identifiable market 
features’ such as ‘the number and size distribution of competing firms, the nature of barriers to entry, and the 
availability of reasonably substitutable services.’”).   
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analyzed evidence about market demand in the context of its transition rules.151  The Commission did not 
make a non-dominance finding as to Aureon and other CEA providers because there was no record 
concerning them.  Neither Aureon nor any other CEA providers participated in the proceeding.  In other 
words, there was no basis on which the Commission could find that CEA providers lacked market power.  
Thus, Aureon is reading into the Commission’s sentence in footnote 43 of the Order a determination 
about rate caps that simply is not there.  In fact, the Technology Transitions Order reaffirmed that “[a]ll 
interstate switched access rate elements are capped.”152  That includes when those elements are offered by 
CEA providers.  
28. Aureon further maintains that the rate cap and rate parity rules do not apply to it, because 
it does not directly serve end users and, consequently, cannot directly offset any decrease in revenue from 
increased charges on end users.153  However, nothing in the USF/ICC Transformation Order suggests that 
the Commission intended to exclude CEA providers from its scope.154  On the contrary, the Order stated 
broadly that the Commission was “abandon[ing] the ‘calling party-network-pays’ model that dominated 
ICC regimes of the last century.”155  As part of the intercarrier compensation reform, the Commission 
took the initial step of adopting rate caps to “ensure[] that no rates increase during reform” and to 
“combat potential arbitrage and other efforts designed to increase or otherwise maximize sources of 
intercarrier revenues during the transition.”156  That is why the Commission recently rejected a similar 
argument made by another intermediate transport provider that also served no end users, concluding that 
there is “no ‘longstanding [Commission] policy of not imposing rate caps on carriers that do not serve 
end-users,’” and that the carrier “must comply with existing rules during the transition to ‘bill and 
keep.’”157  In upholding the Commission’s decision, the D.C. Circuit emphasized that the “issue here is 
not what Great Lakes may charge once the transition to bill-and-keep is complete in 2018, but rather 
whether Great Lakes was subject to the Commission’s benchmark rule in the years prior to AT&T’s 2014 
complaint … [t]he Commission reasonably concluded that it was.”158  Whatever additional transition steps 
the Commission ultimately may decide apply to CEA providers such as Aureon (or other entities that do 
                                                     
151 Technology Transitions Order, 31 FCC Rcd at 8287-98, paras. 13-39.   
152 Technology Transitions Order, 31 FCC Rcd at 8288-89, para. 15 (emphasis added). 
153 Answer at 99; Answer, Legal Analysis at 11-12, 15-16.  Aureon’s argument that because it has no end users, it 
cannot recover its costs if its tariff rates must be reduced is not correct.  As a result of the Commission’s decision to 
move all switched access services to a bill-and-keep regime, without regard to the impact on a carrier’s rate of 
return, all access service providers must find new ways to recover their costs.  CEA providers may, for example, 
need to revise their business model and consider recovering a portion of their costs from the LECs who subtend their 
networks.  Those LECs have available all of the cost recovery options adopted by the Commission and affirmed by 
the Tenth Circuit.  This alternative likely could have the additional benefit of discouraging access stimulating LECs 
from subtending CEA networks. 
154 [BEGIN CONFIDENTIAL] 
 
 [END CONFIDENTIAL] 
155 USF/ICC Transformation Order, 26 FCC Rcd at 17676, para. 34. 
156 USF/ICC Transformation Order, 26 FCC Rcd at 17932-33, para. 798; id. at 17933-34, para. 800, n.1494.   
157 See AT&T Servs. Inc. v. Great Lakes Comnet, Inc. and Westphalia Tel. Co., 30 FCC Rcd 2586, para. 22 (2015) 
(AT&T v. Great Lakes Comnet), aff’d in relevant part, Great Lakes Comnet, Inc. v. FCC, 823 F.3d 998 (D.C. Cir. 
2016) (Great Lakes Comnet v. FCC). 
158 Great Lakes Comnet v. FCC, 823 F.3d at 1003-04. 
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not directly serve end users) in the future has no relevance to Aureon’s current duty to comply with 
existing law.159    
29. Finally, Aureon contends that the CEA rate contained in its June 17, 2013, interstate tariff 
filing took effect on July 2, 2013, because the Commission neither suspended nor investigated the rate 
increase, and therefore it is “deemed lawful.”160  We disagree.  Aureon’s Tariff was not “deemed lawful” 
when filed.  Nothing in Section 204(a)(3) of the Act transforms rates, terms, or conditions that are 
unlawful when filed into “deemed lawful” status.  “[T]ariffs still must comply with the applicable 
statutory and regulatory requirements,” and “[t]hose that do not may be declared invalid.”161  Where the 
Commission, as here, has prohibited the filing of a tariff with rates above the transitional default rate,162 
such a tariff cannot benefit from “deemed lawful” status.  As of December 29, 2011, Aureon’s interstate 
switched access rates should not have exceeded $0.00819 per minute.  Aureon’s 2013 tariff filing raising 
the interstate rates above that level (as well as its subsequent tariff filings containing rates above $0.00819 
per minute) consequently was unlawful when filed and void ab initio.163   
30. AT&T argues that Aureon’s CEA rates also are unlawful because Aureon engaged in 
improper accounting practices.164  We need not reach this issue, because we have decided that Aureon’s 
interstate Tariff is void ab initio.  Nevertheless, Aureon is subject to Section 61.38 of the Commission’s 
rules, and AT&T has raised a number of significant questions about Aureon’s CEA practices and rates 
that deserve further exploration.  These include Aureon’s treatment of network investment, its cost 
allocations, and the role of lease costs involving the regulated entity and a competitive services 
affiliate.165  We will consider these arguments in the damages phase of this proceeding, where we will 
establish what the appropriate tariff rate should have been beginning June 17, 2013.166         
C. Aureon Did Not Violate the Commission’s Access Stimulation Rules. 
31. AT&T alleges that Aureon violated Sections 201(b) and 203 by engaging in access 
stimulation and failing to file revised tariffs.167  AT&T argues that Aureon satisfies the two “conditions” 
that “identify when an access stimulating LEC must refile its interstate access tariffs.”168  To begin, 
AT&T contends that Aureon’s ratio of terminating minutes to originating minutes in a calendar month is 
well above the 3-1 ratio specified in the Commission’s rules.169  The parties’ stipulations support this 
assertion.170  Next, AT&T maintains that Aureon has implied revenue sharing agreements with the 
subtending CLECs, which inure to the benefit of the CLECs’ FCP partners.171  We disagree on the last 
point. 
32. Our rule requires that an access stimulator be party to an “access revenue sharing 
agreement . . . that, over the course of the agreement, would directly or indirectly result in a net payment 
                                                     
159 AT&T v. Great Lakes Comnet, 30 FCC Rcd at 2592-93, para. 22 (how the transition will occur in the future when 
a tandem owner does not own the end office has “no bearing” on how the Commission’s rules “presently appl[y]”). 
160 Answer, Legal Analysis at 33-34. 
161 Global NAPs v FCC, 247 F.3d at 260.   
162  47 CFR 51.905(b). 
163 See AT&T v. Great Lakes Comnet, 30 FCC Rcd at 2595, at paras. 28-29. 
164 See, e.g., Complaint at 57-64, paras. 118-33; Complaint, Legal Analysis at 48-63. 
165 See Complaint, Legal Analysis at 48-63; AT&T Initial Brief at 3-9; AT&T Reply Brief at 5-10. 
166 See Complaint at 70-71, para. 155(c) (requesting that the Commission find that Aureon “must refund amounts it 
improperly billed to AT&T, and which AT&T paid, in amounts to be determined in a subsequent proceeding), (d) 
(asking the Commission to conduct “a detailed review of [Aureon’s] CEA rates in order to determine … whether 
[Aureon] engaged in ‘furtive concealment’ of violations of the Commission’s rules by using improper accounting 
methods, thus allowing access customers to pursue refunds”).  See also Verizon v. FCC, 269 F.3d 1098, 1104-06 
(D.C. Cir. 2001) (holding that Section 208(b) of the Act applies to a finding of liability). 
 Federal Communications Commission FCC 17-148  
 
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to the other party.”172  The problem for AT&T is that Aureon has provided an affidavit from an officer 
attesting that Aureon is not a party to any revenue sharing agreement,173 and AT&T has not proven 
otherwise. 
33. AT&T instead contends that Aureon’s traffic agreements with “access stimulating 
CLECs fall within the parameters of the Commission’s rule regarding revenue sharing” [BEGIN 
CONFIDENTIAL]  
 
  
[END CONFIDENTIAL]  However, Aureon has always charged IXCs—not subtending LECs—for its 
CEA switched access service, which facilitates the switching and transport of calls from the IXCs’ 
customers to customers of Aureon’s subtending LECs.176  Although Aureon has traffic agreements with 
the subtending LECs, these agreements pertain to Aureon’s ability to provide CEA service to IXCs and 
the mandatory termination requirement of its Section 214 authorization.177  They have remained 
unchanged since 1989.178  AT&T can identify no change in Aureon’s practices indicating that its traffic 
agreements are intended to facilitate access stimulation beyond noting that certain CLECs and their FCP 
(Continued from previous page)                                                            
167 See footnote 88 above. 
168 Complaint at 52-56, paras. 105-114, Complaint, Legal Analysis at 38-43.  See USF/ICC Transformation Order, 
26 FCC Rcd at 17877, para. 667. 
169 Complaint at 53, para. 107; Complaint, Legal Analysis at 38-39 (citing 47 CFR §§ 61.3(bbb)(1)(i)-(ii)). 
170 Joint Statement at 8, Stipulated Fact 71. 
171 Complaint at 53-56, paras. 108-14; Complaint, Legal Analysis at 40-43.  
172 47 CFR § 61.3(bbb)(1)(i). 
173 See Answer, Exh. 25, Affidavit of Frank Hilton, INS’ Reply to AT&T’s Opposition to Motion for Summary 
Judgment of Tariff Claims, at 7-8, para. 12; Answer, Legal Analysis at 26; see also USF/ICC Transformation Order, 
26 FCC Rcd at 17889, para. 699.     
  
  
176 Joint Statement at 4, Stipulated Fact 25; See Complaint, Exh. 3, INAD Tariff F.C.C. No. 1, Section 1.2, at 2nd 
Revised Page 16; Answer at 28-29, paras. 51-52; Answer, Exh. B, F. Hilton Decl. at 12, para. 21.  
177 See Answer at 27; Answer, Exh. B, F. Hilton Decl. at 11-12, paras. 20-21.  See also INS Section 214 Order, 3 
FCC Rcd at 1473, paras. 33-34 (“We do not believe that the mandatory termination requirement for interstate traffic 
is unreasonable or differs substantially from the normal way access is provided, as both an originating and 
terminating service …”); Answer, Exh. 29, In re: Iowa Network Access Division, Division of Iowa Network 
Services, Order Granting Rehearing for the Limited Purpose of Modification and Clarification and Denying 
Intervention, Iowa Utilities Board Docket No. RPU-88-2 (issued Dec. 7, 1988) at 4-5 (“[p]ursuant to their 
participation agreements with [Aureon], the PTCs [participating telephone companies] will be allowed to require at 
their option that all terminating traffic be routed over the [Aureon] network and [Aureon] will be allowed to charge 
its CEA rate for all such terminating traffic”) (emphasis added).   
178 See Answer at 27-29, paras. 50-51; Answer, Exh. B, F. Hilton Decl. at 11-12, paras. 20-21.  We disagree with 
AT&T’s contention that the traffic agreements are anti-competitive.  See Complaint at 40-45, paras. 81-85; 
Complaint, Legal Analysis at 16-19.  These agreements have long been accepted as an integral aspect of Aureon’s 
ability to terminate traffic, and neither the Commission nor the Iowa Utilities Board have determined differently 
since the agreements were first authorized in 1988.  See footnote 139 above.  See also Northwestern Bell Telephone 
Company v. Iowa Utilities Board, 477 N.W.2d 678 (1991) (“[W]e conclude that the board’s rationales for allowing 
INS to enter into exclusive contracts with the [subtending LECs] for the provision of terminating access is 
adequately supported by the evidence.). 
 Federal Communications Commission FCC 17-148  
 
18 
partners now engage in access stimulation.179  As we held above, Aureon’s handling of the traffic destined 
for access stimulating CLECs is consistent with its Section 214 authorization and the Tariff. 180 
34. AT&T requests that, in the event there is not an access stimulation agreement within the 
meaning of the Commission’s rules, we nonetheless find that Aureon’s conduct is an unreasonable 
practice under Section 201(b) because Aureon “facilitated access stimulation schemes by entering into 
traffic agreements to carry CLECs’ access stimulation traffic that [otherwise] would have been subject to 
the pricing requirements of the access stimulation rules.”181  We decline to so rule in this adjudication.  
The premise of this argument is that the CLECs are required to “price their switched access services, 
including transport, at rates that do not exceed the rates for functionally equivalent service offered by the 
lowest-priced price cap LEC in the state, which is CenturyLink” and to offer a direct transport service like 
CenturyLink.182  AT&T appropriately raised this assertion in another formal complaint proceeding against 
GLCC, , described above, and that is where the Commission will decide the issue.  
IV. CONCLUSION 
35. We have found above that Aureon violated Sections 201(b) and 203 of the Act because 
its rates were not just and reasonable.  We therefore grant Counts I and II of AT&T’s Complaint in part 
consistent with the findings in this Order.  In the damages phase of this proceeding, we will conduct a 
detailed review of Aureon’s rates to determine what the appropriate tariff rates should have been.183  We 
also order Aureon to file a revised interstate tariff with rates that comply with this Order, as well as all 
necessary cost studies and support as required by Section 61.38 of the Commission’s rules for its revised 
rates within 60 days of the date of this Order.184   
                                                     
179 Whether the CLECs engaged in access stimulation are abiding by the Commission’s benchmarking rules is 
beyond the scope of this complaint proceeding involving AT&T and Aureon. 
180 AT&T advocates treating Aureon as a CLEC for purposes of the Commission’s access stimulation rules, because 
(1) Aureon provides “some” of the interstate exchange access services that are used to send traffic to the FCPs, and 
(2) Aureon “stands in the shoes” of the access stimulating CLECs that would provide transport if Aureon did not.  
Complaint at 56, para. 114; Complaint, Legal Analysis at 44-45; Reply, Legal Analysis at 32-33.  Alternatively, 
AT&T contends that Aureon is subject to the access stimulation rules as a rate-of-return carrier.  Reply, Legal 
Analysis at 33, n.23.  Because we find that Aureon has not entered into a revenue sharing agreement, we need not 
reach the issue of which, if any, of the Commission’s access stimulation rules apply to intermediate carriers, such as 
CEA providers.   
181 Complaint at 56, para. 114; Complaint, Legal Analysis at 38, 45-48. 
182 Complaint, Legal Analysis at 46-48. 
183 See paragraph 30 above.  Consequently, we deny as moot AT&T’s Motion to Strike Portions of INS’s Final 
Reply Brief and Supporting Declarations.  See AT&T’s Motion to Strike Portions of INS’s Final Reply Brief and 
Supporting Declarations, Proceeding Number 17-56, Bureau ID Number EB-17-MD-001 (filed Aug. 31, 2017).  In 
the context of the damages proceeding, the parties will have the opportunity to raise and address issues relating to 
Aureon’s accounting practices.   
184 See 47 CFR § 61.38.  The Commission may determine at such time whether to initiate an investigation of 
Aureon’s proposed rates pursuant to Sections 204 and 205 of the Act.  47 U.S.C. §§ 204, 205.  See also Complaint at 
70-71, para. 155(d).  In addition, pursuant to the outcome of the damages phase of this proceeding regarding the 
correct intrastate rate, the parties should work with the Iowa Utilities Board to ensure Aureon files a revised 
intrastate tariff containing lawful intrastate switched access rates. 
 Federal Communications Commission FCC 17-148  
 
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V. ORDERING CLAUSES   
36. Accordingly, IT IS HEREBY ORDERED, pursuant to Sections 1, 4(i), 4(j), 201, 203, and 
208 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i), 154(j), 201, 203, 208, 
and Sections 1.720-1.736, 61.26, and 61.38 of the Commission’s Rules, 47 CFR §§ 1.720-1.736, 61.26, 
61.38, that Count I is GRANTED IN PART as described herein.   
37. IT IS FURTHER ORDERED, pursuant to Sections 1, 4(i), 4(j), 201, 203, and 208 of the 
Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i), 154(j), 201, 203, 208, and Sections 
1.720-1.736, 61.26 and 61.38 of the Commission’s Rules, 47 CFR §§ 1.720-1.736, 61.26, and 61.38 that 
Count II is GRANTED IN PART as described herein.  
38. IT IS FURTHER ORDERED, pursuant to Sections 1, 4(i), 4(j), 201, 203, and 208 of the 
Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i), 154(j), 201, 203, 208, and Sections 
1.720-1.736, 61.26 and 61.38 of the Commission’s Rules, 47 CFR §§ 1.720-1.736, 61.26 and 61.38 that 
Aureon is directed to file a revised interstate tariff within 60 days from the date of this Order, and that 
such revised tariff is to be compliant with the Commission’s rate cap requirements, and must include 
required cost support.   
      FEDERAL COMMUNICATIONS COMMISSION 
 
 
 
 
      Marlene H. Dortch 
      Secretary