*Pages 1--8 from Microsoft Word - 11539.doc* Federal Communications Commission DA 01- 2162 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D. C. 20554 In the Matter of ) ) ILLINOIS BELL TELEPHONE COMPANY, ) INC., d/ b/ a AMERITECH ILLINOIS, ) INDIANA BELL TELEPHONE COMPANY, ) INC., d/ b/ a AMERITECH INDIANA, ) MICHIGAN BELL TELPHONE ) COMPANY, INC., d/ b/ a AMERITECH ) MICHIGAN, THE OHIO BELL TELEPHONE ) COMPANY, d/ b/ a AMERITECH OHIO, ) WISCONSIN BELL, INC., d/ b/ a ) File No. EB- 00- MD- 008 AMERITECH WISCONSIN, PACIFIC ) BELL TELEPHONE COMPANY and ) SOUTHWESTERN BELL TELEPHONE ) COMPANY, ) ) Complainants, ) ) v. ) ) ONE CALL COMMUNICATIONS, INC., ) ) Defendant. ) MEMORANDUM OPINION AND ORDER Adopted: September 14, 2001 Released: September 17, 2001 By the Chief, Enforcement Bureau: I. INTRODUCTION 1. In this Memorandum Opinion and Order (“ Order”), we grant a formal complaint filed by Illinois Bell Telephone Company, Inc., d/ b/ a Ameritech Illinois; Indiana Bell Telephone Company, Inc., d/ b/ a Ameritech Indiana; Michigan Bell Telephone Company, Inc., d/ b/ a Ameritech Michigan; The Ohio Bell Telephone Company, d/ b/ a Ameritech Ohio; Wisconsin Bell, Inc., d/ b/ a Ameritech Wisconsin; Pacific Bell Telephone Company; and Southwestern Bell Telephone Company (collectively, “Complainants”) against One Call Communications, Inc. (“ One Call”) pursuant to section 208 of the Communications Act of 1934, as amended (“ Act”). 1 1 47 U. S. C. § 208. 1 Federal Communications Commission DA 01- 2162 2 Complainants assert that One Call violated section 276( b)( 1)( A) of the Act 2 and section 64.1300 of the Commission’s rules 3 by failing to compensate Complainants for “1+” calls that originated at Complainants’ payphones and were routed to One Call’s network. We agree and order One Call to compensate Complainants in the amount of $42,440.91, plus interest, for completed 1+ calls that One Call carried between October 7, 1997 and December 31, 1999. 4 II. BACKGROUND 2. Complainants are local exchange carriers (“ LECs”) that provide local exchange and payphone service. 5 One Call is a telecommunications carrier that provides interstate and intrastate telephone toll service. 6 Between October 7, 1997 and December 31, 1999, One Call carried traffic that originated from payphones owned by Complainants, including so- called “1+” calls. 7 In the context of this dispute, a 1+ call is an interLATA toll call originating at a payphone and carried by an interexchange carrier (“ IXC”), where the IXC’s operator or its automated rating system directs the calling party to deposit coins for the call. 8 3. Section 276( b)( 1)( A) of the Act required the Commission to prescribe regulations 2 47 U. S. C. § 276( b)( 1)( A). 3 47 C. F. R. § 64.1300. 4 The Complaint did not specify the types of payphone- originated traffic at issue, and instead asserted generally that One Call failed to compensate the Complainants for “each and every completed intrastate and interstate call using [a] payphone.” Illinois Bell Telephone Co., Inc., d/ b/ a Ameritech Illinois, et al. v. One Call Communications, Inc., Complaint, File No. EB- 00- MD- 008 (filed May 17, 2000) at 2, ¶ 1 (quoting 47 U. S. C. § 276( b)( 1)( A)) (“ Complaint”). However, Complainants’ Brief clarified that Complainants sought compensation for 1+, 0+, and 1- 800 calls directed to One Call’s network. See Illinois Bell Telephone Co., Inc., d/ b/ a Ameritech Illinois, et al. v. One Call Communications, Inc., Complainants’ Opening Brief, File No. EB- 00- MD- 008 (filed Sept. 25, 2000) at 2 (“ Complainants’ Brief”). The parties recently settled the claims involving 0+ and 1- 800 calls, and they moved to dismiss “all disputes that underlie this litigation, except One Call’s liability for Per- Call Payphone Compensation, principal and interest, arising from 1+ calls.” Illinois Bell Telephone Co., Inc., d/ b/ a Ameritech Illinois, et al. v. One Call Communications, Inc., Joint Motion for Partial Dismissal With Prejudice, File No. EB- 00- MD- 008 (filed June 8, 2001) at 2 (“ Motion to Dismiss”). We grant the Motion to Dismiss. 5 Complaint at 3, ¶ 3; Complainants’ Brief at 2; Illinois Bell Telephone Co., Inc., d/ b/ a Ameritech Illinois, et al. v. One Call Communications, Inc., Revised Joint Statement of the Parties, File No. EB- 00- MD- 008 (filed Sept. 6, 2000) at 3, 4, ¶¶ III. A. 1, 11 (“ Revised Joint Statement”). 6 Complaint at 3, ¶ 4; Illinois Bell Telephone Co., Inc., d/ b/ a Ameritech Illinois, et al. v. One Call Communications, Inc., Answer, File No. EB- 00- MD- 008 (filed June 6, 2000) at 4, ¶ 4 (“ Answer”); Revised Joint Statement at 4, ¶ 14. 7 Complaint at 3, ¶ 4; Answer at 4, ¶ 4; Revised Joint Statement at 4, ¶ 15; Complainants’ Brief at 2; Illinois Bell Telephone Co., Inc., d/ b/ a Ameritech Illinois, et al. v. One Call Communications, Inc., One Call’s Initial Brief, File No. EB- 00- MD- 008 (filed Sept. 25, 2000) at 3 (“ One Call’s Brief”). 8 Complainants’ Brief at 4; One Call’s Brief at 2. 2 Federal Communications Commission DA 01- 2162 3 establishing a per- call payphone compensation plan. 9 The purpose of the compensation plan was “to ensure that all payphone service providers are fairly compensated for each and every completed intrastate and interstate call using their payphone . . . .” 10 The only exceptions to the per- call compensation requirement identified in the Act are calls to emergency numbers and calls by hearing disabled persons to a telecommunications relay service. 11 In a series of orders, the Commission adopted regulations establishing a per- call compensation plan for payphone services. 12 4. In January 1997, Complainants and One Call entered into an agreement governing the accounting of coins deposited by payphone users for 1+ calls carried over One Call’s network. 13 Pursuant to the Coin Revenue Agreement, Complainants collected the coin revenue for such calls and remitted it to One Call, less certain adjustments for theft shortage and processing fees. 14 In turn, One Call paid Complainants a “message processing charge” for each call, which covered the cost to Complainants of constructing a monthly “coin settlement report” for submission to One Call. 15 The Coin Revenue Agreement does not compensate Complainants for the use of their payphones. 16 5. In order for a LEC payphone service provider (“ PSP”) to be eligible to receive per- call compensation, it must satisfy various prerequisites, including certifying that it has filed an effective cost allocation manual, and that it has in place certain effective interstate and intrastate 9 47 U. S. C. § 276( b)( 1)( A). 10 Id. 11 Id. The Commission’s rules subsequently clarified that local calls for which the caller has made the required coin deposit also are excluded from the per- call compensation requirement. See 47 C. F. R. § 64.1300( b). 12 Implementation of the Pay Telephone Reclassification and Compensation Provisions of the Telecommunications Act of 1996, Report and Order, 11 FCC Rcd 20541 (1996) (“ First Payphone Order”), aff’d in part and remanded in part sub nom. Illinois Public Telecomm. Ass’n v. FCC, 117 F. 3d 555 (D. C. Cir. 1997); Second Report and Order, 13 FCC Rcd 1778 (1997) (“ Second Payphone Order”), aff’d in part and remanded in part sub nom. MCI v. FCC, 143 F. 3d 606 (D. C. Cir. 1998); Third Report and Order, and Order on Reconsideration of the Second Report and Order, 14 FCC Rcd 2545 (1999) (“ Third Payphone Order”), aff’d sub nom. American Public Communications Council v. FCC, 215 F. 3d 51 (D. C. Cir. 2000) (collectively, “Payphone Orders” or “Payphone Classification Proceeding”). 13 See Revised Joint Statement at Exhibit 1 (“ Coin Revenue Agreement”). 14 Complainants’ Brief at 3, 5, 6; One Call’s Brief at 7. See also Revised Joint Statement at Exhibit 1 (Coin Revenue Agreement at § 6). 15 See Revised Joint Statement at Exhibit 1 (Coin Revenue Agreement at § 6.A.). 16 Id. See also Complainants’ Brief at 3, 6. One Call does not dispute this fact. Rather, as discussed infra, section III, One Call maintains that the Complainants could have negotiated a term requiring payment for 1+ calls, but opted not to do so. See One Call’s Brief at 7- 8. 3 Federal Communications Commission DA 01- 2162 4 tariffs. 17 In addition, Bell Operating Companies (such as Complainants) must “have approved CEI [comparably efficient interconnection] plans for basic payphone services and unbundled functionalities prior to receiving compensation.” 18 On April 15, 1997, the Commission approved Complainants’ CEI plan for the provision of payphone services. 19 Having previously satisfied the other requirements, Complainants became eligible to receive per- call compensation on October 7, 1997, the effective date of the payphone regulations. 20 One Call, however, has refused to pay compensation relating to 1+ calls. 21 6. On May 17, 2000, Complainants filed their Complaint, alleging that One Call violated section 276 of the Act and the Commission’s rules by refusing “to compensate Complainants for each compensable completed [1+] call carried by Defendant from Complainants’ payphones on and after October 7, 1997.” 22 The Complaint requests an order requiring One Call to pay Complainants $. 24, or other amount established by law or contract, for each and every compensable completed 1+ call routed to One Call from any of Complainants’ payphones, as well as damages, including interest, for per- call compensation due and owing at the time of judgment. 23 III. DISCUSSION 7. We find that One Call violated section 276( b)( 1)( A) of the Act and section 64.1300 of the Commission’s rules by failing to compensate Complainants for 1+ calls that were made from Complainants’ payphones and routed to One Call’s network. In reaching this conclusion, we begin with an examination of the relevant statutory and regulatory language. Section 276( b)( 1)( A) mandates that all PSPs are to be fairly compensated for “each and every completed intrastate and interstate call using their payphone.” 24 The Commission’s rules similarly provide that every carrier to whom a “completed call from a payphone is routed” must 17 Implementation of the Pay Telephone Reclassification and Compensation Provisions of the Telecommunications Act of 1996, Order on Reconsideration, 11 FCC Rcd 21233, 21293, ¶ 131 (1996). 18 Id., 11 FCC Rcd at 21294, ¶ 132. 19 See In the Matter of Ameritech’s Plan to Provide Comparably Efficient Interconnection to Providers of Pay Telephone Services, Order, 12 FCC Rcd 4238 (1997). 20 See First Payphone Order, 11 FCC Rcd at 20710, ¶ 366 (per- call compensation regulations become effective one year after publication in Federal Register). 21 Complaint at 7, ¶ 15; Answer at 7, ¶ 15. 22 Complaint at 8, ¶¶ 18, 20. 23 Complaint at 8. Complainants later clarified that, for the period between October 7, 1997 and March 31, 1999, they request a per- call compensation rate of $. 238. See Illinois Bell Telephone Co., Inc., d/ b/ a Ameritech Illinois, et al. v. One Call Communications, Inc., Letter from William A. Brown, Senior Counsel— External Affairs/ FCC, SBC Telecommunications, Inc. to Lisa B. Griffin, Assistant Chief, Market Disputes Resolution Division, Enforcement Bureau, FCC, No. EB- 00- MD- 008 (dated Aug. 10, 2001). 24 47 U. S. C. § 276( b)( 1)( A) (emphasis added). 4 Federal Communications Commission DA 01- 2162 5 either pay a compensation rate agreed upon by contract or, in the absence of an agreement, $. 24. 25 Thus, with the exception of three types of calls identified in the Commission’s rules 26 – none of which is at issue here – the only express limitation on the types of payphone calls eligible for compensation is that they be “completed.” 8. Focusing on various passages of the Payphone Orders, One Call argues that 1+ calls nonetheless are exempt from the Commission’s per- call compensation requirements. In particular, One Call argues that the absence of any language in the Payphone Orders specifically identifying 1+ calls as calls for which PSPs are not otherwise compensated indicates that the Commission did not intend for such calls to be covered by the compensation system set forth in the rules. 27 One Call also asserts that the Commission’s description in the Payphone Orders of the “typical” manner in which PSPs are compensated for 1+ calls indicates that the Commission did not intend for PSPs to receive compensation for such calls through alternative mechanisms. 28 9. We disagree with One Call’s arguments. As the Commission has explained, payphone revenue can derive from a variety of sources, including coins “deposited into the payphone, through commission payments on operator service calls, or from compensation mandated by the FCC or the states.” 29 The Payphone Orders limit statutorily- mandated, per- call compensation to completed calls that do not produce revenue from other sources, 30 such as access code calls and toll- free number calls. 31 The Commission’s citation of these two examples, however, does not mean that PSPs are not entitled to per- call compensation for other types of non- revenue- generating calls. With respect to 1+ calls, the Commission stated that PSPs “typically” receive coin revenue directly from callers. 32 But that is not the case here, because the Complainants do not receive coin revenue for the 1+ calls carried on One Call’s network. In short, nothing in the Payphone Orders purports to supercede the statutory requirement that PSPs 25 47 C. F. R. §§ 64.1300 (a) and (c) (emphasis added). 26 See 47 C. F. R. § 64.1300( b). 27 See One Call’s Brief at 4 (citing paragraph 52 of the First Payphone Order, 11 FCC Rcd at 20568, ¶ 52) (PSPs “receive[ ] no revenue” for originating subscriber 800 and other toll- free number calls, or are “unable to block” callers making access code calls). 28 See One Call’s Brief at 5- 6 (citing Third Payphone Order, 14 FCC Rcd at 2548- 49, ¶ 5 & n. 7) (PSPs receive a “direct payment” for providing long distance calls using a presubscribed carrier, including 1+ calls, where coins are deposited). 29 Implementation of the Pay Telephone Reclassification and Compensation Provisions of the Telecommunications Act of 1996, Notice of Proposed Rulemaking, 11 FCC Rcd 6716, 6725, ¶ 15 (1996). 30 See, e. g., First Payphone Order, 11 FCC Rcd at 20567, ¶ 49 (“ It is only in cases where the market does not or cannot function properly that the Commission needs to take affirmative steps to ensure fair compensation.”). 31 See id., 11 FCC Rcd at 20568, ¶ 52. 32 Third Payphone Order, 14 FCC Rcd at 2548- 49, ¶ 5 n. 7. 5 Federal Communications Commission DA 01- 2162 6 – including the Complainants – are to be fairly compensated for all completed calls for which they otherwise do not receive revenue. 33 10. It is undisputed that the Coin Revenue Agreement does not contain a provision compensating Complainants for 1+ calls made from their payphones, and that there are no other agreements between Complainants and One Call regarding a per- call compensation rate. 34 One Call nevertheless asserts that Complainants are not entitled to compensation for 1+ calls, because they had the “opportunity to receive such compensation” through the Coin Revenue Agreement, but chose not to do so. 35 11. The record does not support One Call’s assertion. As an initial matter, when the parties executed the Coin Revenue Agreement in January 1997, Complainants had not yet satisfied the nonstructural and accounting safeguards that are prerequisites to BOC payphone operations. 36 Consequently, they lacked the ability to participate in the selection of presubscribed carriers at payphones and to obtain compensation from such carriers by contract. 37 Moreover, contrary to One Call’s assertion, 38 the Complainants did not designate the presubscribed 1+ carrier in the Coin Revenue Agreement. Section 2 of the Coin Revenue Agreement merely defines “Direct 1+ Carrier” as the “Presubscribed 0+ Carrier” for Complainants’ payphones who has “elect[ ed] . . . to carry interLATA calls initiated by dialing ‘1’ plus the called number . . . .” 39 33 In support of their respective positions, the parties focus extensively on arguments advanced by the Commission in its brief on appeal of the Third Payphone Order. See Complainants’ Brief at 6- 7; Illinois Bell Telephone Co., Inc., d/ b/ a Ameritech Illinois, et al. v. One Call Communications, Inc., Complainants’ Response Brief, File No. EB- 00- MD- 008 (filed Oct. 10, 2000) at 6 (“ Complainants’ Response Brief”); Illinois Bell Telephone Co., Inc., d/ b/ a Ameritech Illinois, et al. v. One Call Communications, Inc., One Call’s Reply Brief, File No. EB- 00- MD- 008 (filed Oct. 10, 2000) at 5- 8 (“ One Call’s Reply Brief”). Like this Order, the Commission’s brief simply noted that statements made in the Payphone Orders regarding the definition of “compensable calls” must be read in the context of the Commission’s regulations, which the statements were not intended to restrict. See American Public Communications Council, Inc., et al. v. FCC, Brief for Respondents (Final Version), No. 99- 1114 (D. C. Cir.) (filed Sept. 7, 1999) at 54- 55. 34 One Call’s Brief at 7- 8. 35 One Call’s Brief at 7. See also One Call’s Reply Brief at 2 (the Coin Revenue Agreement “further demonstrates that Ameritech ‘[ could] otherwise charge’ for 1+ calls carried by One Call but ‘has chosen not to enter into a contract for payment’ for such calls and thus may not later demand per- call compensation therefor”) (quoting Third Payphone Order, 14 FCC Rcd at 2568- 69, ¶ 53 & n. 90). 36 As noted supra, paragraph 5 and note 21, the Commission approved Complainants’ CEI plan for the provision of payphone services on April 15, 1997. 37 See First Report and Order, 11 FCC Rcd at 20660- 61, ¶ 239 (“ we believe that it is prudent to ensure that such safeguards are in place before the BOCs are allowed to participate in interLATA presubscription for their payphones”). See also 47 U. S. C. § 276( b)( 1)( D) (providing BOCs the right to negotiate with location providers regarding presubscribed carriers unless the Commission finds such right is not in the public interest). 38 One Call’s Reply Brief at 9. 39 Joint Statement at Exhibit 1 (Coin Revenue Agreement at § 2.B.) (emphasis added). 6 Federal Communications Commission DA 01- 2162 7 Thus, it was the 0+ carrier presubscribed to Complainants’ payphones — in this case, One Call — decided whether it also would carry 1+ calls. In other words, designation of the presubscribed 0+ or 1+ carrier for a particular payphone (and compensation arrangements for calls routed over that carrier’s network) was not accomplished in the Coin Revenue Agreement, but in other document( s) to which Complainants were not parties. 12. In sum, Complainants are entitled to per- call compensation for completed 1+ calls made from their payphones and routed to One Call. Section 64.1300( c) of the Commission’s rules provides for a per- call compensation rate of $. 24. 40 In the Third Report and Order, the Commission adjusted that rate to $. 238 for calls placed between October 7, 1997 and April 21, 1999. 41 13. In accordance with these rates, the parties have stipulated that (assuming a liability finding) One Call owes Complainants principal of $42,440.91 for per- call compensation relating to 1+ calls carried by One Call between October 7, 1997 and December 31, 1999. 42 Because we have determined that Complainants are entitled to compensation for 1+ calls, we find One Call is liable in the amount the parties have stipulated, plus interest, which shall be calculated at an annual rate of 11.25 percent. 43 IV. ORDERING CLAUSES 14. ACCORDINGLY, IT IS ORDERED, pursuant to sections 1, 4( i), 4( j), 208, and 276 of the Communications Act of 1934, as amended, 47 U. S. C. §§ 151, 154( i), 154( j), 208, and 276, and section 64.1300 of the Commission’s rules, 47 C. F. R. § 64.1300, that the above-captioned complaint filed by Illinois Bell Telephone Company, Inc., d/ b/ a Ameritech Illinois; Indiana Bell Telephone Company, Inc., d/ b/ a Ameritech Indiana; Michigan Bell Telephone Company, Inc., d/ b/ a Ameritech Michigan; The Ohio Bell Telephone Company, d/ b/ a Ameritech Ohio; Wisconsin Bell, Inc., d/ b/ a Ameritech Wisconsin; Pacific Bell Telephone Company; and Southwestern Bell Telephone Company IS GRANTED to the extent indicated above. 15. IT IS FURTHER ORDERED, pursuant to sections 1, 4( i), 4( j), 208, and 276 of the Communications Act of 1934, as amended, 47 U. S. C. §§ 151, 154( i), 154( j), 208, and 276, and section 64.1300 of the Commission’s rules, 47 C. F. R. § 64.1300, that One Call shall pay 40 47 C. F. R. § 64.1300( c). 41 Third Payphone Order, 14 FCC Rcd at 2635, ¶ 196. 42 Revised Joint Statement at 5, ¶ 19. 43 The Commission has previously determined that an 11.25% interest rate is appropriate when IXCs are late in making payments to PSPs. See Implementation of the Pay Telephone Reclassification and Compensation Provisions of the Telecommunications Act of 1996, Memorandum Opinion and Order, 13 FCC Rcd 10893, 10895, ¶ 3 (Com. Car. Bur. 1998); Third Payphone Order, 14 FCC Rcd at 2630- 31, ¶ 189. 7 Federal Communications Commission DA 01- 2162 8 Complainants damages in the amount of $42, 440.91, plus prejudgment interest computed at a rate of 11. 25 percent, compounded annually. One Call shall pay this amount to Complainants within 60 days of release of this Order. 16. IT IS FURTHER ORDERED, pursuant to sections 1, 4( i), 4( j), and 208 of the Communications Act of 1934, as amended, 47 U. S. C. §§ 151, 154( i), 154( j), and 208, that the parties’ Joint Motion for Partial Dismissal With Prejudice IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION David H. Solomon Chief, Enforcement Bureau 8