Federal Communications Commission FCC 21-68 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of AT&T Corp., AT&T Services, Inc., and MCI Communications Services LLC, Complainants, v. Wide Voice, LLC, Defendant. ) Proceeding No 20-362 ) Bureau ID No. EB-20-MD-005 ) ) ) ) ) ) ) ) ) ) MEMORANDUM OPINION AND ORDER Adopted: June 9, 2021 Released: June 9, 2021 By the Commission: I. INTRODUCTION 1. This Memorandum Opinion and Order resolves a formal complaint filed by inter- exchange carriers (IXCs) against Wide Voice, LLC (Wide Voice), a competitive local exchange carrier (LEC).1 The IXCs—AT&T Corp. and AT&T Services, Inc. (collectively, AT&T) and MCI Communications Services LLC (Verizon)—allege that Wide Voice carried out a scheme to preserve profits derived from “access stimulation.” According to the IXCs, Wide Voice rearranged traffic flows in an effort to circumvent the Commission’s access stimulation rules, caused network congestion and call failure by rerouting large quantities of traffic, and attempted to force the IXCs to deliver traffic to a remote location that created no net public benefit as required by the Commission. The IXCs contend that these actions violate section 201(b) of the Communications Act of 1934, as amended (the Act), which prohibits telecommunications carriers from engaging in unjust or unreasonable practices.2 2. We agree. We find that Wide Voice may not bill AT&T and Verizon in connection with the traffic at issue in the Complaint and must refund any amounts the IXCs already have paid with respect thereto. This finding affords AT&T and Verizon all the relief to which they are entitled. Accordingly, we need not and do not reach the remaining counts of the Complaint and dismiss them without prejudice. II. BACKGROUND 3. AT&T Corp. is a New York corporation that provides and purchases communications and other services with its principal place of business in New Jersey.3 AT&T Services, Inc. is a Texas 1 Formal Complaint of AT&T Corp., AT&T Services, Inc., and MCI Communications Services LLC, Proceeding No. 20-362, Bureau ID No. EB-20-MD-005 (filed Jan. 11, 2021) (Complaint). 2 47 U.S.C. § 201(b). 3 Joint Statement of Stipulated Facts, Settlement, Discovery and Scheduling Pursuant to 47 C.F.R. § 1.733(b)(1)(i)- (v), Proceeding No. 20-362, Bureau ID No. EB-20-MD-005 (filed Mar. 12, 2021) (Joint Statement) at 3, Stipulated Fact No. 3. Federal Communications Commission FCC 21-68 corporation that performs centralized administrative support services, including information technology and billing, real estate, procurement, human resources, training, and finance.4 4. Verizon is a Delaware corporation that provides and purchases communications and other services with its principal place of business in New Jersey.5 5. Wide Voice is a Nevada limited liability company with its principal place of business in El Segundo, California.6 Wide Voice is a competitive LEC that offers access services to IXCs.7 6. The Complaint identifies several entities that have some relationship to the call traffic in dispute as relevant non-parties. Four of those entities are “closely related” to Wide Voice: Free Conferencing Corporation (Free Conferencing), CarrierX, LLC d/b/a Free Conferencing (CarrierX); HD Carrier, LLC (HD Carrier); and HDPSTN, LLC d/b/a HD Tandem (HD Tandem).8 Most of the call traffic at the center of this dispute flows to numbers associated with Free Conferencing, which provides “free or low-cost calling services . . . through FreeConferenceCall.com.”9 Free Conferencing’s Chief Executive Officer, David Erickson, is a founder of Wide Voice.10 Erickson directly owns approximately 50 percent of CarrierX,11 which owns and operates FreeConferenceCall.com.12 Erickson also owns and manages HD Carrier (an interconnected VoIP provider),13 and he is the founder and CEO of HD Tandem (a provider of “connectivity between originating carriers and terminating carriers, including carriers to 4 Joint Statement at 3, Stipulated Fact No. 4. 5 Joint Statement at 2, Stipulated Fact No. 2. 6 Joint Statement at 2, Stipulated Fact No. 1. 7 Joint Statement at 2-3, Stipulated Fact Nos. 1, 5, 7; Supplemental Joint Statement of Stipulated Facts, Proceeding No. 20-362, Bureau ID Number EB-20-MD-005 (filed Mar. 29, 2021) (Supplemental Joint Statement) at 1, Stipulated Fact No. 1. 8 See Complaint at 10-12, paras. 25-28. 9 See Complaint at 10, para. 25; Wide Voice, LLC’s Answer to Numbered Paragraphs of Formal Complaint of AT&T Corp., AT&T Services, Inc. and MCI Communications Services LLC, Proceeding No. 20-362, Bureau ID No. EB-20-MD-005 (filed Feb. 18, 2021) (Answer) at 9, para. 25. 10 Complaint at 9-10, paras. 24-25; Answer at 8-9, paras. 24-25. See also Answer, Declaration of David Erickson, Proceeding No. 20-362, Bureau ID No. EB-20-MD-005 (filed Feb. 18, 2021) (Erickson Answer Decl.) at 2, para. 4 (“I was involved in the business creation process for CarrierX, Wide Voice, HD Carrier, and Free Conferencecall.com”). 11 Complaint at 10, para. 26; Answer at 9, para. 26. 12 Complaint at 10, paras. 25-26; Answer at 9, paras. 25-26. See Erickson Answer Decl. at 1, para. 2 (CarrierX LLC “operates the FreeConferencecall.com application”). Erickson largely owns CarrierX. Besides his direct 50 percent ownership, Erickson owns 77 percent of Free Conferencing, which, in turn, owns 50 percent of CarrierX. Complaint at 10, para. 26 (citing Affidavit of David Erickson, 1 at para. 2, Inteliquent v. Inc. v. Free Conferencing Corp., No. 1:16-cv-06976 (N.D. Ill. Dec. 20, 2019) (Inteliquent v. Free Conferencing) Dkt. 619). 13 Complaint at 11, para. 27; Answer at 9, para. 27; Exhibits in Support of Wide Voice, LLC’s Submissions Dated March 29, 2021, Proceeding No. 20-362, Bureau ID No. EB-20-MD-005 (filed Mar. 29, 2021) (Wide Voice Supplemental Exhibit Submission), Exh. L, Pages from Wide Voice’s Answers to IXCs’ First Set of Interrogatories, at 11, Wide Voice Response to Interrogatory No. 5. The parties refer to Wide Voice’s non-LEC customers as both voice over internet protocol (VoIP) providers and internet protocol enabled service (IPES) providers. Any distinction is not relevant to our discussion, and we use the terms interchangeably. 21 terminating applications and to the high-volume application providers”).14 Wide Voice’s majority owner is a trust whose beneficiaries are {[ ]}.15 7. Different forms of terminating access charges are relevant to this case. Historically, IXCs paid terminating end office access charges to the LEC that ultimately delivered calls to the called party.16 In addition, IXCs paid terminating tandem switching and terminating tandem switched transport access charges to LECs that move traffic between an IXC and the terminating LEC’s end office.17 Tandem switches “operate much like railway switches, directing traffic” between service providers rather than routing calls directly to end users.18 A. The Commission’s Access Stimulation Reforms 8. The Commission “has been combating access stimulation for more than a decade.”19 Traditionally, access stimulation involved LECs artificially inflating their access charge revenue by entering into arrangements to terminate calls on behalf of entities that offer high-volume calling services, such as “free” conference calls or chat lines.20 In 2011, the Commission reformed the intercarrier compensation system, in part, to address inefficiencies and opportunities for wasteful arbitrage, including access stimulation.21 The Commission found that “[a]ccess stimulation imposes undue costs on consumers, inefficiently diverting capital away from more productive uses such as broadband deployment,” and that it “harms competition by giving companies that offer a ‘free’ calling service a competitive advantage over companies that charge their customers for the service.”22 As a result, the Commission established parameters to define when a LEC is engaged in access stimulation and imposed a 14 Complaint at 12, para. 28; Answer at 9, para. 28. CarrierX owns all of HD Tandem’s outstanding shares, and Erickson, by virtue of his ownership position with CarrierX, is therefore also HD Tandem’s majority owner. Complaint at 12, para. 28; Answer at 9, para. 28. 15 Complaint at 9, para. 24 and n.17 (citing Free Conferencing Statement of Undisputed Facts at 5, para. 16, Inteliquent v. Free Conferencing Dkt. 569 (“A trust established by Mr. [David] Erickson owns 88% of Wide Voice.”));Wide Voice Supplemental Interrogatory Responses at 14-15, Supplemental Response to Interrogatory No. 12; Wide Voice Supplemental Exhibit Submission, Exh. O (Declaration of Trustee of Wide Voice majority owner Trust) at WV_000663. Material set off by double brackets {[ ]} is confidential and is redacted from the public version of this document. 16 In Re FCC 11-161, 753 F.3d 1015, 1111 (10th Cir. 2014) (showing call path diagrams and explaining that IXC paid access charge to LEC terminating the call). 17 Updating the Intercarrier Compensation Regime to Eliminate Access Arbitrage, Notice of Proposed Rulemaking, 33 FCC Rcd 5466, 5468-69, para. 6 and n.15 (2018) (Access Arbitrage NPRM) (describing components of tandem access charges including transport charges “for hauling tandem-switched traffic between the tandem switch and connecting carriers”). 18 See Verizon Communications, Inc. v. FCC, 535 U.S. 467, 490 (2002); see also Access Arbitrage NPRM, 33 FCC Rcd at 5469, n.15 (describing components of tandem access charges including transport charges “for hauling tandem-switched traffic between the tandem switch and connecting carriers”). 19 Updating the Intercarrier Compensation Regime to Eliminate Access Arbitrage, Order on Reconsideration, 35 FCC Rcd 6223, 6224, para. 4 (2020) (Access Arbitrage Recon Order). 20 Connect America Fund, Report and Order and Further Notice of Proposed Rulemaking, 26 FCC Rcd 17663, 17874, para. 656 (2011) (USF/ICC Transformation Order), pets. for review denied, In re FCC 11-161, 753 F.3d 1015 (10th Cir. 2014), cert. denied, 135 S. Ct. 2050, and 135 S. Ct. 2072 (2015). 21 See USF/ICC Transformation Order, 26 FCC Rcd at 17676, para. 33. 22 Access Arbitrage Recon Order, 36 FCC Rcd at 6224, para. 5 (citing USF/ICC Transformation Order, 26 FCC Rcd at 17875, para. 663, 17876, para. 665). specific “benchmark rule” on the rates for access services provided by those access-stimulating LECs.23 More generally, the Commission adopted a schedule for transitioning away from terminating end office access charges to bill and keep by 2020.24 The Commission recognized that moving to bill and keep would help curb traditional access arbitrage.25 9. In response to the imposition of the benchmark rule and the transition of terminating end office rates to bill-and-keep, access-stimulating LECs and their non-LEC partners adapted their practices to take advantage of terminating tandem switching and transport charges that were not being reduced to bill-and-keep. To close that loophole, in its 2019 Access Arbitrage Order, the Commission further revised its rules to make the access-stimulating LEC responsible for the cost of call delivery to itself because it chooses the call path.26 The Commission reasoned that shifting the financial responsibility for both tandem switching and transport charges from IXCs to access-stimulating LECs would “help eliminate access arbitrage,” thereby reducing implicit subsidies for access stimulation traffic and encouraging those LECs to make more efficient call routing decisions.27 The Commission found that “the practice of imposing tandem switching and tandem switched transport access charges on IXCs for terminating access-stimulation traffic . . . is unjust and unreasonable under section 201(b) of the Act and is therefore prohibited.”28 The Commission also modified the definition of “access stimulation” to apply only to a LEC “serving end user(s).”29 23 47 CFR § 61.3(bbb)(1) (providing that a LEC is engaged in access stimulation if it: (1) has an access revenue sharing agreement that directly or indirectly resulted in a net payment, which is based on billing or collection of access charges from IXCs, and (2) either has an interstate terminating-to-originating traffic ratio of at least 3:1 in a calendar month or has more than a 100 percent growth in interstate originating and/or terminating switched access minutes of use in a month over the same month in the preceding year). If a competitive LEC meets these criteria, it shall not file a tariff at rates above the tariffed rates of the price cap LEC with the lowest switched access rates in the state, and must file a revised tariff accordingly. See 47 CFR § 61.26(g); USF/ICC Transformation Order, 26 FCC Rcd at 17874, paras. 657-58. 24 USF/ICC Transformation Order, 26 FCC Rcd at 17934-35, para. 801. 25 USF/ICC Transformation Order, 26 FCC Rcd at 17873, para. 651, 17879, para. 672, 17890, para. 701. 26 47 CFR § 51.914(a). See Updating the Intercarrier Compensation Regime to Eliminate Access Arbitrage, Report and Order and Modification of Section 214 Authorization, 34 FCC Rcd 9035, 9042, para. 17, 9043-44, paras. 20-23, 9050, para. 37, 9067, para. 73 (2019); pet. for rev. pending sub nom. Great Lakes Communications Corp. et al. v. FCC, No. 19-1233 (Consolidated with No. 19-1244) (D.C. Cir. filed Oct. 29, 2019) (Access Arbitrage Order). 27 Access Arbitrage Order, 34 FCC Rcd at 9036-37, para. 4, 9050, para. 37, 9067, para. 73. See also Northern Valley Communications, LLC, Tariff F.C.C No. 3, Memorandum Opinion and Order, 35 FCC Rcd 6198, 6201, para. 9 (2020), pet. for review filed and held in abeyance, Northern Valley Commc’ns, LLC v. FCC, No. 20-187 (D.C. Cir. Oct. 20, 2020) (Northern Valley Tariff Order). 28 Access Arbitrage Order, 34 FCC Rcd at 9073-74, para. 92. Recognizing that carriers with high-volume calling service partners could continue to profit from arbitrage without revenue sharing agreements, the Commission also amended the access stimulation definition to include competitive LECs with terminating-to-originating traffic ratios of 6:1. If a competitive LEC meets this standard, there is no revenue sharing agreement requirement. 47 CFR § 61.3(bbb)(1)(ii). See also Access Arbitrage Order, 34 FCC Rcd at 9054, para. 45 (“an access-stimulating LEC that is co-owned with a high-volume calling service provider could retain the stimulated access revenues for itself, while letting the high-volume calling service provider operate at a loss”). 29 47 CFR § 61.3(bbb)(1). The Commission limited the definition to LECs serving end users to exempt centralized equal access (CEA) providers, who could be unintentionally in the call path of access stimulation traffic from high volume applications like Free Conferencing. See Access Arbitrage Order, 34 FCC Rcd at 9103-04, App. B para. 38; see also id. at 9060, para. 57 and n.176 (citing comments from a CEA provider “expressing concern that it could somehow be deemed to be engaged in access stimulation if an over-inclusive definition of access stimulation were adopted”). CEA providers operate solely as intermediate providers in rural states and do not serve end users. See id. 9039-40, para. 12. B. Wide Voice’s Evolving Business Model 10. Formed in 2010, Wide Voice concedes that it was in the “access stimulation business.”30 From 2012 to 2019, it offered “end-office termination services to high volume voice applications,” specifically, Free Conferencing.31 Wide Voice also provided tandem switched services.32 11. In response to the Access Arbitrage Order, which made access-stimulating LECs—rather than IXCs—responsible for tandem switching and transport charges, Wide Voice “decided to stop . . . connecting to end users” and focus on functioning as a “competitive tandem” provider.33 It ceased providing all end-office service by {[ ]} months after the effective date of the rules implemented in the Access Arbitrage Order.35 As a result, Wide Voice no longer terminates any calls directly to Free Conferencing. Instead, it sends the traffic to HD Carrier, which then “terminates calls to Free Conferencing.”36 12. During the same time frame, several other access-stimulating rural LECs ceased providing service “to high volume applications.”37 These access-stimulating LECs previously “connected calls to telephone numbers used by HD Carrier’s customers, such as [Free Conferencing].”38 When the LECs stopped providing service, HD Carrier’s customers, including Free Conferencing, “had an immediate need to migrate the [access stimulation] traffic.”39 13. To solve this problem, Free Conferencing moved its traffic to HD Carrier for termination.40 HD Carrier, in turn, designated Wide Voice as the tandem service provider to which the 30 See Answer, Declaration of Andrew Nickerson, Proceeding No. 20-362, Bureau ID No. EB-20-MD-005 (filed Feb. 18, 2021) (Nickerson Answer Decl.) at 5, para. 9 (“Wide Voice structured its business [transition] to get out of access stimulation business”); see also Legal Analysis in Support of Answer to Formal Complaint by Wide Voice, LLC, Proceeding No. 20-362, Bureau ID No. EB-20-MD-005 (filed Feb. 18, 2021) (Answer Legal Analysis) at 23 (“Wide Voice has pivoted its business model to transition away from the access stimulation business.”). 31 Nickerson Answer Decl. at 2, para. 4, 6, para. 11; Answer Legal Analysis at 11. 32 See Complaint Exh. 61, Tariff at ATTVZ00358, (defining “Switched Access Service” to include both terminating end office and tandem switched services). See also Wide Voice Supplemental Exhibit Submission, Exh. BB, WV_000818- 27 (Tandem Services Traffic Agreement between Wide Voice and Native American Telecom, LLC); Wide Voice, LLC’s Objections and Answers to IXCS’ First Set of Interrogatories, Proceeding No. 20-362, Bureau ID No. EB-20-MD-005 (filed Feb. 1, 2021) (Wide Voice Interrogatory Responses) at Exh. A, WV-INT-ANS- 000002-19 (PSTN Network Hosting Agreement and Master Services Agreement between Wide Voice and HD Carrier, LLC). 33 Nickerson Answer Decl. at 2-3, paras. 4-5. 34 Wide Voice, LLC’s Objections and Supplemental Answers to IXCS’ Interrogatories, Proceeding No. 20-362, Bureau ID No. EB-20-MD-005 (filed Mar. 29, 2021) (Wide Voice Supplemental Interrogatory Responses) at 5, Supplemental Response to Interrogatory 3. 35 Joint Stipulation at 3, Stipulated Fact No. 6 (“The Access Arbitrage Order and corresponding CFR provisions took effect on November 27, 2019, except for 47 CFR § 51.914(b) and (e), which became effective June 9, 2020.”). 36 Nickerson Answer Decl. at 6-7, para. 11; Answer Legal Analysis at 11. 37 Answer Legal Analysis at 19; see Nickerson Answer Decl. at 8-9, para. 18; Answer at 17-18, para. 45. See also Answer Exh. 9, WV_000103-114 (Letters submitted in WC Docket No. 18-155 from Goldfield Access Network, BTC, Inc., Louisa Communications, Inc., Interstate Cablevision, LLC, and OmniTel Communications, Inc.). 38 Nickerson Answer Decl. at 8-9, para. 18; see Answer Legal Analysis at 19. 39 Answer Legal Analysis at 19; see Nickerson Answer Decl. at 8-9, para. 18. 40 Nickerson Answer Decl. at 8-9, para. 18; Answer Legal Analysis at 19. Notwithstanding its name, HD Carrier claims it is not a telecommunications carrier. We express no opinion on that issue. IXCs were to deliver the traffic.41 Wide Voice claims that HD Carrier is not a LEC.42 Wide Voice is a LEC but purportedly no longer serves end users. Wide Voice contends that this arrangement, therefore, falls outside the ambit of the Commission’s definition of “access stimulation.”43 Through this arrangement, Wide Voice has billed the IXCs for tandem switching and transport access charges on calls delivered to HD Carrier, despite the Access Arbitrage Order.44 C. Escalation of Call Volume 14. To accommodate this new arrangement, the IXCs had to expand greatly their capacity to deliver calls at Wide Voice’s tandem switches. Traffic between the IXCs and Wide Voice had flowed without incident prior to November 2019.45 AT&T and Verizon exchanged traffic with Wide Voice at two locations—Wide Voice’s tandem switches in Los Angeles and Miami.46 Between May 2019 and November 2019, AT&T delivered 27-31 million minutes of use each month to Wide Voice at its switches in Los Angeles and Miami.47 Verizon delivered 3-4 million minutes of use per month.48 To manage traffic exchanged with Wide Voice in 2019, Verizon had two DS3 circuits in Los Angeles and three DS3 circuits in Miami.49 AT&T had roughly three DS3 circuits each in Los Angeles and Miami.50 These facilities were sufficient to handle the call volumes between the parties as of October 2019.51 In fact, in mid-2019, after determining that Wide Voice was underutilizing AT&T’s existing facilities,52 AT&T notified Wide Voice that it was reducing the number of trunks on its side of the meet point with Wide Voice.53 AT&T accomplished this by removing the assignment on the facilities to Wide Voice and not by 41 Nickerson Answer Decl. at 7, para. 14 (“HD Carrier began designating additional codes (new Iowa codes) to Wide Voice’s tandems as early as August, 2019 in the LERG database.”), 8-9, para. 18 (“When the [LECs] changed their businesses, the end users ported their telephone numbers to HD Carrier. HD Carrier had already designated Wide Voice and Peerless . . . as tandem providers for traffic that formerly was routed to the rural LECs.”). See also Answer Legal Analysis at 27. 42 Answer Legal Analysis at 48; Answer at 7, para. 10. 43 47 CFR § 61.3(bbb); Answer Legal Analysis at 50 (stating that Wide Voice no longer serves end users and HD Carrier is not a CLEC). 44 See Complaint at 39, para. 98; Answer at 34, para. 98. 45 See Complaint at 19, para. 44; Answer at 17, para. 44. The parties generally agree on the call path of the traffic AT&T and Verizon exchanged with Wide Voice. See Complaint Exh. 73; Answer Exh. 48. 46 Complaint at 18, para. 40; Answer at 16, para. 40. Verizon exchanged traffic with Wide Voice under the Tariff. See Complaint at 2, n.2. See, e.g., Joint Statement at 3-4, Stipulated Fact Nos. 7-9. AT&T exchanged traffic with Wide Voice first under a negotiated agreement and then, when the agreement ended, under the Tariff. Complaint at 18-19, para. 43; Complaint, Declaration of Kim Meola, Proceeding No. 20-362, Bureau ID No. EB-20-MD-005 (filed Jan. 11, 2021) (Meola Complaint Decl.) at 5, para. 12. AT&T and Wide Voice disagree when their agreement terminated, but we need not address that issue to resolve this dispute. See Complaint at 19, n.71. 47 Meola Complaint Decl. at 6, para. 15. 48 Joint Statement at 4, Stipulated Fact No. 15. 49 Complaint at 18, para. 41; Answer at 16, para. 41; Complaint, Declaration of Robert Mullins, Proceeding No. 20- 362, Bureau ID No. EB-20-MD-005 (filed Jan. 11, 2021) (Mullins Complaint Decl.) at 2, paras, 3, 5. A DS1 is estimated to handle approximately 250,000 MOUs, and a DS3 is comprised of 28 DS1s. See id. at 6, para. 15. 50 Complaint at 18, para. 42; Answer at 16, para. 42; Meola Complaint Decl. at 6-7, paras. 14, 18. 51 Complaint at 19, para. 44; Answer at 17, para. 44. 52 Complaint at 18, para. 42; Meola Complaint Decl. at 6-7, paras. 14, 18. Wide Voice’s monthly traffic volumes with AT&T decreased from 31 million minutes of use in May 2019 to approximately 27 million minutes of use in December 2019. See Meola Complaint Decl. at 6, para. 15. 53 Complaint at 18, para. 42; Answer at 16-17, para. 42. A “meet point” is a predetermined location where carriers’ networks meet. See Reply in Support of Formal Complaint of AT&T Corp., AT&T Services, Inc. and MCI (continued….) removing the actual physical facilities.54 In response to AT&T’s notice, Wide Voice disconnected the actual physical facility on its side of the meet point.55 15. Things changed in 2020. Due to the migration of access stimulation traffic from some LECs in response to the Access Arbitrage Order,56 the volume of AT&T and Verizon traffic destined for Wide Voice’s tandem switches increased dramatically beginning in January 2020. Wide Voice notified AT&T and Verizon of the expected traffic volume increase in a series of traffic forecasts.57 Between October 2019 and February 2020, Wide Voice provided AT&T with four forecasts that projected additional traffic volumes increasing to 262 million minutes of use per month in 2020.58 Wide Voice also provided two forecasts to Verizon, one each in January and February 2020, that projected additional traffic volumes increasing to 304 million minutes of use per month in 2020.59 This massive and sudden increase in traffic flowing to Wide Voice’s tandem switches caused significant call congestion.60 16. To accommodate the increased traffic to Wide Voice’s tandems, AT&T and Verizon significantly augmented their facilities throughout 2020. Between January and September 2020, AT&T increased its capacity at Wide Voice’s Los Angeles and Miami tandems by adding approximately 17 DS3s.61 On September 9, 2020, Wide Voice told AT&T that “[t]he installation of the facilities ordered for Miami and Los Angeles have alleviated call failures at the moment.”62 Wide Voice further noted, however, that it “has significant customer demand . . . which it cannot meet due to the limited capacity AT&T has installed.”63 As of January 11, 2021, AT&T had connected to Wide Voice’s Los Angeles and Miami switches using 12 DS3s in each location for a total of 24 DS3s.64 Between January and July 2020, Verizon augmented its capacity at Wide Voice’s two tandems by adding approximately 12 DS3s.65 As of July 2020, Verizon had connected to Wide Voice’s Los Angeles tandem using six DS3s and to its Miami Communications Services LLC, Proceeding No. 20-362, Bureau ID No. EB-20-MD-005 (filed Mar. 1, 2021) (Reply), Reply Declaration of Kim Meola (Meola Reply Decl.) at 3, para 7. See also Mullins Complaint Decl. at 7, para. 16. 54 Meola Decl. at 17, para. 48. 55 Meola Decl. at 17, para. 48. 56 See supra paragraph 12. 57 Complaint at 20-26, paras. 46-61; Meola Complaint Decl. at 8-10, paras. 23-27, 12-14, paras. 35-37, 19-20, para. 52; Mullins Complaint Decl. at 3-5, paras. 9-11; Complaint Exhs. 11, 12, 13, 31, 32, 35, 36. 58 Wide Voice Interrogatory Responses at 15-16, Response to Interrogatory No. 8. 59 Joint Statement at 8, Stipulated Facts Nos. 32 and 33. 60 See Complaint at 20, para. 45; see generally Answer at 17-18, para. 45; Answer Legal Analysis at 36. 61 See Joint Statement at 10-12, Stipulated Fact Nos. 39-42 (stipulating that AT&T added 11,232 lines to Wide Voice’s two tandems). 62 Joint Statement at 12, Stipulated Fact No. 44; Complaint Exh. 41 at ATTVZ00173. 63 Joint Statement at 12, Stipulated Fact No. 44; Complaint Exh. 41 at ATTVZ00173. 64 Meola Complaint Decl. at 23, para. 59; Wide Voice Supplemental Submission, Exh. J, Pages from DeCosta Answer Decl. at 10, para. 32. 65 See Joint Statement at 9-10, Stipulated Fact Nos. 37-38 (stipulating that Verizon added 7,728 lines to Wide Voice’s two tandems). tandem using nine DS3s.66 By mid-2020, the additional facilities were able to handle the increased traffic with few issues.67 D. Designation of New Point of Interconnection 17. Wide Voice updated the Local Exchange Routing Guide (LERG)68 in December 2019 with a new tandem switch in Rudd, Iowa, a rural town of about 350 people.69 Wide Voice did not notify AT&T or Verizon before updating the LERG, and AT&T and Verizon had no facilities in Rudd.70 Wide Voice previously switched traffic destined for the rate centers associated with the new Rudd tandem at its tandems in Miami and Los Angeles,71 but asserts it designated the new Rudd tandem switch to be geographically close to its high-volume calling service provider customers.72 Ultimately, neither AT&T nor Verizon delivered any traffic to the Rudd tandem, and Wide Voice abandoned its efforts to expand its tandem services in Iowa.73 E. The Dispute Before the Commission 18. Wide Voice has billed the IXCs under its Tariff F.C.C. No. 3 for terminating tandem switching and tandem switched transport access charges.74 The IXCs dispute these charges.75 AT&T and Verizon filed an informal complaint against Wide Voice on April 24, 2020, and Wide Voice submitted a response on May 27, 2020. Despite negotiations, the parties were unable to resolve their dispute and, on January 11, 2021, the IXCs filed their Complaint.76 They assert eleven counts against Wide Voice that can be grouped into four general categories: access stimulation, call congestion, unilateral change in point of interconnection, and tariff and rule violation issues. We discuss the first three issues below, resolving the IXCs’ claims in their favor because we find that Wide Voice has violated section 201(b) of 66 See Complaint at 18, para. 41, Answer at 16, para. 41; Joint Statement at 9, Stipulated Fact No. 36; Complainant MCI Communications Services LLC’s Answer to Commission Staff Questions Pursuant to 47 CFR § 1.732(c), Proceeding No. 20-362, Bureau ID No. EB-20-MD-005 (filed Mar. 27, 2021) at 3. 67 Joint Statement at 12, Stipulated Fact No. 44; Meola Complaint Decl. at 18, para. 50; Complaint Exh. 41. 68 The LERG is a database used by the telecommunications industry to identify NPA-NXX or “blocks” of telephone numbers and contains information that carriers use for call routing over the public switched telephone network. See Supplemental Joint Statement at 2, Stipulated Fact No. 9. 69 Complaint at 20, para. 47; Answer at 18, para. 47; Meola Complaint Decl. at 9, para. 24; Mullins Complaint Decl. at 11, para. 28. 70 Complaint at 20, para. 47; Answer at 18, para. 47; Meola Complaint Decl. at 9, para. 24; Mullins Complaint Decl. at 11, para. 28; Supplemental Joint Statement at 10, Stipulation Fact No. 29. 71 Complaint at 20, para. 47; Answer at 18, para. 47; Meola Complaint Decl. at 9, para. 24; Mullins Complaint Decl. at 11, para. 28; Supplemental Joint Statement at 10, Stipulation Fact No. 29. 72 Answer Legal Analysis at 85. See Answer at 31, para. 90, 33, para. 93. 73 Answer Legal Analysis at 85. 74 See Joint Statement at 3, Stipulated Fact Nos. 5-7; see also Complaint Exh. 61 (Wide Voice, LLC, Tariff F.C.C. No. 3, effective Dec. 28, 2019)) (Tariff). 75 See Joint Statement at 3, Stipulated Fact Nos. 7-8; see also Complaint at 2, para. 2, 74, paras. 203-05, 75, paras. 208-11, 76, paras. 214-16, 77-78, paras. 219-21. 76 The Commission granted the parties’ request to extend the relation-back deadline in 47 CFR § 1.718 until January 11, 2020. See Grant Stamped Consent Motion for Wavier and to Extend the Deadline to Convert AT&T and Verizon’s Informal Complaint Against Wide Voice to a Formal Complaint, Informal Complaint File No. EB-20- MDIC-0004 (Nov. 19, 2020). Because the IXCs converted their informal complaint into a formal complaint by that date, the formal complaint “relate[s] back to the filing date of the informal complaint.” See 47 CFR § 1.718. the Act. We need not and do not address the tariff and rule violation issues. At the IXCs’ request, we defer consideration of damages until a subsequent phase of this proceeding.77 III. DISCUSSION 19. The Commission has tried twice through rulemaking to address the practice of access stimulation. Most recently, in the Access Arbitrage Order, the Commission found that “requiring IXCs to pay the tandem switching and tandem switched transport charges for access-stimulation traffic is an unjust and unreasonable practice that we have authority to prohibit pursuant to section 201(b) of the Act.”78 Wide Voice admits that it was in the access stimulation business, and it continues to serve the same high volume customer (Free Conferencing), via HD Carrier. Nonetheless, Wide Voice claims that because it no longer directly serves end users, it can continue to charge AT&T and Verizon for tandem switching and tandem switched transport charges for access stimulation traffic. 20. We find that Wide Voice has violated section 201(b) of the Act in three respects: by restructuring its business operations so that it could impose tandem charges that it otherwise was not entitled to bill (Count V); by intentionally causing call congestion in an effort to force the IXCs into commercial arrangements that required the payment of tandem charges (Count I); and, for the same purpose, by unilaterally declaring a new interconnection point that does not create a net public benefit (Counts II and III). We discuss each in turn. A. Wide Voice Violated Section 201(b) by Restructuring Its Business Operations So It Could Impose Tandem Charges That It Was Not Entitled to Bill 21. The Commission has several tools at its disposal to curb the misconduct of carriers that seek to continue to bill IXCs in connection with access stimulation. There are, of course, rules regarding access stimulation, which the Commission promulgated in 2011 and revised in 2019.79 But they are not the only means by which the Commission can act. Through the section 208 complaint process,80 the Commission may investigate a specific carrier’s conduct and determine whether that conduct is unjust or unreasonable in violation of section 201(b) of the Act.81 The complaint process is especially well-suited to cases like this one—where a carrier has modified its business practices to engage in unjust and unreasonable charges and practices not specifically addressed by the Commission’s rules. It is well 77 AT&T and Verizon requested that the Commission first determine liability and then decide any damages in a separate proceeding. See Complaint at 6, para. 13 (citing 47 CFR § 1.723(c) and (d)). The IXCs may file a supplemental complaint for damages. See 47 CFR § 1.723(e). 78 Access Arbitrage Order, 34 FCC Rcd at 9073-74, para. 92. See also Northern Valley Tariff Order, 35 FCC Rcd at 6209, para. 25. 79 See supra paragraphs 8-9. 80 See 47 U.S.C. § 208(b) (giving the Commission authority to “investigate the matters complained of [in a complaint against a common carrier] in such manner and by such means as it shall deem proper”). 81 See, e.g., AT&T Corp. v. All American Telephone Co., Memorandum Opinion and Order, 28 FCC Rcd 3477, 3490 at para. 29 (2013) (All American Order), pets. for review granted in part and denied in part, All American Tel. Co., Inc. v. FCC, 867 F.3d 81 (D.C. Cir. 2017) (Commission may ensure compliance with section 201(b) through section 208); AT&T Corp. v. YMAX Communications Corp., Memorandum Opinion and Order, 26 FCC Rcd 5742, 5761, paras. 52-53 & n. 147 (2011) (YMax Communications Order); Access Charge Reform, First Report and Order, 12 FCC Rcd 15982, 16141, para. 363 (1997) (“[I]f an access provider’s service offerings violate section 201 . . . of the Act, we can address any issue of unlawful rates through the exercise of our authority to investigate and adjudicate complaints under section 208.”). established that the Commission has discretion to proceed by adjudication to address such practices as well as by rulemaking.82 22. The Commission has issued several orders finding unreasonable carrier efforts to impose charges through sham arrangements and other forms of regulatory arbitrage. For example, in the Total Tel Order, the Commission found a violation of section 201(b) when two “highly intertwined” competitive LECs acted in concert to serve a chat line customer for the sole purpose of “extract[ing] inflated access charges from the IXCs.”83 Calling the arrangement a sham, the Commission said it would not permit a carrier “to charge indirectly, through a sham arrangement, rates that it could not charge directly through its existing tariff.”84 Similarly, in the All American Order, the Commission considered a complaint in which an incumbent LEC “masterminded” a sham arrangement with competitive LECs and free chat line and conferencing service providers for the purpose of generating access charges for which it could bill AT&T.85 Describing the scheme as a sham designed to “capture access revenues that could not otherwise be obtained by lawful tariffs,” the Commission concluded that the conduct constituted an unjust and unreasonable practice in violation of section 201(b).86 Finally, in the Alpine Order, five Iowa LECs unilaterally moved their points of interconnections to significantly increase the transport charges they could bill to IXCs. The Commission found the tariff by which the LECs sought to impose the charges “unjust and unreasonable in violation of Section 201(b) to the extent it allows the Iowa LECs’ admitted manipulation of [points of interconnection] undertaken with the intent and effect of ‘pumping’ mileage charges.”87 23. Here, the record establishes that Wide Voice, in concert with closely related companies, acted to evade the Commission’s access stimulation rules by rearranging traffic flows to preserve the ability to impose tandem access charges on IXCs that it otherwise could not charge. Based on the record in this proceeding, we have little trouble concluding that Wide Voice’s conduct is unreasonable and violates section 201(b) of the Act, and, accordingly, grant Count V of the Complaint. 1. Wide Voice, HD Carrier, and Free Conferencing are Closely Related 24. Non-arm’s length relationships are a hallmark of access stimulation schemes that the Commission has held violate section 201(b). Wide Voice seeks to minimize the connections among the parties involved in delivery of the IXCs’ traffic to end users, arguing that neither David Erickson nor HD Carrier controls Wide Voice.88 But there is substantial evidence the common enterprise at issue here is broader than the relationship between HD Carrier and Wide Voice, and evidence supports a finding that the closely knit entities do not, in fact, operate independently. Erickson was involved in the “business creation process” for four companies that each play a substantial role in the practices at issue here: 82 See, e.g., Conference Group, LLC v. FCC, 720 F.3d 957, 966 (D.C. Cir. 2013); US West Communications, Inc. v. FCC, 177 F.3d 1057, 1061 (D.C. Cir. 1999). See generally Shalala v. Guernsey Mem’l Hosp., 514 U.S. 87, 96 (1995). 83 Total Telecommunications Service, Inc. and Atlas Telephone Company, Inc. v. AT&T Corp., Memorandum Opinion and Order, 16 FCC Rcd 5726, 5727, para. 3, 5733, para. 16 (2001) (Total Tel Order), pets. for review granted in part and denied in part, AT&T Corp. v. FCC, 317 F.3d 227 (D.C. Cir. 2003). 84 Total Tel Order, 16 FCC Rcd at 5734, para. 18. 85 All American Order, 28 FCC Rcd at 3488, para. 26. 86 All American Order, 28 FCC Rcd at 3487-88, para. 24. 87 AT&T Corp. v. Alpine Communications, LLC, Memorandum Opinion and Order, 27 FCC Rcd 11511, 11529, para. 45 (2012) (Alpine Order). 88 Answer Legal Analysis at 11, 51-52; Nickerson Answer Decl. at 6, para. 10, 7, para. 12. CarrierX, Wide Voice, HD Carrier, and [Free Conferencing].”89 The controlling (88%) owner of Wide Voice is an irrevocable trust that Erickson established.90 {[ ]} are the trust’s sole beneficiaries.91 Although an independent third-party professional trustee manages the trust,92 the record contains no evidence that the Trustee has any personal knowledge of, or has a substantive role in, the management or control of Wide Voice.93 Not so with Erickson, who has “personal knowledge” regarding Wide Voice’s current business, including Wide Voice’s strategic direction94 and attempts to convince the IXCs to enter into commercial arrangements to alleviate call congestion.95 What is more, Erickson {[ ]}.96 In sum, nothing in the record suggests that Erickson is limited in his ability to act, indirectly and through other entities, to benefit the companies he created, including Wide Voice. 25. Erickson’s ties to the other entities he created—CarrierX, Free Conferencing, and HD Carrier—are substantial. He is a 77% shareholder of Free Conferencing, and he and Free Conferencing, in turn, are the sole shareholders of CarrierX.97 Erickson is also CarrierX’s Chief Executive Officer.98 Finally, he owns and manages HD Carrier.99 89 Erickson Answer Decl. at 2, para. 4; see also id. at 1, para. 2 (“I have personal knowledge of the business model and strategic direction of CarrierX, Wide Voice, HD Carrier . . . I am the CEO of CarrierX, LLC, which operates the Freeconferencecall.com application . . . I am the manager of HD Carrier, LLC”). 90 Complaint at 9, para. 24 and n.17 (citing Free Conferencing Statement of Undisputed Facts at 5, para. 16, Inteliquent v. Free Conferencing Dkt. 569 (“A trust established by Mr. [David] Erickson owns 88% of Wide Voice.”)); Wide Voice Supplemental Interrogatory Responses at 14-15, Supplemental Response to Interrogatory No. 12; Wide Voice Supplemental Exhibit Submission, Exh. O at WV_000663. 91 Wide Voice Supplemental Exhibit Submission, Exh. O at WV_000663. 92 Nickerson Answer Decl. at 6, para. 10. Wide Voice states that Erickson ]}. Wide Voice Supplemental Exhibit Submission, Exh. O at WV_000663. 93 See Supplemental Brief of AT&T Corp., AT&T Services, Inc., and MCI Communications Services LLC, Proceeding No. 20-362, Bureau ID No. EB-20-MD-005 at 5 (filed Apr. 5, 2021) (IXCs’ Brief). We note that Erickson appears to acknowledge some direct relationship with Wide Voice. Erickson Answer Decl. at 4, para. 11 (“AT&T and Verizon have undermined Wide Voice’s transition and engaged in a campaign that – at its worst – feels entirely too personal and intended to force Wide Voice (and me) to exit its chosen market.”). 94 Erickson Answer Decl. at 1, para. 2 (“I have personal knowledge of the business model and strategic direction of . . . Wide Voice”). 95 See Erickson Answer Decl. at 7, para. 20 (attesting to Wide Voice’s efforts to convince the IXCs to enter into a commercial arrangement or deliver traffic via an IP-connection). See also id. at 3, para. 8 (attesting to Wide Voice “never charg[ing] distance-sensitive trunking rates in connection with its tandem switching business”). 96 Wide Voice Supplemental Exhibit Submission, Exh. O at WV_000663. 97 Complaint at 10, paras. 25-26 (citing Affidavit of David Erickson, at 1, para. 2, Inteliquent v. Free Conferencing Dkt 619); Answer at 9, paras. 25-26. Specifically, Erickson owns 77 percent of Free Conferencing, which in turn, owns 50 percent of CarrierX. Erickson directly owns the other 50 percent of CarrierX. Complaint at 10, para. 26; (citing Affidavit of David Erickson, at 1, para. 2, Inteliquent v. Free Conferencing Corp., Dkt. 619). As a result of a corporate restructuring, Free Conferencing contributed its assets and liabilities to CarrierX, including FreeConferencingCall.com, in exchange for an equity interest in CarrierX. Free Conferencing Statement of Undisputed Material Facts, Inteliquent v. Free Conferencing, Dkt. 569 at para. 14. 98 Erickson Answer Decl. at 1, para. 2. 99 Complaint at 11, para. 27; Answer at 9, para. 27; Wide Voice Supplemental Exhibit Submission, Exh. L, Pages from Wide Voice’s Answers to IXCs’ First Set of Interrogatories, at 11, Wide Voice Response to Interrogatory No. 5 (“HD Carrier is owned by David Erickson.”). 26. There are additional connections among the several entities. Andrew Nickerson, Wide Voice’s Chief Executive Officer, has an email address at both Wide Voice and Free Conferencing,100 notwithstanding Wide Voice’s claim that it has no “overlapping officers, directors, or employees with any other non-LEC.”101 Similarly, although Wide Voice states that it does not share access revenues {[ ]},102 Wide Voice and CarrierX “from time to time provide each other with administrative or technical support services.”103 And, HD Carrier’s customers include some of Wide Voice’s former customers.104 27. The diagram below shows the entities Erickson created, his relationship to them, and their relationships to each other. 2. Wide Voice and Closely Related Companies Re-Routed Traffic to Evade the Access Stimulation Rules 28. In the Access Arbitrage Order, the Commission enacted rules requiring access- 100 Wide Voice Supplemental Exhibit Submission, Exh. N at WV_000504-507 (Nickerson copied on email traffic between Free Conferencing and Wide Voice at “Andrew Nickerson”