In re At&T Servs.
| Decision Date | 24 June 2020 |
| Docket Number | DA 20-648,Proceeding 19-222 |
| Court | Federal Communications Commission Decisions |
| Parties | In the Matter of AT&T Services, Inc. and AT&T Corp., Complainants. v. 123.Net, Inc. (d/b/a Local Exchange Carriers of Michigan and/or Prime Circuits) Defendants. Bureau ID No. EB-19-MD-007 |
Adopted: June 24, 2020
By the Chief, Enforcement Bureau:
TABLE OF CONTENTS
Para.
I. INTRODUCTION 1
II. BACKGROUND 2
A. Legal Framework 2
B. Factual Background ......................................................................................................................... 4
III. DISCUSSION ........................................................................................................................................ 7
A. LEC-MI Violated Sections 201(b) and 203(c) by Imposing Access Charges for Traffic
Not Originated by LEC-MI End Users. . ........................................................................................ 18
B. LEC-MI's Defenses Are Unavailing .............................................................................................. 27
C. LEC-MI Owes AT&T Damages, Plus Interest, for Charges Improperly Billed. . .......................... 31
IV.ORDERING CLAUSES ....................................................................................................................... 20
I. INTRODUCTION
1. This order concludes a long-running dispute among AT&T, 123.Net, Inc. d/b/a Local Exchange Carriers of Michigan (LEC-MI), and others regarding improper end office charges on aggregated toll free long distance traffic that originated from wireless customers (traffic in dispute).[1] In this proceeding, AT&T alleges that LEC-MI violated the Communications Act (Act) by billing and collecting end office charges, through its agent, with respect to toll free wireless calls that were placed to AT&T's toll free customers. LEC-MI concedes that the charges were improper, but counters that it should not be held responsible for the bills its agent sent on its behalf. Although the facts of this case are complex, the underlying misconduct is simple-LEC-MI charged for services that it did not provide. We therefore find that LEC-MI unlawfully billed and collected these charges and grant AT&T a refund in the amount of $972, 394, plus interest, for charges it paid from February 2012 through April 2014.
II. BACKGROUND
A. Legal Framework
2. The Act defines the obligations of carriers to behave in a just and reasonable manner, their tariffing duties, and their responsibility for those acting on their behalf. Under section 201(b) of the Act, "[a]ll charges, practices, classifications, and regulations for and in connection with [interstate or foreign] communication service, shall be just and reasonable, and any such charge, practice, classification, or regulation that is unjust or unreasonable is declared to be unlawful."[2] A carrier violates section 201(b) when it bills for services it does not provide.[3] In addition, section 203(c) prohibits a carrier from collecting charges for services that are not described in its tariff. Specifically, section 203(c) provides: "[N]o carrier shall [] charge, demand, collect or receive a greater . . . compensation" than the "charges specified" in the carrier's tariff. [4]
3. Section 217 provides that "the act, omission, or failure of any officer, agent, or other person acting for or employed by any common carrier or user, acting within the scope of his employment, shall in every case be also deemed to be the act, omission, or failure of such carrier or user as well as that of the person."[5] The Commission has observed that "Congress's clear intent in enacting section 217 was to ensure that common carriers not flout their statutory duties by delegating them to third parties."[6] A carrier's liability for the conduct of agents or contractors extends to actions within the scope of their employment that are contrary to the carrier's policies, for "[t]o hold that [s]ection 217 does not extend to independent contractors acting inconsistently with the carrier's policy would create a loophole in the requirements of the Act and frustrate clear legislative intent."[7]
B. Factual Background
4. Parties and Relevant Non-Parties. Complainant AT&T Corp., for purposes of this case, provides end users the ability to make long distance calls[8] and offers and provides toll free long distance service to end-user customers around the country.[9] Callers initiate toll free calls by dialing 800 or another three digit prefix beginning with the number 8 in lieu of an area code. The customer receiving the call (rather than the customer making the call) pays its toll free provider for the call.[10] Thus, the calls are "toll free" for the calling party but not the called party. AT&T's customers here are the businesses that receive the toll free calls.[11] AT&T Corp. is the AT&T entity involved in routing the traffic in dispute.[12]
5. Complainant AT&T Services, Inc. performs centralized administrative support services including information technology and billing support services.[13] AT&T Services, Inc. is not a carrier and was not involved in routing any of the traffic in dispute.[14] In this order, we refer to AT&T Corp. and AT&T Services, Inc. collectively as AT&T.
6. Defendant LEC-MI is a common carrier and competitive local exchange carrier that operates an end office switch in Southfield, Michigan, among other communications services.[15] LEC-MI's telephone numbering resources are limited to certain NPA-NXXs associated with its switch in Southfield.[16]
7. From October 21, 2003 until approximately September 19, 2014, LEC-MI's end office switch in Southfield was connected to a tandem switch owned by Great Lakes Comnet (Great Lakes).[17]During that time, Great Lakes was registered with the Michigan Public Service Commission as a facilities-based competitive access provider.[18] Great Lakes provided interstate switched and special access services, including tandem switched transport, tandem switched facility, tandem switched termination, and tandem switching via a tandem switch located in Westphalia, Michigan.[19]
8. Westphalia Telephone Company (Westphalia) is an incumbent local exchange carrier and affiliate of Great Lakes that provides telephone exchange services to business and residential customers and switched access services to long distance carriers in Michigan.[20]
9. Traffic and Billing Responsibilities.
Great Lakes filed an interstate access service tariff with the Commission (Great Lakes Tariff or Tariff) that governs the rates and terms of its interstate switched and special access services.[21] Until 2014, LEC-MI participated as an issuing carrier in the Great Lakes Tariff.[22] The Great Lakes Tariff provided that the local switching (or end office) rate includes "information surcharge, common trunk port, and tandem switched termination charges for the portion of those services directly provided by LEC[-MI]."[23]
10. The Tariff also reflected an arrangement between LEC-MI and Great Lakes under which Great Lakes had billing responsibility for LEC-MI's interexchange traffic.[24] Specifically, Great Lakes and LEC-MI had entered into a network operating agreement in 2003 under which Great Lakes was responsible for, inter alia, billing local switching and other switched access services to long distance carriers for the jointly provided access services on toll and toll free calls for which LEC-MI was a participating carrier in the call flow.[25] Later, Great Lakes assigned its responsibility to bill switched access services for such calls to Westphalia.[26] As a result of this assignment, Westphalia assumed responsibility for billing AT&T and other long distance carriers for LEC-MI's switched access services during the time period from January 1, 2012 through September 19, 2014.27[]
11. The Disputed Traffic and Billing.
AT&T received monthly bills in electronic format from Westphalia for services that LEC-MI, Great Lakes, and Westphalia purportedly provided to AT&T.28[] The bills identified by operating company number (OCN) the carrier associated with the specific rate elements that were billed.29[] These bills to AT&T included charges for end office switching and related access charges billed under LEC-MI's OCN for aggregated toll free traffic that originated from wireless customers throughout the country, 30[] even though LEC-MI did not provide end office switching services on that traffic.31[] Westphalia, directly or through its vendor, accepted AT&T's payments on access bills for traffic associated with LEC-MI during the time period February 2012 through July 2013.32[] LEC-MI was aware that Westphalia was billing access charges on LEC-MI's behalf for traffic that was transported from LEC-MI to Great Lakes, 33[] and LEC-MI received at least some of the access charges Westphalia collected.34[]
12. Starting in or around 2010, the total amount of billings to AT&T for access services jointly provided by LEC-MI Great Lakes, and Westphalia began to increase steadily, largely due to the aggregation of toll free traffic that originated from wireless customers throughout the country.35[] Prior to November 2009, the volume of traffic to and from AT&T through LEC-MI's switch in Southfield was about one million minutes per month, but by May 2013 the monthly volume had...
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