In re AT&T Corp.
| Decision Date | 11 August 2004 |
| Docket Number | FCC 04-195,EB-04-MD-002 |
| Court | Federal Communications Commission Decisions |
| Parties | In the Matter of AT&T CORP. AND AT&T OF THE VIRGIN ISLANDS, INC., Complainants, v. VIRGIN ISLANDS TELEPHONE CORPORATION, D/B/A/ INNOVATIVE TELEPHONE, Defendant. |
Adopted: August 4, 2004
By the Commission: Commissioner Martin approving in part dissenting in part, and issuing a statement.
1. In this Memorandum Opinion and Order, we grant a formal complaint[1] filed by AT&T Corp. and AT&T of the Virgin Islands, Inc., (collectively, "AT&T") against Virgin Islands Telephone Corporation, d/b/a/ Innovative Telephone ("Vitelco"), pursuant to section 208 of the Communications Act of 1934, as amended ("the Act").[2] AT&T alleges that Vitelco violated section 201(b) of the Act[3] by earning access revenues above its maximum allowable rate of return ("overearning") during the period beginning January 1, 1997 and concluding December 31, 1998 (the "1997-1998 Monitoring Period" or "Monitoring Period"). AT&T further alleges that Vitelco is liable for refunds regarding Vitelco's overearnings in 1997, when, in AT&T's view, Vitelco's access rates were not "deemed lawful" under section 204(a)(3) of the Act.[4] For the reasons explained below, we agree with AT&T. Accordingly, we grant AT&T's Complaint and hold Vitelco liable to AT&T for AT&T's portion of Vitelco's overearnings from rates in effect from January 1, 1997 through December 31, 1997.
2. AT&T provides interexchange telecommunications services.[5] Vitelco is a "rate of return" local exchange carrier that provides interstate access services.[6] During 1997 and 1998, AT&T purchased interstate access services from Vitelco pursuant to Vitelco's Interstate Access Tariff.[7]
3. Under section 201(b) of the Act, a local exchange carrier may charge only "just and reasonable" rates for its provision of access services.[8] To enforce this requirement, the Commission has prescribed an authorized rate of return of 11.25 percent for rate-of-return carriers.[9] To comply with this prescription, a rate-of-return carrier sets its tariff rates at levels designed to produce no more than an 11.25 percent return on its investment for the tariff period, based on an analysis of historical and projected cost data and the respective demand for services.[10] The carrier may then file its rates on a "non-streamlined" basis on at least 16 days' notice pursuant to section 203 of the Act[11] and sections 69.3(a) and 61.58 of our rules.[12]
4. The carrier's access earnings are measured over a two year period (the "monitoring period") to determine compliance with the maximum allowable rate of return.[13] After the first year, the carrier files an "interim monitoring report" that reflects earnings realized during the first year.[14] During the course of the two-year monitoring period, a rate-of-return carrier may make access rate adjustments to try to ensure that it does not exceed or fall short of its maximum allowable rate of return.[15] Moreover, during the course of the two-year monitoring period, the Commission may require the carrier to change its rates prospectively, pursuant either to a section 205 investigation or a section 208 complaint.[16]
5. When the two-year monitoring period ends, the carrier files a "final monitoring report" reflecting its total access earnings.[17] If this final monitoring report indicates that the carrier has exceeded its maximum allowable rate of return at the end of the two-year monitoring period, the Commission may then, in response to formal complaints for damages, require refunds of any such overearnings to affected access customers.[18]
6. In the Telecommunications Act of 1996, [19] Congress provided all local exchange carriers, including rate-of-return carriers such as Vitelco, an alternative method for filing interstate access rates.[20] Under section 204(a)(3) of the Act, a rate-of-return carrier may file new or revised access rates on a "streamlined" basis.[21] Access rates that a carrier files pursuant to this provision "shall be deemed lawful and shall be effective 7 days (in the case of a reduction in rates) or 15 days (in the case of an increase in rates) after the date on which the rates are filed with the Commission unless the Commission takes action under paragraph (1) [47 U.S.C. § 204(a)(1)] before the end of the 7-day or 15-day period, as appropriate."[22] Even if the carrier files a "streamlined" access tariff under section 204(a)(3), the carrier must still report its earnings periodically, and may still revise its rates during the course of the monitoring period, just as if the tariff had been filed under section 203. Moreover, interim monitoring reports that reveal overearnings can still prompt the Commission to cause the carrier to change its rates prospectively, pursuant to a section 205 investigation or a section 208 complaint. If the carrier has overearned at the end of the two-year monitoring period, however, the Commission cannot require the carrier to refund such overearnings to its access customers for periods during which the rates have been "deemed lawful" by operation of law. [23]
7. Vitelco's maximum allowable rate of return was 11.65% for the 1997-1998 Monitoring Period.[24] Four Vitelco access tariffs applied during different portions of the 1997-1998 Monitoring Period. The first was effective on July 1, 1996;[25] the second was effective on July 1, 1997;[26] the third was effective on January 1, 1998;[27] and the fourth was effective on July 1, 1998.[28] Vitelco filed the July 1996 tariff on a non-streamlined basis pursuant to section 203 of the Act.[29] Vitelco filed the subsequent three tariffs on a streamlined basis pursuant to section 204(a)(3) of the Act.[30] During the 1997-1998 Monitoring Period, Vitelco also filed interim monitoring reports on September 25, 1997[31] and on March 30, 1998, [32] and a final monitoring report and a corrected final monitoring report on September 30, 1999[33]and October 5, 1999, [34] respectively.
8. On June 27, 1997, the Common Carrier Bureau ("CCB")[35] issued an order suspending and setting for investigation Vitelco's second tariff (i.e., the July 1997 tariff).[36] On July 28, 1997, on its own motion, CCB issued an order (i) reconsidering its decision to suspend and investigate Vitelco's July 1997 tariff and (ii) declining to investigate that tariff.[37]
9. The parties stipulate that Vitelco's access earnings exceeded its maximum allowable rate of return during the first six months of 1997.[38] In addition, the record clearly indicates that Vitelco's access earnings exceeded its maximum allowable rate of return during the remainder of the 1997-1998 Monitoring Period, as well.[39]
10. On September 10, 2001, pursuant to sections 1.716-1.717 of our rules, [40] AT&T filed an informal complaint against Vitelco alleging that Vitelco had earned more than its maximum allowable rate of return, and thus had overcharged AT&T for access services, during the 1997-1998 Monitoring Period.[41] Also on September 10, 2001, AT&T and Vitelco moved jointly that the Enforcement Bureau ("Bureau") instruct Vitelco not to respond to AT&T's informal complaint until 90 days after a certain court decision became final.[42] The Bureau granted the Joint Request.[43] Thereafter, the relevant court decision became final, our informal complaint process ran its course, and AT&T timely filed its formal complaint. Thus, pursuant to our informal complaint rules and orders, the instant formal complaint relates back to AT&T's September 10, 2001 informal complaint for purposes of tolling the applicable two-year statute of limitations set forth in 47 U.S.C. § 415(b).[44]
11. The formal complaint alleges that Vitelco violated section 201(b) of the Act by reaping access earnings over its 11.65% maximum allowable rate of return during the 1997-1998 Monitoring Period.[45] Pursuant to section 1.722(d) of our rules, [46] AT&T "bifurcated" this proceeding and requests a determination regarding only liability at this time.[47] AT&T seeks a finding of liability for damages only with respect to Vitelco's 1997 earnings, however. AT&T concedes that section 204(a)(3) precludes any finding of liability for damages regarding Vitelco's 1998 earnings.[48]
12. In response, Vitelco asserts that AT&T's claims for damages are barred by the two-year statute of limitations in section 415(b) of the Act.[49] Vitelco also asserts that section 204(a)(3) bars AT&T's claim for damages regarding Vitelco's earnings during the period July 1, 1997 through December 31, 1997, because the Suspension Order did not deprive Vitelco's access rates of their "deemed lawful" status during that period.[50]
13. For the reasons discussed below, we find that AT&T timely filed its September 10, 2001 informal complaint, and thus the statute of limitations in section 415(b) of the Act does not bar AT&T's claims for damages. We also find that the Suspension Order stripped Vitelco's July 1997 access rates of their deemed lawful status, and that the Reconsideration Order did not subsequently render those rates "lawful." Moreover, we find that Vitelco overearned in 1997 and did not underearn in 1998. Accordingly, we grant AT&T's Complaint and hold Vitelco liable to AT&T for AT&T's share of Vitelco's overearnings during 1997.
C. AT&T's Claims Are Timely.
14. In Vitelco's view, AT&T's claim for damages arising from the overearnings...
To continue reading
Request your trial