In re Cox Virginia Telcom Inc.
| Decision Date | 10 May 2002 |
| Docket Number | FCC 02-133,EB-01-MD-006 |
| Court | Federal Communications Commission Decisions |
| Parties | In the Matter of COX VIRGINIA TELCOM, INC., Complainant, v. VERIZON SOUTH INC., Respondent. |
Adopted: May 2, 2002
1. In this Order, we grant a formal complaint that Cox Virginia Telcom, Inc. ("Cox") filed against Verizon South Inc.[1] ("Verizon South") pursuant to sections 208 and 252(e)(5) of the Communications Act of 1934, as amended ("Act").[2] In its complaint, Cox seeks to recover pursuant to an interconnection agreement with Verizon South ("Agreement"), payment of reciprocal compensation for the delivery of traffic bound for Internet service providers ("ISPs").
2. As discussed below, we conclude that the Agreement obligates Verizon South to pay reciprocal compensation for the delivery of ISP-bound traffic. We further find that, prior to April 6, 2001, Verizon South waived its right to object to being billed for end-office, rather than tandem, termination, and to being charged reciprocal compensation for calls to customers that have no physical presence in the local calling area associated with the NXX code Cox has assigned.
3. Cox is a facilities-based competitive local exchange carrier in Virginia.[3] Verizon South is an incumbent local exchange carrier in Virginia.[4]
4. Cox and Verizon South interconnect their networks to enable an end user subscribing to one party's local exchange service to place calls to and receive calls from end users subscribing to the other party's local exchange service.[5] In March 1996, Cox initiated negotiations with Verizon South regarding an interconnection agreement pursuant to section 252(a)(1) of the Act.[6] During negotiations, the parties reached an impasse over certain issues, which they then submitted to the Virginia State Corporation Commission ("VSCC") for arbitration pursuant to section 252(b)(1) of the Act.[7] At the conclusion of arbitration, the VSCC approved the resultant Agreement pursuant to section 252(e)(1) of the Act.[8] Cox and Verizon South signed the Agreement on March 25 and 27, 1997, respectively.[9] The parties dispute whether the Agreement remains in effect.[10]
5. The Agreement obligates the parties to "reciprocally terminate local exchange traffic . . . between each other's networks, "[11] and to pay reciprocal compensation to each other for the delivery of "Local Calls" that are "originated from [one party] and terminated to [the other party's] end offices or tandems.[12] This obligation does not apply, however, until there is an "imbalance" of "Local Traffic" that "exceeds plus-or-minus 10%."[13] The Agreement defines "Local Exchange Traffic" as "any traffic that is defined by Local Calling Area."[14] "Local Calling Area, " in turn, means "Extended Area Service (EAS) and Extended Local Service (ELS) calling area as defined in [Verizon South's] local tariff at the date of this agreement."[15] During their negotiation of the Agreement, Cox and Verizon South did not address specifically whether ISP-bound traffic constituted "local exchange traffic" for purposes of the Agreement's reciprocal compensation provisions.[16]
6. Two provisions of the Agreement address waiver of rights. Paragraph XIX.AM., which is captioned "Waiver, " is the more general of the two provisions. It states:
The failure of either Party to insist upon the performance of any provision of this Agreement, or to exercise any right or privilege granted to it under this Agreement, shall not be construed as a waiver of such provision or any provisions of this Agreement, and the same shall continue in full force and effect.[17]
Paragraph XIX.G.1. is entitled "Dispute" and falls under the heading "Billing and Payment." This paragraph, which is more specific than Paragraph XIX.AM., provides:
If a Party disputes a billing statement, that Party shall notify the other Party in writing regarding the nature and the basis of the dispute within thirty (30) calendar days from the bill date or twenty (20) calendar days from the receipt of the bill, whichever is later, or the dispute shall be waived. The Parties shall diligently work toward resolution of all billing issues.[18]
7. Paragraph XIX.G.5. of the Agreement establishes the rights of the parties to perform an audit:
Each Party shall have a right to audit all bills rendered by the other Party pursuant to this Agreement, verifying the accuracy of items, including but not limited to, the services being provided on a wholesale basis pursuant to this Agreement, usage recording and provisioning, and nonrecurring charges.[19]
8. In September 1997, Verizon South and Cox began to exchange traffic in accordance with the Agreement.[20] Cox sent its first bill to Verizon South for reciprocal compensation in November 1997, [21] and, a month later, specifically notified Verizon South that local traffic was out of balance by more than 10 percent.[22] On December 29, 1997, Verizon South informed Cox in writing that "charges for local termination of traffic . . . have been billed in error, " because the parties allegedly had agreed, in September 1997, "to remain in a bill and keep arrangement until January 1998."[23] Nevertheless, Cox continued to bill Verizon South on a monthly basis for reciprocal compensation.[24]
9. During a February 23, 1998 meeting, Verizon South advised Cox that, due to technical limitations of the switch through which Cox interconnected with Verizon South's network, Verizon South could not measure traffic for purposes of reciprocal compensation billing until Verizon South converted its trunks from two-way trunks to one-way trunks.[25] The parties agreed to a March 6, 1998 conversion date.[26] It was not until August 14, 1998, however, that Verizon South installed and converted the trunks.[27]
10. On August 17, 1998, Verizon South sent Cox a letter disputing Cox's reciprocal compensation bills through August 1998 on the ground that the parties allegedly had agreed to a bill and keep arrangement until Verizon South installed one-way trunks.[28] Verizon South reiterated this view in October 16, 1998 correspondence, but nonetheless agreed to "an earlier reciprocal compensation billing start date of April 1, 1998, " and asked Cox to submit invoices for local traffic Cox terminated to Verizon South from April 1, 1998 forward.[29]
11. In a December 7, 1998 letter, Verizon South complained to Cox that there was [30] Verizon South requested that the parties "establish a discussion and work toward resolution of the dispute as soon as possible."[31] Four days later, Cox and Verizon South agreed to begin reciprocal compensation billing as of March 6, 1998.[32]
12. In a January 6, 1999 letter to Cox, Verizon South stated that it had "determined the traffic to Cox is terminating to Internet service providers, not to actual end users in the local serving area and Internet traffic is not local in jurisdiction."[33] Verizon South proposed that the parties agree to withhold payment for such traffic until the "FCC, the state Commission or court of competent jurisdiction issues a final and non appealable order regarding the compensation for Internet traffic."[34] Cox responded to Verizon South in correspondence dated February 3, 1999, which pledged that Cox would seek relief from the VSCC if Cox did not receive payment of all outstanding reciprocal compensation invoices by February 19, 1999.[35] As discussed below, Cox filed a complaint with the VSCC in March 1999.[36]
13. Throughout the remainder of 1999, the parties debated Verizon South's obligation to pay reciprocal compensation for the delivery of ISP-bound traffic.[37] Prior to April 2000, Verizon South did not pay any reciprocal compensation to Cox.[38] Beginning in April 2000, and in each of the next four months, Verizon South sent Cox payments for reciprocal compensation for what Verizon South determined was "bona fide local traffic."[39] This excluded what Verizon South estimated to be the volume of ISP-bound traffic. Cox returned Verizon South's first two checks, stating that the payments did not constitute the full amount due.[40] Verizon South ceased making reciprocal compensation payments to Cox in August 2000.[41]
14. In March 1999, Cox filed a complaint with the VSCC requesting an order "declaring that local calls to ISPs constitute local traffic under the terms of the Agreement and that Cox and [Verizon South] are entitled pursuant to their Agreement to reciprocal compensation for the completion of such calls; and enforcing [Verizon South's] obligations under the Agreement to make payments to Cox."[42] The VSCC refused to act on Cox's complaint, citing concerns about issuing a ruling that possibly would conflict with a subsequent decision by this Commission regarding reciprocal compensation for the delivery of ISP-bound traffic.[43]
15. On June 30, 2000, Cox filed a petition with this Commission requesting preemption of the VSCC's jurisdiction over Cox's reciprocal compensation complaint pursuant to section 252(e)(5) of the Act.[44] In September 2000, the Commission granted Cox's petition, stating that it would resolve the following question: "whether the existing interconnection agreement between Cox and [Verizon South] requires [Verizon South] to pay compensation to Cox for the delivery of ISP-bound...
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