In re Saturn Telecommunication Services Inc., EB-09-MD-008

• Decision Date: 04 April 2013
• Docket Number: EB-09-MD-008
• Court: Federal Communications Commission Decisions
• Parties: In the Matter of Saturn Telecommunication Services, Inc., Complainant, v. BellSouth Telecommunications, Inc., d/b/a/ AT&T Florida, Defendant.

In the Matter of Saturn Telecommunication Services, Inc., Complainant,
v.
BellSouth Telecommunications, Inc., d/b/a/ AT&T Florida, Defendant.

No. EB-09-MD-008

Federal Communications Commission

April 4, 2013

Adopted: April 4, 2013

MEMORANDUM OPINION AND ORDER

By the Associate Chief, Enforcement Bureau:

I. INTRODUCTION

1. This Memorandum Opinion and Order (Order) dismisses with prejudice the formal complaint^[1] that Saturn Telecommunication Services, Inc. (STS) filed against BellSouth Telecommunications, Inc., d/b/a/ AT&T Florida (AT&T or BellSouth) under Section 208 of the Communications Act of 1934, as amended (Act).^[2] STS alleges that AT&T violated Sections 201(a), 201(b), 202(a), 251(c)(2)(B)-(D), 251(c)(3), and 271(c)(2)(B) of the Act^[3] by refusing to permit STS to purchase special access service commingled with certain "non-designed" DS-0 loops rather than commingled with higher-priced, "designed" DS-0 loops.^[4] In addition, STS alleges that AT&T violated Sections 202(a) and 251(c)(2)(C) of the Act by failing to have a process by which AT&T could "seamlessly convert" STS's existing customers in bulk from "UNE-P" arrangements to arrangements commingling special access service with loops.^[5] STS further alleges that AT&T violated its duty under Section 251(c)(1) of the Act to negotiate an interconnection agreement in good faith.^[6]

2. For the reasons discussed below, we dismiss Counts I-IX and XI-XIII because STS released the claims stated in those Counts under the terms of a prior settlement agreement with AT&T. Because these are the only Counts remaining in the Complaint, ^[7] we dismiss the Complaint in its entirety.

II. BACKGROUND

3. During all relevant periods, STS was a competitive local exchange carrier (CLEC) and interexchange carrier (IXC) certified by the Florida Public Service Commission (FPSC) to provide telecommunications services in Florida.^[8] STS offered local and long distance services to businesses and residential consumers in an area that included South Florida.^[9] Prior to 2006, pursuant to an interconnection agreement with AT&T, ^[10] STS served most, if not all, of its customers by purchasing from AT&T a service known as "UNE-P, " which consisted of unbundled local switching combined with local loops and shared transport.^[11]

4. For purposes relevant to this proceeding, AT&T is an incumbent local exchange carrier (ILEC) certified by the FPSC to provide local exchange services in Florida.^[12] AT&T is also a Bell Operating Company (BOC), and its affiliate BellSouth Long Distance, Inc. d/b/a AT&T Long Distance Service is an IXC authorized by this Commission and the FPSC to provide long distance services.^[13]

5. On February 4, 2005, the Commission released the Triennial Review Remand Order (TRRO), which, inter alia, eliminated a requirement that ILECs such as AT&T sell UNE-P service to CLECs such as STS.^[14] The Commission established a 12-month transition period for CLECs to purchase from ILECs services other than UNE-P to serve the CLECs' customers.^[15]

6. By late 2004, prior to the release of the TRRO, AT&T and STS had already begun discussing the design and construction of a new AT&T network to which STS could migrate its UNE-P customers.^[16] Working with AT&T through 2005, STS ultimately decided on a network consisting of the commingling of Section 251(c)(3) unbundled network elements with a special access facility called a SMARTRing (henceforth, the "commingled network").^[17] The commingled network design called for STS's customers to be connected to the SMARTRing through "DS-0" and "DS-1" loops, ^[18] with collocation arrangements located at eight AT&T wire centers.^[19]

7. During the negotiations in 2005, AT&T advised STS that STS could purchase two types of "non-designed" DS-0 loops for use in the commingled network: either an Unbundled Copper Loop Non-Designed (UCL-ND) loop or a Service Level 1 (SL1) loop.^[20] During those same discussions, STS told AT&T that, to transition STS's customers from UNE-P to the new commingled network as quickly as possible, STS wanted AT&T to use a "bulk migration" process capable of moving customers in large increments.^[21] At that time, STS had approximately 18, 200 UNE-P lines, provisioned mostly to small business and residential customers in South Florida.^[22]

8. In about March 2006, shortly before the TRRO transition deadline and while the parties were negotiating the terms of a new interconnection agreement, AT&T changed its earlier advice and informed STS for the first time that it was technically infeasible to use a non-designed DS-0 loop in the commingled network.^[23] According to AT&T, only a certain "designed" DS-0 UNE loop-known here as a Service Level 2 (SL2) Loop-would work in the commingled network, and such designed loops would cost STS substantially more than non-designed loops.^[24] Further, AT&T informed STS that it had not created a bulk migration process to convert STS's UNE-P customers to the kind of commingled network STS had chosen.^[25]

9. STS expressed great dissatisfaction with these late revelations and demanded that AT&T compensate STS for the additional costs STS would incur as a result of AT&T's changed requirements.^[26]The parties engaged in a series of discussions, and exchanged several settlement proposals, in an effort to resolve this dispute.^[27] During those discussions, STS questioned AT&T about its failure to develop a bulk migration process and about the basis for AT&T's determination that commingling using non-designed DS-0 loops was technically infeasible.^[28] STS expressed skepticism-both internally and in communications with AT&T-about the veracity of the answers it received^[29] and harbored doubts about whether AT&T was conducting these discussions in good faith.^[30]

10. In June 2006, after the parties had failed to achieve a resolution, STS filed a complaint against AT&T before the FPSC, ^[31] and also filed comments with this Commission opposing AT&T's then-proposed merger with BellSouth.^[32] In both filings, STS assailed AT&T's alleged failure to timely migrate STS's UNE-P customers to another arrangement, and asserted that AT&T had misled STS regarding the use of non-designed DS-0 loops in the commingled network and imposed arbitrary commingling rules.^[33]STS also asserted in both filings that AT&T had improperly refused to provide a bulk migration process to transfer STS's UNE-P customers to the commingled network, and had made misrepresentations to STS concerning the availability and operation of AT&T's bulk migration process.^[34] STS further argued in both filings that AT&T had acted fraudulently, anti-competitively, and in bad faith in dealing with STS on the commingling and migration issues.^[35] In its FPSC Complaint, STS sought prospective relief in the form of an order requiring AT&T to transfer STS's existing UNE-P customers, and to add new STS customers in the future, to the commingled network at the lower rates for non-designed DS-0 loops.^[36]

11. Following these filings, representatives of AT&T and STS engaged in a mediation of their dispute in July 2006 and ultimately reached a settlement.^[37] Pursuant to that settlement, in late 2006, STS and AT&T entered into a Confidential Settlement Agreement (Settlement Agreement)^[38] and a new Interconnection Agreement (ICA).^[39]

12. Under the Settlement Agreement, the parties agreed that AT&T would provide STS with certain billing credits^[40] and that STS would withdraw all billing disputes regarding the difference between the rates for a non-designed DS-0 loop and an SL2 loop, regardless of whether the disputed charges were assessed under the existing or the new ICA.^[41] The Settlement Agreement also permitted STS to migrate 2, 500 of STS's existing UNE-P lines to SL2 loops commingled with special access transport using a "bulk migration work-around process."^[42]

13. The Settlement Agreement acknowledged that STS had withdrawn the FPSC Complaint and the FCC Comments without prejudice, and STS expressly agreed not to re-file the FPSC Complaint or the FCC Comments "or the allegations raised in or associated with" them, in any forum.^[43] In addition, STS agreed in the Settlement Agreement to "release[], acquit[], and discharge[] [AT&T] from all Demands, Actions and Claims, whether known or unknown, asserted or which could have been asserted, against [AT&T] related to" the FPSC Complaint or the FCC Comments.^[44] The parties agreed that the Settlement Agreement would be construed in accordance with Florida law.^[45]

14. The parties agree that the ICA, executed just days prior to the Settlement Agreement, limits STS to commingling certain kinds of DS-0 loops, including SL2 loops, but not including non-designed DS-0 loops, such as SL1 loops.^[46] The parties disagree about whether the ICA requires AT&T to provide bulk migrations to commingled arrangements.^[47]

15. In the months that followed execution of the Settlement Agreement, the parties experienced difficulties in implementing the Settlement Agreement's provisions allowing bulk migration of 2, 500 of STS's existing UNE-P lines to the commingled arrangement.^[48] Each party blames the other for these difficulties.^[49] In the end, only about eighty-five of STS's UNE-P lines were moved to the commingled network utilizing a bulk migration work-around process.^[50]

16. On May 30, 2008, pursuant to Commission rules 1.716-1.718, ^[51] STS filed an informal complaint against AT&T with this Commission.^[52] The Informal Complaint asserted violations of Sections 271 and 251 of the Act based primarily on AT&T's allegedly faulty implementation of a new Operating Support System (OSS) in April 2008.^[53] The Informal Complaint also alleged that AT&T had "misled STS into believing that [AT&T] had perfected the process" for converting STS's existing UNE-P customers to a commingled network when, according to STS, AT&T was "unable to do this conversion in...