MCI Communications Corp. v. AMERICAN TELEPHONE & T. CO., Civ. A. No. 73-2499.

• Decision Date: 07 January 1974
• Docket Number: Civ. A. No. 73-2499.
• Citation: 369 F. Supp. 1004
• Parties: MCI COMMUNICATIONS CORPORATION et al., Plaintiffs, v. AMERICAN TELEPHONE AND TELEGRAPH COMPANY and the Bell Telephone Company of Pennsylvania, Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

369 F. Supp. 1004

MCI COMMUNICATIONS CORPORATION et al., Plaintiffs, v. AMERICAN TELEPHONE AND TELEGRAPH COMPANY and the Bell Telephone Company of Pennsylvania, Defendants.

Civ. A. No. 73-2499.

United States District Court, E. D. Pennsylvania.

December 31, 1973.

As Amended January 7, 1974.

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Lewis A. Rivlin, Peabody, Rivlin & Lambert, Washington, D. C., Raymond W. Midgett, Jr., Dechert, Price & Rhoads, Philadelphia, Pa., for plaintiffs.

Irving R. Segal, Schnader, Harrison, Segal & Lewis, Philadelphia, Pa., Charles Ryan, J. Hugh Roff, Jr., New York City, Donald F. Clarke, Philadelphia, Pa., for defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

NEWCOMER, District Judge.

The Parties

1. Plaintiffs are MCI Communications Corporation, MCI Telecommunications Corporation, MCI-New York West, Inc., Interdata Communications, Inc., and Microwave Communications, Inc.

2. Plaintiffs are communications common carriers specializing in the interstate transmission of voice and data by microwave. Plaintiffs offer their services primarily to businesses and government agencies whose intra-organizational volume of communication warrants full-time private circuits between their branches which are located in different states as well as with their out-of-state customers. MCI competes in the offering of these services, called "private line services," with other interstate common carriers, including AT&T's Long Lines Department.

3. MCI Communications Corporation, the parent of the other plaintiffs, does not itself provide any transmitting services.

4. MCI has 13,000 stockholders.

5. Some of the services MCI proposes to offer are directly competitive to AT&T interstate offerings, while others may be interstate services not offered by AT&T.

6. MCI also competes, in a sense, with corporations which create their own private microwave communications system.

7. The specialized common carriers like MCI serve with special communications services the corporations which do not have sufficiently great communications needs to warrant building their own private microwave systems.

8. The MCI network has now been extended to include St. Louis, Chicago, South Bend, Toledo, Detroit, Cleveland, Pittsburgh, Philadephia, Newark, New York City, and will soon reach Baltimore, Washington, D. C., Akron, Tulsa, Oklahoma City, and Dallas.

9. MCI constructs microwave radio systems, which consist of various terminals and repeaters spaced approximately 20 to 25 miles apart which relay radio signals to transmit voice, data, facsimile or other communications services between designated cities. In each of the cities where MCI has a terminal and offers its service, MCI leases circuits from the local telephone company to link MCI's terminal to its customers' premises.

10. Except for the coincidence that a customer of MCI may be located in the same building as an MCI terminal, interconnections with local loops provided by the local telephone company monopolies are necessary for the provision of point-to-point private line interstate business communications service by MCI.

11. Defendants are American Telephone and Telegraph Company (hereafter "AT&T") and its subsidiary, The Bell Telephone Company of Pennsylvania (hereafter "Bell of Pa."), both of which are communications common carriers subject to the Communications Act of 1934, as amended.

The Services in Dispute

12. As of November 14, 1973, MCI had under lease from Bell System companies 488 local distribution circuits to MCI terminals in eleven major cities along its routes, including Philadelphia and Pittsburgh. 327 of those circuits are already terminated in Bell System PBX's or key telephone sets, and 91 are to be terminated therein later.

13. However, Bell of Pa., as well as other local Bell companies have refused to provide MCI with four kinds of interconnection necessary for services which MCI appears authorized to provide and which MCI claims are provided to MCI's competitors. Those kinds of services for which interconnection is necessary are Foreign Exchange Service (FX), Common Carrier Switching Arrangements (CCSA), "interexchange" service, i. e., linkage between Bell defined metropolitan areas and areas more distant from MCI's towers, and "transiting" service, or the interconnection of the transmitting and receiving facilities of MCI and another common carrier.

14. FX (Foreign Exchange) service is a form of "switched" service, which allows a businessman located in one state to, in effect, maintain a local phone within another state. Under Foreign Exchange service, a businessman can be reached by customers in a different state and can himself reach another state through a telephone line which has the appearance to those customers of being a local telephone in their city.

15. As a specific example of a refusal by Bell to provide interconnection for interstate private line specialized common carrier service of the FX type, Bell of Ohio, the week preceding the hearing, on orders from AT&T, refused to permit MCI service to the Chilton Corporation. Another example was a refusal by Illinois Bell for Cone Mills.

16. Common Control Switching Arrangement (CCSA) is a private line system for linking the various offices of a large company through large switches on a local telephone company's premises instead of through the PBX switches on the customers' premises.

17. Although the private line circuits furnished in CCSA are provided for the exclusive use of the CCSA customer, the switching machines are shared with other private line service customers and message telecommunications service (MTS) and wide area telecommunication service (WATS) customers.

18. A specific example of a refusal by Bell to provide interconnection for interstate private line specialized common carrier service of the CCSA type arose when Illinois Bell refused to interconnect an MCI long haul interstate circuit in Chicago for the Westinghouse CCSA private line system.

19. Both FX and CCSA require interconnection with Bell terminating equipment on Bell premises; in other words, rather than merely interconnecting MCI's micro-wave towers to either Bell or customer owned equipment on MCI's customers' premises, the interconnections necessary to permit FX and CCSA requires Bell to interconnect MCI's customers with Bell's central switching facilities.

20. "Interexchange service" merely pertains to MCI's ability to connect with customers outside of the immediate area surrounding its receiving and transmitting facilities. AT&T and the local Bell companies have refused to approve MCI's requests for interconnection lying outside of the Bell defined local distribution area, even though the customer to be serviced is not so far from the local distribution area as to require a long distance call. AT&T has offered to make interconnection beyond the local distribution area available to MCI if and when the FCC approves AT&T's proposed hi-lo tariff. FCC approval of the proposed hi-lo tariff, by enabling the local Bell companies to vary their long-distance rates according to the costs of servicing particular routes, would allow AT&T to match if not undercut MCI's rates for servicing those routes.

21. The approval of the hi-lo tariff by the FCC is not a legal pre-requisite for the AT&T's furnishing of interexchange interconnection to MCI.

22. As specific examples of refusal by Bell to provide interconnection for interstate private line specialized common carrier service to communities outside Bell's local distribution area, service to St. Charles and St. Peters, near St. Louis, have both recently been refused by Southwestern Bell. An MCI customer, Santa Fe Pipeline, was lost (either to AT&T Long Lines or to Western Union) as a result of this refusal by Bell to permit interconnection.

23. Transiting is the provision of telephone company facilities to interconnect the terminals of two different specialized common carriers. Bell has refused to permit transiting interconnection between specialized common carriers. Customers cannot use N-Triple-C from Omaha to Chicago, and MCI from Chicago to New York, because Illinois Bell refuses to provide circuits from the N-Triple-C terminal to the MCI terminal. The terminals are approximately one mile apart.

24. Mr. Woods, of Bell, stated that Bell would be willing to modify its tariffs to provide for transiting service.

Negotiations between MCI & AT&T to Date

25. Following the FCC's orders in the MCI case (Docket 16509) and in Docket 18920, Illinois Bell and Southwestern Bell negotiated and entered into interim contracts with MCI, which permitted MCI to connect its Chicago and St. Louis microwave terminals to the customers' premises and thus provided overall MCI service from a customer's premises in one city to that customer's premises in another city (end-to-end service). The interim contracts also provided for special construction and special facilities on an individual case-by-case basis where required.

26. MCI commenced operations between Chicago and St. Louis in January 1972, and has placed or is about to place additional routes in operation between Chicago and New York via Pittsburgh, from Washington to New York via Philadelphia and from St. Louis southwest to Dallas during the latter half of 1973.

27. AT&T and MCI have been negotiating since March of 1971 concerning the kinds of interconnection that would be provided MCI and the terms and conditions of their provision.

28. During the latter part of the summer of 1973, AT&T broke off negotiations with MCI and submitted tariffs for approval by the state Public Utilities Commissions in those states where MCI sought interconnection terminating in Bell supplied equipment. Pending state approval of these tariffs, Bell refused to provide interconnection to MCI if such interconnection terminated in Bell supplied equipment. These tariffs now appear to have been...