Federal Communications Commission FCC 99-408
Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
)
MGC Communications, Inc., )
)
Complainant )
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v. ) File No. EAD-99-002
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AT&T Corp., )
Defendant )
)
MEMORANDUM OPINION AND ORDER
Adopted: December 22, 1999 Released: December 28, 1999
By the Commission:
1. In this order, we affirm a July 16, 1999, order of the Common Carrier Bureau (Bureau), which ruled that AT&T Corp. was liable to MGC Communications, Inc., at the tariffed rate, for the originating access service that MGC had provided to AT&T after August 22, 1998.[1] The Bureau Order reached this conclusion after finding that AT&T had failed effectively to terminate the arrangement with MGC pursuant to which AT&T previously had purchased access service under the terms offered in MGC’s tariff. AT&T now argues that the Bureau’s decision is arbitrary and capricious and lacks record support.
2. We have reviewed AT&T’s application for review and conclude that it largely fails to raise issues beyond those already fully discussed in the Bureau Order. While AT&T disputes the Bureau’s interpretation of, or the weight it accorded to, various portions of the record, it has not persuaded us that the Bureau erred either in its finding of facts or in its application of the law. Accordingly, we adopt the reasoning of the Bureau Order, and incorporate the same herein, with the additional comments and one modification set out below.
3. AT&T attacks, as without record support, the Bureau’s conclusion that the ambiguity of AT&T’s actions in this case likely arose from its desire to avoid inconvenience or interruption of service for its end users, which, in turn, could lead to the loss of its own business customers.[2] In support of its position, AT&T points to the depositions of certain AT&T employees who testified that AT&T was not interested in continuing to receive MGC’s originating access service at the tariffed rate.[3]
4. Notwithstanding the conflicting portions of the record to which AT&T draws our attention, we agree with the Bureau that the record as a whole supports the conclusion that AT&T failed to take reasonable and appropriate steps to terminate its access service arrangement with MGC at least in part because it wished “to avoid service interruption or other inconvenience for its own customers.”[4] As the Bureau noted, Mr. Miller of AT&T testified that AT&T chose not to block MGC’s traffic from its network because such a step would be “onerous and inconvenient for our business customers.”[5] Similarly, Mr. Taggart, another AT&T employee, testified that AT&T’s decision to continue accepting traffic was motivated by concern about “reaction both from a customer standpoint, from an MGC standpoint and from an FCC standpoint.”[6]
5. AT&T asserts that the Bureau misapprehended the significance of its employees’ statements about concern for AT&T’s customers and the desire to avoid inconvenience for them. Thus, it argues that “the inconvenience AT&T was trying to avoid by not unilaterally blocking MGC’s originating traffic was the disruption in its customers’ ability to continue making 1+ long distance calling that would occur if AT&T unilaterally blocked” MGC’s traffic.[7] We do not see that the Bureau Order is necessarily inconsistent with AT&T’s interpretation of its employees’ statements. In any event, we agree with the Bureau’s conclusion that AT&T elected to continue accepting MGC’s access traffic because it wished to avoid the dissatisfaction for AT&T customers and the consequent loss of business that could have resulted from an alternative course of action.
6. Our review of the record as a whole convinces us that AT&T’s conduct was motivated by its desire to maintain the status quo while it attempted to negotiate reductions to MGC’s access rates. In any event, regardless of AT&T’s motivations, the record demonstrates that AT&T did not unambiguously terminate MGC’s originating access service. As the Bureau noted, on three separate occasions AT&T affirmed in writing that it would continue to avail itself of MGC’s originating access service while the parties continued to negotiate. AT&T’s letters of July 21 and August 26, 1998, asserted that it would continue to accept MGC’s originating access traffic, as did an e-mail message dated October 19, 1998.[8] Additionally, AT&T took no meaningful steps to begin the process of terminating service to those customers that it shared with MGC.[9] Rather, having taken the position that it no longer wished to pay the rates that MGC charged for originating access, AT&T simply declined to pay the validly tariffed rate for the service that it continued to receive. It made no attempt to inform the shared customers that AT&T no longer would provide their interexchange service. Finally, as the Bureau found, AT&T continued to permit MGC customers to designate AT&T as their presubscribed interexchange carrier, although this almost certainly would lead to additional access traffic of the sort that AT&T now claims not to have wanted.[10]
7. We view AT&T’s failure to initiate contact with the customers it shared with MGC as especially damaging to its position in this matter. AT&T’s position throughout this proceeding essentially has been that, with a single notification letter to MGC, it could disrupt the long distance service on which thousands of MGC local service customers relied and that it could force MGC to bear the full burden of contacting the affected customers and moving them to another carrier. AT&T’s assertions in this regard ignore the fact that these users were as much customers of AT&T as they were of MGC. We reject the notion that an interexchange carrier may withdraw the long distance service that it provides to an entire class of customers, then wash its hands of the matter, as AT&T attempted to do in this case. AT&T voluntarily began providing interexchange service to MGC’s local service customers, taking access service at MGC’s tariffed rates. Having done so, AT&T may not simply terminate its access arrangement with MGC in a way that suddenly would leave thousands of blameless consumers without the service that they have been receiving through the two companies.[11] AT&T’s apparent attempt to do so in this case was unjust and unreasonable.
8. Indeed, as the Bureau pointed out, any effort by MGC unilaterally to move these customers to new long distance service providers would have put MGC at risk of violating Commission slamming rules; it would also have raised the real possibility of legal action by either the customers or AT&T itself.[12] The record indicates that AT&T was aware of the issues posed by the carriers’ shared customers but consciously chose not to take reasonable measures to address these concerns because it did not wish to inconvenience its own customers.[13]
9. AT&T’s actions in this case are not consistent with its claimed intention to terminate MGC’s originating access service. To the contrary, it appears that AT&T may have attempted to use the threat of termination of MGC’s access service – or the withholding of payment for the service it continued to receive – as a means of exerting pressure on MGC in the parties’ ongoing rate negotiations. Thus, Mr. Taggart testified that AT&T had identified three potential courses of action that MGC might take upon receiving AT&T’s purported termination correspondence: “Options were to negotiate to a rate that was competitive, another option was to continue to send us traffic without compensation, and another was just maybe stop sending us traffic all together.”[14] However, as the Bureau noted, AT&T believed that MGC likely would not stop sending traffic to AT&T because such a step “would be very destructive between MGC’s end user customers and [AT&T’s] long distance customers.”[15] As the Bureau found, the record indicates that AT&T was pleased to continue receiving MGC’s access service as long as it was not required to pay the tariffed rate for it.[16]
10. AT&T also argues that the Bureau erred because MGC failed to establish either that it misunderstood AT&T’s claimed desire to terminate the access service or that, if AT&T had expressed itself differently, MGC would have stopped routing to AT&T the access traffic here at issue.[17] We find no error in the Bureau Order. The thrust of the Bureau’s ruling is that AT&T failed to take reasonable and appropriate steps to terminate its access service arrangement with MGC. If AT&T had taken such steps – if, for example, it had initiated the process of separating the customers it shared with MGC[18] or taken some other unambiguous step toward terminating MGC’s access service – our ruling in this matter might well have been different, regardless of MGC’s subjective understandings or beliefs. However, taken as a whole, the record before us indicates that AT&T took no such unambiguous steps. As discussed both above and in the Bureau Order, AT&T’s purported termination correspondence equivocated on whether it would reject MGC’s access service; AT&T chose not to block MGC’s traffic, at least in part, to avoid inconvenience for its customers and the concomitant possibility of lost business; and AT&T’s representatives continued to permit MGC’s new customers to designate AT&T as their primary interexchange carrier. This combined course of action is neither reasonable nor appropriate for a carrier that truly seeks to terminate its access-service arrangement with a local exchange carrier. Accordingly, we affirm the Bureau’s ruling that AT&T is liable to MGC, at MGC’s tariffed rate, for the originating access service that AT&T received after August 22, 1998.
11. Finally, AT&T challenges the Bureau’s decision to award interest on the stipulated amount of unpaid access charges. AT&T argues that the stipulated amount already included MGC’s tariffed late charges and that an award of interest on top of the late charges would amount to an unjustified double recovery.[19]
12. The Commission has routinely awarded prejudgment interest in order to make a party whole or to compensate for a party’s opportunity costs in awaiting payment of amounts due to it.[20] MGC’s tariff provides for the imposition of a late payment charge of 1.5% of the unpaid balance “when the previous month’s bill has not been paid in full.”[21] We agree with AT&T that a monthly late fee of 1.5%, if regularly applied to outstanding balances, should more than adequately compensate MGC for its loss of use of the disputed charges during the pendency of this proceeding. Accordingly, we reverse the Bureau’s award of interest on the stipulated amount of unpaid access charges in this matter.
ORDERING CLAUSES
13. For the reasons discussed more fully above, IT IS ORDERED that, pursuant to sections 1, 4(i), 4(j), 201 and 208 of the Act, as amended, 47 U.S.C. §§ 151, 154(i), 154(j), 201, 208, the portion AT&T’s application for review challenging the Bureau’s award of interest on the stipulated damages amount of $1,966,240.07 IS GRANTED. The remainder of AT&T’s application for review IS DENIED.
FEDERAL COMMUNICATIONS COMMISSION
Magalie Roman Salas
Secretary
5
[1] See MGC Communications, Inc. v. AT&T Corp., 14 FCC Rcd. 11647 (Comm. Car. Bur. rel. July 16, 1999) (Bureau Order).
[2] See AT&T Application for Review at 17-22.
[3] See id. at 20-22.
[4] Bureau Order, 14 FCC Rcd. at 11656, ¶ 18.
[5] Id. (quoting Deposition of Phillip Miller at 34:4-12, MGC Hearing Exh. No. 26).
[6] Deposition of William Taggart at 24:12-15, MGC Hearing Exh. No. 25.
[7] See AT&T Application for Review at 18; see also id. at 15.
[8] See Bureau Order, 14 FCC Rcd. at 11648-49, ¶ 4 (quoting July 21, 1998, letter of Philip Miller to Kent Heyman, MGC Hearing Exh. 5); id. at 11653-54, ¶ 14 (quoting August 26, 1998, letter of Philip Miller to Kent Heyman, MGC Hearing Exh. No. 7, and October 19, 1998, e-mail from Stephen Sisk to Kent Heyman, MGC Hearing Exh. No. 8).
[9] See, e.g., id. at 11655-56, ¶¶ 16-17.
[10] See id. at 11657-58, ¶¶ 23-24.
[11] Cf. In re. Citizens Telecommunications Co. and Alliance Group Servs., Inc., Joint Request for Waiver, CC Dkt No. 94-129, DA 99-129, 1999 WL 556949 (Comm. Car. Bur. rel. July 30, 1999) (noting importance of maintaining uninterrupted long distance service to end users).
[12] See Bureau Order, 14 FCC Rcd. at 11655, ¶ 16.
[13] See id. at 11655-56, ¶ 17.
[14] Deposition of William Taggart at 19:20 to 20:4, MGC Hearing Exh. No. 25.
[15] Id. at 20:16-18.
[16] Parenthetically, we note that, instead of attempting to terminate MGC’s access service, AT&T also could have filed a complaint with the Commission challenging the reasonableness of MGC’s rates for originating access service. See 47 U.S.C. § 208.
[17] See AT&T Application for Review at 23-24.
[18] See Bureau Order, 14 FCC Rcd. at 11655-56, ¶ 17.
[19] See AT&T Application for Review at 25.
[20] See MCI Telecomm. Corp v. Pacific Bell Tel. Co., 8 FCC Rcd. 1517, 1530, ¶ 48 (1993); Allnet Communication Servs., Inc. v. Cincinnati Bell Tel. Co., 11 FCC Rcd. 8519, 8529, ¶ 19 (1996); In re Western Union Tel. Co., 10 FCC Rcd. 1741, 1747, ¶ 36 (1995).
[21] MGC Tariff FCC No. 1 § 2.9.4, Exh. B to MGC’s Complaint.