FCC Says RLEC Must Pay Damages for Illegal Access Charges
The FCC ordered a rural local-exchange carrier accused by Qwest of “traffic pumping” to pay the big carrier damages for violations of Sections 203(c) and 201(b) of the 1934 Communications Act. In a second reconsideration order in a dispute between Qwest and Farmers and Merchants Mutual Telephone, the commission said Wednesday new evidence from Qwest proved “unjust and unreasonable” Farmers’ charges to the big carrier for traffic generated by free conferencing providers that Farmers had business arrangements with. Farmers had a deal to pay the conferencing companies for sending traffic to numbers in its exchange.
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The damages figure will be set in a separate proceeding, the FCC said. The commission told Qwest to file a supplemental complaint for damages within 60 days.
The order may affect a case at the U.S. District Court in Sioux City, Iowa, regarding an Iowa Utilities Board decision that required Farmers and seven other RLECs to refund unauthorized intrastate switched access charges billed to Qwest. In an ex-parte letter last week to the FCC, Qwest called the reconsideration petition significant to the court case and asked the commission to act promptly. But Great Lakes Communications, another of the eight RLECs, wrote the FCC earlier this week (CD Nov 25 p5) saying Qwest’s “hope is misplaced.”
The FCC ruled that Farmers shouldn’t have charged Qwest tariffed switched-access rates, because the new evidence shows the conference-calling companies weren’t “end users” as defined in Farmer’s switched-access service tariff. “Farmers sought to organize its business relationship with the conference calling companies through individualized contracts that involved an exchange of services and business relationship quite distinct from Farmers’ tariffed switched access service. And Farmers did not offer the same terms of service to others that requested it. Notwithstanding the back-dated contract amendments that Farmers cites as evidence of the parties’ intent that the conference calling companies would purchase service under Farmers’ tariff, we find that the evidence of the parties’ actual course of dealing demonstrates that there was no purchase of tariffed services.”
Farmers failed to explain why it never “entered the conference calling companies into its customer systems in the normal course of its business” or “why it failed to bill the conference calling companies and collect payment as required under its tariff over its two year relationship with them,” the FCC said. “The facts that Farmers sent no bills until shortly before the first round of discovery in this case, and then sent no further bills until the Commission ordered additional discovery, constitute very strong evidence that Farmers neither believed that it was providing, nor intended to provide, tariffed services to the conference calling companies.”
The FCC rejected an argument by Farmers that applying the “filed rate doctrine” to its relationship with conference-call providers compels a finding that the business arrangements fell under its tariff. “The purpose of the filed rate doctrine is to prevent unreasonable and unjust discrimination among similarly-situated customers of a particular common carrier’s service, and to ensure that carriers impose like charges for like services,” the commission said. “But here, the facts developed on reconsideration show a purposeful deviation from the tariff’s terms that allowed the conference calling companies to reap benefits from a free service offered only to them, which thereby enabled Farmers to dramatically increase its access charge billing to Qwest.”
Qwest believes the “thoughtful, thorough and timely” order shows “that Farmers’ traffic pumping activities are not authorized by tariff, and that efforts to mislead commissions through manufactured evidence will not be tolerated,” said Senior Vice President Steve Davis. “We look forward to presenting our evidence of damages to the FCC in further proceedings in this case.” An attorney for Farmers and other RLECs didn’t reply immediately to a request for comment.