$// Not. of App. Liability for Forfeiture & Show Cause; FCC 94-359//$ $/ 47 C.F.R., Section 1.80(f)(3) /$ TRANSMITTED FOR FCC RECORD ONLY FCC No. 94-359 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. In the Matter of ) ) AT&T Communications ) ) Apparent Liability for Forfeiture ) and Order to Show Cause ) NOTICE OF APPARENT LIABILITY FOR FORFEITURE AND ORDER TO SHOW CAUSE Adopted: December 30, 1994 ; Released: January 4, 1995 By the Commission: I. INTRODUCTION 1. By this Notice of Apparent Liability for Forfeiture (NAL), we initiate enforcement action against AT&T Communications (AT&T). For the reasons we discuss below, we find that AT&T apparently violated Section 201(a) of the Communications Act of 1934, as amended ("Act"), 47 U.S.C.  201(a), by failing to provide communications service under Contract Tariff F.C.C. No. 383 after receiving orders for this service from Tel-Save, Inc. (Tel-Save), Public Service Enterprises, Inc. (PSE), and GE Communications Systems, Inc. (GECCS). Based on our review of the facts and circumstances surrounding this violation, we find that AT&T is apparently liable for a forfeiture in the amount of $1,000,000. We also order AT&T to show cause why it should not be ordered to provide service to these parties under Contract Tariff No. 383. 2. Section 201(a) of the Act requires common carriers to furnish communication service upon reasonable request. As an interstate common carrier, AT&T is bound by these and other provisions in Title II of the Act. PSE, Tel-Save and GECCS resell interstate telecommunication services provided to them by AT&T and thus are also common carriers. The Commission has a long-standing requirement that all common carriers must permit unlimited resale of their services. The Commission has found that unlimited resale promotes the public interest by creating competitive pressures on carriers to provide service at rates near the cost of service and by stimulating demand for such service. Because of these benefits from resale of communications services, the Commission has rejected restrictions on resale as unjust and unreasonable under Section 201(b), and has concluded that resale and sharing serves as a vehicle for efficient enforcement of Section 202(a) of the Act. 3. In the Interexchange Competition Order, the Commission permitted AT&T to offer contract-based rates, concluding that such offerings were consistent with Sections 202 and 203 of the Act. The Commission determined that contract tariffs are presumed lawful and are accorded streamlined review, taking effect after 14 days' notice. In considering the potential adverse effects of contract carriage on resellers, the Commission concluded that it was "not reasonable to assume that AT&T will refuse to present them [resellers] with viable service options at reasonable rates. In any event, . . ., the terms of AT&T's contracts must be filed with the Commission and made available to all similarly situated customers, including resellers." In this order, we address a situation in which AT&T has apparently refused to provide service under a contract tariff despite requests for this service from the resellers named above, in violation of Section 201(a) of the Act. II. BACKGROUND 4. On August 9, 1993, AT&T filed Contract Tariff No. 383 with the Common Carrier Bureau. The tariff took effect on August 23, 1993. Tel-Save and PSE requested service under the contract tariff on August 24 and September 14, respectively. GECCS requested service not long thereafter. These three customers thus sought service under Contract Tariff 383 as originally filed, with the same terms and conditions that were in effect when they first requested the service. No service under Contract Tariff 383 has been delivered to these resellers from the time that this contract tariff was introduced. 5. On September 9, 1993, after receiving the order for service from Tel-Save, AT&T filed a tariff transmittal that would have changed material terms and conditions of Contract Tariff 383. By this transmittal, AT&T proposed to amend the application of certain usage credits provided under Contract Tariff 383. As originally filed, Sections 6.B.3 and 6.B.4 of Contract Tariff 383 stated: 3. AT&T will apply a quarterly usage credit, in an amount equal to 10% of the total of the qualifying usage charges in the previous quarter . . .To be eligible to receive this credit, the Customer must have at least $90,000 in . . .quarterly usage billing. The customer must satisfy all monitoring conditions . . .or will be liable for repayment of this credit. 4. AT&T will apply a quarterly usage credit, in an amount equal to 15% of the total qualifying usage charges in the previous quarter . . .To be eligible to receive this credit, the Customer must have at least $195,000 in . . .quarterly usage billing. The customer must satisfy all monitoring conditions specified . . .or will be liable for repayment of this credit. Thus, under the plain language of the tariff as originally filed, a customer could qualify for both usage discounts. Even if the language were found to be ambiguous, however, it is well-established that such uncertainties in tariff provisions are interpreted in the customer's favor. AT&T proposed in the September 9 tariff transmittal to amend Sections 6.B.3 and 6.B.4 to state: 3. AT&T will apply a quarterly usage credit, in an amount equal to 10% of the total of the qualifying usage charges in the previous quarter . . .To be eligible to receive this credit, the Customer must have at least $90,000 in . . .quarterly usage billing. This credit cannot be combined with the credit in 6.B.4., following. The customer must satisfy all monitoring conditions . . .or will be liable for repayment of this credit. 4. AT&T will apply a quarterly usage credit, in an amount equal to 15% of the total qualifying usage charges in the previous quarter . . .To be eligible to receive this credit, the Customer must have at least $195,000 in . . .quarterly usage billing. This credit cannot be combined with the credit in 6.B.3., preceding. The customer must satisfy all monitoring conditions specified . . .or will be liable for repayment of this credit. (emphasis added). 6. On September 13, 1993, prior to the date on which the proposed changes to Contract Tariff 383 would have taken effect, AT&T sent a letter to Tel-Save accepting its request for Contract Tariff 383. In its letter, AT&T also notified Tel-Save of the pending "clarifications" that were on file with the Commission. Finally, AT&T attached a Contract Tariff Order Form, which it claimed was "necessary to execute the agreement" between AT&T and Tel-Save. This document, however, had previously been completed and forwarded to AT&T by Tel-Save as part of its initial request on August 24. 7. On September 15, 1993, Tel-Save and GECCS filed petitions to reject or suspend and investigate the amendments contained in the September 9 tariff transmittal. On the same date, PSE filed a petition to reject the transmittal. The parties claimed AT&T was attempting to alter material terms of Contract Tariff 383 by means of the proposed amendments. They also claimed that their orders for Contract Tariff 383 had been received by AT&T prior to the proposed effective date of those contract amendments. Thus, these petitioners argued, AT&T should have sought their approval of any changes to the contract terms rather than attempting to change unilaterally the terms of the contract tariff. At the direction of the Common Carrier Bureau, the effective date of the revisions to Contract Tariff 383 contained in the tariff transmittal was deferred until December 8, 1993 in order to evaluate the issues raised by petitioners. 8. On November 16, 1993, AT&T filed an amendment to the tariff to "grandfather" parties ordering service under Contract Tariff 383. This amendment provided that "customers who have ordered this Contract Tariff [Contract Tariff 383] by November 16, 1993" were not subject to the amendments contained in the September 9 transmittal, but were still bound by the terms of the contract service offering as filed on August 9, 1993. Thus, the new tariff amendment allowed the petitioners to take service under Contract Tariff 383 pursuant to the terms and conditions that were in effect when AT&T accepted their requests for service. GECCS, PSE and Tel-Save withdrew their petitions against the tariff transmittal in light of AT&T's amendment. Because of these developments, the Bureau granted AT&T's request to advance the effective date of the amendments to Contract Tariff 383 from December 8, 1993 to November 16, 1993. 9. As of December 1, 1994, AT&T has not furnished communications service under Contract Tariff 383 to Tel-Save, PSE and GECCS despite AT&T's acknowledgement of their requests for service. III. DISCUSSION 10. We find that AT&T has apparently violated Section 201(a) of the Act by failing to furnish communications service pursuant to Contract Tariff 383 to Tel-Save, PSE and GECCS. Tel-Save, PSE and GECCS requested service under Contract Tariff 383. Nevertheless, no service has been provided to them under Contract Tariff 383, nor has AT&T provided to them a satisfactory reason for its delay in providing this service. Under the circumstances we have described here, AT&T's failure to provide the requested communications service constitutes an apparent breach of its common carrier obligation to provide a tariffed service upon reasonable request as set forth in Section 201(a) of the Act. 11. The Commission has routinely required common carriers to meet their Section 201(a) obligations to furnish communications service when so requested. In imposing a forfeiture for a violation of Section 201(a), the Commission has stated: we expect that carriers who are requested to provide service should make all efforts to do so, such as providing them under protest pending the resolution of complaints, petitions, or litigation, rather than refusing to meet a questionable obligation until after the complaint or litigation is resolved. Those who choose the course of non-compliance are on notice that they will be acting at their own peril, should the question of the legitimacy of their refusal to meet the common carrier obligations be decided against them. This admonition is particularly relevant when an important Commission policy (our resale requirements) is thwarted by a carrier's refusal to provide service. 12. We have concluded that AT&T's failure to provide service under Contract Tariff 383 to these resellers is an apparent violation of Section 201(a) of the Communications Act. AT&T's actions are of significant concern to us because they appear to be an intentional attempt to vitiate the goals of the Commission's resale policy. In the Resale and Shared Use Order, we determined that unlimited resale of communications services in a competitive environment is just and reasonable, and that tariff provisions preventing or restricting such practices are unjust and unreasonable and thus unlawful under Section 201(b) of the Communications Act. The Commission found that numerous public benefits would flow from unlimited resale and sharing activity, which in part "entails elimination of underlying carrier tariff restrictions on resale and sharing." Chief among the public benefits from unlimited resale is the incentive provided to carriers to offer services at rates that more closely reflect the underlying cost of providing the service. If a carrier's communications services and facilities can be resold, it is more likely to price them closer to costs. Further, because unrestricted resale and sharing of communications services will increase the number of parties offering the same types of services, undue discrimination in the marketplace is less likely to occur. Thus, the resale mechanism furthers the objectives of Sections 201(b) and 202(a) of the Act. 13. Actions taken by a carrier that effectively obstruct the Commission's resale requirements are inherently suspect. AT&T's failure to provide service under Contract Tariff 383 to resellers in response to their orders, and its attempts to use the tariff process to alter material terms of the service to the detriment of resellers after AT&T had received service orders, leads us to conclude that AT&T has apparently sought to evade the Commission's resale policy. The three resellers identified above relied on the general availability of Contract Tariff 383 by ordering service within days of the tariff's effective date. After acknowledging the resellers' orders for service, however, AT&T attempted to change the discounts that were available under the terms of the contract tariff. AT&T's actions in attempting to amend material terms of the contract tariff after Tel-Save's order had been submitted appear to support an inference that AT&T intentionally sought to prevent these resellers from obtaining the full benefits of the contract tariff that were originally offered. Additional evidence of such apparent intent can be found in AT&T's lengthy inaction in response to the parties' timely request for service. Further, despite its receipt of Tel-Save's request for service, AT&T's cover letter accompanying the proposed amendments stated only that the "existing Customer for the Contract Tariff is aware of and has agreed to this change." Although only one entity had been receiving service under Contract Tariff 383, more than one party had expressed interest in receiving service under the existing terms of the contract tariff when AT&T proposed to amend the tariff. By its letter, however, AT&T implied to the Bureau that the only party desiring service under Contract Tariff 383 had agreed to the amendments AT&T proposed. 14. Most importantly, however, AT&T still has not actually provided service to these resellers under Contract Tariff 383. The failure to provide service serves as the basis for our finding of an apparent violation of Section 201(a). The evidence of AT&T's apparent intent to evade the Commission's resale requirements further buttresses the essential finding of an apparent statutory violation warranting a proposed forfeiture. 15. Our authority to assess forfeitures for the apparent violations of Section 201 of the Act and related Commission rules, regulations, and orders is governed by Section 503 of the Act. The forfeiture ceiling per day for a continuing violation set forth in Section 503 is $100,000 for common carriers, with an overall limit of $1,000,000 for continuing violations involving a single act or failure to act. We find that AT&T's failure to furnish communications service under Contract Tariff 383 to each of these resellers is a willful, continuing violation of Section 201(a) of the Act of a duration exceeding at least ten days, thus implicating the statutory maximum. Forfeiture amounts for violations of Section 201(a) are not specified in the Act. Because of the apparently intentional nature of AT&T's violation and the fact that the violation was repeated with three separate entities and continued for some time, we believe a forfeiture of the statutory maximum amount of $1,000,000 is warranted consistent with factors set forth in Section 503(b)(2)(D) of the Act. 16. We also order AT&T to show cause why it should not be required to bring itself into compliance with Section 201(a) by remedying its failure to provide service to PSE and GECCS. IV. ORDERING CLAUSES 17. Accordingly, IT IS ORDERED, pursuant to Section 503(b) of the Communications Act, 47 C.F.R.  503(b), and Section 1.80 of the Commission's Rules, 47 C.F.R.  1.80, that AT&T Communications IS HEREBY NOTIFIED of an Apparent Liability for Forfeiture in the amount of $1,000,000 for its continuing violation of Section 201(a) of the Communications Act, 47 U.S.C.  201(a) by failing to furnish communication service upon the reasonable request of Tel-Save, Inc., Public Service Enterprises, Inc., and GE Communications Systems, Inc. 18. IT IS FURTHER ORDERED, pursuant to Section 1.80(f)(3) of the Commission's Rules, 47 C.F.R.  1.80(f)(3), that AT&T Communications SHALL PAY within thirty (30) days of the release of this notice the full amount of the forfeiture ordered here in the manner provided for in Section 1.80(h) of the Rules or SHALL FILE a response showing why a forfeiture should not be imposed or should be reduced. 19. IT IS FURTHER ORDERED that AT&T shall show cause why it should not be required to furnish service to Public Service Enterprises, Inc. and GE Communications Systems, Inc., under the terms and conditions of AT&T Contract Tariff F.C.C. No. 383 within thirty (30) days of the release of this Order. 20. IT IS FURTHER ORDERED that copies of this Notice of Apparent Liability for Forfeiture and Order to Show Cause SHALL BE SENT by certified mail to AT&T's counsel, Francine J. Berry, Esq., AT&T Communications, Room 3244J1, 295 North Maple Avenue, Basking Ridge, NJ 07920. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary