Skip Navigation

Federal Communications Commission

English Display Options

Commission Document

AT&T v. Alpine

Download Options

Released: December 21, 2012

Federal Communications Commission

FCC 12-163

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

AT&T Corp.,
)
)

Complainant,
)
)

v.
)
File No.: EB-12-MD-003
)
Alpine Communications, LLC, Clear Lake
)
Independent Telephone Co., Mutual Telephone
)
Co. of Sioux Center, Iowa, Preston Telephone
)
Co., and Winnebago Cooperative Telephone
)
Association,
)
)

Defendants.
)

ORDER ON RECONSIDERATION

Adopted: December 20, 2012

Released: December 21, 2012

By the Commission:

I.

INTRODUCTION

1.
This Order on Reconsideration dismisses on procedural grounds and, as an alternative
and independent basis for the decision, denies on the merits certain issues raised in a petition for
reconsideration1 filed under section 1.106 of the Commission’s rules2 by Alpine Communications, LLC,
Clear Lake Independent Telephone Company, Mutual Telephone Company of Sioux Center, Iowa,
Preston Telephone Company, and Winnebago Cooperative Telecom Association (collectively, the Iowa
LECs). The Order further denies the remaining issues raised in the Petition. The Iowa LECs seek
reconsideration of the Commission’s Memorandum Opinion and Order3 granting a formal complaint4
filed by AT&T Corp. (AT&T) against them under Section 208 of the Act.5 In the Order, the Commission
found that the Iowa LECs violated Sections 201(b) and 203 of the Communications Act of 1934, as


1 Defendants’ Petition for Reconsideration of Memorandum Opinion and Order, File No. EB-12-MD-003 (filed
Oct. 11, 2012) (Petition).
2 47 C.F.R. § 1.106.
3 AT&T Corp. v. Alpine Communications, LLC, Clear Lake Independent Telephone Company, Mutual Telephone
Company of Sioux Center, Iowa, Preston Telephone Company, and Winnebago Cooperative Telecom Association
,
Memorandum Opinion and Order, 27 FCC Rcd 11511 (2012) (Order).
4 Formal Complaint of AT&T Corp., File No. EB-12-MD-003 (filed Apr. 13, 2012) (Complaint).
5 47 U.S.C. § 208.

Federal Communications Commission

FCC 12-163

amended (Act),6 by engaging in an unlawful “mileage-pumping” scheme. As explained below, the
Petition is procedurally flawed and lacks merit, and we decline to reconsider the Order.

II.

BACKGROUND7

2.
The Iowa LECs are incumbent local exchange carriers (ILECs) that provide local
exchange telecommunications services in rural areas of Iowa.8 AT&T is an interexchange carrier (IXC)
furnishing telecommunications services that enable customers from one local exchange area to call
customers in other local exchange areas.9 Iowa Network Services (INS) is a statewide fiber-optic network
and switching system that “offers and provides” centralized equal access (CEA) telecommunications
services10 used to facilitate the delivery of interstate (and intrastate) calls in Iowa.11 IXCs must deliver
their traffic to INS and typically do so by interconnecting with the INS central access tandem switching
system in Des Moines.12 INS delivers the long-distance traffic received from IXCs over its fiber ring to
one of sixteen Points of Interconnection (POIs) located across the state and bills IXCs at a flat, non-
distance-sensitive rate for every minute of traffic transported.13 At the POIs, the Iowa LECs connect with
the INS network and transport interstate switched access traffic between their POIs and their end office
switches.14
3.
The Iowa LECs initially established POIs with the INS network at toll centers in close
physical proximity to their operating territories.15 Then, between 2001 and 2005, each of the Iowa LECs
purported to change its POI to Des Moines and began billing AT&T mileage-based transport charges for
carrying the traffic between their local exchanges and Des Moines.16 This created a sizeable increase in


6 47 U.S.C. §§ 201(b), 203.
7 The Order contains a complete description of the facts underlying this case, which we incorporate by reference.
See Order, 27 FCC Rcd at 11512-17, paras. 2-17.
8 Order, 27 FCC Rcd at 11512, para. 3.
9 Order, 27 FCC Rcd at 11512, para. 2.
10 In states where multiple rural LECs each serve a separate rural area, the Commission has approved CEA
arrangements. Order, 27 FCC Rcd at 11512-13, para. 5. CEA service provides presubscription and equal access
capabilities through a centralized switching system rather than through each end office switch. Order, para. 5.
The Commission approved the CEA arrangement for Iowa in 1988. Order, 27 FCC Rcd at 11513, para. 6. See
Application of Iowa Network Access Division
, Memorandum Opinion, Order, and Certificate, 3 FCC Rcd 1468
(Com. Car. Bur. 1988).
11 Order, 27 FCC Rcd at 11513, para. 7. INS is a single legal entity with three divisions. This case involves two of
the divisions: INICD and INAD. INICD owns the applicable INS facilities. INAD leases digital switching, fiber
optic transmission capacity, and certain related service from INICD to provide CEA service. Order, 27 FCC Rcd at
11513, para. 7, n.19.
12 Order, 27 FCC Rcd at 11513, para. 7.
13 Order, 27 FCC Rcd at 11513-14, paras. 7, 9.
14 Order, 27 FCC Rcd at 11513, para. 7.
15 Complaint, Exhibit 3, Stipulations With Regard to Referred Matters in Alpine et al. v. AT&T, at 9, para. 57
(Stipulations). Specifically, the initial POIs were as follows: Alpine – Cedar Rapids – established in 1997;
Clear Lake – Mason City – established in 1989; Mutual – Sioux City – established in 1989; Preston – Davenport
– established in 1989; Winnebago – Mason City – established in 1987. Stipulations at 9, para. 58.
16 Stipulations at 9, para. 60.
2

Federal Communications Commission

FCC 12-163

the transport mileage used to calculate the Iowa LECs’ switched access charges without affording
corresponding benefits to end users or IXCs.17 The Iowa LECs contend that the applicable tariffs permit
them to alter their POIs and, as a result, impose distance-sensitive charges for the transport of IXC traffic
that INS is required to provide at a flat, distance-insensitive rate.18
4.
In the Order, the Commission found, for three independent reasons, that the Iowa LECs
violated the NECA Tariff in contravention of Sections 203 and 201(b) of the Act.19 First, the
Commission determined that the Iowa LECs billed AT&T mileage charges that are not authorized under
the NECA Tariff.20 The Commission concluded that the NECA Tariff incorporates the INAD Tariff’s
terms regarding POI selection, because the parties stipulated that INS is a “non telephone company
provider” of CEA.21 The Commission then noted that the INAD Tariff does not describe how the POI is
to be selected but rather defines the “Point of Interconnection” as the “demarcation point or network
interface, on an Iowa Network premises at which Iowa Network’s responsibility for the provision of
[CEA] ends.”22 After considering AT&T’s and the Iowa LECs’ equally “reasonable constructions of the
term ‘responsibility,’” the Commission concluded that the term is ambiguous, thereby rendering the
NECA Tariff ambiguous as well, and it construed the ambiguity against the Iowa LECs.23 The
Commission thus held that Des Moines was not the POI for the Iowa LECs because INS retained
“responsibility” for transmission between Des Moines and the Iowa LECs' traditional POIs.24 Second, the
Commission found that three of the Iowa LECs (Alpine, Mutual, and Preston) that billed AT&T for
transport to and from Des Moines (which is outside the LATAs in which they serve their local customers
and have local exchanges) violated provisions in the NECA Tariff stating that access services may be
provided only “in” or “within a LATA.”25 Third, the Commission held that, even assuming that the POI


17 Order, 27 FCC Rcd at 11515, para. 11 & chart, para. 14.
18 Order, 27 FCC Rcd at 11514, paras. 8-9, 11. NECA Tariff F.C.C. No. 5 (NECA Tariff) is the tariff under which
the Iowa LECs provide switched access service to IXCs (such as AT&T) and bill the IXCs for such service.
Order, 27 FCC Rcd at 11514, para. 8. The Iowa LECs do not file individual tariffs. Rather, they utilize the
NECA Tariff. Order, 27 FCC Rcd at 11514, n.26. Iowa Network Access Division Tariff F.C.C. No. 1 (INAD
Tariff) is the tariff under which INS provides CEA services to IXCs and bills IXCs for such service. Order, 27
FCC Rcd at 11514, para. 9. The terms of the INAD Tariff require IXCs to pay INS a flat, non-distance-sensitive
charge for every minute of traffic transported on the INS fiber ring to the POIs. Id.
19 Order, 27 FCC Rcd at 11518-30, paras. 18-48.
20 Order, 27 FCC Rcd at 11518-23, paras. 18-30.
21 Order, 27 FCC Rcd at 11518-19, paras. 21-22 (citing Stipulations at 21, para. 129). NECA Tariff Section
6.1.3(A) states “[w]hen service is provided in cooperation with a non telephone company provider of Centralized
Equal Access, the SWC will be that wire center which would normally provide dial tone to the telephone company
point of interconnection with the non telephone company provider of Centralized Equal Access specified in the tariff
of the Centralized Equal Access provider
.” Order, 27 FCC Rcd at 11519, para. 22 (citing NECA Tariff § 6.1.3(A),
Original Page 6-7.3 (emphasis added)).
22 Order, 27 FCC Rcd at 11520, para. 23 (citing INAD Tariff § 2.5, 1st Rev. Page 62) (emphasis added).
23 Order, 27 FCC Rcd at 11520-23, paras. 23-30. The Commission further explained that its construction was
supported by the rules that tariffs should be construed to avoid unfair/absurd results and to advance the purpose for
which the tariff was imposed. Order, 27 FCC Rcd at 11522, para. 29 (noting the Iowa LECs’ stipulations that
moving their POIs to Des Moines benefitted neither their end user customers nor IXCs and, in fact, substantially
increased access charges, in contravention of the Iowa CEA arrangement’s purpose (i.e., lowering transport costs)).
24 Order, 27 FCC Rcd at 11522, paras. 28-29.
25 Order, 27 FCC Rcd at 11523-24, paras. 31-34.
3

Federal Communications Commission

FCC 12-163

had changed, four of the Iowa LECs (Alpine, Clear Lake, Mutual, and Preston) failed to comply with the
provision in the NECA Tariff requiring that they give “reasonable notice” of “service-affecting”
activities, which encompassed changes in POIs that resulted in substantial increases in access bills.26
5.
In the alternative, the Commission held that, if the NECA Tariff were interpreted to allow
the Iowa LECs to change their POIs for the sole purpose of inflating mileage charges, the tariff is
unreasonable in violation of Section 201(b).27 The Commission explained that carriers do not have
“unbounded authority” to determine POIs and that any CEA arrangement that “significantly increas[es]
IXCs’ operating costs without significant increases in service choices or benefits to subscribers” and IXCs
would be unreasonable.28 The Commission relied on the undisputed facts in the record establishing that
the Iowa LECs’ purported changes to their POIs with INS (i) were designed to, and in fact did, result in
“net increases” to the LECs’ billed access charges to AT&T and thereby would have “increased” the
LECs’ net “revenues and profits,” and (ii) provided “no benefits” to end users or to AT&T.29

III.

DISCUSSION

6.
The Iowa LECs offer five reasons the Commission should reconsider its determination
that they violated the NECA Tariff in contravention of Sections 203 and 201(b) of the Act. Specifically,
the Iowa LECs argue that (1) INAD is the party to the INAD Tariff and did not possess the facilities to
provide the services in issue;30 (2) the POI changes did not affect service, and sufficient proof was offered
that AT&T received actual and constructive notice of the POI changes;31 (3) INAD removed the facilities
leased by the Iowa LECs from their facilities leased from INICD;32 (4) the Commission’s conclusions
should be applied only prospectively, and AT&T should be estopped from the recovery of damages or
other retroactive relief;33 and (5) because AT&T paid several years of invoices for switched access
transport, it should be estopped from the recovery of damages or other retrospective relief.34 We address
each of these arguments in turn.35


26 Order, 27 FCC Rcd at 11524-26, paras. 35-38.
27 Order, 27 FCC Rcd at 11528-30, paras. 44-48. Because this determination afforded AT&T all the relief it
sought in Count II of its Complaint, the Commission did not reach AT&T’s claims relating to “sham
arrangements.” Order, 27 FCC Rcd at 11526, para. 39.
28 Order, 27 FCC Rcd at 11522, para. 29, 11528-29, para. 44 (citing Application of Indiana Switch Access Div.,
Memorandum Opinion and Order, 1 FCC Rcd 634, 635, at para. 5 (1986) (Indian Switch)).
29 Order, 27 FCC Rcd at 11529, para. 45 (citing Stipulations at 11, para. 71, 17, para. 100, 19, para. 120).
30 Petition at 1-4.
31 Petition at 4-7.
32 Petition at 7-8.
33 Petition at 8-10.
34 Petition at 10-13. The Petition does not seek reconsideration of the Order’s finding that three of the Iowa LECs
violated the NECA Tariff by charging for transport service outside their local access and transport areas (LATAs).
35 AT&T filed its Opposition to the Iowa LECs’ Petition on October 22, 2012. Opposition of AT&T Corp. to
Petition for Reconsideration, File No. EB-12-MD-003 (filed Oct. 22, 2012) (Opposition). The Iowa LECs filed
their Reply to AT&T’s Opposition on October 29, 2012. Reply to AT&T’s Opposition to Petition for
Reconsideration of Memorandum Opinion and Order, File No. EB-12-MD-003 (filed Oct. 29, 2012) (Reply to
Opposition).
4

Federal Communications Commission

FCC 12-163

A.

The Commission Properly Concluded that the Iowa LECs Were Not Responsible for
Providing Service Between Des Moines and the Traditional POIs Within the
Meaning of the Tariff.

1.

Because the Petition is Procedurally Defective, We Dismiss It.

7.
In the Order, the Commission found that the NECA Tariff incorporates the INAD
Tariff’s definition of “Point of Interconnection,” which is the “demarcation point or network interface, on
an Iowa Network premises at which Iowa Network’s responsibility for the provision of [CEA] ends.”36
The Commission then construed the term “responsibility,” considering each side’s arguments about that
word’s meaning. AT&T maintained that “responsibility” means “own[ing], control[ling], operat[ing],
and maintain[ing] the facilities that are used to provide the CEA service.”37 AT&T argued that, under that
construction, responsibility shifted from INS to the Iowa LECs at the traditional POIs, because INS
retained ownership and control of the facilities between Des Moines and the traditional POIs,
notwithstanding any leases between the Iowa LECs and INS.38 The Iowa LECs, on the other hand,
asserted that “responsibility” means “accountability” for the CEA service.39 They claimed that, by virtue
of their “leases” with INS, they acquired the means to transport the traffic and became exclusively
entitled to impose transport charges for that traffic.40 As part of their argument, the Iowa LECs spent
“considerable time . . . making distinctions between two divisions of INS,”41 asserting that one division
(INAD) “removed the facilities” used to transport traffic from Des Moines to the traditional POIs from
the facilities it leased from another division (INICD) and that the Iowa LECs subsequently became
responsible for those facilities by virtue of their leases with INICD.42
8.
The Commission asked “whether the Iowa LECs, as opposed to any part of INS,
exercised ‘responsibility.’”43 In other words, for purposes of its analysis, the Commission assumed that
the Iowa LECs’ assertions about the internal leases were true and concluded that the Iowa LECs had
proffered one “reasonable construction[] of the term ‘responsibility.’”44 Nevertheless, the Commission
also found that AT&T presented an equally plausible construction of the term “responsibility.”45 The
resulting ambiguity led the Commission to construe the language in the INAD Tariff and, in turn, the
NECA Tariff against the Iowa LECs.46


36 Order, 27 FCC Rcd at 11520, para. 23 (citing INAD Tariff § 2.5, 1st Rev. Page 62) (emphasis added).
37 Order, 27 FCC Rcd at 11523, para. 26.
38 Id.
39 Order, 27 FCC Rcd at 11520-21, para. 25.
40 Id.
41 Order, 27 FCC Rcd at 11521, n.96.
42 Id.
43 Id. The Iowa LECs stipulated that INS is a single legal entity. Stipulations at 6, para. 37.
44 Order, 27 FCC Rcd at 11521-22, para. 27.
45 Id.
46 Id. It is undisputed that the Iowa LECs “utilize [the] NECA Tariff . . . for their switched access services” and that
they billed AT&T for those services pursuant to the tariff. Stipulations at 3-4, paras. 14, 19, at 18-19, paras. 111-13,
119. Yet the Iowa LECs now suggest that, because they are “merely concurring parties to the tariff’s language,” the
Commission should not have construed the NECA Tariff against them. Reply to Opposition at 1. This argument is
(continued…)
5

Federal Communications Commission

FCC 12-163

9.
Although the Order squarely considered and rejected the Iowa LECs’ argument about the
significance of INS’s internal divisions,47 the Iowa LECs advance it a second time in their Petition,
asserting that the relationship between the INS divisions was “highly relevant” and that the Order’s
“refusal to address” the issue resulted in an “internal inconsistency.”48 We dismiss this aspect of the
Petition because it is “settled Commission policy that petitions for reconsideration are not to be used for
the mere reargument of points previously advanced and rejected.”49
2.

On Alternative and Independent Grounds, We Deny the Petition Because It
Lacks Merit.

10.
As an alternative and independent basis for our decision, we deny the argument on the
merits because it is based on a mischaracterization of the Order. The Iowa LECs contend that the
Commission “apparently” agreed that “INAD (by virtue of its lease of the facilities for transport from
INICD) obtained ‘responsibility’ for the transport of the traffic under the CEA relationship” and that the
Iowa LECs subsequently assumed that responsibility by virtue of their leases with INICD.50 According to
the Iowa LECs, it is “inconsistent” for the Commission to conclude that “responsibility . . . can be
conferred from INICD to INAD by virtue of a lease, but to reject this proposition . . . when the same type
of leasing arrangement is utilized and only the identity of the lessee is changed from INAD to [the Iowa
LECs].”51 To the extent the Iowa LECs believe the Commission reached conclusions about the relative
“responsibility” between INAD and INICD under leases, however, they are mistaken. The record
contained no evidence regarding the substance of leases between INAD and INICD, and the Commission
made no findings about those leases.
11.
The Iowa LECs further argue that, when faced with an ambiguity, the Commission
(Continued from previous page)


unconvincing. The NECA Tariff lists all five Iowa LECs as “issuing carriers,” which the Commission’s rules define
as “a carrier subject to the Act that publishes and files a tariff or tariffs with the Commission.” 47 C.F.R. § 61.3(u).
47 Order, 27 FCC Rcd at 11521, n.96.
48 Petition at 1-4 (citing Order paras. 23 and 27 and n.96). The Iowa LECs contend that the first sentence of
paragraph 27 of the Order is a conclusion that constitutes material error. But that sentence is merely a recitation of
AT&T’s argument, not a conclusion of the Commission.
49 Qwest Communications Company, LLC v. Northern Valley Communications, LLC, Order on Reconsideration, 26
FCC Rcd 14520, 14522, para. 5 (2011) (citing S&L Teen Hosp. Shuttle, Order on Reconsideration, 17 FCC Rcd
7899, 7900, para. 3 (2002) (citations omitted)). Cf. 47 C.F.R. § 1.106(p)(3) (a Bureau may dismiss or deny a
petition for reconsideration of a Commission action that “plainly do[es] not warrant consideration by the
Commission,” including petitions that “[r]ely on arguments that have been fully considered and rejected by the
Commission within the same proceeding”).
50 Petition at 2. Specifically, the Iowa LECs rely upon footnote 19 of the Order, which cited the parties’ stipulation
that INAD “leases digital switching, fiber optic transmission capacity, and certain related services from INICD to
provide CEA service.” Order, 27 FCC Rcd at 11513, n.19 (citing Stipulations at 6, para. 37). The Iowa LECs
maintain that the stipulation contains an “inference” (which the Commission purportedly “acknowledged” by citing
to it) that “INAD had responsibility under the [INAD] [T]ariff for the transport of CEA traffic.” Reply to
Opposition at 2-3. The Iowa LECs further contend that, because the Order cited the definition of POI in the INAD
Tariff, the Commission “has, either expressly or implicitly . . . recognized that the lease between INAD and INICD
conferred ‘responsibility’ under the tariff to INAD for the transport of CEA traffic.” Reply to Opposition at 3.
51 Petition at 3.
6

Federal Communications Commission

FCC 12-163

should have considered extrinsic evidence “to aid in tariff interpretation.”52 To begin, they cite a letter
from INS indicating that the Iowa LECs “provide and determine how to provide transport”53 and a letter
from NECA stating that the Iowa LECs “possess authority to reconfigure their networks and provide
transport.”54 Neither of these letters, however, addresses the precise question at hand—i.e., the
appropriate construction of the word “responsibility” as it is used in the NECA Tariff. Rather, the letters
express opinions about the Iowa LECs’ “rights” under the NECA Tariff based upon provisions of the
tariff that the Commission held are not relevant to determining the locations of the POIs.55 Next, the Iowa
LECs highlight decisions by the Iowa Utilities Board and the Iowa Supreme Court that “conferred upon
[the Iowa LECs] the right to designate the POI and to provide transport capacity.”56 Yet those decisions
similarly do not discuss the meaning of the term “responsibility” in the NECA Tariff, which the
Commission held determines the POI location. Finally, the Iowa LECs rely upon the “uncontroverted
testimony of Robert Sherlock regarding ‘responsibility’ for delivery of the CEA traffic.”57 Although
Mr. Sherlock’s testimony is consistent with the Iowa LECs’ construction of the term “responsibility,” it
does nothing to undercut AT&T’s equally plausible construction of the term. Indeed, Mr. Sherlock
acknowledged that the leases between the Iowa LECs and INS were “paper changes” that effected “no
change with respect to INS’s control of the traffic” and that the “network is still maintained by INS
personnel.”58 We thus conclude that none of these arguments provide a basis for reconsidering the Order.

B.

The Commission Properly Determined that the POI Changes Constituted “Service-
Affecting Activities” Under the NECA Tariff and that, with the Exception of
Winnebago, the Iowa LECs Did Not Provide Reasonable Notice of the Changes as
Required by the NECA Tariff.

12.
In the Order, the Commission found that all but one of the Iowa LECs violated the
NECA Tariff’s requirement that they provide customers with “reasonable notification of service-affecting


52 Reply to Opposition at 2.
53 Reply to Opposition at 2 (citing Defendants’ Answer to Formal Complaint of AT&T Corp, File No. EB-12-MD-
003 (filed May 3, 2012) (Answer), Exhibit E). With the exception of Alpine, the Iowa LECs were among the
carriers that formed INS, and they remain INS shareholders. Order, 27 FCC Rcd at 11513, para. 6.
54 Reply to Opposition at 2 (citing Answer, Exhibit DD).
55 See Answer, Exhibit E (citing the first sentence of NECA Tariff § 6.1.3(A)); Order, 27 FCC Rcd at 11519, para.
22 (holding that the first sentence of NECA Tariff § 6.1.3(A) is inapplicable because INS is a “non telephone
company” provider of CEA); Answer, Exhibit DD (citing NECA Tariff § 6.8.3); Order, 27 FCC Rcd at 11519, n.82
(holding that NECA Tariff § 6.8.3 “describes only the call path and not the designation of the POI”). Although the
Commission discussed section 2.1.9 of the NECA Tariff (see Answer, Exhibit DD (citing NECA Tariff § 2.1.9)), it
was not in the Order’s analysis of how the POI is established. Rather, it was in the Order’s discussion of whether
the Iowa LECs provided adequate notice of the POI changes, assuming they had in fact changed their POIs. See
Order
, 27 FCC Rcd at 11524-25, paras. 35-38 (holding that, with the exception of Winnebago, the Iowa LECs
violated NECA Tariff § 2.1.9 by not providing reasonable notice of purported POI changes).
56 Reply to Opposition at 2 (citing Answer, Exhibits P and Q, and Complaint, Exhibit 11).
57 Petition at 3-4. See Reply to Opposition at 4-5.
58 Stipulations at 15-16, paras. 92, 93. Cf. Stipulations at 16, para. 95 (“INS remained responsible for the
maintenance and operation of the leased facilities.”), para. 96 (“Plaintiffs’ representatives acknowledged that INS
still ‘runs the show’ with respect to the facilities leased to Plaintiffs.”), para. 98 (“Plaintiffs’ representatives testified
that they had no knowledge about what happened to the traffic while it was on the INS facilities subject to the lease
other than it reached the desired destinations.”), 17, para. 99 (“Plaintiffs depended on INS to ensure that the traffic
was delivered between Des Moines and the Plaintiffs’ prior designated POIs.”).
7

Federal Communications Commission

FCC 12-163

activities.”59 In particular, the Order highlighted the NECA Tariff’s language identifying
“rearrangements” as an example of a “service-affecting activity,” noted the Iowa LECs’ characterization
of a POI as the “location where the facilities of INAD meet the facilities of the LEC,” and explained that
a “change in that location—especially when accompanied by a significant increase in mileage charges” is
equivalent to a “rearrangement.”60 The Order went on to find that Winnebago alone provided AT&T
with actual notice of the POI change,61 and it rejected the Iowa LECs’ assertions that AT&T otherwise
received constructive notice of the POI changes.62
13.
The Iowa LECs challenge the Order’s conclusion that the change of POIs is a “service-
affecting activity.”63 Although they acknowledge that POI changes “may, arguably, be classified as a
‘rearrangement,’” the Iowa LECs assert that the Order did “not provide any rationale for the conclusion
. . . that this activity ‘affected service.’”64 This assertion is baseless. The Commission explained how this
particular rearrangement – which was intended to, and in fact did, drastically increase the amount of
mileage for which the Iowa LECs would bill transport – affected the service AT&T received.65

14.
The Iowa LECs further claim that the Commission “failed to address” a purported
“inconsistency” between this conclusion and AT&T’s argument that the change of POIs “had no effect”
upon the transport of AT&T’s traffic.66 There is no inconsistency, however. The argument AT&T made
in its Complaint is that the “leases” between INS and the Iowa LECs did not bring about a true change of
responsibility for handling the traffic.67 In the portion of the Order dealing with the notice issue, the
Commission assumed that the Iowa LECs changed their POIs,68 and examined whether the POI changes
affected the Switched Access Service AT&T received under the NECA Tariff. As explained above, the
Commission found that the service was altered as a result of the POI changes (assuming there was a
change), because the Iowa LECs significantly increased the number of miles (an additional 79 to 135


59 Order, 27 FCC Rcd at 11524-26, paras. 35-38 (citing Complaint Ex. 6, NECA Tariff No. 5, § 2.1.9).
60 Order, 27 FCC Rcd at 11524-25, para. 36.
61 Order, 27 FCC Rcd at 11525, para. 37.
62 Order, 27 FCC Rcd at 11525-26, para. 38.
63 Petition at 5; Reply to Opposition at 6.
64 Petition at 5. See also Reply to Opposition at 6 (“The Commission’s Order fails to address [the Iowa LECs’]
contentions, instead assuming that because the POI changes were a rearrangement, they must affect service.”).
65 See paragraph 12.
66 Petition at 5 (citing unspecified portions of the Complaint); Reply to Opposition at 6 (citing Answer at 7-8, para.
13, at 19-20, para. 63, at 40, para. 122).
67 See Complaint at 37, para. 95 (“Although the Iowa LECs claim to have oral or written agreements with INS that,
according to them, are ‘leases’ of the INS facilities, it is clear that those arrangements were, as INS has admitted,
merely ‘paper changes’ that had no effect on INS’s responsibility or control over its fiber ring facilities”); 65, para.
153 (“the so called ‘lease’ arrangements between INS and each Iowa LEC had little or no economic substance, cf.
Total II
, 317 F.3d at 233, and had no effect whatsoever on the actual operation of the network facilities.”). The fact
that the leases had no effect on the transport of AT&T’s traffic only highlights the unreasonableness of the Iowa
LECs’ scheme.
68 Order, 27 FCC Rcd at 11528-26, para. 38 (“Thus, even if the Iowa LECs changed their POIs, those changes were
done in violation of the NECA Tariff . . . .”).
8

Federal Communications Commission

FCC 12-163

miles) for which they imposed transport charges.69
15.
Next, the Iowa LECs argue that the Commission erroneously disregarded expert witness
affidavits and reports purportedly showing that AT&T received “constructive and/or actual notice” of POI
changes through “adjustments made to the Local Exchange Routing Guide [LERG] . . . and to NECA
Tariff FCC No. 4.”70 As the Order explained, the Iowa LECs did not pinpoint the portions of the LERG
or the NECA Tariff they contend support their assertions, in violation of the Commission’s rules
requiring parties to plead all facts in support of their claims and defenses fully and with specificity.71 The
Iowa LECs nonetheless argue that Federal Rule of Evidence 703 relieved them of the obligation to proffer
information regarding the facts upon which their experts relied.72 The Commission’s formal complaint
rules, rather than Rule 703, apply here, however.73 The Iowa LECs have never identified the portions of
the NECA Tariff (which is thousands of pages long and frequently updated),74 or the LERG (which is
similarly voluminous) they contend constituted “reasonable notification of [a] service-affecting
activit[y],”75 as required by the Commission’s formal complaint rules.76


69 Order, 27 FCC Rcd at 11524-25, para. 36.
70 Petition at 5; Reply to Opposition at 6-7.
71 Order, 27 FCC Rcd at 11525-26, para. 38, n.40. Contrary to the Iowa LECs’ assertion, the Commission’s
formal complaint rules relate to “substantive evidence,” Reply to Opposition at 7, because they require parties to
file “fact based” pleadings. See Implementation of the Telecommunications Act of 1996, Amendment of Rules
Governing Procedures to Be Followed When Formal Complaints Are Filed Against Common Carriers
, Report and
Order, 12 FCC Rcd 22497, 22529, para. 70 (1997) (Formal Complaints Order) (“The Commission’s rules have
always required fact-based pleadings. That is, all complaints, answers and related pleadings are required to
contain complete statements of fact, supported by relevant documentation and affidavits.”). Rule 1.720(h) applies
to tariffs in particular. See 47 C.F.R. § 1.720(h) (“Specific reference shall be made to any tariff provisions relied
on in support of a claim or defense. Copies of relevant tariffs or relevant portions of tariff that are referred to or
relied upon in a complaint, answer, or other pleading shall be appended to such complaint, answer, or other
pleading.”).
72 Petition at 6 (citing Fed. R. Evid. 703) (“An expert may base an opinion on facts or data in the case that the expert
has been made aware of or personally observed. If experts in the particular field would reasonably rely on those
kinds of facts or data in forming an opinion on the subject, they need not be admissible for the opinion to be
admitted . . . .”).
73 Although the Commission consulted the Federal Rules of Civil Procedure for guidance when revising its formal
complaint rules, that guidance “was limited by the many differences between federal court proceedings and
Commission proceedings.” Formal Complaints Order, 12 FCC Rcd at 22535, para. 85. The Commission has
broad statutory authority to “conduct its proceedings in such manner as will be conduce to the proper dispatch of
business and to the ends of justice.” 47 U.S.C. § 4(j). See also 47 U.S.C. § 4(i) (“The Commission may . . . make
such rules and regulations . . . as may be necessary in the execution of its functions).
74 Opposition at 12, n.13.
75 Reply and Reply Legal Analysis of AT&T Corp., File No. EB-12-MD-003 (filed May 10, 2012) at 24. Nor
have the Iowa LECs shown when they purportedly changed the NECA Tariff and LERG and linked those changes
to the timing of the POI changes. Although the NECA Tariff does not require a “specific advance notification
period,” in order to constitute notice, the Iowa LECs must have alerted AT&T in advance of the POI changes. See
Complaint, Exhibit 6, NECA Tariff, § 2.1.9 (“The Telephone Company will work cooperatively with the customer
to determine reasonable notification requirements.”).
9

Federal Communications Commission

FCC 12-163

16.
Finally, the Iowa LECs object to the Commission’s failure to “accept the allegation of
Preston’s representative that he provided AT&T with a letter informing it of the POI change,” given that
AT&T “never claimed that it did not receive the letter.” 77 The Commission, the Iowa LECs argue,
“should have required satisfactory evidence from AT&T (i.e., an affidavit) that it did not possess the letter
before concluding that there was a lack of evidence supporting the assertion.”78 As explained in the
Order, however, the Commission declined to credit Mr. Kilburg’s testimony that he specifically recalled
sending a letter to each IXC eight years earlier without any documentary evidence to support his
recollection.79 The Commission was well within its discretion “to refuse to accord evidentiary value to a
witness’ uncontradicted testimony where such testimony was found to be inherently improbable . . . .”80

C.

The Order

Accurately Stated that AT&T Was Billed Twice for Transport.

17.
The Iowa LECs object to the Order “to the degree that [it] can be read to infer that AT&T
was ‘double-billed’ for transport.”81 The phrase “double-billed” appears nowhere in the Order. The
Order does note that AT&T is being billed for transport both by INS (at a flat rate) and by the Iowa LECs
(at a mileage-based rate). Those statements reflect, nearly verbatim, the parties’ stipulations and are in no
way inaccurate.82
(Continued from previous page)


76 Even assuming that Rule 703 somehow applied here, that Rule still requires identification of the “facts or data in
the case” on which the Iowa LECs’ expert bases his opinion. See Fed. R. Evid. 703. Thus, the Iowa LECs have
not demonstrated that they even satisfied that standard (if it had applied).
77 Petition at 6-7.
78 Id.
79 Order, 27 FCC Rcd at 11525, para. 37. Neither Preston nor AT&T produced a copy of the purported Preston
form notice letter. Stipulations at 10, paras. 65, 66. Rather, Preston relied exclusively upon deposition testimony of
Mr. Kilburg, who testified regarding his general understanding of the process that he believed would have occurred
to notify IXCs that Preston’s POI had changed. See Answer, Exhibit U, Deposition of Roger Kilburg at 42-43.
Unlike the specific evidence supporting Winnebago’s assertion that it provided advance notice to AT&T in a billing
insert about its change and when it would be effective, Mr. Kilburg did not testify about any of the specifics of
Preston’s purported notice letter, including when and how it was sent, whether it was in advance of any change, and
whether Preston worked cooperatively with AT&T regarding notice of the POI change. In the absence of any
documentary evidence supporting such details, the Commission declined to credit Mr. Kilburg’s purportedly
detailed recollection about mailing a letter to each IXC more than eight years ago. Nor did the Commission
misapply the burden of proof, as the Iowa LECs contend. See Petition at 7. As the carrier attempting to enforce the
terms of its tariff in the underlying litigation, Preston, not AT&T, bears the burden of proving that it complied with
its tariff. See, e.g., Hi-Tech Furnace Systems, Inc. v. FCC, 224 F.3d 781, 787 (D.C. Cir. 2000) (affirming the
Commission's decision to impose the burden of proof on the complainant).
80 In re Applications of Henderson Broad. Co., Decision, 63 F.C.C.2d 149, 423 (1977). See also Application of
Albert E. Gary Killington Broad.
, Memorandum Opinion and Order, 5 FCC Rcd 6235, 6236 (1990) (“[p]robative
evidence necessarily includes something more than the self-serving, uncorroborated statement of the individual
responsible for the certification that he had taken steps to secure the needed funds”).
81 Petition at 7 (citing Order, para. 20 & n.108).
82 Stipulations at 17, para. 101 (“INS continues to bill AT&T its flat, distance-insensitive charge, which covers
transport to any point on the INS ring, regardless of distance.”); at 9, para. 60 (listing the dates on which each of the
Iowa LECs “began billing AT&T mileage-based transport charges”); at 22, para. 142 (discussing the Iowa LECs’
switched access invoices to AT&T, which included transport service charges between Des Moines and the Iowa
LECs’ local switches). The Order also noted the parties’ stipulation that the INS rate excluded the facilities INICD
(continued…)
10

Federal Communications Commission

FCC 12-163

D.

The Iowa LECs’ Remaining Assertions Pertain to Damages and Can Be Addressed
in Connection with Any Damages Complaint AT&T Files.

18.
The Petition argues that AT&T should be “estopped from the recovery of damages or
other retrospective relief.”83 According to the Iowa LECs, it was “material error for the Commission to
conclude that an award of damages to AT&T was justified and appropriate” because they proffered a
“reasonable” interpretation of the NECA Tariff and, accordingly, were not on “fair notice” that their
actions were inconsistent with their tariff.84 The Iowa LECs further contend that AT&T was aware of the
increase in transport charges resulting from the Iowa LECs’ POI changes and yet “never advised [the
Iowa LECs] of any objection to the increase . . . .”85 In their view, it was “inappropriate for the
Commission to conclude that an award of damages to AT&T was justified and appropriate” because
AT&T’s “actions and inactions establish the elements of equitable estoppel.”86
19.
Nowhere in the Order did the Commission conclude that AT&T is entitled to an award of
damages. The Order ruled in AT&T’s favor on issues of liability, noted that AT&T had requested
damages to be determined in a separate proceeding, and stated that AT&T “may file with the Commission
a supplemental complaint for damages in accordance with 47 C.F.R. § 1.722(e).”87 In response to any
supplemental complaint for damages that AT&T files,88 the Iowa LECs will have ample opportunity to
present and substantiate their estoppel defenses.89 After considering those and any other defenses, the
Commission will decide whether AT&T is entitled to an award of damages.

IV.

ORDERING CLAUSES

20.
Accordingly, IT IS ORDERED, pursuant to sections 1, 4(i), 4(j), 201, 203, 208, and 405
of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i), 154(j), 201, 203, 208, and
405, and section 1.106 of the Commission’s rules, 47 C.F.R. § 1.106, that the Defendants’ Petition for
Reconsideration of Memorandum Opinion and Order is DISMISSED.
(Continued from previous page)


leased to the Iowa LECs and that INS has not quantified any reduction in the rates IXCs pay as a result. Order, 27
FCC Rcd at 11516, n.54. See Stipulations at 18, para. 109.
83 Petition at 8, 10-11. See also Reply to Opposition at 7-8.
84 Petition at 8-10 (citing Order, n.2 and paras. 39-45); Reply to Opposition at 9.
85 Petition at 10-12 (citing Order, paras. 11, 15, 37).
86 Petition at 12-13.
87 Order, 27 FCC Rcd at 11511, para. 1 & n.2.
88 The Commission recently granted the parties’ joint motion to extend the time period in which AT&T can file a
supplemental complaint for damages to 90 days following the Commission’s order resolving the Iowa LECs’
Petition. See Consent Motion of AT&T Corp. to Extend the Time to File a Supplemental Complaint Regarding
Damages, File No. EB-12-MD-003 (filed Oct. 22, 2012), and Letter from Rosemary H. McEnery, FCC, to Counsel
for the Parties, File No. EB-12-MD-003 (filed Oct. 25, 2012).
89 See 47 C.F.R. § 1.724(e).
11

Federal Communications Commission

FCC 12-163

21.
It is FURTHER ORDERED, pursuant to sections 1, 4(i), 4(j), 201, 203, 208, and 405 of
the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i), 154(j), 201, 203, 208, and 405,
and section 1.106 of the Commission’s rules, 47 C.F.R. § 1.106, that, as an alternative and independent
holding, the Defendants’ Petition for Reconsideration of Memorandum Opinion and Order is otherwise
DENIED.
FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch
Secretary
12

Note: We are currently transitioning our documents into web compatible formats for easier reading. We have done our best to supply this content to you in a presentable form, but there may be some formatting issues while we improve the technology. The original version of the document is available as a PDF, Word Document, or as plain text.

close
FCC

You are leaving the FCC website

You are about to leave the FCC website and visit a third-party, non-governmental website that the FCC does not maintain or control. The FCC does not endorse any product or service, and is not responsible for, nor can it guarantee the validity or timeliness of the content on the page you are about to visit. Additionally, the privacy policies of this third-party page may differ from those of the FCC.