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Paetec v. MCI d/b/a Verizon, No. 11-2268, et al. (3rd Cir.)

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Released: March 14, 2012
Case: 11-2268 Document: 003110838099 Page: 1 Date Filed: 03/14/2012
BRIEF FOR AMICUS CURIAE FEDERAL COMMUNICATIONS COMMISSION
IN THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 11-2268 (consolidated with 11-2568) & 11-1204 (consolidated with 11-2569)
PAETEC COMMUNICATIONS, INC. ET AL.,
PLAINTIFFS – COUNTERCLAIM DEFENDANTS - APPELLEES – CROSS-APPELLANTS,
V.
MCI COMMUNICATIONS SERVICES, INC. D/B/A VERIZON BUSINESS SERVICES;
VERIZON GLOBAL NETWORKS INC.,
DEFENDANTS – COUNTERCLAIM PLAINTIFFS – APPELLANTS – CROSS-APPELLEES.
On Appeal and Interlocutory Review Under 28 U.S.C. § 1292(b) from the United
States District Court for the Eastern District of Pennsylvania, No. 09-cv-1639 (SD)
AUSTIN C. SCHLICK
GENERAL COUNSEL
PETER KARANJIA
DEPUTY GENERAL COUNSEL
RICHARD K. WELCH
DEPUTY ASSOCIATE GENERAL COUNSEL
MAUREEN K. FLOOD
COUNSEL
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON, D.C. 20554
(202) 418-1740

Case: 11-2268 Document: 003110838099 Page: 2 Date Filed: 03/14/2012

TABLE OF CONTENTS

TABLE OF AUTHORITIES ........................................................................... ii
STATEMENT OF INTEREST .........................................................................1
QUESTIONS PRESENTED .............................................................................1
STATEMENT OF THE CASE .........................................................................2
I.
Statutory and Regulatory Background.......................................................2
II. The Proceedings Below ...........................................................................10
ARGUMENT ..................................................................................................11
I.
If A CLEC Does Not Provide Tandem Switching, It May
Not Charge For Tandem Switching. ........................................................12
II. A Tariff Filed On Fewer Than 15 Days’ Notice Is Not
Entitled to “Deemed Lawful” Status Under 47 U.S.C. §
204(a)(3)...................................................................................................21
III. CLEC Switched Access Rates Above The Benchmark Are
Subject To Mandatory Detariffing And Cannot Be “Deemed
Lawful” Pursuant To 47 U.S.C. § 204(a)(3)............................................25
IV. A Carrier That Violates Its Tariff Can Be Subject To
Overcharge Liability. ...............................................................................29
CONCLUSION ...............................................................................................29

Case: 11-2268 Document: 003110838099 Page: 3 Date Filed: 03/14/2012

TABLE OF AUTHORITIES

CASES

ACS of Anchorage, Inc. v. FCC, 290 F.3d 403 (D.C.
Cir. 2002).......................................................................................................4
Auer v. Robbins, 519 U.S. 452 (1997) ............................................................12
Global NAPS, Inc. v. FCC, 247 F.3d 252 (D.C. Cir.
2001)..................................................................................................... 25, 28
Riegel v. Medtronic, Inc., 552 U.S. 312 (2008) ..............................................11
Talk Am., Inc. v. Michigan Bell Tel. Co., 131 S.Ct.
2254 (2011) .................................................................................................12
Virgin Islands Tel. Corp. v. FCC, 444 F.3d 666
(D.C. Cir. 2006).................................................................................. 3, 4, 27

ADMINISTRATIVE DECISIONS

1997 Annual Access Tariff Filings, 13 FCC Rcd.
5677 (Com. Car. Bur. 1997)........................................................................24
Access Charge Reform, 23 FCC Rcd 2556 (2008) ........................ 9, 13, 15, 19
Access Charge Reform; Reform of Access Charges
Imposed by Competitive Local Exchange
Carriers,
16 FCC Rcd 9923 (2001) ................... 4, 5, 6, 7, 20, 21, 25, 27, 28
Access Charge Reform; Reform of Access Charges
Imposed by Competitive Local Exchange
Carriers,
19 FCC Rcd 9108 (2004) ... 8, 9, 12, 13, 14, 15, 16, 17, 18, 19, 20
Administration of the North American Numbering
Plan, 20 FCC Rcd 2957 (2005)...................................................................24
Chesapeake and Potomac Tel. Co. of Maryland;
Am. Tel. & Tel. Co.; Petition for Declaratory
Ruling Regarding Intrastate Private Lines Used
in Interstate Communications
, 2 F.C.C.R. 3528
(1987) ..........................................................................................................29
Implementation of Section 402(b)(1) of the
Telecommunications Act of 1996, 12 FCC Rcd
2170 (1997) .................................................................................................23
ii

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Long-Term Telephone Number Portability Tariff
Filings, 14 FCC Rcd 3306 (Com. Car. Bur. 1999) .....................................24
Petition of ACS of Anchorage, Inc. Pursuant to
Section 10 of the Communications Act of 1934, as
Amended, (47 U.S.C. § 160(c)), for Forbearance
,
22 FCC Rcd 16304 (2007) ..........................................................................26
Petitions of AT&T, Inc. and BellSouth Corp. for
Forbearance, 22 FCC Rcd 18705 (2007) .............................................. 4, 26
Policy and Rules Concerning the Interstate,
Interexchange Marketplace, Second Report and
Order, 11 FCC Rcd 20730 (1996), recon., Order
on Reconsideration, 12 FCC Rcd 15014 (1997),
further recon., Second Order on Reconsideration
and Erratum, 14 FCC Rcd 6004 (1999), aff’d,
MCI WorldCom, Inc. v. FCC,
209 F.3d 760 (D.C.
Cir. 2000).......................................................................................................5
Protested Tariff Transmittal Action Taken, 25 FCC
Rcd 13327 (Wir. Comp. Bur. 2010)............................................................24
Sprint Communications Co. L.P. v. Northern Valley
Communications, LLC, 26 FCC Rcd 10780
(2011) ..........................................................................................................28

STATUTES AND REGULATIONS

47 U.S.C. § 151 et seq. ......................................................................................1
47 U.S.C. § 160 ...................................................................................... 4, 6, 27
47 U.S.C. § 201(b).........................................................................................2, 3
47 U.S.C. § 202(a).............................................................................................2
47 U.S.C. § 203(a).............................................................................................2
47 U.S.C. § 204(a)(1) ................................................................................. 3, 27
47 U.S.C. § 204(a)(3) ............................................................... 3, 11, 21, 24, 30
47 U.S.C. § 205 .............................................................................................3, 4
47 U.S.C. § 206 .................................................................................................3
47 U.S.C. § 208 .............................................................................................3, 4
47 C.F.R. § 61.23 ............................................................................................22
iii

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47 C.F.R. § 61.23(a) ................................................................................. 22, 23
47 C.F.R. § 61.23(b)........................................................................................22
47 C.F.R. § 61.26 ..............................................................................................8
47 C.F.R. § 61.26(a)(5) ...................................................................................19
47 C.F.R. § 61.26(b)........................................................................................18
47 C.F.R. § 61.26(b)(1) ...................................................................................26
47 C.F.R. § 61.26(c) ......................................................................... 7, 8, 14, 18
47 C.F.R. § 61.26(f) ........................................................................................18
47 C.F.R. § 69.1(b)............................................................................................5

OTHERS

Letter from Consolidated Communications to FCC
(Dec. 19, 2011) ............................................................................................24
Letter from Frontier Communications Solutions to
FCC (Feb. 17, 2010)....................................................................................24
iv

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At this Court’s invitation, the Federal Communications Commission
(“FCC” or “Commission”) respectfully files this brief as amicus curiae.

STATEMENT OF INTEREST

The FCC has primary responsibility for implementing and enforcing
the Communications Act of 1934, as amended, 47 U.S.C. § 151 et seq. (“the
Act”). The FCC has an interest in ensuring that the Act, its implementing
rules, and its precedents are correctly interpreted.

QUESTIONS PRESENTED

This Court, pursuant to its Order dated January 25, 2012, invited the
FCC to set forth its position on four questions:
1. Is a [CLEC] authorized under the regulations codified at 47 C.F.R. § 61.26
et seq., and the FCC’s rulings in the Eighth Report and Order, 19 FCC
Rcd. 9108 (2004), to include a tandem-switch fee in the composite
switched access rate it charges to long-distance carriers for calls to and
from the CLEC’s end-users in either of the following situations: (a) when
the CLEC provides an indirect connection to its end-office switch, and
subtends a third party tandem switch?; or [(b)] when the CLEC provides a
direct connection to its end-office switch? In neither situation does the
CLEC directly operate a tandem switch.
Answer: As explained in Argument Section I below, the FCC believes the
answer to both parts of the question is no.
2. Whether a tariff intended to be filed on a “streamlined basis” pursuant to
47 U.S.C. § 204(a)(3), but received by the FCC 14 days before the
“effective date” printed on the tariff, can be “deemed lawful” (e.g., by
tolling the “effective date” one day forward to provide a 15 day notice
period)?

Answer: As explained in Argument Section II below, the FCC believes

Case: 11-2268 Document: 003110838099 Page: 7 Date Filed: 03/14/2012
the answer is no.
3. Whether a CLEC’s switched access tariff, filed on a “streamlined” basis
pursuant to 47 U.S.C. § 204(a)(3) but subsequently found to violate the
FCC’s benchmark, can enjoy “deemed lawful” status? Or, is that tariff
subject to the mandatory detariffing rule announced in the Seventh Report
and Order
, 16 FCC Rcd. 9923 (2001)?

Answer: As explained in Argument Section III below, the FCC believes
the answer is no to the first question, and yes to the second question.
4. Whether a CLEC is subject to overcharge liability despite charging the
rates specified in its “deemed lawful” tariff schedule, when those rates are
subsequently found to violate the FCC’s benchmark and the tariff contains
a provision stating that “notwithstanding any other provision … the rate
for Switched Access Service shall equal the maximum rate permitted
under 47 C.F.R. § 61.26”?

Answer: As explained in Argument Section IV below, the FCC believes a
CLEC could be subject to overcharge liability under 47 U.S.C. § 203(c) of
the Act if the CLEC violates the terms of its tariff.

STATEMENT OF THE CASE

I.

STATUTORY AND REGULATORY BACKGROUND

1. The Act directs the FCC to ensure that rates for telecommunications
services are “just and reasonable,” 47 U.S.C. § 201(b), and not unjustly or
unreasonably discriminatory. 47 U.S.C. § 202(a). In certain circumstances, a
carrier is required to file “schedules of charges” (i.e., “tariffs”) with the FCC
setting forth the rates (as well as other terms and conditions) upon which it
will provide service to customers. 47 U.S.C. § 203(a). When a carrier files a
tariff, it may charge only the rate specified in that tariff. Id. § 203(c). The
2

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Act, moreover, provides the FCC various tools to ensure that tariffed rates are
1
just and reasonable, as required by section 201(b) of the Act.
Courts have drawn a distinction between “legal” and “lawful” tariffs.
“A legal tariff is procedurally valid – it has been filed with the Commission,
the Commission has allowed it to take effect, and it contains the published
rates the carrier is permitted to charge.” Virgin Islands Tel. Corp. v. FCC,
444 F.3d 666, 669 (D.C. Cir. 2006) (“Vitelco”) (internal quotations and
citations omitted). “A lawful tariff,” by contrast, “is a tariff that is not only
legal, but also contains rates that are ‘just and reasonable’ within the meaning
of § 201(b).” Id. (emphasis added).
A legal tariff can become substantively lawful if it is so adjudged in a
hearing before the FCC, see 47 U.S.C. § 204(a)(1), or it can be “deemed
lawful” if it is filed pursuant to a “streamlined” procedure specified in 47
U.S.C. § 204(a)(3). Under that provision, a tariff filed on a streamlined basis
“shall be deemed lawful and shall be effective 7 days [for a rate decrease] and

1 See, e.g., 47 U.S.C. § 205 (the FCC may prescribe a just and reasonable
rate “to be thereafter observed” if it determines after a hearing that a carrier’s
tariffed rate is unlawful); 47 U.S.C. § 208 (the FCC must investigate claims
about the lawfulness of rates set forth in effective tariffs); 47 U.S.C. § 206
(the FCC may award damages to a complainant if it finds that a carrier’s
tariffed rates are unlawful); 47 U.S.C. § 204(a)(1) (the FCC may suspend a
new or revised tariff before it becomes effective).
3

Case: 11-2268 Document: 003110838099 Page: 9 Date Filed: 03/14/2012
15 days [for a rate increase] after the date on which it is filed with the
Commission unless the Commission takes action … before the end of that 7-
day or 15-day period.”
“A carrier charging a merely legal rate may be subject to refund
liability if customers can later show that the rate was unreasonable.” ACS of
Anchorage, Inc. v. FCC, 290 F.3d 403, 411 (D.C. Cir. 2002); see also Vitelco,
444 F.3d at 669. “A carrier charging rates under a lawful tariff, however, is
immunized from refund liability, even if that tariff is found unlawful in a later
complaint [under 47 U.S.C. § 208] or rate prescription proceeding [under 47
U.S.C. § 205].” Vitelco, 444 F.3d at 669.
In certain circumstances, the Commission has exercised its authority
under 47 U.S.C. § 160 to forbear from applying the tariff provisions in the
Act (including, but not limited to, § 204) and the FCC’s implementing
regulations. See, e.g., Access Charge Reform; Reform of Access Charges
Imposed by Competitive Local Exchange Carriers, 16 FCC Rcd 9923, 9956-
58 (¶¶ 82-87) (2001) (“Seventh Report and Order”); Petitions of AT&T, Inc.
and BellSouth Corp. for Forbearance, 22 FCC Rcd 18705, 18729 (¶ 42)
(2007) (“AT&T Forbearance Order”). One exercise of the Commission’s
forbearance authority has involved a procedure known as “mandatory
detariffing.” Under that procedure, carriers are prohibited from filing tariffs
4

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with the FCC. Instead, they must negotiate rates with their customers without
2
resort to section 203 of the Act and the FCC’s rules governing tariffs.
2. This case involves interstate switched “access service” – the service
that local telephone companies (“local exchange carriers” or “LECs”) provide
to connect their end-user subscribers with interexchange carriers (“IXCs”)
when such subscribers make or receive long-distance calls. The FCC’s rules
generally require LECs to file tariffs with the Commission that establish the
rates, terms, and conditions for their interstate access services, subject to
certain exceptions. See, e.g., 47 C.F.R. § 69.1(b).
a. “Historically,” the “access charges” levied by incumbent local
exchange carriers (“ILECs”) “have been the product of an extensive
regulatory process.” Seventh Report and Order, 16 FCC Rcd at 9939 (¶ 41).
“This process,” the FCC has found, “yield[s] presumptively just and
reasonable rates.” Id. Competing LECS (“CLECs”), by contrast, were
“largely unregulated in the manner in which they set their access rates” until
2001, when the FCC adopted the Seventh Report and Order. Id. at 9931

2 See, e.g., Policy and Rules Concerning the Interstate, Interexchange
Marketplace, Second Report and Order, 11 FCC Rcd 20730 (1996), recon.,
Order on Reconsideration, 12 FCC Rcd 15014 (1997), further recon., Second
Order on Reconsideration and Erratum, 14 FCC Rcd 6004 (1999), aff’d, MCI
WorldCom, Inc. v. FCC,
209 F.3d 760 (D.C. Cir. 2000).
5

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(¶ 21). In that Order, the FCC “limit[ed] the application of [its] tariff rules to
CLEC access services” after finding that some CLECs were “us[ing] the
regulatory process to impose excessive access charges on IXCs and their
customers.” Id. at 9924-25 (¶ 2); see also id. at 9934 (¶ 27). This
anticompetitive practice was possible because the market for these services
did not allow competition to discipline rates and CLECs thus enjoyed a
monopoly over access charges: in order to originate and terminate long
distance traffic, the IXC has no choice but to use the local network of the
LEC serving the end-user customer. See id. at 9934-36 (¶¶ 28-32).
Responding to the record evidence, the FCC expressed “concern[] that
… permitting CLECs to tariff any rate they choose may allow some CLECs
inappropriately to shift onto the long distance market … a substantial portion
of the CLECs’ start-up and network build-out costs.” Id. at 9936 (¶ 33).
That, in turn, “may promote economically inefficient entry into the local
markets and may distort the long distance market.” Id.
“[T]o eliminate regulatory arbitrage opportunities that previously have
existed with respect to tariffed CLEC access services,” the FCC used its
forbearance authority under 47 U.S.C. § 160 to impose a “detariffing
regime”. Id. at 9925 (¶ 3). “CLEC access rates that are at or below [a]
benchmark … will be presumed to be just and reasonable” and “CLECs may
6

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impose them by tariff.” Id. But “[a]bove the benchmark,” the FCC held that
“CLEC access services will be mandatorily detariffed.” Id.; see also id. at
9938-40, 9956 (¶¶ 40-44, 82). Thus, under this mandatory detariffing regime,
a CLEC “must negotiate higher rates with IXCs” outside the tariff process set
forth in the Act and the FCC’s implementing regulations. Id. at 9925 (¶ 3).
The FCC explained that the “benchmark rate, above which a CLEC
may not tariff, should eventually be equivalent to the switched access rate of
the incumbent provider operating in the CLEC’s service area.” Id. at 9941
(¶ 45); see also 47 C.F.R. § 61.26(c). The FCC capped CLEC switched
access charge rates at those of the competing ILECs because ILEC rates are
“presumptively just and reasonable.” Id. at 9939 (¶ 41). In “moving CLEC
tariffs to the ‘rate of the competing ILEC,’” the FCC clarified that it “d[id]
not intend to restrict CLECs to tariffing solely the per-minute rate that a
particular ILEC charges for its switched, interstate access service.” Id. at
9945 (¶ 54). “The only requirement,” the FCC explained, “is that the
aggregate charge for these services, however described in [CLEC] tariffs,
cannot exceed our benchmark.” Id. at 9946 (¶ 55).
In the Seventh Report and Order, the FCC did not immediately require
CLECs to reduce their interstate access rates to the switched access rate of the
competing ILEC. Instead, it imposed transitional benchmark rates that
7

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dropped from 2.5 cents per minute to 1.2 cents per minute over the course of
three years. Id. at 9944-45 (¶ 52); see also 47 C.F.R. § 61.26(c). It was only
at the end of the transition period, which ended on June 21, 2004, that a
CLEC’s tariffed interstate access rates were capped at the benchmark rate
(i.e., the switched access rate of the competing ILEC). Id.
The FCC codified these requirements at 47 C.F.R. § 61.26.
b. Three years after the Seventh Report and Order, in 2004, the FCC
rejected a request by Qwest Communications Corporation, an IXC, to clarify
that “the benchmark rate should be … reduced” when “a carrier other than the
[C]LEC” provides part of the switched access services necessary to deliver a
long-distance call. Access Charge Reform; Reform of Access Charges
Imposed by Competitive Local Exchange Carriers, 19 FCC Rcd 9108, 9113
(¶ 10) (2004) (“Eighth Report and Order”). The FCC held that, so long as
the CLEC was providing local telephone service to the person who received
that call (the “end user”), the CLEC could tariff a rate equal to the full
benchmark rate. Id. at 9114 (¶ 13). At the same time, the FCC rejected a
request by NewSouth Communications, Inc., a CLEC, to declare “that a
[C]LEC should be permitted to charge for all of the competing [I]LEC access
elements (including tandem switching and end office switching) if its switch
serves a geographic area comparable to the competing [I]LEC’s tandem.” Id.
8

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3
at 9118 (¶ 20). The FCC instead “clarif[ied] that the competing [I]LEC
switching rate” used as the benchmark “is the end office switching rate when
a [C]LEC originates or terminates calls to end-users and the [ILEC] tandem
switching rate when a [C]LEC passes calls between two other carriers.” Id. at
9119 (¶ 21).
c. A subsequent FCC order reiterated that a CLEC may only charge an
IXC for tandem switching when it actually provides tandem switching. See
Access Charge Reform, 23 FCC Rcd 2556, 2564 (¶ 26) (2008) (“Clarification
Order”). In that order, the FCC clarified that the earlier Eighth Report and
Order “does not prevent [C]LECs from charging for both tandem and end
office switching when these functions are provided by separate switches.” Id.
Acknowledging its earlier holding that a CLEC may only charge an IXC a
single switching rate (i.e., either tandem or end office switching, whichever is
applicable) when it uses one switch to provide interstate access service, the
FCC found that “[w]hen a [C]LEC performs both functions, … using two
separate switches, it may charge for both functions, as would an [I]LEC.” Id.

3 A switch is a device used to route telephone calls to their destinations. An
end-office switch is a type of switch located in a LEC central office; it serves
as the network entry point for the loops, or transmission facilities, that
connect a residence or business to the Public Switched Telephone Network.
A tandem switch is an intermediate switch located between the end-office
switch and the final destination of the call.
9

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II.

THE PROCEEDINGS BELOW

1. PAETEC Communications, Inc. (“PAETEC”) is a CLEC. Its
provision of interstate switched access services to IXCs, including Verizon
Business Services (“Verizon”), is governed by PAETEC Tariff No. 3 on file
with the FCC. Pls. Br. 18; Defs. Br. 15. Two of those services are in dispute:
(1) Switched Access Service (“SWAS”), which applies to long-distance calls
that an IXC routes to PAETEC indirectly through an ILEC’s tandem switch,
and (2) Switched Access Service (Direct Connection) (“SWAS-DC”), which
applies to long-distance calls that an IXC routes directly to PAETEC’s
switch. Pls. Br. 18; Defs. Br. 16-17. Since August 2, 2006, PAETEC has
charged a single “composite” rate for SWAS and SWAS-DC, and as relevant
to this case, those rates include a charge for tandem switching that is
equivalent to the competing ILEC’s rate for tandem switching. Pls. Br. 18-
19; Defs. Br. 18.
2. On April 17, 2009, PAETEC filed a complaint in which it sought to
collect SWAS and SWAS-DC charges that IXC Verizon had disputed and
failed to pay. In ruling on cross-motions for summary judgment, the court
below interpreted the FCC’s rules to permit a CLEC to charge an IXC for
tandem switching where the CLEC routes its calls to its own end-user
customers through an ILEC tandem switch. (App. 92). Accordingly, the
10

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district court found that PAETEC’s SWAS rates complied with the
benchmark rate in Rule 61.26. (App. 92). By contrast, where an IXC
connects directly to a CLEC switch, the court held that a CLEC may not
charge for tandem switching and, as a consequence, that PAETEC’s SWAS-
DC rate exceeded the benchmark rate in Rule 61.26(c). (App. 92-96).
The district court then addressed two further issues concerning
PAETEC’s SWAS-DC rates. First, the court found that PAETEC’s SWAS-
DC rates were not deemed lawful for the period beginning December 24,
2008, because PAETEC’s tariff for that period provided the FCC with only
14 days’ notice, not the 15 days required by 47 U.S.C. § 204(a)(3). (App.
102-105). Second, it held that PAETEC’s SWAS-DC rates for the period
August 2, 2006 through December 24, 2008 (App. 24) were “deemed lawful,”
despite the fact that the FCC’s regulations “forbid[] CLECs from filing tariffs
in excess of the Benchmark” in Rule 61.26(c). (App. 59-63).

ARGUMENT

An “agency’s reading of its own rule is entitled to substantial
deference.” Riegel v. Medtronic, Inc., 552 U.S. 312, 328 (2008). Indeed, an
agency’s construction of its own rule is “controlling” when, as in this case,
the interpretation reflects a “fair and considered judgment” and is not “plainly
erroneous or inconsistent with the regulation.” Auer v. Robbins, 519 U.S.
11

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452, 461-62 (1997). This rule of deference applies to the FCC’s
interpretation of its own regulations, as set forth in an amicus brief that (like
this brief) reflects the agency’s fair and considered view on the question.
Talk Am., Inc. v. Michigan Bell Tel. Co., 131 S.Ct. 2254, 2261 (2011)
(deferring to FCC rule interpretation contained in amicus brief).

I.

IF A CLEC DOES NOT PROVIDE TANDEM SWITCHING,
IT MAY NOT CHARGE FOR TANDEM SWITCHING.

Under the rules at issue in this case, if a CLEC does not provide
tandem switching functionality, the CLEC may not include a tandem-
switching charge in the interstate switched access rates it levies on IXCs for
calls to and from the CLEC’s end-user customers. This common-sense
interpretation – that a carrier may charge only for services that it actually
provides – applies irrespective of how the CLEC interconnects with the IXC
(i.e., “directly” or “indirectly,” as described in Question 1) or how it elects to
bill the IXC (i.e., through a composite rate or individual rate elements).
The FCC decided this issue in the Eighth Report and Order, where it
rejected NewSouth’s proposal “that a [C]LEC should be permitted to charge
for all of the competing [I]LEC access elements (including tandem switching
and end office switching) if its switch serves a geographic area comparable to
the competing [I]LEC’s tandem.” Id. at 9118 (¶ 20). In that Order, the FCC
explained that its “long-standing policy with respect to [I]LECs is that they
12

Case: 11-2268 Document: 003110838099 Page: 18 Date Filed: 03/14/2012
should charge only for those services that they provide.” Id. at 9118-19
(¶ 21). The FCC noted that “[u]nder this policy, if an [I]LEC switch is
capable of performing both tandem and end office functions, the applicable
switching rate should reflect only the function(s) actually provided to the
IXC.” Id. It then reasoned that “a similar policy should apply to [C]LECs.”
Id.
The FCC’s Clarification Order supports this conclusion. There, the
FCC considered the applicable benchmark rate where a CLEC uses both a
tandem switch and an end-office switch to connect calls from IXCs to its end-
user customers. Citing paragraph 21 of the Eighth Report and Order, the
FCC reiterated that “where a single switch is capable of providing tandem
and end office functions, … [C]LECs can charge the end office switching rate
when they originate or terminate calls to end users, and the tandem switching
rate when they pass calls between two other carriers.” Id., 23 FCC Rcd at
2565 (¶ 26). Yet it also emphasized that “[w]hen a [C]LEC performs both
functions, … using two separate switches, it may charge for both functions,
4
as would an [I]LEC.” Id.

4 Verizon thus reaches the right result under the wrong theory in this case.
Relying on paragraph 19 of the Eighth Report and Order, Verizon claims that
paragraph 13 applies only to the transitional benchmark rates, whereas
Footnote continued on the next page.
13

Case: 11-2268 Document: 003110838099 Page: 19 Date Filed: 03/14/2012
The first question this Court has posed to the FCC appears to perceive
some tension between paragraphs 13 and 21 of the Eighth Report and Order,
19 FCC Rcd at 9114, 9118-19 (¶¶ 13, 21). See Jan. 25, 2012 Order at 1, n.1.
Properly construed, however, the two paragraphs are harmonious. In
paragraph 13 of that Order, the FCC “den[ied] Qwest’s request for
clarification that the full benchmark rate is not available in situations when a
[C]LEC does not provide the entire connection between the end user and the
IXC.” Id. at 9114 (¶ 13). The FCC so held in order to enable a CLEC to
charge the “full benchmark rate” in Rule 61.26(c), 47 C.F.R.§ 61.26(c), in the
circumstance where a CLEC and an ILEC provide the same access element
(e.g., tandem switching) in the call path between an IXC and the CLEC’s
end-user customer. Paragraph 21 is thus entirely consistent with paragraph
13 in that it also holds that a CLEC may charge an IXC for the services it
actually provides – or, more specifically, a CLEC may charge for tandem
switching when it provides tandem switching in addition to end-office
switching to terminate an IXC’s long-distance traffic with the CLEC’s end-

paragraph 21 of that Order and the subsequent Clarification Order apply to
the final benchmark rate. Defs. Br. 41-44. The Eighth Report and Order
does not establish such a dichotomy. Paragraph 19 explains that “the
arguments presented by Qwest to support its request are equally applicable to
the transitional benchmark rates” and the final benchmark rates. 19 FCC Rcd
at 9117-18.
14

Case: 11-2268 Document: 003110838099 Page: 20 Date Filed: 03/14/2012
user customers. Id. at 9118-19 (¶ 21); see also Clarification Order, 23 FCC
Rcd at 2564 (¶ 26).
By way of example, an IXC could send its traffic through two tandem
switches to reach an end user customer served by a CLEC. As shown in the
diagram below, the IXC would interconnect with an ILEC tandem switch,
which would be interconnected with a CLEC’s switch. A call from the IXC
to the CLEC end user customer would thus pass through the ILEC’s tandem
switch, to the CLEC’s switch, and then to a different CLEC switch before
being terminated with the end user customer. In that circumstance, the CLEC
is performing all of the functions encompassed by the full benchmark rate
(from tandem switching to termination with the end user customer), even
though there also is an ILEC performing some functions between the IXC
and the CLEC.
ILEC
CLEC
CLEC “end-office”
IXC
tandem
“tandem”
switch (terminating
End
switch
switch
access services)
user
Qwest’s request for clarification effectively asked the FCC to
determine that an IXC is never required to pay a CLEC for tandem switching
where that service is provided by a different carrier, including in the scenario
described above. Specifically, Qwest argued that “when one or more of the
15

Case: 11-2268 Document: 003110838099 Page: 21 Date Filed: 03/14/2012
services necessary to originate or terminate an interexchange call is provided
by a carrier other than a [C]LEC, … the benchmark rate should be
correspondingly reduced.” Eighth Report and Order, 19 FCC Rcd at 9113
(¶ 10). So, for example, “where the [I]LEC still provides tandem switching,”
Qwest asserted that “the IXC should have to pay that charge to the [I]LEC
only, and not to both the [I]LEC and the [C]LEC” – even where the CLEC
5
also provides tandem switching service with its own switch. Id. The FCC,
in paragraph 13, disagreed. “When a [C]LEC originates or terminates traffic
to its own end users,” the FCC explained, “it is providing the functional
equivalent of those services, even if the call is routed from the [C]LEC to the
IXC through an [I]LEC tandem.” Eighth Report and Order, 19 FCC Rcd at
9114 (¶ 13). Paragraph 13 thus confirms the common-sense principle that
where a CLEC provides a functionality such as tandem switching, it can
charge for it, even if an ILEC also provides the same functionality in the call
path between an IXC and a CLEC end-user customer.

5 Qwest specifically argued that “if an ILEC provides (and directly bills an
IXC for) tandem switching used to originate and terminate long distance calls
to a CLEC’s end user [customers], the ILEC’s rate for tandem switching
should be subtracted from the ‘competing ILEC rate’ used in the applicable
benchmark,” irrespective of whether the CLEC also provides tandem
switching to complete the long-distance call. See Qwest Communications
Corporation Petition for Clarification Or, In the Alternative, Reconsideration,
CC Docket No. 96-262 at 3 (filed June 20, 2001).
16

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Contrary to PAETEC’s position, Paragraph 13 of the Eighth Report
and Order does not support the counter-intuitive proposition that a CLEC
may charge an IXC for tandem switching when it does not provide that
service. See Pls. Br. 30. PAETEC misconstrues that paragraph when it
broadly asserts that “the FCC confirmed that a CLEC can charge a composite
rate based on the aggregate total of what an ILEC charges, specifically
including the ILEC’s charge for the ILEC tandem switch, even if the CLEC
6
does not itself use a tandem switch to deliver its access service.” Pls. Br. 18.
In so arguing, PAETEC overlooks that the FCC’s holding in paragraph 13 of
the Eighth Report and Order is qualified: “because there may be situations”
(such as the relatively rare double-tandem scenario described above) “when a
[C]LEC does not provide the entire connection between the end user and the
IXC, but is nevertheless providing the functional equivalent of the [I]LEC
interstate exchange access services, we deny Qwest’s petition.” Id. (emphasis

6 Relying on rule 61.26(a)(3), as quoted in paragraph 13 of the Eighth
Report and Order, PAETEC contends that “when CLECs deliver switched
access service, the CLECs are providing the functional equivalent of all the
elements – including tandem switching – that ILECs may use to provide
switched access service.” Pls. Br. 28. That statement is correct only insofar
as the CLEC actually provides the IXC with the access service elements
listed in the rule. To the extent that the CLEC does not provide those service
elements, PAETEC’s interpretation would violate the FCC’s “long-standing
policy” that LECs “should charge only for those services that they provide.”
Eighth Report and Order, 19 FCC Rcd 9118 (¶ 21).
17

Case: 11-2268 Document: 003110838099 Page: 23 Date Filed: 03/14/2012
added). Instead, PAETEC effectively replaces the qualified “may” in
paragraph 13 with an unqualified “will,” so that in PAETEC’s view a CLEC
“will” be permitted to charge an IXC the full benchmark rate in any
“situation[] when a [C]LEC does not provide the entire connection between
the end user and the IXC.” Id. This reading is contrary to the text of the
Eighth Report and Order and it is impossible to square with the FCC’s
holding in paragraph 21 that CLECs “should charge only for those services
7
that they provide.” Id. at 9118 (¶ 21).
The district court thus erred when it found that a CLEC may charge
IXCs for tandem switching if it provides an indirect connection to its end-

7 PAETEC claims that this interpretation would “nullify” the distinction
between “the amount a CLEC can charge when it is acting as an intermediate
carrier from the amount a CLEC can charge when it is serving its own end-
user customers.” Pls. Reply 9, citing 47 C.F.R. § 61.26(b), (c), and (f). Not
so. The FCC added new subsection (f) to Rule 61.26 in the Eighth Report
and Order,
19 FCC Rcd at 9117 (¶ 18), to address confusion surrounding
application of the benchmark rate when a CLEC is not serving the end-user
customer. Some carriers, including PAETEC’s predecessor in interest,
argued that CLECs “should be permitted to charge the full benchmark rate
when they provide any component of the interstate switched access services
used in connecting an end user to an IXC.” Id. at 9115 (¶ 14). The FCC
disagreed, explaining “that the rate that a [C]LEC charges for access
components when it is not serving the end-user should be no higher than the
rate charged by the competing [I]LEC for the same functions.” Id. at 9116
(¶ 17). Subsection (f), which codified that holding, was therefore necessary
to clarify that CLECs that do not serve end-user customers (like those that do)
“should charge only for those services that they provide.” Id. at 9118 (¶ 21).
18

Case: 11-2268 Document: 003110838099 Page: 24 Date Filed: 03/14/2012
office switch (i.e., when the CLEC’s end office switch subtends a third-
party’s tandem switch). As both PAETEC and Verizon point out (Defs. Br.
39-45; Pls. Br. 45-46; Pls. Reply 17), the FCC’s rules and orders do not
establish different benchmark rates based on the manner in which the CLEC
and the IXC interconnect. Rather, the FCC’s orders have established a single
benchmark rate, and that rate is computed based on the ILEC’s rates for the
services that a CLEC actually provides an IXC. Eighth Report and Order, 19
FCC Rcd at 9118 (¶ 21); Clarification Order, 23 FCC Rcd 2565 (¶ 26). The
district court’s holding undermines that policy because it would allow a
CLEC to charge an IXC the ILEC rate for tandem switching provided by the
ILEC, and not the CLEC itself.
For similar reasons, there is no merit to PAETEC’s contention that a
CLEC may charge an IXC for tandem switching, so long as it charges the
IXC a “composite rate” (i.e., a single, combined rate) for exchange access
rather than an individual tandem switching rate element. Pls. Br. 23-24, 37-
41; Pls. Reply 18-23. This novel distinction finds no support in the FCC’s
rules and orders. For example, FCC Rule 61.26 defines a single rate
benchmark – and that benchmark does not vary based on how the CLEC
elects to bill an IXC. See 47 C.F.R. § 61.26(a)(5) (“The rate for interstate
switched exchange access services shall mean the composite, per-minute rate
19

Case: 11-2268 Document: 003110838099 Page: 25 Date Filed: 03/14/2012
for these services, including all applicable fixed and traffic-sensitive
charges.”) (emphasis added). Similarly, in the Seventh Report and Order, 16
FCC Rcd at 9946 (¶ 55), the FCC explained that “[t]he only requirement is
that the aggregate charge for these services, however described in [CLEC]
tariffs, cannot exceed our benchmark.” In other words, the rate structure a
CLEC chooses for its tariff has no bearing on the maximum rate level
established by Rule 61.26(c).
PAETEC’s position is also inconsistent with the FCC’s holdings in the
Eighth Report and Order (19 FCC Rcd at 9118-19 (¶ 21)) and the
Clarification Order (23 FCC Rcd 2565 (¶ 26)). The FCC in those decisions
held that where a CLEC uses a single switch for access service, it may only
charge an IXC a single switching rate (i.e., either tandem or end office
switching, but not both). Clarification Order, 23 FCC Rcd 2565 (¶ 26); see
also Eighth Report and Order, 19 FCC Rcd at 9118-19 (¶ 21). It would be
contrary to those orders to find that a CLEC may include in its composite rate
a tandem switching fee that it would be prohibited from billing separately.
Indeed, PAETEC’s element-specific pricing versus composite rate
distinction is inconsistent with its own theory of the case. Throughout its
briefs, PAETEC claims that the FCC permits CLECs to charge IXCs for
tandem switching that they concededly do not provide in order to “foster the
20

Case: 11-2268 Document: 003110838099 Page: 26 Date Filed: 03/14/2012
equality of access charge revenue” between ILECs and CLECs. Pls. Br. 24;
8
see also id. at 17, 46-47; Pls. Reply at 15. That claim is incorrect: the FCC
enacted the CLEC access charge regime at issue to address the CLECs’
misuse of market power by “eliminat[ing] from [its] rules opportunities for
arbitrage and incentives for inefficient market entry.” Seventh Report and
Order, 16 FCC Rcd at 9936 (¶ 33); see also id. at 9924 (¶¶ 2-3). But even
assuming arguendo that the FCC intended to maximize CLEC access charge
revenue, it would make little sense for the Commission to enact regulations
that force CLECs to charge less simply because they elect “a la carte” or
element-specific pricing over a single, composite price.

II.

A TARIFF FILED ON FEWER THAN 15 DAYS’ NOTICE
IS NOT ENTITLED TO “DEEMED LAWFUL” STATUS
UNDER 47 U.S.C. § 204(a)(3).

A tariff filed in a streamlined manner pursuant to 47 U.S.C. § 204(a)(3)
“shall be deemed lawful and shall be effective 7 days [for a rate decrease] or
15 days [for a rate increase] after the date on which it is filed with the

8 In practice, PAETEC’s theory actually promotes revenue inequality.
Under PAETEC’s theory, the CLEC could collect more than an ILEC for a
given call because the ILEC can only charge an IXC for the services it
provides, while a CLEC charging the composite rate would be permitted to
bill an IXC for every access element listed in Rule 61.26(a)(3), even
including elements it does not provide itself. Rather than equalize revenue
opportunities between ILECs and CLECs, this would give the CLEC a
competitive advantage over the ILEC.
21

Case: 11-2268 Document: 003110838099 Page: 27 Date Filed: 03/14/2012
Commission unless the Commission takes action … before the end of that 7-
day or 15-day period.” Therefore, a tariff proposing a rate increase will not
be “deemed lawful” for purposes of section 204(a)(3) of the Act unless it is
filed with 15 days’ notice from its effective date.
9
Under the FCC rules then in effect, a carrier must specify an effective
date on the face of a new or revised tariff. See 47 C.F.R. § 61.23(a). The
notice period required by section 204(a)(3) “begins on and includes the date
the tariff is received by the Commission, but does not include the effective
date.” 47 C.F.R. § 61.23(b). Thus, in response to the Court’s second
question, Jan. 25, 2002 Order at 2, a tariff filed only 14 days before the
carrier-designated “effective date” could not be “deemed lawful” under
section 204(a)(3).
With respect to the Court’s question about potential tolling of the
“effective date,” nothing in section 204(a)(3) of the Act or the FCC rules then
in effect provides for such tolling. Contrary to PAETEC’s claims, section
204(a)(3) does not set the effective date of the tariff filing “without regard to
the ‘Effective Date’ written on the tariff pages being filed” so that a tariff

9 47 C.F.R. § 61.23, which was the operative rule at the time of this dispute,
was removed from the Code of Federal Regulations effective November 17,
2011.
22

Case: 11-2268 Document: 003110838099 Page: 28 Date Filed: 03/14/2012
filed on a streamlined basis “‘shall be deemed lawful’ and ‘shall be effective’
15 days after filing.” Pls. Br. 64-65. Rather, the FCC’s rules expressly
provided that “[e]very proposed tariff filing must bear an effective date and,
except as otherwise provided by regulation, special permission, or
Commission order, must be made on at least the number of days notice
specified in this section.” In other words, the tariff’s effective date marked
the end of the notice period, 47 C.F.R. § 61.23(a), and the carrier determined
that “effective date” under the FCC’s former rules by filing within the periods
specified by section 204(a)(3).
Indeed, the FCC has unequivocally stated that “all LEC tariff
transmittals, other than those that solely reduce rates, shall be filed on 15 days
notice” to receive “deemed lawful” treatment. Implementation of Section
402(b)(1) of the Telecommunications Act of 1996, 12 FCC Rcd 2170, 2203
(1997) (¶ 68). Moreover, the agency repeatedly has held that tariffs filed
outside the statutory notice period, while permitted by the FCC’s rules and
23

Case: 11-2268 Document: 003110838099 Page: 29 Date Filed: 03/14/2012
10
precedent, do not qualify for “deemed lawful” treatment. And this rule is
11
widely understood by LECs.
PAETEC’s remaining arguments are no more persuasive. See Pls. Br.
65-66. As Verizon points out, PAETEC cannot rely on the FCC’s treatment
of tariffs filed during the 1995 federal government shutdown because “the
government was not closed when PAETEC filed its December 2008 tariff”;
rather, “PAETEC simply sent the tariff to the wrong address.” Defs. Reply at
41. Likewise, PAETEC’s reliance on cases involving contract interpretation
and the FCC’s rules requiring notice of discontinuance of service are
inapposite because they do not involve the statutory notice requirements in
section 204(a)(3) of the Act. Pls. Br. 65-66.

10 See, e.g., Administration of the North American Numbering Plan, 20 FCC
Rcd 2957, 2960 (¶ 7 n.31) (2005) (tariff filed on one day’s notice was “not
‘deemed lawful’ under section 204(a)(3)”); Protested Tariff Transmittal
Action Taken
, 25 FCC Rcd 13327 (n.1) (Wir. Comp. Bur. 2010) (same for
tariff filed on 16 days’ notice); Long-Term Telephone Number Portability
Tariff Filings
, 14 FCC Rcd 3306, 3306-07 (¶ 2) (Com. Car. Bur. 1999) (same
for tariff filed on 17 days’ notice); 1997 Annual Access Tariff Filings, 13
FCC Rcd. 5677, 5706 (¶ 78) (Com. Car. Bur. 1997) (“LEC tariffs not filed on
either 7-days’ or 15-days’ notice will not be ‘deemed lawful.’”).
11 See, e.g., Letter from Consolidated Communications to FCC (Dec. 19,
2011) (conceding that a tariff filed on 16 days’ notice is not subject to 47
U.S.C. § 204(a)(3)); Letter from Frontier Communications Solutions to FCC
(Feb. 17, 2010) (explaining that “because the original tariff was not filed on
15 days’ notice, Frontier foregoes … deemed lawful status.”) (attached as
Appendix A).
24

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III.

CLEC SWITCHED ACCESS RATES ABOVE THE
BENCHMARK ARE SUBJECT TO MANDATORY
DETARIFFING AND CANNOT BE “DEEMED LAWFUL”
PURSUANT TO 47 U.S.C. § 204(a)(3).

A CLEC tariff for interstate switched access services that includes rates
in excess of the benchmark in Rule 61.26 is subject to mandatory detariffing.
Under that regime, a carrier is prohibited from filing a tariff; any attempt to
do so would violate the FCC’s rules and render the prohibited tariff void ab
initio if filed with the Commission. Cf. Global NAPS, Inc. v. FCC, 247 F.3d
252, 259-60 (D.C. Cir. 2001) (“Merely because a tariff is presumed lawful
upon filing does not mean that it is lawful”; rather, “[s]uch tariffs still must
comply with the applicable statutory and regulatory requirements” and
“[t]hose that do not may be declared invalid.”). Thus, such a tariff cannot
benefit from “deemed lawful” status pursuant to section 204(a)(3) of the Act.
In the Seventh Report and Order, 16 FCC Rcd at 9956 (¶ 82), the FCC
explained:
[A] CLEC must negotiate with an IXC to reach a contractual
agreement before it can charge that IXC access rates above the
benchmark. During the pendency of these negotiations, or to the
extent the parties cannot agree, the CLEC may charge the IXC
only the benchmark rate. In order to implement this approach,
we adopt mandatory detariffing for access rates in excess of the
benchmark. That is, we exercise our statutory authority to
forbear from the enforcement of our tariff rules and the Act’s
tariff requirements for CLEC access services priced above our
benchmark.
25

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The FCC’s implementing rule, 47 C.F.R. § 61.26(b)(1), specifies that “a
CLEC shall not file a tariff for its interstate switched exchange access
services that prices those services … higher [than t]he rate charged for such
services by the competing ILEC” (emphasis added).
Section 204(a)(3) is one of “the Act’s tariff requirements” subject to
the FCC’s forbearance action, so “deemed lawful” status under that statutory
provision is not available for CLEC switched access charges above the
benchmark in Rule 61.26(c). Indeed, in an analogous context, the FCC has
explained that it utilizes mandatory detariffing to “restrict” a LEC’s “ability
to assert ‘deemed lawful’ status.” AT&T Forbearance Order, 22 FCC Rcd at
18729 (¶ 42) (conditioning forbearance relief granted to AT&T on its not
filing or maintaining any interstate tariffs for certain broadband services); cf.
Petition of ACS of Anchorage, Inc. Pursuant to Section 10 of the
Communications Act of 1934, as Amended, (47 U.S.C. § 160(c)), for
Forbearance, 22 FCC Rcd 16304, 16331-32 (¶¶ 59-61) (2007) (explaining
that “the Commission imposed a permissive detariffing regime through
[Rule] 61.26 that permits the filing of tariffs … where the rates are at or
below a benchmark that is ‘the rate of the competing ILEC,’” and holding
that the relevant ILEC could “obtain deemed lawful treatment of its tariffed
rates,” if it “compli[ed] with the … condition … that the rates for [its]
26

Case: 11-2268 Document: 003110838099 Page: 32 Date Filed: 03/14/2012
switched access services not increase” above the benchmark rate) (emphasis
added).
Relying on its forbearance authority under 47 U.S.C. § 160, the FCC
found that the mandatory detariffing of above-benchmark rates would serve
the public interest because “CLECs are positioned to wield market power
with respect to access service.” 16 FCC Rcd at 9957 (¶ 84). Mandatory
detariffing, the FCC explained, “will provide greater assurance that [CLEC
switched access charge] rates are just and reasonable and will likely prevent
CLECs from using long distance ratepayers to subsidize their operational and
build-out expenses.” Id. at 9958 (¶ 86).
As noted above (see n.1), the FCC has authority to suspend and
investigate streamlined tariffs filed pursuant to section 204(a)(3). See
47 U.S.C. § 204(a)(1). But it is not possible, as a practical matter, for the
FCC to examine each of the hundreds of CLEC access tariffs filed with the
agency within the 15 days before those tariffs go into effect. Once those
tariffs become effective, moreover, the “deemed lawful” provision in the
statute insulates the CLEC from refund liability should the FCC later find that
its access rates exceed the benchmark in Rule 61.26. Vitelco, 444 F.3d at
669. That is why the FCC mandatorily detariffed CLEC access charge rates
in excess of the benchmark: prohibiting those presumptively unreasonable
27

Case: 11-2268 Document: 003110838099 Page: 33 Date Filed: 03/14/2012
rates from being tariffed in the first instance better serves the public interest
by according IXCs (and, ultimately, consumers) more protection from
unreasonably high interstate access rates than attempting to identify such
unreasonable rates on an ad hoc basis after the tariffs are filed. See Seventh
Report and Order, 16 FCC Rcd at 9958 (¶¶ 86-87).
If the Court were to find that a CLEC access tariff that includes rates
exceeding the benchmark can enjoy “deemed lawful” status, it would
undermine the mandatory detariffing regime imposed by the FCC. Cf. Global
NAPS, 247 F.3d at 259-60 (affirming FCC’s determination that a CLEC’s
federal tariff was void ab initio because the FCC had not authorized the tariff
filing and instead directed the carrier to negotiate intercarrier compensation
12
rates with other LECs).

12 Relying on Sprint Communications Co. L.P. v. Northern Valley
Communications, LLC, 26 FCC Rcd 10780, 10788 (¶ 17) (2011) (“Northern
Valley Order
”), PAETEC claims that “[a]bsent wrongdoing, deemed
lawfulness applies.” Br. 62. That is not the case with respect to CLEC
switched access charge rates that exceed the benchmark rate in Rule 61.26(c).
The Northern Valley Order did not address that issue, see 26 FCC Rcd at
10783-10788 (¶¶ 7-16), and Sprint (the complainant IXC) “admi[tted] [that]
the Tariff rates [at issue] are no higher than the ILEC rates against which they
are benchmarked pursuant to rule 61.26.” Id. at 10788 (¶ 18).
28

Case: 11-2268 Document: 003110838099 Page: 34 Date Filed: 03/14/2012

IV.

A CARRIER THAT VIOLATES ITS TARIFF CAN BE
SUBJECT TO OVERCHARGE LIABILITY.

If a carrier fails to comply with the terms of its own tariff, it is subject
to liability under 47 U.S.C. § 203(c). That statutory provision holds that “no
carrier shall … charge, demand, collect, or receive a greater or less or
different compensation for such communication, or for any service in
connection therewith, between the points named in any such schedule than
the charges specified in the schedule then in effect.” Id.
In the FCC’s view, a CLEC could be subject to liability under section
203(c) if its tariff prohibited it from charging interstate switched access rates
that are higher than the maximum rate permitted by Rule 61.26(c), and the
CLEC nevertheless charged rates exceeding that benchmark. See, e.g.,
Chesapeake and Potomac Tel. Co. of Maryland; Am. Tel. & Tel. Co.; Petition
for Declaratory Ruling Regarding Intrastate Private Lines Used in Interstate
Communications, 2 F.C.C.R. 3528, 3532 (1987) (tariff filer “would
apparently violate its statutory duties under Section 203(c) … if it refrained
from billing and collecting the applicable rate for these lines.”).

CONCLUSION

As set forth above, the Court should affirm the district court’s
conclusion that a CLEC may not charge an IXC for tandem switching when
the IXC directly connects with the CLEC. The Court should, however,
29

Case: 11-2268 Document: 003110838099 Page: 35 Date Filed: 03/14/2012
reverse the district court’s conclusion that a CLEC may charge an IXC for
tandem switching functionality that the CLEC does not actually provide when
an IXC indirectly connects to the CLEC through an ILEC tandem switch.
This Court should reach both dispositions applying the reasoning set forth in
Argument Section I, above.
The Court should also affirm the district court’s holding that a tariff
filed on 14-days’ notice does not enjoy “deemed lawful” status pursuant to 47
U.S.C. § 204(a)(3).
Finally, the Court should reverse the district court’s holding that a
CLEC tariff that contains interstate switched access rates above the
benchmark rate in Rule 61.26(c) enjoys “deemed lawful” status pursuant to
section 204(a)(3) of the Act. Instead, the Court should find that such a tariff
is void ab initio when filed.
30

Case: 11-2268 Document: 003110838099 Page: 36 Date Filed: 03/14/2012
Respectfully
submitted,

AUSTIN C. SCHLICK
GENERAL COUNSEL
PETER KARANJIA
DEPUTY GENERAL COUNSEL
RICHARD K. WELCH
DEPUTY ASSOCIATE GENERAL
COUNSEL
/s/ Counsel
MAUREEN K. FLOOD
COUNSEL
FEDERAL COMMUNICATIONS
COMMISSION
WASHINGTON, D.C. 20554
(202) 418-1740
March 14, 2012
31

Case: 11-2268 Document: 003110838099 Page: 37 Date Filed: 03/14/2012
IN THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
PAETEC COMMUNICATIONS, INC. ET AL.,
Plaintiffs – Counterclaim
Defendants - Appellees – Cross-
Appellants,
Nos. 11-2268
(consolidated
v.
with 11-2568) &
MCI C
11-1204
OMMUNICATIONS SERVICES, INC. D/B/A
V
(consolidated
ERIZON BUSINESS SERVICES; VERIZON GLOBAL
N
with 11-2569)
ETWORKS INC.,
Defendants – Counterclaim
Plaintiffs – Appellants – Cross-
Appellees.
CERTIFICATE OF COMPLIANCE
I hereby certify that (1) this brief complies with the type-volume
limitation of Fed. R. App. 32(a)(7)(B) because the brief contains 7,256
words, excluding the parts of the brief exempted by Fed. R. App.
32(a)(7)(B)(iii), and (2) this brief complies with the typeface requirements of
Fed. R. App. P. 32(a)(5) and the type-style requirements of Fed. R. App. P.
32(a)(6) because this brief has been prepared in a proportionally spaced
typeface using Microsoft Word in 14-point Times New Roman type.

Case: 11-2268 Document: 003110838099 Page: 38 Date Filed: 03/14/2012
Pursuant to Third Circuit Rule 31.1(c), I further certify that the text of
the electronic brief is identical to the text in the paper copies and that a virus
detection program, Symantec Endpoint Protection version 11.0.4014.26, has
been run on the file and that no virus was detected.
/s/ Counsel
Maureen K. Flood


Counsel
Federal Communications Commission
Washington, D.C. 20554
(202) 418-1740 (Telephone)
(202) 418-2819 (Fax)
March 14, 2012
2

Case: 11-2268 Document: 003110838099 Page: 39 Date Filed: 03/14/2012
APPENDIX A

Case: 11-2268 Document: 003110838099 Page: 40 Date Filed: 03/14/2012

Case: 11-2268 Document: 003110838099 Page: 41 Date Filed: 03/14/2012
Frontier Telephone Companies
180 South Clinton Avenue
Rochester, NY 14646
February 17, 2010
Second Amended Transmittal No. 2
Federal Communications Commission
Office of the Secretary
445 12th Street, S.W.
12th Street Lobby, TW-A325
Washington, DC 20554
ATTENTION: WIRELINE COMPETITION BUREAU
Dear Secretary:
On February 12, 2010, Frontier filed its Transmittal No. 2, deferring the effective date of material filed
under Transmittal No. 1 from February 23, 2010 to February 27, 2010. In Transmittal No. 2, Frontier
stated that Transmittal No. 1 was being deferred in order to achieve the required 15-day statutory notice.
Frontier acknowledges that, because the original tariff was not filed on 15 days' notice, Frontier foregoes the
deemed lawful status that would otherwise be available under §203(a)(3) of the Communications Act.

Case: 11-2268 Document: 003110838099 Page: 42 Date Filed: 03/14/2012
Frontier Telephone Companies
180 South Clinton Avenue
Rochester, NY 14646
Second Amended Transmittal No. 2
February 17, 2010
Page 2
In accordance with the requirements of Section 61.21(a)(3) of the Commission's Rules, the FCC
Registration Number (FRN) for Frontier is 0003-5763-52. Frontier is making this filing on behalf of
issuing carriers with the following FRNs:
FRNs for participants in Tariff FCC No. 1
0003-5726-17 0003-5839-37 0003-5743-16
0003-5745-89 0003-5745-63 0001-5968-81
0003-5745-48 0003-5745-22 0003-5733-91
0004-2605-68 0003-5745-06 0004-0549-38
0004-0367-03 0001-6713-20 0004-3410-95
0003-9342-05 0002-7227-42 0003-4132-42
FRNs for participants in Tariff FCC No. 2
0003-4074-91 0003-4558-96 0003-2732-40
0003-2233-85 0004-9663-54 0003-2712-36
0005-0613-38 0004-1323-38 0005-0603-71
0004-1561-62 0005-0604-13 0005-0402-66
0004-9663-62 0004-2439-52 0005-0604-96
0005-0605-12 0003-2222-21 0005-0604-08
0005-0603-14 0003-3996-80 0005-0610-64
0005-0605-87 0005-0611-14 0002-7189-71
FRNs for participants in Tariff FCC No. 3
0002-6246-41 0002-5749-60

Case: 11-2268 Document: 003110838099 Page: 43 Date Filed: 03/14/2012
Frontier Telephone Companies
180 South Clinton Avenue
Rochester, NY 14646
Second Amended Transmittal No. 2
February 17, 2010
Page 3
Questions regarding this filing may be directed to me at:
Kevin Clinefelter
Frontier Communications
5th Floor
180 S. Clinton Avenue
Rochester, New York 14646
Voice Phone Number (585) 777-5754
Fax Number (585) 262-2625
Personal or facsimile service of any petitions which may be filed against this transmittal should use the
above name, address, and fax number.
Respectfully
Submitted,







Kevin Clinefelter
Manager,
Pricing
&
Tariffs

Case: 11-2268 Document: 003110838099 Page: 44 Date Filed: 03/14/2012
11-2268, et al.

IN THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Paetec Communications, Inc., et al., Plaintiffs

v.

MCI Communications Services, Inc. d/b/a Verizon Business Services, et
al., Defendants

CERTIFICATE OF SERVICE

I, Maureen K. Flood, hereby certify that on March 14, 2012, I electronically
filed the foregoing Brief for Amicus Curiae Federal Communications
Commission with the Clerk of the Court for the United States Court of
Appeals for the Third Circuit by using the CM/ECF system. Participants in
the case who are registered CM/ECF users will be served by the CM/ECF
system.
Alexis Arena
Darren H. Goldstein
Flaster Greenberg
Donna T. Urban
1600 John J. Kennedy Boulevard
Flaster Greenberg
2nd Floor
1810 Chapel Avenue West
Philadelphia, PA 19103
Cherry Hill, NJ 08002
Counsel for: Paetec
Counsel for: Paetec
Communications, Inc.
Communications Inc.
Scott H. Angstreich
A. Richard Feldman
Kiran S. Raj
Michael A. Shapiro
Kellogg Huber, Hansen, Todd, Evans
Bazelon, Less & Feldman
& Figel
1515 Market Street
1615 M Street, N.W., Suite 400
Suite 700
Washington, DC 20036
Philadelphia, PA 19102
Counsel for: MCI Communications
Counsel for: MCI
Services, d/b/a Verizon Business
Communications Services, d/b/a
Services
Verizon Business Services

Case: 11-2268 Document: 003110838099 Page: 45 Date Filed: 03/14/2012
11-2268, et al.
Eamon P. Joyce
Sidley Austin
787 Seventh Avenue
New York, NY 10019
Counsel for: AT&T Corp.
/s/ Maureen K. Flood

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