******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) C.F. COMMUNICATIONS CORP., et al. ) Complainant ) ) v. ) ) MICHIGAN BELL TELEPHONE CO., et al., ) File No. E-92-97, et al. ) Defendant. ) ) Section 208 Complaints Alleging Unlawful ) Application of End User Common Line ) Charges to Independent Payphone Providers ) MEMORANDUM OPINION AND ORDER Adopted: January 23, 1997; Released: February 4, 1997 By the Commission: I. INTRODUCTION 1. In this Memorandum Opinion and Order, where we are consolidating 52 Section 208 proceedings, we find that the complainant independent payphone providers ("IPPs") have not met their burden of establishing that the defendant local exchange carriers ("defendant LECs") have violated Sections 201(a), 201(b), 202(a), and 203(c) of the Communications Act of 1934, as amended (the "Communications Act" or the "Act"), Part 69 of the Commission's rules, or the defendant LECs' tariffs, by assessing end user common line ("EUCL") charges on the complainants. II. BACKGROUND 2. The issues presented in these consolidated complaint proceedings are virtually identical to those presented by the complainant in C.F. Communications. Corp. ("CFC") v. Century Tel. of Wisconsin, et al. In the CFC Reconsideration Order, we held that the complainant was a "reseller" whose resale transmissions originated entirely on its "premises," and was therefore an "end user" under Section 69.2(m) of the Commission's regulations. In addition, we found that the payphone service provided by the complainant, unlike that provided by the defendant LECs, was not a "public" telephone service as that term is defined in Section 69.2(ee) of our regulations. Accordingly, we found that the complainant was required to pay the EUCL, even though the defendant LECs did not pay that charge on their "public" payphones. 3. These issues are also currently the subject of another proceeding at the Commission. In February 1996, the Telecommunications Act of 1996 was enacted. The 1996 Act directed the Commission to promulgate new rules governing the payphone industry, including rules to ensure that "all payphone service providers are fairly compensated." Accordingly, we issued the Payphone Order which concludes that the EUCL should apply to both LEC and competitive payphones. Thus, our conclusion in the Payphone Order is consistent with our finding in the CFC Orders that IPPs should pay EUCL charges. 4. In this proceeding, the relevant facts presented by the parties are largely undisputed. The complainants are independent payphone providers in the business of selling, leasing, installing and maintaining payphones in the States of New York, California, Florida, Georgia, Illinois, Indiana, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas, Vermont, Virginia, and Wisconsin, thereby providing IPP service to their customers. They purchase exchange access service from the defendant LECs, who in turn, submit monthly bills to the complainants for each line ordered. III. CONTENTIONS AND DISCUSSION 5. The complainants raise a number of arguments to support their claims that the defendants' assessment of EUCL charges is unlawful, all of which were addressed and resolved in the CFC Orders. Consistent with our findings and conclusions in the CFC Orders, we find that the complainants have failed to make a persuasive showing that the defendant LECs, by assessing EUCL charges on the complainants' payphone lines, have violated either the Commission's rules or orders, the Communications Act, or their tariffs. A. Part 69 of the Commission's Rules 1. Contentions of the Parties 6. The complainants' primary argument is that because they are not "end users" (and because the two exceptions under which carriers are treated as "end users" for access charge purposes do not apply to them), they may not be assessed EUCL charges. The complainants rely in large part on the definition of "end user" contained in our rules, which imposes EUCL charges on "end users." In averring that they are carriers rather than end users, the complainants claim that the defendant LECs' costs should be assigned to the carrier common line charge ("CCL"), and not the EUCL. In support of this claim, they contend that the Commission has already determined that non-traffic sensitive ("NTS") costs attributable to LEC public payphones ("LECPPs") are assignable to the CCL, and that their payphones are accessible to the public in the same way as LECPPs. Finally, the complainants argue that they do not meet the Commission's definition of "resellers" because they: (1) are "carriers" who do not exclusively resell telecommunications services to the public; and (2) do not originate all of the calls that they resell from their "premises." Thus, the complainants assert that they are not subject to the EUCL. 7. The defendant LECs assert that the complainants are "end users" subject to the EUCL charges, and that they did not violate any of the Commission's rules or orders, or any provisions of the Communications Act, by assessing the EUCL upon the complainants. The defendant LECs contend that they may assess EUCL charges (on a flat-rate, NTS basis) on each line between the end users' premises and the local telephone company switching office, on all end users that subscribe to their local exchange telephone service. Moreover, the defendant LECs maintain that, in the MTS and WATS Market Structure Order, the Commission did not decide whether competitive pay telephone providers should be exempt from the EUCL charge. 2. Discussion 8. We have carefully examined the record before us and conclude that the complainants have cited no facts and have made no arguments that would warrant a ruling contrary to the CFC Orders. In the CFC Reconsideration Order, we rejected an identical claim made by the complainant that IPPs are not "end users" subject to Part 69. We held that because the complainant's customers necessarily had to come to the places where its payphones were located in order to use the complainant's service, the complainant's payphones were its "premises" for purposes of Section 69.2(m) of our regulations. We further held that the complainant did not provide local exchange service, and therefore, was not a "telephone company." In this proceeding, the record is clear that telephone calls using the resold telecommunications services originate exclusively at the payphones (i.e. premises) of the complainants and that the complainants do not provide local exchange service. Accordingly, we conclude that complainants are "end users" and are not "telephone companies" who offer "public" payphone service as those terms are defined in our rules. Our rules permit EUCL charges to be assessed on end users like complainants, who subscribe to local exchange telephone service (and then resell it exclusively from their "premises"), for each line between the local telephone company's switching office and the end user. The complainants are therefore subject to the EUCL charge. B. Section 201 of the Communications Act 1. Contentions of the Parties 9. The complainants argue that since IPPs are not encompassed by Part 69, the defendant LECs' assessment of EUCL charge on them violates Section 201 of the Communications Act. Complainants do not specify, however, whether they are alleging violations of Section 201(a) or 201(b) of the Act. The defendant LECs deny that imposing EUCL charges on complainants violates Section 201 of the Act. 2. Discussion 10. Consistent with our conclusions in the CFC Reconsideration Order, we find that the complainants in this proceeding are "end users" subject to the EUCL under Part 69 of our rules. Accordingly, all of the complainants' Section 201 arguments based on Part 69 must fail. Further, by failing to specify which subsection of Section 201 they allege defendant LECs have violated, the complainants have failed to plead their Section 201 claims with the clarity and specificity required by our rules. In any event, the complainants have failed to prove a violation of either Section 201(a) or Section 201(b). 11. Section 201(a) of the Act places a duty on common carriers to provide communications service upon reasonable request. Since the complainants have not alleged that the defendant LECs failed to provide communications service upon a reasonable request, there is no need for us to conduct a Section 201(a) analysis. We note, however, that it seems apparent from the record that the complainants have requested, and obtained, exchange access service for their payphones from the defendant LECs. Thus, the complainants have failed to prove that the defendant LECs have violated Section 201(a) of the Act. 12. Pursuant to Section 201(b) of the Act, "charges, practices, classifications, and regulations for . . . communication service[s] shall be just and reasonable, and any such charge, practice, classification or regulation that is unjust or unreasonable is deemed to be unlawful." We have found that the complainants are "end users" that may be assessed EUCL charges. Thus, the defendant LECs' assessment of the EUCL charge on complainants is neither unjust nor unreasonable, and therefore, not unlawful under Section 201(b). Therefore, we cannot find that the defendant LECs violated Section 201(b) of the Communications Act. C. Section 202(a) of the Communications Act 1. Contentions of the Parties 13. The complainants argue that, since they are not "end users," the imposition of EUCL charges on them is an act of unjust and unreasonable discrimination amounting to an unreasonable preference and advantage in favor of the defendant LECs, in violation of Section 202(a) of the Act. They claim that, although the defendants are direct competitors in furnishing payphone service, no EUCL charge or equivalent charge for the recovery of NTS costs is attributed to any end user for the defendants' LECPPs (who recover the cost of their lines through the CCL). They assert that, by not assessing a EUCL charge on LECPPs, the defendants are engaging in unlawful discrimination. Moreover, the complainants assert that any regulatory differences that might exist between IPPs and LECPPs do not justify the application of EUCL charges on complainants' payphones. 14. The defendant LECs argue that their assessment of EUCL charges on the complainants does not constitute unjust and unreasonable discrimination because the complainants are operating "business" telephones. They stress that, since they assess a EUCL charge on all "business" telephones that use their local telephone service, they are not discriminating against the complainants. They explain that they do not assess EUCL charges on LECPPs because LECPPs are not identical to IPPs, who are subject to far fewer regulatory constraints. 2. Discussion 15. Under Section 202(a) of the Communications Act, carriers may not unjustly or unreasonably discriminate in charges, practices, classifications, regulations, facilities, or services in connection with like communication services. Applicable judicial decisions establish a three-prong test for determining whether a Section 202(a) violation has occurred. First, we must determine whether the services at issue are like one another. Second, we must determine whether there is disparate pricing or treatment between the like services. Third, if disparate pricing or treatment is found to exist, we must decide whether the disparity is justified and, therefore, not unreasonable. In a Section 208 complaint proceeding, the complainant has the evidentiary burden of establishing that the services are like and that discrimination exists between them. Once like services and discrimination are established, the burden shifts to the defendant carrier to show that the discrimination is not unreasonable. 16. The complainants purchase exchange access service in the form of business lines to their payphones. As such, we have determined them to be "end users" and not "telephone companies." Thus, they are not similarly situated to the defendant LECs who are "telephone companies." Moreover, the defendant LECs claim, and the complainants do not dispute, that the defendant LECs assess EUCL charges on all business telephones. Thus, it appears that the defendants correctly distinguish the complainants' payphones from the LECPPs and do not unlawfully discriminate against the complainants when they assess EUCL charges on the former type of payphones and not the latter. Accordingly, because the complainants failed to show the existence of like services and disparate pricing or treatment, there is no need to proceed with the third step of the discrimination analysis. Moreover, consistent with our findings and conclusions in the CFC Orders, we thus conclude that the defendants have not violated Section 202(a) of the Communications Act. D. Defendants' Tariffs and Section 203(c) of the Communications Act 1. Contentions of the Parties 17. In arguing that they are not end users, the majority of complainants claim that the defendant LECs' assessment of a EUCL charge on complainants violates the defendant LECs' tariffs. These complainants note that the defendant LECs' definition of an "end user" is identical to the Commission's definition, which, according to the complainants, excludes IPPs. The majority of complainants also argue that, because the imposition of the EUCL charge on them violates the defendant LECs' tariffs, the defendant LECs are accordingly also in violation of Section 203(c) of the Act. 18. The defendant LECs deny that IPPs are excluded from the definition of "end user" in their tariffs and that they are in violation of their tariffs or Section 203(c) of the Act. They maintain that assessment of EUCL charges on the complainant IPPs is authorized by their tariffs. They further explain that their tariffs include a provision, as required by our rules, for the collection from end users of a EUCL charge. 2. Discussion 19. The complainants are incorrect in alleging that the defendant LECs' tariffs do not provide for EUCL charges to be assessed on IPPs. Consistent with the CFC Reconsideration Order, we have found that complainants are "end users" as that term is defined in the Commission's rules. Because the defendant LECs' tariffs contain the same definition, we conclude that the complainants are "end users" under the defendant LECs' tariffs. Furthermore, we find that under the defendants' tariffs, the defendants may assess EUCL charges against "end users." Thus, the defendant LECs have not violated their tariffs or Section 203(c) of the Act, which requires common carriers to furnish service solely in accordance with the charges, practices, classifications and regulations of their tariffs filed with the Commission. E. PROCEDURAL MATTERS 20. As mentioned herein, some of the defendants have filed motions to dismiss and motions for summary judgment. Since this order discusses the merits of each of the issues raised in these motions, we accordingly dismiss the motions as moot. In addition, CFC has filed a motion to consolidate its complaint in this proceeding with the proceedings in File Nos. E-89-170 through 172 and E-89-180 through 182. The complaints associated with these file numbers, however, have already been addressed in the CFC Order. Accordingly, we deny CFC's motion to consolidate. 21. The APCC has moved for leave to intervene in certain of the proceedings that have been consolidated herein solely to address the "carrier end user issue," and has submitted a brief with its motion. In addition, in those same proceedings, the National Exchange Carriers Association ("NECA") has filed an amicus brief in support of the defendant LECs. We grant the intervention of APCC and NECA and accept their amicus briefs. 22. Finally, the defendant LECs argue that the complainants' claims for periods earlier than two years before the complaints were filed are barred by the statute of limitations set forth in Section 415 of the Act. Because we find that the defendant LECs are not liable to the complainants, this issue is moot. IV. CONCLUSION 23. For the reasons stated above, we find that complainant IPPs, who are resellers whose resale transmissions originate entirely on their premises, are "end users." In addition, we find that complainant IPPs do not provide "public" telephone service and therefore do not come within the "public" telephone exemption. Therefore, we conclude that the complainant IPPs are subject to end user common line charges. We further conclude that the complainants have failed to prove their allegations that the defendant LECs have violated Sections 201(a), 201(b), 202(a), and 203(c) of the Communications Act, or their tariffs. V. ORDERING CLAUSES 24. Accordingly, IT IS ORDERED, pursuant to Section 1, 4(i), 4(j), and 208 of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 154(j) and 208, and the authority delegated in Section 0.291 of the Commission's rules, 47 C.F.R.  0.291, that the above- captioned complaints, which have been consolidated herein, ARE DENIED. 25. IT IS FURTHER ORDERED that the motions to dismiss filed by New York Telephone Company, New England Telephone Company, United Telephone Company of Florida, Carolina Telephone Company, United Telephone Company of Pennsylvania, Ameritech Corporation, Central Telephone Company of Illinois, Continental Telephone of Indiana, Inc., Southwestern Bell Telephone Company, GTE North of Michigan, GTE-Indiana Operations, Inc., and GTE Service Corporation in the above-captioned complaints ARE DISMISSED. 26. IT IS FURTHER ORDERED that the motion for summary judgment filed by Southwestern Bell Telephone Company in the above-captioned complaints IS DISMISSED. 27. IT IS FURTHER ORDERED that the Motion for Leave to Intervene filed by the American Public Communication Council IS GRANTED for the limited purpose of filing an amicusbrief, and that the amicus briefs filed by APCC and NECA ARE ACCEPTED into the record. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary APPENDIX A List of Individual Complaints E-91-86 -- Total Communications Services, Inc. v. Central Telephone Company of Illinois, Inc. E-91-87 -- Total Communications Services, Inc. v. Continental Telephone of Indiana, Inc. E-91-88 through E-91-90 -- Total Communications Services, Inc. v. GTE North of Michigan, Inc., GTE Indiana Operations, Inc., and GTE Service Corporation E-91-91 through E-91-93 -- Total Communications Services, Inc. v. Illinois Bell Telephone Co., Indiana Bell Telephone Company, and Ameritech Operating Companies, Inc. E-92-97 -- C.F. Communications Corp. v. Michigan Bell Telephone Co. E-93-34 -- NYPAY Communications Company v. New York Telephone Company E-93-35 through E-93-38 -- Ascom Communications, Inc. v. Bell Telephone Company of Pennsylvania, New Jersey Bell Telephone Company, C&P Telephone Company of Maryland, and C&P Telephone Company of Virginia E-93-39 -- Ascom Communications, Inc. v. Southern Bell Telephone and Telegraph Company E-93-40 through E-93-42 -- Ascom Communications, Inc. v. GTE Florida, Inc., GTE North, Inc., and GTE South, Inc. E-93-43 -- Ascom Communications, Inc. v. Carolina Telephone Company E-93-44 -- Ascom Communications, Inc. v. United Telephone Company of Pennsylvania E-93-45 -- Ascom Communications, Inc. v. United Telephone Company of Florida E-93-46 through E-93-47 -- Millicom Services Company v. New Jersey Bell Telephone Company and Bell Telephone Company of Pennsylvania E-93-48 -- Millicom Services Company v. New York Telephone Company E-93-49 -- Millicom Services Company v. Southwestern Bell Telephone Company E-93-50 -- B.D.A. Sales, Inc. v. New York Telephone Company E-93-51 -- Payline, Inc. v. New York Telephone Company E-93-52 -- All-Global Tel-Com, Inc. v. New York Telephone Company E-93-53 -- Telecorp Public Communications, Inc. v. New York Telephone Company E-93-56 -- Alcazar Ltd. v. New York Telephone Company E-93-57 -- American Pay Phone, Inc. v. New York Telephone Company E-93-58 -- Kayson Communications, Inc. v. New York Telephone Company E-93-59 -- New York Pay Phone Systems, Inc. v. New York Telephone Company E-93-60 through E-93-61-- Ascom Communications, Inc. v. New York Telephone Company and New England Telephone and Telegraph Company E-93-62 -- Just-Tel, Inc. v. New York Telephone Company E-93-73 -- Best Payphones, Inc. v. New York Telephone Company E-93-74 -- Crescent Communications v. New York Telephone Company E-93-75 -- Dial-A-Profit Pay Telephones, Inc. v. New York Telephone Company E-93-76 -- Jamco Phones v. New York Telephone Company E-93-77 -- Mitel Communications, Inc. v. New York Telephone Company E-93-78 -- North American Industries of New York, Inc. v. New York Telephone Company E-93-79 -- Pay Phone, Ltd. v. New York Telephone Company E-93-80 -- South Shore Payphone v. New York Telephone Company E-93-81 -- Telebeam Telephone Systems, Inc. v. New York Telephone Company E-93-82 -- Top Phone v. New York Telephone Company E-93-83 -- Ultra Tech Payphone Systems, Inc. v. New York Telephone Company E-93-84 -- North American InTeleCom, Inc./North American Industries, Inc. v. Southwestern Bell Telephone Company E-93-85 -- Dave Communications v. New York Telephone Company E-93-93 -- Peconic Communications, Inc. v. New York Telephone Company E-94-67 through E-94-68 -- Southern California Pay Phone Co. v. Pacific Bell and GTE California, Inc.