Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.



December 21, 1982;






 SPCC alleges that the procedures it was compelled to follow to obtain local facilities were deliberately designed to be inefficient and cumbersome so as to impede SPCC's attempts to compete with Long Lines. Specifically, SPCC complains that in the first year of its operations, the operating companies had not always established formal ordering procedures such as a single point of contact, standard order forms and standard installation intervals. SPCC also complains that the procedures established in later years were inadequate, included unnecessary requirements and were not always adhered to by the Bell operating companies. The claimed inadequacies included AT & T's failure to give SPCC access to its Adnet Administrative System, failure to permit SPCC to utilize AT & T's Universal Service Order Code (USOC), failure to permit SPCC participation in the interactive design process, failure to provide SPCC with Bell Standard Practices (BSPs) and other necessary technical information and failure to coordinate due dates at each end of an SPCC circuit. SPCC's allegations of unnecessary practices concerned the need for it to obtain a letter of agency and the operating companies' return, rather than correction, of erroneous SPCC orders. SPCC's claim of a lack of compliance with established procedures consisted of its charge that several Bell operating companies, particularly New York Telephone, did not always comply with System-wide standard installation intervals.

 Although each of SPCC's charges is discussed in detail below, the Court finds no evidence of any deliberate plan to impede SPCC in the ordering of facilities. The ordering procedures used made available by defendants to SPCC were reasonable and there is no evidence that SPCC was injured by any of these procedures.

 Plaintiffs' evidence of early deficiencies in the ordering processes for local loops consisted of several insignificant matters that were expeditiously resolved. In the Court's view, SPCC's criticisms of the ordering and design process in the early days of its operations established nothing more than the fact that not every procedure or mechanism SPCC desired was always in place on the day SPCC served its first customer.

 Typical of the nature of these claims is SPCC's complaint that in 1974, when SPCC was dealing with only a few operating companies, each company developed its own form for placing orders (Sanford, PX6-0007 at 4). These kinds of minor differences among the operating companies strike the Court as inevitable during the start up phase of any complex relationship and, in any event, do not provide a basis for finding a violation of the antitrust laws. Similarly, although SPCC complained that there were no established procedures for ordering local distribution facilities, its witness conceded that by the Fall of 1974 most operating companies provided a single point of contact for such orders (Sanford, PX-6-0007 at 4). *fn260"

 SPCC also complained that the Bell operating companies initially failed to provide SPCC with standard installation intervals. However, the evidence shows that when SPCC commenced operations, each operating company had standard intervals for repetitive orders; on the other hand, for large or complex orders the intervals were established after the order was received (Thompson, S-T-65 at 13). Until 1976, the standard intervals provided plaintiffs and other specialized common carriers varied with each operating company (id.). Long Lines was treated in a similar manner and was required to negotiate an installation interval with each local Bell operating company involved each time it sought more than one circuit (Thompson, S-T-65A at 5). In these circumstances, the Court concludes that there is no evidence of discrimination in the provision of installation intervals.

 The good faith of defendants in attempting to develop reasonable procedures for the ordering of local facilities during the early days of SPCC's operations is apparent from plaintiffs' own exhibit reporting on a meeting held at Pacific Telephone in March 1974 concerning procedures for leasing local facilities to the specialized carriers (PX4-0332). The document discussed the need to provide "uniform treatment" to the specialized carriers and states (id.):


"AT & T Plant Department's advice is to treat orders for LDFs in the same manner as we would for private line service between the same points."

  Thus, SPCC and the other new carriers were to be treated as ordinary customers -- exactly the treatment plaintiffs requested -- a fact plaintiffs' counsel and Chairman of the Board stressed to the Court (Tr. 1390-92, Biaggini, Tr. 3234). Therefore, the Court finds no convincing evidence that defendants' early ordering procedures for local distribution facilities were unreasonable in any manner.

 SPCC also complained about the ordering and design procedures in effect today. The record is clear, however, that these procedures were established as a result of the Docket No. 20099 negotiations (Sanford, Tr. 1093; see Agreed Fact 6-2-011). As discussed above, the settlement agreement in Docket No. 20099 was reached only after extensive negotiations among the parties under the aegis of the FCC (Weinstein, S-T-201 at 6-7), and although at one point SPCC claimed that it entered into this agreement under "duress," the evidence contradicts this claim (e.g., Biaggini, Tr. 3207).

 Even if the Court were to disregard the fact that SPCC voluntarily agreed to these practices, it has failed to establish that any of the challenged practices were in any way improper. With respect to the period following Docket No. 20099, SPCC's witness, Mr. Sanford, identified only three major differences between Long Lines and SPCC in the ordering and design service provided by the Bell operating companies: use of defendants' Adnet system, participation in defendants' USOC ordering system, and participation in defendants' internal design process (Sanford, PX-6-0007 at 9). In addition to the fact that these procedures were voluntarily agreed to, the differences are of no consequence in view of the fact that SPCC has never offered to pay for the services in question (Sanford, Tr. 1080-81).

 Furthermore, the evidence satisfies the Court that none of these services would have been particularly useful to SPCC. Thus, Mr. Sanford's testimony and SPCC's documents cast serious doubt on the validity of SPCC's claims that access to the Adnet system would facilitate the ordering process. He testified that SPCC used courier services among its own locations and decided not to implement its own internal teletype system because it would cause mistakes and not result in appreciable time savings (Sanford, Tr. 1097-1100; S-4459C). Similarly, AT & T recommended against use of facsimile or electronic methods of exchanging information with the specialized carriers because it was costly and likely to lead to errors (Thompson, S-T-65 A at 18). When New York Telephone installed facsimile devices for the exchange of design information with the specialized carriers, it encountered recurring problems with SPCC's facsimile devices that were so severe as to require all communications also to be sent through the mail to insure that no information was lost (Marshall, T., S-T-129 at 17-18; S-3686; S-3746). The Court has also reached the same conclusion with respect to the claim regarding use of AT & T's complicated USOC codes -- that is, the availability of those codes would not have saved any time for SPCC or reduced the error rate in its orders (Thompson, S-T-65A at 11).

 SPCC also asserted that the ordering process was hampered by AT & T's failures to provide SPCC with essential technical information. SPCC charged that AT & T unreasonably failed to make available to it a large quantity of technical and other data which SPCC contended would have been useful to it -- including, notably, the Bell System Practices (BSPs). As pointed out above, the Court finds, however, that defendants provided more than sufficient technical information to SPCC, and there is no requirement of which the Court is aware that they go further and divulge proprietary information which SPCC did not need in order to furnish its authorized services. Indeed, as defendants' witness, Mr. Hogan, pointed out, SPCC had nearly 200 of the most relevant BSPs in its possession (Hogan, S-T-205 at 20-21), *fn261" and the OCCANs, OCCEIs and OCCTNs provided to SPCC by AT & T would in any event be fully adequate, even if SPCC did not have access to these BSPs, for SPCC to design and provide its services (Thompson, S-T-65A at 12-15; Thovson, S-T-66A at 17-18). Given this state of the record, the Court concludes that anything in the BSPs which was not contained in the OCCANs, OCCEIs and OCCTNs would either have been superfluous or would have divulged highly sensitive descriptions of Bell System equipment and other proprietary data (Thompson, S-T-65A at 14-15).

 Two of plaintiffs' witnesses also complained that AT & T procedures did not provide for coordination of SPCC's local facilities at each end of a circuit involving more than one operating company (Vasilakos, PX6-0005 at 25-26; Gundy, PX6-0009 at 4). However, another SPCC witness, Mr. Sanford, testified that he did not expect AT & T or the operating companies to perform this coordination function (Sanford, Tr. 1101). Common sense suggests that it is properly the responsibility of the specialized carrier, with the operating companies' cooperation, to coordinate turn-up of its own circuits by negotiating compatible due dates with both operating companies involved (Thompson, S-T-65A at 12). The Court finds that this allocation of responsibility is fully consistent with the fact that the end-to-end service is an SPCC, not Bell, service and therefore overall management of the installation process logically falls to the carrier having overall responsibility for the service.

 SPCC also took issue with the installation intervals it received from defendants in 1976. Although AT & T agreed in the Docket No. 20099 Settlement Agreement to treat the specialized carriers' orders the same as Long Lines, those carriers soon complained that such an arrangement was onerous (Thompson, S-T-65A at 6). Consequently, in 1976, at AT & T's insistence, the operating companies established standard intervals that were uniform throughout the country (Thompson, S-T-65 at 13). From the Court's review of the evidence, it appears that the procedures which were developed were actually more favorable to the specialized carriers than the treatment received by Long Lines. Thus, while the specialized carriers today have the benefit of standard intervals for up to eight circuits, Long Lines is quoted standard intervals only on orders of up to five circuits (Thompson, S-T-65A at 6). Although plaintiffs have pointed to the temporary inability of New York Telephone, in particular, to meet the system-wide standard intervals, the Court is satisfied that this situation was caused by problems beyond its control and did not reflect an intent to impede SPCC's operations (id. at 7-8).

 In addition to these claimed deficiencies in the ordering process, SPCC also asserted that the process included unnecessary practices. First, SPCC complained about defendants' requirement that SPCC obtain an agency letter confirming its authority to represent and receive information concerning a customer (Sanford, PX6-0007 at 5). However, the evidence shows that SPCC (along with the other specialized carriers) required agency letters to be furnished it before it would cooperate in the conversion of an SPCC customer's service to another specialized carrier (Thompson, S-T-65A at 10-11; S-4227; S-6096). Mr. Gibbs, former SPCC Operations Manager for the Eastern Region, testified that SPCC required agency letters for the same reason he understood Bell to require them -- for protection of the customer (S-6096 at 132-33). The Court can find no fault with such a widely used and sensible practice.

 Second, SPCC claimed that the Bell operating companies returned its orders because of minor or correctable errors (Vasilakos, PX6-0011 at 28). The Court cannot conceive of any antitrust obligation on the part of defendants to correct SPCC's errors and thus, even if this charge were true, it is meaningless. The Court finds, however, that SPCC has failed to substantiate its claim. Defendants' policy was to return orders only for serious errors and that wherever possible, corrections should be worked out over the telephone (Thompson, S-T-65A at 7). This policy was adhered to by the operating companies (id.; see also, Charette, S-T-118 at 5; Cherne, S-T-72 at 13; Euler, S-T-102 at 5-6; King, D., S-T-75 at 5-6).

 SPCC asserts that the effect of these ordering procedures was to cause it to experience a 50 to 58 day ordering interval versus 12 to 18 days for Long Lines (Sanford, Tr. 1066-68). The Court finds that this proposition is unsupported by the evidence. First, as discussed in more detail below, it is apparent that SPCC suffered from severe internal delays in processing orders. For example, a memorandum written by Mr. Vasilakos on June 3, 1974 stated that "LDFs have not been ordered anywhere from two weeks to as much as two months after the order received by operations" (S-3037) and a later internal SPCC memorandum shows that the timeliness of SPCC's facilities orders to the operating companies was still very much a matter of concern in June 1976 (S-4362). Yet, this period of time -- solely attributable to SPCC's own inefficiencies -- is included in Mr. Sanford's 50-58 day figure. Second, the measurements for SPCC and Long Lines intervals are not comparable because the Long Lines interval does not include the time required for inter-company coordination of due dates, whereas the SPCC interval does (Sanford, PX6-0007 at Attachments 1, 2). Under these circumstances, SPCC has failed to prove that it was injured by defendants' ordering process.

 The Court finds that the practices and procedures related to the ordering of local facilities do not constitute essential facilities, that none of defendants practices constituted independent antitrust violation and that they do not provide any inference of anticompetitive intent. Even if the Court does not rely on SPCC's prior agreement to these matters, the Court finds that the ordering practices and procedures were reasonable and SPCC has failed to prove that they were instituted with the intent of disadvantaging SPCC or that they in fact disadvantaged SPCC in any manner.


 Plaintiffs devoted a considerable portion of their interconnection case to the claim that SPCC received intentionally inferior service from the Bell operating companies in the installation and repair of local distribution facilities. SPCC claimed that the service it received was so much worse than that given Long Lines as to constitute evidence of anticompetitive discrimination by defendants against SPCC. As proof of this alleged discrimination, SPCC principally relied on selected statistical data purporting to measure (1) the percentage of SPCC local distribution facility installation dates missed by Bell operating companies, and (2) the average time taken to repair SPCC circuits when troubles were encountered. SPCC then compared these data with installation and repair statistics for Long Lines and with Bell's self-imposed service goals.

 Plaintiffs also made a number of minor charges against defendants related to specific practices which SPCC claimed were unreasonable. In the area of installation service, these practices included the operating companies' alleged refusal to engage in preservice and joint end-to-end testing, their refusal to provide end links terminating in customer-owned and maintained ("COAM") equipment, inferior transmission and testing parameters for facilities provided to SPCC and to other specialized carriers as compared to those applicable to Long Lines, and alleged abuse by the operating companies of the special construction provisions of the local distribution facility tariffs. SPCC also complained of certain operating company's insistence upon wiring local distribution facilities onto "66" block connectors and the refusal by Illinois Bell to install inside wiring at SPCC's customer location between SPCC's station package and the Bell equipment terminations. Finally SPCC also introduced evidence of several specific incidents where installation delays allegedly affected individual customer accounts.

 In the area of repair, SPCC claimed that it was hampered by AT & T's refusal to provide it with CCSA routing guides and that the Bell operating companies imposed inferior procedures for reporting troubles on local facilities. SPCC also complained that it was unfairly charged for overtime work performed by operating company personnel for repair service on local distribution facilities and that it received delayed repair service in several discrete instances.

 As discussed above, SPCC principally relied on statistical data of the Bell operating companies' repair and installation performance. Statistics can, of course, be used as evidence of anticompetitive activity, but they are seldom solely determinative. See, e.g., United States v. General Dynamics Corp., 415 U.S. 486, 498, 94 S. Ct. 1186, 39 L. Ed. 2d 530 (1974) (statistics on market share alone were not enough, further examination into the particular market was required). The use of statistical evidence to prove discrimination in some types of cases under the Civil Rights Act of 1964 can be used to give rise to an inference of discrimination in regard to the establishment of a prima facie case. However, this merely requires the defendant to assume the burden of persuasion that the conduct complained of was for a legitimate non-discriminatory reason. When this is done, as was the case here by the defendants, unless the plaintiffs prevail on rebuttal to show, for example that defendants' conduct was pretextual, then the plaintiffs lose. This is so elemental now that it needs no reference or citation to numerous Supreme Court cases. Moreover, the statistical evidence must not be flawed by problems in data gathering, inadequate data assembly or selective comparisons and it must be representative and accurate.

 For a variety of reasons the Court concludes that SPCC's statistical evidence, which constitutes its principal proof of inferior installation and repair service, is seriously deficient and does not support SPCC's allegation of discriminatory treatment. As shown above, there are significant differences between Long Lines and SPCC facilities which greatly increase the effort needed to install and repair SPCC facilities as compared to those of Long Lines. In addition, as detailed below, a careful examination of the statistics proffered by SPCC shows them to be of little value. Similarly, the Court concludes that SPCC has not proven its litany of miscellaneous installation and repair charges against the operating companies, or that these charges, even if proven, demonstrate either a denial of essential facilities or an anticompetitive intent on the part of defendants. The Court will now examine SPCC's evidence with respect to its statistical and other evidence.


 SPCC's statistical evidence of discriminatory installation treatment consisted of a single parameter, the percentage of times that Bell operating companies failed to provide local distribution facility installations to SPCC on the date promised. *fn262" SPCC statistics purported to show that the operating companies missed a higher percentage of due dates for SPCC than they did for Long Lines (Vasilakos, PX6-0006; Petty PX6-0008; Bastic PX6-0010). In support of this claim, SPCC introduced three sets of statistics. The first set of results was for Pacific Telephone. From these results, Mr. Bastic concluded that Pacific Telephone missed 55 percent of SPCC's installation due dates (Bastic, PX6-0010 at 11; see also PX4-0320; PX4-0510; PX4-0313; PX4-0470) between December 1, 1977 and March 10, 1978. *fn263" The second set, pertaining to New York Telephone operations, covered a one week period in 1977 and a two month period in 1978. This data showed New York Telephone missing between 17 percent and 22 percent of SPCC's installation due dates (PX4-0428). The third set of statistics covered an eleven week period in 1978 for all operating companies in which SPCC was doing business and showed the operating companies missing only 16 percent of the due dates over the period (PX4-0191).

 Even if the percentages of missed installation dates calculated by SPCC were to be accepted, the Court finds these data to be of limited usefulness. SPCC claimed that it was discriminated against from the day it commenced operations -- December 26, 1973 -- until this action was filed in March 1978. Yet SPCC offered no evidence that these small statistical samples were in any way representative of this four year period. The longest statistical interval covered only thirteen weeks for Pacific Telephone in 1977-78, barely 5 percent of the period covered in the complaint. There was no showing that these isolated and sporadic statistics were representative of the Bell System's (rather than a few companies') installation service to SPCC. Indeed, SPCC's own statistics confirm that several operating companies completed 100 percent of SPCC installations on time (PX4-0191). Nor did SPCC offer any evidence that the statistics were even representative of each companies' performance. For example, the results cited for Pacific Telephone pertained only to the Northern California area in one instance (PX4-0510) and Los Angeles in another instance (PX4-0321). The New York Telephone results were only for two New York City locations (PX4-0428). Since SPCC was doing business in other areas serviced by these companies, the studies are not necessarily representative of each operating company's actual performance.

 The Court's examination of these statistics also shows that they are inconsistent with each other. For example, Pacific Telephone is shown in the third set of statistics as missing approximately 16 percent of its SPCC due dates over the same period in which the first set of statistics, containing just data for the Northern California region, showed that 55 percent of the due dates were missed. The Court cannot place too much confidence in statistics which differ from each other by more than 300 percent. Furthermore, because of the small samples involved there is tremendous variation within the statistics themselves. For example, New England Telephone's performance changed from 47 percent on-time to 100 percent on-time in the space of one week (PX4-0191).

 In addition to these statistics being non-representative and inconsistent, their underlying data are suspect. Although Mr. Petty testified that SPCC's reports, which tracked late installations by the Bell operating companies and which contain the raw data for SPCC's statistics, were prepared in the normal course of business, the record shows otherwise. These reports were routinely sent to SPCC's legal department pursuant to instructions from that department and were prepared to support SPCC's legal activities (Petty, Tr. 1206, 1209-10). Accordingly, even though the Court received these reports in evidence and carefully considered them, the Court believes there is strong evidence to support defendants' position that the SPCC reports are not entitled to treatment as "business records." *fn264"

  On the assumption that these reports constitute legitimate business records, the Court nonetheless finds them to be sufficiently deficient in several critical respects to render them of little probative value. The data for these reports were not gathered in a standardized manner and were not reviewed by Mr. Petty, who compiled the reports (Petty, Tr. 1222-24). Although the reports purport to measure instances where defendants were "late" in their performance, Mr. Petty gave no instructions regarding the meaning of "late," but rather, left this to the interpretation of SPCC's individual terminal managers (Petty, Tr. 1227). Mr. Petty, who sponsored the reports at trial, had "no idea" of how many of the "late" installations were cured the very next day (Petty, Tr. 1227-28). Thus, these reports do not constitute meaningful or even accurate evidence of the number of delayed installations.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.