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UNITED STATES v. WESTERN ELEC. CO.

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA


October 14, 1988

UNITED STATES OF AMERICA, Plaintiff,
v.
WESTERN ELECTRIC COMPANY, INC., et al., Defendants

The opinion of the court was delivered by: GREENE

HAROLD H. GREENE, UNITED STATES DISTRICT JUDGE

 The issues before the Court concern Regional Company practices with respect to so-called "calling cards," that is, telephone credit cards, and with respect to telephones owned by the Regional Companies that are located in public places (e.g., airports, service stations, street corners). Unlike many of the recent controversies in this case, the current issues do not involve the line of business restrictions on the Regional Companies; what is claimed here by the Department of Justice, with support from a number of the interexchange carriers, is that the Regional Companies have been favoring AT & T in violation of the nondiscrimination and equal access provisions of the decree.

 The Department of Justice has filed a motion *fn1" pursuant to the decree, *fn2" seeking an order to enjoin (1) the continuing assignment to AT & T of all long distance calls *fn3" made on Regional Company credit cards; (2) preferential treatment accorded by these companies to AT & T's calling cards; and (3) the routing exclusively to AT & T of long distance calls from public telephones owned by the Regional Companies. The Court grants the motion in substantial part, but it denies some aspects of the requested relief.

 I

 Regional Company Calling Cards

 This is the first time the Court has considered in detail telephone calling cards in light of the decree. Calling cards have assumed considerable importance in consumer telecommunications, as roughly fifty percent of operator-assisted *fn4" telephone traffic is now conducted by means of such cards. It is appropriate to outline briefly the evolution of the processing of these charge cards for making telephone calls.

 A. Background

 Prior to divestiture, the Bell Operating Companies performed billing functions for all Bell System calls. In order to permit customers to credit calls to their accounts when away from their home telephones, these companies issued so-called "calling cards" which enabled the holder to charge both local and long distance calls to the account number appearing on the card. The customer could accomplish this task by punching the calling card number on a touchtone telephone, by reading the number to an operator, or by inserting the card into the telephone.

 Although with the breakup of the Bell System, AT & T and the Regional Companies issued separate calling cards, they continued to share information concerning the identity of the customers who held cards and the validity of these cards. This sharing was specifically authorized by the Plan of Reorganization. *fn5" Under the Plan, the Regional Companies received the Data Base Administration Systems (hereinafter referred to as the DBA systems) which are used, inter alia, to assign and maintain calling card numbers, while the so-called Billing Validation Application database, necessary, inter alia, to validate calling cards, *fn6" was assigned to AT & T. *fn7" By virtue of the Plan, the Regional Companies are required to provide data base maintenance service under contract to AT & T. *fn8" The decree itself (in section I(A)(2)) gives the Regional Companies the right to continue to use AT & T's billing validation database for the limited purpose of validating local calling card calls. *fn9"

 The existence and use of common databases not surprisingly led AT & T and the Regional Companies to adopt the same calling card number for any particular customer. Moreover, the contractual relations between the Regional Companies and AT & T resulted in the refusal of the former to share the information contained in these databases with any interexchange carriers other than AT & T; AT & T is therefore the only interexchange carrier to receive from the Regional Companies the information necessary to validate its calling cards.

 The effect of these practices is that all long distance calls made with Regional Company calling cards are assigned to AT & T, and, as might be expected, the other interexchange carriers complain vociferously about this arrangement. After thorough examination, the Court has concluded, as did the Department of Justice, that these practices discriminate in favor of AT & T in violation of the decree.

 B. The Decree Permits Regional Companies To Issue Calling Cards

 MCI, US Sprint, and ALC Communication Corporation, all of them interexchange carriers, argue that the decree entirely forbids the Regional Companies to issue calling cards which may be used by the holder to charge long distance calls, *fn10" the argument being that the very issuance of such cards constitutes an interexchange telecommunications service prohibited to the Regional Companies by the decree. *fn11" However, the Court concludes that the issuance by the Regional Companies of calling cards is not part of the interexchange business, and that the availability for use of Regional Company calling cards for long distance calling is not otherwise inconsistent with the decree.

 The issuance of calling cards does not constitute an interexchange telecommunication service; rather, it is an "exchange access" service, a term which is defined in the decree as including the "provision of information necessary to bill customers." *fn12" This billing function permitted by the decree is not restricted to local calls; the Regional Companies are actually required by section II of the decree *fn13" to furnish exchange access services "for the interexchange services of any interexchange carrier." *fn14"

 This understanding of the decree is further supported by the assignment of the DBA systems to the Regional Companies by the Plan of Reorganization. In fact, the Plan explicitly notes that these systems may be used to "update and maintain Calling Card and other billing information files . . . ." *fn15" More, the DBA systems lawfully update and maintain calling card information for both local and long distance calls. *fn16" Since the DBA systems properly handle long distance calls under the authority of the Regional Companies, it is appropriate to conclude that these companies were intended to be able to bill long distance calls made from their calling cards.

 The issuance by the Regional Companies of calling cards for long distance calls not only does not offend the terms of the decree; it is also consistent with its purposes. The purpose underlying the prohibition against the provision of interexchange services by the Regional Companies is the prevention of competition by these companies with the interexchange carriers for long distance business. United States v. Western Electric Co., 627 F. Supp. 1090, 1100 (D.D.C. 1986). There is no threat of such competition in this instance.

 Regional Company calling cards good for long distance calling create no incentives to favor their own long distance operations: the Regional Companies are prohibited from engaging in the long distance business. Moreover, the calling cards will not create incentives for the Regional Companies to favor one interexchange carrier over another; once the appropriate changes are made (see Part III, infra) the calling card holder (Part VII-A) or other third parties (Part VII-D) -- not the Regional Company -- will select the interexchange carrier as well as any additional interexchange services. *fn17" Indeed, Regional Company calling cards for long distance calls may be said actually to promote long distance competition, for they will permit a customer to select an up and coming interexchange carrier which is as yet unable to supply its customers with a calling card of its own. *fn18"

 It is also worthy of mention that calling cards are today a ubiquitous billing mechanism. They provide a convenient payment method for calls made away from the customer's usual telephone, an increasingly common occurrence. But they are a convenience to the customer only as long as they do not become too complicated for regular use. A prohibition on the use of the Regional Company calling cards for long distance calling would frustrate consumers who would be required to change cards every time they changed over from a local to a long distance call. In view of these customer complications, that kind of a prohibition is unwarranted in the absence of incentives for discrimination, and such incentives, as noted above, are absent.

 Thus, on any basis -- the language of the decree, its purposes, and the maintenance of an important aspect of universal service -- the conclusion is inescapable that Regional Companies may issue calling cards usable not only for local but also for long distance calling -- provided, of course, that they do not discriminate among the various interexchange carriers with respect to these cards. The Court now turns to that subject.

 II

 Claimed Calling Card Decree Violations

 Under the specific terms of the decree, the Regional Companies must offer exchange access as well as billing services on an equal and nondiscriminatory basis. *fn19" This mandate applies to the provision of billing services through Regional Company calling cards as to any other billing service. *fn20" For the reasons stated below, the Court concludes that the Regional Companies have used their calling cards in ways that treat interexchange carriers unequally and discriminate in favor of AT & T.

 In its enforcement motion, the Department of Justice asserts that the Regional Companies' calling cards are used to AT & T's advantage in three ways. According to the motion (1) most, if not all, the Regional Companies provide to AT & T commercially important calling card validation data *fn21" that they do not make available to other interexchange carriers; (2) some of these companies market or advertise their calling card in a manner that promotes AT & T's interexchange services over those of other interexchange carriers; and (3) several of the Regional Companies include an international number on their calling card that credits calls only to AT & T in circumstances where other interexchange carriers cannot obtain comparable international numbers. The Regional Companies have not, by and large, seriously contradicted this factual information. What remains to be decided is the consistency of these practices with the decree.

  III

 Validation

 With limited exceptions, the Regional Companies currently provide billing validation data *fn22" to AT & T, but not to other interexchange carriers. *fn23" At the time of divestiture, no other interexchange carrier offered operator services, and as a consequence only AT & T requested this validation information. That is no longer the case. US Sprint's predecessor GTE Sprint began to phase in operator services in early 1986, *fn24" and MCI expects to begin to do so shortly. Even some resellers and alternative service providers furnish the operator service necessary for the acceptance of calling card calls. None of these companies will or can *fn25" accept calls charged to Regional Company calling cards as long as the Regional Companies refuse to provide the information necessary to determine whether the caller is using a legitimate calling card. *fn26"

 Obviously, AT & T derives a considerable competitive advantage from its sole access to the validation databases it shares with the Regional Companies. That advantage extends beyond the capture of direct calling card business. The inability of other interexchange carriers to accept calls made by way of Regional Company calling cards causes customer annoyance and discourages further attempts in other contexts to use any carrier other than AT & T. Beyond that, the lack of calling card validation capacity also hampers the attempts of competing interexchange carriers to persuade large businesses, hotels, and other major customers to presubscribe to their service.

 All of the Regional Companies profess in their filings a willingness in theory to end their discriminatory validation practices, *fn27" but apparently only US West and Pacific Telesis have offered validation data or validation service to companies other than AT & T since the time the Department filed its motion. *fn28"

 Not only is the failure to provide validation information to AT & T's competitors discriminatory; unlike some other services that are part of the calling card service (see infra), validation is not technically difficult. *fn29" In fact, no Regional Company contends that the provision of validation data to the interexchange carriers is not feasible, and none has contradicted the Department's assertion that no serious technical difficulty exists. Nevertheless, it is apparent that the companies will not actually make the data available *fn30" unless there is a court order. *fn31"

 Accordingly, the Court is ordering *fn32" the Regional Companies to cease discriminating in favor of AT & T in the provision of validation data on or before January 1, 1989. *fn33" Each Regional Company must certify to the Court on or before that date that it is currently making available and will continue to make available to all interexchange carriers requesting it the same validation data *fn34" for its calling cards that the company provides to AT & T, at the same prices, and on the same terms and conditions as are extended to AT & T. *fn35" Certification must include a description of the validation data, including updates that are available, and state the prices, terms, and conditions on which the Regional Companies validation data are available to AT & T and to the other interexchange carriers. *fn36"

  IV

 Marketing and Advertising

 Beginning in 1987 with the issuance of the Regional Companies' magnetic-encoded plastic calling cards, some of the Regional Companies began to advertise the cards for both long distance and local calls. For example, Bell Atlantic campaigned that its card "lets you charge local and long distance calls directly to your phone bill." These advertisements did not reveal that the Regional Companies automatically routed interexchange service to AT & T, nor did they inform the public, contrary to the implication in their announcements, that the Regional Companies themselves do not provide long distance service (which they are of course prohibited from doing).

 On March 27, 1987 MCI requested a Department of Justice enforcement investigation which led to a June 5, 1987 letter from the Department to the Regional Companies advising them of the impropriety of such advertising. *fn37" The Department's advice was, of course, entirely correct. Any Regional Company advertising at this juncture will have the direct foreseeable effect of promoting AT & T services over those of the other interexchange carriers. *fn38" This violates the nondiscrimination provisions of the decree.

 Shortly after they received the Department's letter, most Regional Companies ceased such advertising, *fn39" and all of them have now recognized that these advertisements promoting the use of their calling cards for long distance use are improper. However, what they contend is that, in view of the changed situation, a court order is unnecessary. *fn40" That is the principal question still before the Court on advertising at this time.

 Although under the law injunctive orders will issue where the possibility remains that the prohibited conduct will recur, *fn41" the Court is reluctant to issue such orders here where that may be redundant or unnecessary. See also, note 38, supra. Accordingly, and since all the Regional Companies have discontinued their objectionable advertising, the Court will at this time refrain from dealing with the marketing and advertising subject by such an order. Of course if the Regional Companies, or any one of them, should in any way evade the prohibition on false *fn42" or misleading *fn43" advertising, prompt judicial action will follow.

 Notwithstanding the Court's decision not to issue an order at this time on the general subject of advertising, it is necessary in view of past practices identifying the Regional Company calling cards with AT & T, that misleading impressions be cleared up and that customers be informed that they have a free choice. In spite of the fact that Regional Company calling card instructions have specifically stated that long distance calls should be dialed on an 0 basis, neither the cards nor the related information advised customers that when they dialed on such a basis, i.e., without an access code, their long distance calls were and still are carried by AT & T rather than by their own presubscribed interexchange carrier. *fn44" To remedy the effects of the prior discriminatory practices, the Regional Companies must, by January 1, 1989, notify their calling card customers that (1) any interexchange services charged to the card will be provided by an interexchange carrier, not by the Regional Company; (2) the interexchange carrier will not always be the carrier the customer selected in the presubscription process; *fn45" and (3) the customer should contact interexchange carriers for information about alternative methods of charging interexchange calls.

 V

 International Numbers

 International numbers which appear on calling cards permit the holder to charge calls made from many foreign countries to the United States. *fn46" Five Regional Companies *fn47" use the same international calling numbers on their cards as AT & T uses on its cards. *fn48" Thus, all inbound international calls made using these Regional Company calling cards are automatically credited to AT & T. This practice, too, violates the decree's nondiscrimination provisions.

 To make an inbound international call with one of these calling cards, the card holder provides to a foreign telephone agency, usually the governmental PTT (Post, Telephone, and Telegraph department), the account number appearing on the card. If the number fits the International Telegraph and Telephone Consultative Committee (CCITT) standard and the AT & T numbers, *fn49" the PTT allows the call to go through. Although Bellcore has assigned to interexchange carriers other than AT & T some blocks of numbers, foreign PTTs recognize only AT & T, and they automatically credit AT & T for all international calls made using a calling card that has an account number based on a home telephone number or a regional accounting office code -- AT & T's calling card format. They do not permit any other carrier to transmit such a call. Thus, the user of a Regional Company calling card with an international number has no choice as to which United States carrier transmits the call; it is always AT & T.

 While the Regional Companies are not responsible for PTT policies which favor AT & T, they cannot, consistently with the decree, be allowed to perpetuate those policies as the use of what is in effect an AT & T international calling card number has some tendency to do. *fn50"

 Nevertheless, for a variety of reasons, the Court does not consider it necessary, as several interexchange carriers as well as the Department of Justice suggest, to order the Regional Companies to cease the issuance of calling cards that bear an international number *fn51" and to withdraw or replace all such cards.

 The international numbers on the calling cards provide an important benefit to American travellers: a simple and familiar way to pay for calls from abroad, particularly since the alternatives frequently involve a high hotel service charge, the necessity for paying for the call in foreign currency, or placing it at a foreign post office. Notwithstanding these considerations, the Court would order a halt to the current practice, without more, either (1) if the Regional Companies were responsible for the discrimination against the non-AT & T carriers, or (2) if such action by the Court would rectify the problem. Neither of these assumptions is correct, however.

 If the foreign PTTs are unwilling to recognize any American interexchange carrier other than AT & T, that is of course deplorable from the point of view of American antitrust and pro-competition policies. However, it is not a matter that is within the power of the Regional Companies, or indeed of this Court, to change. What the Court could do, as indicated above, would be to stop all use by the Regional Companies of international numbers on their calling cards. That would not have the effect of altering foreign PTT policies; those foreign telecommunications agencies that recognize only AT & T could confidently be expected to continue to do so.

 Indeed, such a court order would likely be counterproductive. To the extent that foreign telecommunications providers and their officials become more acquainted with interexchange carriers other than AT & T (see infra), they might become more sympathetic to the need to permit calls to be made through the medium of such carriers. Except for that possibility, the only real effect of such an order by the Court would be to make it more difficult for American travellers abroad to charge their calls.

 Here, as in other matters, it is not necessary to cut off service completely or to do nothing. At least one Regional Company (BellSouth) has suggested that it is prepared to place on its cards the international number of any interexchange carrier to which the customer may have presubscribed. In the Court's view, such a solution, if required across the board, will adequately remedy the discrimination for which the Regional Companies are actually responsible.

 Accordingly, the Court is ordering that the Regional Companies shall by January 1, 1989, *fn52" recall all their calling cards that carry the same international number as is used by AT & T. However, these companies may continue these cards in circulation, as limited to AT & T customers, if by that same date they issue calling cards which list, instead of the number that identifies AT & T, the international number of any interexchange carrier other than AT & T to which the customer may have presubscribed. *fn53"

 VI

 Regional Companies' Acceptance Only of AT & T Calling Cards

 The Regional Companies will currently accept AT & T calling cards for local calls; they will not do this, however, for any other interexchange carrier. For example, a caller attempting to use a US Sprint FONCARD to charge a local call will receive a Regional Company operator response that the calling card is not valid. The effect of this practice is to permit AT & T, and only AT & T, to offer a universal calling card, that is, a card that may be used for both local and long distance calls -- a significant competitive advantage.

 The reason given by the Regional Companies for accepting AT & T's cards for local calls is that they are able to use the DBA systems to validate calls charged to AT & T, but that they lack the necessary information to validate the calling cards of other interexchange carriers. However, the Regional Companies have long known that they were required to file, and they presumably did file, written commitments that they would provide "equal access to the interexchange carriers with respect to all LATAs within [their] control, on a non-discriminatory basis, for intra-LATA as well as for inter-LATA traffic." *fn54" Obviously, with respect to the use that may be made of interexchange carriers' calling cards, exchange access is not being provided on an non-discriminatory basis.

 The current discrimination would be removed if the Regional Companies stopped validating AT & T's calling cards until they had the ability to validate the calling cards of all interexchange carriers who wanted their calling card to have access to the local market. This remedy, however, runs the risk that the Regional Companies will never achieve that ability having no incentive to do so, and that they will instead entrench their own cards as the only universal calling cards. The only productive remedy therefore is to achieve validation of the cards of all interexchange carriers, not merely AT & T's.

 The Department of Justice states that, notwithstanding the current violation, it cannot ask the Court for remedial action because it does not know how, technologically, the Regional Companies can validate the calling cards of interexchange carriers other than AT & T. *fn55" Likewise, neither the Regional Companies nor the interexchange carriers have informed the Court how the existing technological problems may be solved.

 It appears that the principal difficulty is the receipt by the Regional Companies of the necessary data from the interexchange carriers and the need to program Regional Company equipment to permit it to recognize the issuing carriers' cards for validation purposes. This clearly should not be an insuperable problem if the parties will work together toward that end. *fn56" The several Regional Companies have suggested in various ways that within the next few months they will be able to submit to the Court their proposed remedies. *fn57"

 On this basis, the Court is ordering the Regional Companies to submit to the Court by January 1, 1989 proposed remedies that would afford to the calling cards of the interexchange carriers the same acceptance as is now given to AT & T cards. *fn58"

 VII

 Regional Company-Owned Public Telephones

 The Regional Companies own large numbers of public telephones that are located on premises owned or controlled by others, including pay telephones in such places accessible to the public as airports, hotel lobbies, service stations, and bars. These public telephones generate enormous revenue: there are said to be 1.7 million Regional Company public telephones, yielding $ 2.5 billion in annual revenue. *fn59"

 With respect to the matter of payment for the calls, two types of long distance calls are made from such public telephones: (1) calls which are paid for by coins deposited in the telephone mechanism, also known as 1 or coin sent-paid *fn60" calls, and (2) all other calls, also known as 0 or operator-assisted *fn61" calls. It is appropriate to consider first the 0 calls since they constitute by far the majority of the public telephone traffic.

 A. Operator Calls

 The Regional Companies route all 0 calls *fn62" from their public telephones to AT & T, yielding that company over one billion dollars annually, *fn63" even though other interexchange carriers now have the operator systems capacity to handle these calls. There is no serious dispute that this practice is discriminatory and violative of sections II(A) and II(B) of the decree, and the Court so concludes. The question is what system is to take its place. *fn64"

  The Regional Companies, the Department of Justice, and others all agree that a system which permits the billed party to select the interexchange carrier of his choice simply by dialing 0 most perfectly comports with the language and purposes of the decree. *fn65"

 That is clearly correct. Section (A)(2)(ii) of Appendix B of the decree unambiguously requires the Regional Companies to

 

offer . . . access that permits each subscriber automatically to route, without the use of access codes, all the subscriber's interexchange communications to the interexchange carrier of the customer's designation (emphasis added).

 Under such a system, all interexchange carriers offering service from a given telephone could be reached by the carriers' customers by dialing 0; none would require the dialing of an access code. Moreover, access to all interexchange carriers would be equal, and it would be in the form most convenient to all callers because (1) a caller would not have to remember a long, complex access code, and (2) he would be charged for his calls by the same company to which he had presubscribed at his home.

 Moreover, the choice of an interexchange carrier would lie, and appropriately so, with the one who paid for the call. On a calling card call, the call would be transmitted by the carrier preferred by the end user to whom the card was issued; on a collect call, the subscriber of the called number would determine the preferred carrier; and on calls billed to a third number, the subscriber at that number would designate the preferred carrier. In short, the interexchange carrier for each call would be the preferred carrier of the billed party, providing only that it served the originating and terminating locations of the call. Such a system would eliminate any threat of discrimination by the Regional Companies.

 That kind of a system does exist in concept. The Line Identification Data Base (LIDB), which the Regional Companies are in the process of developing, will permit the routing of 0 calls to the interexchange carrier selected by the customer, and it will also permit the necessary validation for billing purposes. Each Regional Company's LIDB will contain all valid telephone numbers and calling card numbers in its region, and each number will be associated with the appropriate indicators relevant to billing validation. These indicators will include means for identifying those customers who have specified in advance that they will or will not accept third-party billing or collect calls and to identify public coin telephones. The LIDB will also indicate the preferred carrier of the party to be billed.

 So far so good. There is, however, one problem: the LIDB system is not technically perfected at this time. Depending upon the source of the information, a functioning LIDB system would appear to be between two and three years away. *fn66"

 Thus, the question is whether alternative means exist to provide equal access from public telephones between now and then, for the Court cannot and will not permit the Regional Companies to delay implementation of this important aspect of the decree for several years more. Numerous options have been proposed in the responses to the Court's August 5, 1988 request for briefs. The principal proposals made in these briefs are as follows: (1) a requirement of the use of a five-digit access code to reach an interexchange carrier -- the Court will refer to this method as blocking since long distance calls made by a customer who dialed only 0 would be blocked; (2) allocation of dial 0 long distance public telephone traffic among the various interexchange carriers; (3) replacement of most of the existing Regional Company public telephones with new instruments equipped with carrier selection buttons; and (4) presubscription by the owner of the premises on which the Regional Company telephones are located.

 A. Blocking

 MCI and ALC propose that equal access be provided by eliminating 0 interexchange dialing from Regional Company-owned public telephones. All such calls would be blocked, and use of any Regional Company public telephone for a long distance call would require the caller to use a 10XXX0 access code *fn67" to reach an interexchange carrier. This proposal does not comport with the language or the spirit of the decree.

 Access to interexchange carriers would surely be equal under this plan since all long distance callers from Regional Company public telephones would be burdened with a complex access code. To put it another way, long distance dialing would be equally inconvenient for all. However, the decree requires not only equality. By its language, it requires that the Regional Companies offer access "that permits each subscriber automatically to route, without the use of access codes, all the subscriber's interexchange communications . . . (emphasis added)." *fn68" Blocking therefore would be inconsistent with the very terms of the decree.

 Beyond that, with blocking, all callers would be required to acquaint themselves with access codes in order to effect long distance calling from a Regional Company public telephone. Every single long distance collect call, third-party billed call, and calling card call would require additional dialing, be it five or more digits, instead of a single digit -- 0. This would be a gross inconvenience to the public; unending public confusion and dissatisfaction would be inevitable if the great bulk of the long distance calls from public telephones could not be completed because the caller could not remember his access code -- as many could not. It is precisely because five-digit access codes are inconvenient and difficult to remember that the equal access provisions of the decree mandate the universal use of the single digit.

 The confusion would be compounded by the fact that pay telephone companies other than the Regional Companies would be able to offer 0 dialing. Consequently, a caller would first have to determine who owns the telephone before he could know whether 0 dialing was possible. Similarly, local, or rather intra-LATA, 0 calls, from Regional Company telephones would continue to be completed since they would be technically feasible and there could not be a prohibition on such use. Not even studious callers would be likely to have researched whether a particular call would have to cross LATA boundaries.

 Customer inconvenience led the Court to reject the blocking of long distance calls from telephones where the customer had not presubscribed to an interexchange carrier for his own home or place of business. United States v. Western Electric Co., 578 F. Supp. 668, 673-75 (D.D.C. 1983). As the Court then said, "if a choice must be made between accommodating the interests of the public and those of various competitors in the interexchange market, the interests of the public must take precedence." Id. at 674.

 The public has long been accustomed to the advantages of 0 dialing without the use of access codes, and the decree expressly requires that this beneficial public convenience continue. Consequently, the Court will not require the Regional Companies to block the 0 calls.

 B. Allocation

 Some of the parties have suggested that all Regional Company public telephone traffic be allocated among the interexchange carriers, providing each carrier with a share of Regional Company public telephone 0 access. The plans vary as to how the allocation is to be determined, which poses the initial difficulty of determining what is a fair formula. *fn69" But allocation reduces to more fundamental problems.

 As the Court said when allocation was proposed in the context of the routing of undesignated traffic from homes and business, enterprises, a court-imposed allocation scheme would be "as foreign to its Tunney Act responsibilities as it would be fraught with . . . practical obstacles." United States v. Western Electric Co., supra, 578 F. Supp. at 673. Moreover, allocation would not promote competition; rather, it would protect current competitors. Almost by definition, allocation would require that presubscription be shared by the existing interexchange carriers, to the exclusion of new ones, in contravention of the purposes of the antitrust laws.

 As the Court has also previously noted, citing such decisions as Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488, 50 L. Ed. 2d 701, 97 S. Ct. 690 (1977), the "antitrust . . . laws are intended to protect the competitive process, not to assure positive results for competitors." United States v. Western Electric Co., supra, 578 F. Supp. at 672. And, of course, there is no reason to believe that the interexchange carrier to which a particular customer was assigned was one with which he wanted any relationship, except by relatively remote coincidence. *fn70"

 For these reasons, the Court also rejects the imposition of allocation.

 C. Telephones With Carrier Selection Buttons

 ALC proposes that equal access can be met by Regional Company replacement of their current public telephone stock with new public telephones equipped with carrier selection buttons. *fn71" These new telephones would permit the caller to reach his preferred interexchange carrier by pushing a single button on the telephone instrument reserved for that carrier.

 Obviously, as long as the telephones provided as many interexchange carrier buttons as there were interexchange carriers desiring to service that telephone, access would be equal. But if enough buttons (or room for enough buttons) were not available, serious problems would exist. For example, a telephone with twelve interexchange carrier buttons would not provide equal access in the Colorado market which is apparently serviced by over seventy interexchange carriers. *fn72" Moreover, in that market, even if each of the seventy carriers could be given a button of its own, the public would be stymied by the array of buttons. Thus, public inconvenience might suggest that equal access be provided another way.

 More fundamentally, however, the instruments with buttons currently exist in only a few locations. *fn73" Not only would mass replacement of virtually all Regional Company telephones be costly, ALC itself concedes that the process might take as long as five years. *fn74" This is a far longer period than has been estimated for the institution of the far better billed party preference plan discussed in Part VII-A, supra.

 In sum, while a carrier-select telephone plan may work on an ad hoc basis, it does not appear to be a solution which can readily be applied throughout any Regional Company's territory, let alone on a nationwide basis.

 D. Premises-Owner Presubscription

 U S West, NYNEX, Bell Atlantic, and Ameritech have proposed plans which would permit the owners of the premises on which the public telephones are located to choose which Regional Company to presubscribe with respect to these telephones. *fn75" While these plans differ in important respects, their common feature is to permit any premises owner to preselect the interexchange carrier which could be reached from the public telephones on his property without the use of an access code. If the caller dialed 0, he would be connected with the interexchange carrier that was so presubscribed, and he could be billed either through the interexchange carrier's calling card (if he had one), or, once validation had become effective (see Part III, supra), through the Regional Company's calling card. Any other interexchange carrier could be reached through the use of an access code.

 MCI and several others challenge this system even on an interim basis, raising a number of objections, which the Court has carefully considered, as follows.

 First, MCI protests that under this proposal the choice of carrier would not be made by the "subscriber" or the "customer" placing the call, as required by section (A)(2)(ii) of Appendix B of the decree. The Court rejects that interpretation of the decree. To the extent that anyone can be said to be a "subscriber" in the public telephone context, it is the owner of the premises.

  This is clearly so with respect to telephones in semi-public services (e.g., in bars, service stations). To be sure, one could conceivably conclude that it is the individual making the call, rather than the premises owner, who is the "customer," if not the "subscriber" in the context of truly public telephones (e.g., in airports, at street corners) although that is by no means certain even as a purely technical matter. However, since it is not technologically feasible at this time to provide the caller with the opportunity to exercise a choice of interexchange carriers by dialing 0, it makes sense during the interim period to consider the premises owner as that individual's surrogate. *fn76"

  Second, MCI makes the closely related contention that the premises owner is a "wholly illogical actor" with no relationship to the public telephone. *fn77" While it is true that the premises owner is virtually never the one who places or pays for calls from a public telephone on his property, he, more than anyone else, has an ongoing relationship with that instrument. Akin to the subscriber of a residential or business telephone, the premises owner decides whether to have public telephones at all (and how many), what type the telephones should be, *fn78" what kinds of services they should offer, where they should be installed, and in some instances when they may be used, and when they should be removed. In short, the owner has ultimate control over the public telephones on his premises and a closer relationship with these telephones than anyone else.

  Third, American Public Communications Counsel (APCC) contends that the premises owner would in reality be an "agent" or a person in active concert or participation with the Regional Companies. *fn79" But the Regional Companies would have no control over the selection of an interexchange carrier by the premises owner, and the premises owner would in fact be free to offer pay telephones which were not owned by a Regional Company.

  Fourth, MCI claims that AT & T will continue to have an advantage with respect to public telephones because it uses the same telephone number as the Regional Companies and only its calls and callers are verified by these companies. That objection is well taken at this time. However, as explained in Part III, supra, exclusive validation of AT & T calling cards will cease within about two months, and the objection will then be mooted.

  Finally, MCI contends that AT & T will continue to have an advantage over its competitors in that, with its traffic base from which to derive revenue for commissions and its greater knowledge of traffic patterns, it will most likely outbid the other interexchange carriers for presubscription to public telephones. *fn80" That, however, is not an objection that has validity under the terms and purposes of the decree. The decree is designed to remove artificial obstacles to fair competition; neither it nor the antitrust laws on which it rests can or were meant to erase all inequalities among the various carriers. Each carrier is of course free to spend its revenues as it sees fit, including for franchises on public telephones.

  In short, the objections of the opponents are not sufficiently weighty to support a rejection by the Court of the option of selection of a presubscribed interexchange carrier by the owner of the premises, particularly when that option is considered in relation to the only other currently existing alternative -- the blocking of all 0 calls made from Regional Company-owned public telephones. At a minimum, it is clear that premises owner presubscription would be a significant advance over the present system.

  Accordingly, the Court will approve on an interim basis (see infra) presubscription by the owner of the premises on which particular public telephones are located; it will be up to that owner to decide on the interexchange carrier that will be reached when 0 is dialed on his telephone. *fn81" This solution also has the virtue, inter alia of being consistent with a 1985 Federal Communications Commission ruling on this subject. *fn82" See Allocation Order, 101 F.C.C. 2d 911, 921 n.37, 932 (1985) (petition for reconsideration pending). *fn83"

   To make presubscription by the premises owner meet the purposes of the decree, it will be incumbent upon the Regional Companies to inform these owners not later than January 1, 1989, that they may presubscribe to an interexchange carrier of their choice for their public telephones, and to institute by that date a system of balloting and allocation similar to that instituted by the Federal Communications Commission for presubscription in homes and business offices. See Allocation Order, supra, Appendix B at 927 (1985).

  Thus, the Regional Companies will have to mail ballots for the selection of interexchange carriers to the premises owners by January 1, 1989 in the same manner as they provide ballots for presubscription of residence and business telephones. If a premises owner fails to return his ballot, the 0 long distance traffic from the public telephones on his premises will be allocated by the several Regional Companies among the interexchange carriers proportionately to the carriers' selection rate from the ballot process. *fn84" The Regional Companies will also have to affix on the face of each of their public telephones the name of the interexchange carrier that will transmit 0 calls from that instrument. *fn85"

  E. Arrangement for the Future

  It must be recognized that presubscription by the owner of the premises is not entirely satisfactory on several levels.

  First, except coincidentally, the interexchange carrier selected by the premises owner is not likely to be the same carrier as the one the caller selected for his home or business telephone. When that occurs -- as it probably will in most instances except where AT & T is the carrier -- the 0 option will not be available. *fn86" On this basis, while premises owner presubscription will be an advance over the present system where all public telephone long distance traffic is transmitted by way of AT & T, it will not achieve equal access on the basis of 0 calling to the extent that the decree contemplates or to the extent that would be achieved by a system which would permit the billed party to make the interexchange carrier selection.

  Second, customer confusion will exist to a significantly greater degree under the premises-owner option than under a system which permits the individual callers themselves to select the interexchange carrier of their choice simply by dialing 0. For example, under the premises-owner option the customer of a particular interexchange carrier could make a long distance call from one public telephone simply by dialing 0 while from another public telephone, even in the same region or town, he might have to dial a five-number access code. This is obviously undesirable.

  Third, some customers not only will not know how to reach a particular carrier because of these problems, but many of them will use whatever carrier to which a given public telephone was presubscribed, and this carrier in most cases is likely to be AT & T -- once again perpetuating that company's existing advantage and thus frustrating true equal access.

  Fourth, in their choice of an interexchange carrier, many premises owners are likely to subordinate quality of service and price -- that are of paramount importance to the end users as well as to the purposes of the decree -- to the amount of commission they may receive from particular interexchange carriers. This, too, would be inconsistent with the fundamental purposes of the decree. *fn87"

  For these reasons, while the Court approves the premises owner option at this time and orders its implementation, that is with the reservation that this option does not fully meet the requirements of section (A)(2)(ii) of Appendix B of the decree. The Court expects that the Regional Companies will continue expeditiously to perfect the LIDB system *fn88" which, when placed into service, will permit full compliance with the decree. The Court will revisit this issue at a future date to determine what further arrangements and orders, if any, *fn89" are necessary.

  VIII

  Coin Sent-Paid Calls

  In 1984, the Court granted a waiver to permit 1 traffic, or coin sent-paid calls, from these telephones to be defaulted to AT & T, but the waiver was to be effective only "until such time as the Operating Companies are able to overcome the technological limitations which presently prevent them from handling inter-LATA sent-paid coin calling from multiple carriers." *fn90" Over four years have passed since that waiver was granted -- a waiver which carried with it the expectation that the Regional Companies "will work with the carriers to develop the necessary technology to overcome the obstacles on an expeditious basis." *fn91" The responses to the Department's motion on calling cards and equal access to 0 calls from Regional Company public telephones indicate that it is time for the Court to revisit the grant of February 6, 1984 waiver permitting the automatic routing of all sent-paid traffic to AT & T. *fn92"

  Some Regional Companies assert that the software is not yet available to enable interexchange competition for calls made by depositing coins directly into the telephone apparatus, while others have proposed plans for providing equal access for coin sent-paid calls. *fn93" Those claiming inability to provide this equal access point to AT & T, a major vendor of switches, for the development of technology that, it is claimed, would provide equal access by way of access tandem switches over the same common trunk used with all other traffic. *fn94" U S West, on the other hand, represents that Northern Telecom has developed an equal access software capability for its switches. *fn95"

   It is not clear from the papers filed with the Court why AT & T has not developed such software or technology, or why the Northern Telecom method cannot be used here. Consequently, the Court is ordering the Regional Companies, and any other interested parties, to submit by January 1, 1989 proposed remedies on whether and on what basis the Court should remove its waiver of the decree obligation to provide equal access to coin sent-paid public calling.

  Conclusion

  The requirement that equal access be provided to all interexchange carriers is one of the key components of the decree, ranking closely behind the divestiture itself and the line of business restrictions on the Regional Companies. *fn96" Equal access with respect to credit cards and public telephones has assumed particular importance as the public relies more and more heavily upon these features, and as a number of the smaller interexchange carriers have acquired the capability to compete in these areas.

  As the discussion above indicates, most of the obstacles to the achievement of that access can be overcome in relatively short order and without undue technological or other complications. This is particularly true since the Regional Companies have been on notice for months and even years that they are required to act in the areas under consideration. There is a general consensus that any necessary additional work *fn97" can be completed in two to three months. The Court has accordingly set January 1, 1989 as the deadline for the completion of these tasks. It is indeed appropriate that the necessary equal access steps be taken by that date, the fifth anniversary of the AT & T divestiture. Five years is long enough for the attainment of the crucial objective as between AT & T and its long distance competitors in the credit card and public telephone sectors, and the Court expects the parties to meet its deadline.

  ORDER - October 14, 1988, Filed

  Upon consideration of the motion of the United States for an enforcement order relating to Regional Company Calling Card Practices, the briefs, reports, and memoranda filed, directly or indirectly, with respect to the issues discussed therein, and the entire record, and in accordance with the Opinion issued contemporaneously herewith, it is this 14th day of October, 1988

  ORDERED that each Regional Company shall certify to the Court, on or before January 1, 1989, that it is currently making available and will continue to make available to all interexchange carriers requesting it the same validation data for its calling cards that the company provides to AT & T, on the same prices, terms, and conditions as are extended to AT & T; and it is further

  ORDERED that each Regional Company shall, on or before January 1, 1989, notify its calling card customers that (1) any interexchange services charged to the card will be provided by an interexchange carrier, not the Regional Company; (2) the interexchange carrier will not always be the carrier the customer selected in the presubscription process; and (3) the customer should contact interexchange carriers for information about alternative methods of charging interexchange calls; and it is further

  ORDERED that the Regional Companies shall on or before January 1, 1989, recall all their credit cards that carry the same international number as is used by AT & T, provided that, if as of that date they have issued calling cards which list the international number of any interexchange carrier other than AT & T to which the customer may have presubscribed, they may continue in circulation the cards issued to AT & T customers; and it is further

   ORDERED that the Regional Companies shall submit to the Court, on or before January 1, 1989, memoranda detailing proposed remedies that would afford to the calling cards of other interexchange carriers the same acceptance as is now given to AT & T cards for intra-LATA calls; oppositions or other responses thereto shall be filed not later than January 20, 1989; and any replies thereto shall be filed not later than February 9, 1989; and it is further

  ORDERED that the Regional Companies shall provide for premises owner presubscription of public telephone in a manner conforming with that delineated in Appendix B to In the Matter of Investigation of Access and Divestiture Related Tariffs, 101 F.C.C. 2d 911, 927-34, and that they shall mail interexchange carrier selection ballots to all public telephone premises owners in implementation of such presubscription on or before January 1, 1989; and it is further

  ORDERED that the Regional Companies and any other interested parties shall, on or before January 1, 1989, submit to the Court memoranda detailing proposed remedies on whether and on what basis the Court should remove its waiver of the decree obligation to provide equal access to coin sent-paid public calling; oppositions or other responses thereto shall be filed not later than January 20, 1989; and any replies thereto shall be filed not later than February 9, 1989.


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