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TOTAL TELCOMS. SERVS. v. AT&T

March 5, 1996

Total Telecommunications Services, Inc., and Atlas Telephone Company, Inc., Plaintiffs,
v.
American Telephone and Telegraph Co., Defendant.



The opinion of the court was delivered by: URBINA

 Granting Defendant's Motion to Refer this Case to the Federal Communications Commission; *fn1" Denying Plaintiffs' Motion for a Preliminary Injunction; and Denying Plaintiffs' Application for a Temporary Restraining Order2

 This matter comes before the court upon defendant's motion to refer this case to the Federal Communications Commission (FCC); plaintiffs' motion for a preliminary injunction; and plaintiffs' application for a temporary restraining order. After considering the submissions, the court concludes that referral to the FCC is appropriate pursuant to the doctrine of primary jurisdiction. Furthermore, so as not to encroach upon FCC's primary jurisdiction by expressing a view as to the underlying merits of the present action, the court will not entertain plaintiffs' request for injunctive relief. Finally, the court concludes that holding this action in abeyance pending agency resolution of the underlying issues is rendered inappropriate by the circumstances of the case.

 I. Background

 TTS asserts that it is a competitive access provider located in Big Cabin, Oklahoma. *fn3" It provides local terminating services, the last link in a long-distance telephone call, to common carriers of interstate communications, such as AT&T. Long-distance carriers do not provide originating or terminating services and are thus dependent upon local telephone companies for those services. TTS provides only interstate services for the termination of calls placed by subscribers of AT&T to an end user served by TTS. TTS does not provide local telephone service to its customers. TTS's sole end user at this point is Audiobridge. *fn4"

 Between August 1, 1995 and November 21, 1995, TTS provided terminating services but no originating services to AT&T. TTS provides its services pursuant to the rates, terms, and conditions of its tariff filed with the FCC on July 31, 1995. The tariff took effect on August 1, 1995. Pursuant to this tariff, TTS seeks to charge long-distance carriers with access fees for providing its terminating services. TTS leased access service from Atlas Telephone Company (Atlas), the other plaintiff in this case. *fn5" Under the arrangement, Atlas and TTS jointly provide the access service ordered by AT&T and each bills AT&T for its services.

 Atlas is a local telephone exchange monopoly located in Big Cabin, Oklahoma, where it owns and controls the telephone lines of service users in that location. Atlas provides originating services, the first step in the communications chain of a long-distance call placed by one of the users served by Atlas. Atlas also provides terminating services to its customers when they receive a long-distance telephone call. Since Atlas is the local monopoly, its rates are regulated. Long-distance carriers purchase access to Atlas's originating and terminating services. AT&T has purchased and continues to purchase access service from Atlas.

 AT&T admits that it Completed many long-distance telephone calls to TTS's end user. As a consequence of the increased traffic resulting from TTS's operations, AT&T requested that Atlas provide additional carrying capacity into Big Cabin. TTS argues that such a request was in effect an order of TTS's services. AT&T disputes this conclusion. TTS further asserts that under its tariff and standard industry practice, it has the authority and the right to charge AT&T as a result of Atlas' extension of access service to TTS. Thus, TTS contends that AT&T is automatically liable to TTS for its services upon TTS notifying AT&T of the change in the billing arrangement between AT&T and Atlas. TTS states that it notified AT&T of the changed billing arrangement by letter dated August 4, 1995. From August to November 1995, TTS billed AT&T approximately $ 800,000 for such services. TTS argues that AT&T is bound to honor TTS's tariff and that AT&T must provide long distance service to telephone numbers served by TTS.

 TTS and Atlas have a highly intertwined relationship. Plaintiffs do not dispute the fact that the president of the latter is also the chairman of the former. TTS has obtained some of the facilities of Atlas to provide terminating services. Although TTS terms itself a competitive access provider, it does not specify how it competes with Atlas. The charges AT&T must pay TTS are in addition to those that the long-distance carrier must pay to Atlas for terminating services for the same telephone calls. Thus, according to AT&T, this arrangement has multiplied by a factor often the access charges that must be paid by the long-distance carriers. In effect, AT&T's position is that if the current operating structure of Atlas and TTS is allowed to persist, long-distance carriers will be forced to pay duplicative access charges. The result would be, AT&T contends, that it would end up losing money on many telephone calls.

 AT&T maintains that the arrangement entered into by TTS and Atlas violates two sets of FCC regulations. First, AT&T contends that TTS is in reality operating a "chat line," that is a pay-per-call 900 numbers service, which must conform to detailed FCC regulations. By devising the present operating structure, AT&T argues, plaintiffs are attempting to evade these regulations by providing a pay-per-call type of service but shifting the cost from the customer to the long-distance carriers. This is so because the customer pays the normal long-distance rates and the plaintiffs extract the profits via the duplicative access fees charged to the long-distance carriers.

 Second, AT&T takes issue with the creation of TTS as a second company and the latter's claims to be a competitive access provider. According to AT&T, plaintiffs have consummated this arrangement in order to avoid the rate regulations that arc applicable to Atlas as a dominant carrier. These regulations include one that requires dominant carriers to charge cost-based rates and to file tariffs specifying their rates at least forty-five days before they take effect. This requirement is imposed by the FCC so that it may investigate and if necessary suspend or reject those rates if they are unreasonably high or otherwise are not legal. 47 C.F.R. § 61.58 (c)(1). Competitive access providers, which lack the market dominance of a dominant carrier, are permitted to file tariffs on one-day's notice and the tariffs are presumed lawful by the FCC.

 AT&T therefore asserts and plaintiffs agree that the current dispute presents issues that are of significant importance to carriers, their customers, and the telephone industry in general. *fn6" This is the case because access charges are the single biggest cost associated with the provision of long-distance service. Moreover, AT&T asserts and plaintiffs do not dispute, that arrangements such as the one between Atlas and TTS are beginning to appear around the country and TTS's president has indicated TTS's intention to replicate the arrangement elsewhere.

 On November 22, 1995, as a consequence of its concerns, AT&T terminated its interconnection services with TTS. However, AT&T states that it continues to provide long-distance service to Big Cabin residents, not through TTS's facilities but through those of Atlas. On November 24, 1995, as a result of AT&T's termination of interconnection services, TTS moved for a temporary restraining order in the United States District Court for the Northern District of Oklahoma, seeking to have "AT&T restrained from blocking telephone calls destined for telephone numbers allegedly assigned and served by TTS which terminate at facilities operated by TTS." Order, Total Telecommunications Services, Inc. v. AT&T 1 (N.D. Okla. Dec. 1, 1995). The court there found that the main disputed issue pertained to the "meaning, scope, applicability, and validity of TTS's tariff as it relates to TTS's billing practices." Id. at 4. The court concluded that the power and duty to examine all tariffs rests with the FCC. The court thus denied TTS' application for a temporary restraining order and referred the matter to the FCC for a determination of all the issues within its jurisdiction. The court further stayed the action pending the FCC's final determination. TTS then voluntarily dismissed the action it had instituted in Oklahoma and has now filed the current action, presenting substantially the same issues, in this jurisdiction.

 II. Doctrine of Primary Jurisdiction

 Plaintiffs have presently moved for a preliminary injunction, seeking this court to order AT&T to provide long distance service to TTS's customers. Plaintiffs also seek to have the court order AT&T to pay for past and future services. *fn7" TTS contends that AT&T's refusal to furnish service violates Sections 201(a); 202, and 214 of the Communications Act of 1934, 47 U.S.C. § 151 et seq. and Section 251 of the 1996 Act (Communications Act). *fn8"

 The issues to be resolved in this case involve questions relating to: (1) whether AT&T must interconnect its services to those of TTS; (2) the validity of TTS's tariff and practices; (3) whether AT&T discontinued service in violation of Section 214; (4) whether AT&T engaged in discriminatory conduct and whether TTS is properly categorized as a competitive access provider. ...


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