TELECOM Digest OnLine - Sorted: The Front Lines - August 1, 2006

The Front Lines - August 1, 2006

Jonathan Marashlian (
Tue, 1 Aug 2006 15:30:01 -0400 The FRONT LINES
Sponsored by The Helein Law Group, P.C.

Advancing The Cause of Competition in the Telecommunications Industry


On July 11, 2006, the Federal Communications Commission ("FCC")
released an Order clarifying the audit information sharing provisions
of its Tollgate rules in the context of a complaint proceeding
involving payphone aggregator, American Public Communications Council
(APCC), and completing carrier, IDT.

The FCC's Tollgate rules ensure that PSPs are fairly compensated for
coinless calls originated from their payphones. These rules require
that the last facilities-based long distance carrier in a call path,
the "completing carrier," compensate PSPs for coinless calls that are
completed by that carrier. The Tollgate rules also provide for
detailed procedures to ensure that calls are tracked in a way that
allows for compensation, review of these procedures by a third party
auditor, and sharing of the audit information with the FCC and PSPs
for which they complete calls.

The provision requiring the sharing of audit information (such as work
papers) was the focal point of the APCC-IDT dispute which gave rise to
the FCC's Order. The Tollgate rules require that, "subject to protec-
tions safeguarding the auditor's and the Completing Carrier's
confidential and proprietary information, the Completing Carrier shall
provide, upon request, to the payphone service provider for inspection
any documents, including working papers, underlying the System Audit

In July 2004, IDT filed its first System Audit Report with the
FCC. Two months later APCC (on behalf of its PSP clients) requested
"all documents underlying [IDT's] system audit report." This request
prompted a dialogue regarding the terms of the information
exchange. IDT questioned which PSPs APCC was requesting the
information for, requested documentation of APCC's authority to
request the information of their behalf, and wanted to produce the
information at its New Jersey office, while APCC demanded that copies
be sent to their attorney's Washington, D.C. office.

While the parties were still discussing the production of the
documents, on February 1, 2005, APCC filed an informal Section 208
complaint with the FCC. The APCC complaint alleged that IDT violated
the Communications Act by engaging in a "dilatory and obstructive
pattern of conduct" in response to APCC's request for documents
underlying the System Audit Report, and by failing to provide those
documents. The complaint asked that the FCC to find IDT in violation
of Rule 64.1320(g) and the Act. The only relief sought by APCC was an
FCC order requiring IDT to either deliver copies of the Underlying
Documents (work papers) to their attorneys, or alternatively, to allow
APCC to inspect the documents in Washington, D.C., and to request and
receive copies of such documents, subject to the condition that
Complainants reasonably compensate IDT for such copies.

APCC and IDT reached an agreement regarding the terms of disclosure
before the FCC resolved the pending complaint. IDT thereafter filed a
motion to dismiss the complaint. APCC, however, opposed the motion on
grounds that: (1) IDT could evade review again in the future; (2) APCC
was harmed by the delay in obtaining the documents; and (3) IDT may
have failed to produce all of the documents.

In its July 11th Order, the FCC granted IDT's motion to dismiss, but
in doing so provided official guidance to the industry in order to
facilitate prompt production of audit documents in the future.

The FCC's Order clarified a Completing Carrier's duties to produce, as

1 "We believe that it is reasonable to expect that a party requesting
documents under rule 64.1320(g) will specifically identify on whose
behalf it makes the request."

2. "We note that rule 64.1320(g) effectively requires the Completing
Carrier to permit payphone service providers to copy the audit
documents, at the payphone service providers' expense, not merely to
examine them. To the extent that copying raises greater issues of
safeguarding confidential information than does on-site inspection, we
expect parties to be able to address this in their nondisclosure

3. "We note that this rule effectively requires Completing Carriers
to ensure that their auditors are contractually obligated to provide
the documents covered by the rule if a payphone service provider
requests them. This obligation can readily be imposed when the
auditor is engaged; if the Completing Carrier fails to take this step,
then any 'impossibility' of compliance will be of its own making. If
the auditor failed to live up to its contractual obligation, we would
consider whether the Completing Carrier had taken all reasonable steps
to enforce compliance before we would excuse its failure to provide
the documents as 'impossible.'"

Clients seeking assistance with rule 64.1320(g) and other Tollgate
requirements may contact Jonathan S. Marashlian at
<> or 703-714-1313.


On July 21, 20006, Voice over IP provider, Vonage, filed a Petition
for Review with the U.S. Court of Appeals for the District of Columbia
Circuit asking the court to review the FCC's Report and Order altering
the methodology for assessing contributions to the federal Universal
Service Fund ("USF"). At issue is the FCC's decision to apply
registration requirements and USF contribution obligations on
"interconnected VoIP" providers, such as Vonage. The case is docketed
as Vonage Holdings Corporation v. Federal Communications Commission,


On July 16, 2006, Qwest Services Corporation ("Qwest") filed a
Petition for Review asking the U.S. Court of Appeals for the District
of Columbia Circuit to review the FCC's June 30, 2006, Declaratory
Ruling and Report and Order, In the Matter of Regulation of Prepaid
Calling Card Services, WC Docket No. 05-68, FCC 06-79. In the Order
the FCC determined it will treat all prepaid calling card service
providers as telecommunications service providers. Such providers are
required to, among other things, pay interstate access charges on
interexchange calls that originate and terminate in different states,
and to contribute to the universal service fund based on their
interstate revenues. Qwest argues that the FCC's Order is arbitrary
and capricious, contrary to the record and otherwise not in accordance
with law.


In the past several weeks, incumbent local exchange providers
BellSouth, AT&T, Qwest and Embarq (formerly Sprint) all filed
Petitions requesting FCC forbearance from the application of common
carrier regulations, such as Title II and Computer Inquiry rules, to
their "broadband" offerings.

BellSouth asks the Commission to grant BellSouth and similarly
situated carriers forbearance from Title II and the Computer Inquiry
rules to certain specified broadband services.

Qwest and AT&T also filed separate Forbearance Petitions. In its
petition, Qwest asks the FCC to forbear from applying Title II and the
Computer Inquiry rules to any broadband services Qwest does or may
offer to the extent those services are not offered as part of an
Internet access service.

AT&T, in its petition, asks the Commission to forbear from applying
Title II and the Computer Inquiry rules to non-time division multiplex
(non-TDM) based broadband transmission services offered by AT&T and
other Bell Operating Companies.

On July 26, 2006, the Embarq Local Operating Companies asked the FCC
to forbear from applying Title II and Computer Inquiry rules to
certain broadband services offered by Embarq and similarly situated
independent incumbent local exchange carriers (independent incumbent
LECs). Specifically, Embarq seeks relief from Title II requirements
regarding tariffs, prices, cost support, price caps, and pricing
flexibility for certain broadband services. Embarq also seeks relief
from the Computer Inquiry requirements to the extent they require
independent incumbent LECs to tariff and offer the transport component
of their broadband services on a stand-alone basis.

Reacting to the spate of Forbearance Petitions by the RBOCs, CompTel
and Embarq asked the FCC to extend the comment and reply comment
deadlines. On July 28, 2006, the FCC granted in part and denied in
part the motions filed by CompTel and Embarq. The FCC agreed to
extend the comment date until August 17, 2006, and the reply comment
date until August 31, 2006 on the three RBOC petitions. The same
filing deadlines apply to the Embarq petition.

The Front Lines is a free publication of The Helein Law Group, P.C.,
providing clients and interested parties with valuable information,
news, and updates regarding regulatory and legal developments
primarily impacting companies engaged in the competitive
telecommunications industry.

The Front Lines does not purport to offer legal advice nor does it
establish a lawyer-client relationship with the reader. If you have
questions about a particular article, general concerns, or wish to
seek legal counsel regarding a specific regulatory or legal matter
affecting your company, please contact our firm at 703-714-1313 or
visit our website:

The Helein Law Group, P.C.
8180 Greensboro Drive, Suite 775
McLean, Virginia 22102

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