[Federal Register Volume 67, Number 146 (Tuesday, July 30, 2002)]
[Rules and Regulations]
[Pages 49242-49244]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-19180]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[WT Docket No. 01-316; FCC 02-203]


Petitions of Sprint PCS and AT&T for Declaratory Ruling Regarding 
CMRS Access Charges

AGENCY: Federal Communications Commission.

ACTION: Final rule; interpretation.

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SUMMARY: In this document, the Commission responds to a primary 
jurisdiction referral from the U.S. District Court for the Western 
District of Missouri in an action styled Sprint Spectrum L.P. v. AT&T 
Corp. In its referral order, the court asked the Commission to decide 
two questions: whether Sprint may charge AT&T access fees for use of 
the Sprint PCS network, and if so, what rate may reasonably charged for 
such services. Based on the rules in effect during the period in 
dispute--from 1998 to the present--the Commission finds that Sprint PCS 
was not prohibited from charging AT&T access charges, but that AT&T was 
not required to pay such charges absent a contractual obligation to do 
so.

FOR FURTHER INFORMATION CONTACT: Steven Morris, Wireline Competition 
Bureau, Pricing Policy Division, (202) 418-1530, or via the Internet at 
[email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Declaratory Ruling in WT Docket No.

[[Page 49243]]

01-316 released on July 3, 2002. The full text of this document is 
available on the Commission's website in the Electronic Comment Filing 
System and for public inspection during regular business hours in the 
FCC Reference Center, Room CY-A257, 445 Twelfth Street, SW., 
Washington, DC 20554.

Background

    In 1998, Sprint PCS, a CMRS provider, began sending invoices to 
AT&T, an IXC, asking that AT&T compensate Sprint PCS for the costs of 
terminating interexchange traffic bound for Sprint PCS's CMRS 
customers. Sprint PCS charged AT&T 2.8 cents per minute, the rate in 
the NECA tariff. AT&T refused to pay. As of September 1, 2001, the 
amount in dispute exceeded $60 million. In August 2000, Sprint PCS 
filed suit in state court in Missouri seeking recovery of the amount 
allegedly owed by AT&T. AT&T removed the case to the federal district 
court for the Western District of Missouri, and then requested that the 
court refer the issues to this Commission under the doctrine of primary 
jurisdiction. The court granted AT&T's request.
    Both parties filed petitions for declaratory ruling on October 22, 
2001, and the Commission sought comment on the petitions. In its 
petition, Sprint PCS asked the Commission to find that there is no 
federal law or Commission policy that bars Sprint PCS from recovering 
its call termination costs from AT&T. Sprint PCS also asked the 
Commission to find that AT&T's refusal to pay access charges to Sprint 
PCS is unreasonably discriminatory under section 202(a) of the 
Communications Act of 1934, as amended (the Act), and unjust and 
unreasonable under section 201(b) of the Act. In its petition, AT&T 
asked the Commission to find that CMRS carriers should continue to 
recover their costs from their end users, not by imposing access 
charges on IXCs. If CMRS carriers are permitted to impose access 
charges, AT&T asked that those charges be capped at the reciprocal 
compensation rate for local traffic and assessed only prospectively.

Discussion

    Sprint PCS is correct that neither the Communications Act nor any 
Commission rule prohibits a CMRS carrier from attempting to collect 
access charges from an interexchange carrier. In 1994, in the CMRS 
Second Report and Order, the Commission addressed the question of which 
Title II requirements it should impose on CMRS carriers. The Commission 
decided that the market for retail CMRS services was sufficiently 
competitive that it was not necessary to regulate the retail rates of 
CMRS carriers, or to require (or permit) CMRS carriers to file tariffs 
for retail services. The Commission also decided temporarily to forbear 
from requiring or permitting the filing of tariffs for interstate 
access services offered by CMRS carriers. In a detariffed, deregulated 
environment such as this one, carriers are free to arrange whatever 
compensation arrangement they like for the exchange of traffic. Thus, 
for example, Sprint PCS and AT&T could agree that AT&T would pay Sprint 
PCS for the traffic exchange, that Sprint PCS would pay AT&T for the 
exchange, or that neither party would pay anything.
    That Sprint PCS may seek to collect access charges from AT&T does 
not, however, resolve the question whether Sprint PCS may unilaterally 
impose such charges on AT&T. There are three ways in which a carrier 
seeking to impose charges on another carrier can establish a duty to 
pay such charges: pursuant to (1) Commission rule; (2) tariff; or (3) 
contract. As noted above, CMRS access services are subject to mandatory 
detariffing, and it is therefore undisputed that Sprint PCS could not 
have imposed access charges on AT&T pursuant to any tariff. 
Consequently, we need only consider whether Sprint PCS can impose 
access charges on AT&T pursuant to Commission rules or a contract 
between the parties.
    We find that there is no Commission rule that enables Sprint PCS 
unilaterally to impose access charges on AT&T. In the LEC-CMRS 
Interconnection NPRM, the Commission specifically addressed the 
question whether CMRS carriers should be able to impose access charges 
on IXCs for calls that are exchanged through LEC facilities. The 
Commission tentatively concluded that CMRS carriers should be able to 
recover access charges from IXCs for the completion of interexchange 
calls in the same manner as LECs and competitive access providers 
(i.e., by setting a rate to be paid by the IXC). The Commission noted, 
however, that some form of price regulation might be necessary if it 
adopted this tentative conclusion because CMRS carriers ``may have some 
market power over IXCs that need to terminate calls to a particular 
CMRS provider's customer.'' The Commission has never adopted a final 
decision adopting or implementing this tentative conclusion, nor has it 
resolved the question of the appropriate form of price regulation for 
CMRS access charges. Accordingly, our rules do not enable Sprint PCS 
unilaterally to impose access charges on AT&T.
    We disagree with Sprint PCS that the forbearance policy adopted in 
the CMRS Second Report and Order enables Sprint PCS to impose 
unilaterally whatever rate it wishes, subject only to AT&T's right to 
file a complaint under section 208 of the Act. Our policy of forbearing 
from regulating CMRS access rates means that we will not regulate rates 
pursuant to the tariffing process set forth in sections 203, 204, and 
205 of the Act. Our forbearance policy does not, however, mean that a 
detariffed carrier unilaterally can impose a charge merely by billing 
an IXC, as Sprint PCS has attempted to do here. This interpretation of 
the CMRS Second Report and Order is consistent with our general 
policies on detariffing, which are premised on the expectation that 
carriers will establish a contractual relationship with customers to 
whom they sell service. Even in a competitive situation, where the 
customer has a choice of carriers, a contract is beneficial to both the 
carrier and the customer because it makes clear the rights and 
obligations of both parties. A contract is particularly important in 
the case of terminating access services because, as Sprint PCS 
acknowledges, CMRS carriers possess market power with respect to 
termination of calls to their subscribers.
    We also do not agree with Sprint PCS's argument that the 1987 
Cellular Interconnection Order entitles it to collect access charges in 
the absence of an agreement with AT&T. The Cellular Interconnection 
Order established a principle of ``mutual switching compensation'' 
between CMRS carriers and LECs. The Commission stated that ``the 
principle of mutual switching compensation should apply to Type 2 but 
not Type 1 service. Cellular carriers and telephone companies are 
equally entitled to just and reasonable compensation for their 
provision of access, whether through tariff or by a division of 
revenues agreement.'' This statement regarding compensation for the 
``provision of access'' clarified how the mutual switching compensation 
principle would apply to Type 1 and Type 2 interconnection, and the 
mechanism for compensation when it does apply (tariff or agreement). 
Following the CMRS Second Report and Order, tariffs no longer were 
available to CMRS carriers; therefore compensation is available only 
through an agreement.
    There being no authority under the Commission's rules or a tariff 
for Sprint PCS unilaterally to impose access charges on AT&T, Sprint 
PCS is entitled to collect access charges in this case only to the 
extent that a contract imposes a payment obligation on AT&T.

[[Page 49244]]

While it is preferable for carriers to memorialize such contracts in a 
written agreement, the parties here agree that there is no written 
agreement or any express contract between AT&T and Sprint PCS. 
Nevertheless, the law recognizes--as has the Commission--that an 
agreement may exist even absent an express contract. Turning to the 
question whether there was such an agreement here, we believe that it 
is an issue that should be resolved by the Court. We interpret the 
Court's primary jurisdiction referral as seeking our input on the 
federal communications law questions related to this dispute. Because 
the existence of a contract is a matter to be decided under state law, 
we defer to the court to answer this question.
    We offer the court two important observations regarding the 
regulatory regimes applicable to both IXCs and CMRS carriers during the 
period in dispute. First, CMRS carriers have never operated under the 
same calling party's network pays (CPNP) compensation regime as 
wireline LECs. Under a CPNP regime, LECs are compensated for 
terminating calls by the carrier of the customer that originates the 
call, not by the customer receiving the call. In contrast, since the 
advent of commercial wireless service, and continuing today, CMRS 
carriers have charged their end users both to make and to receive 
calls. Until 1998, when Sprint PCS first approached AT&T and other IXCs 
about payment for terminating access service, all CMRS carriers 
recovered the cost of terminating long distance calls from their end 
users, and not from interexchange carriers.
    Second, there is a benefit to customers of both IXCs and CMRS 
carriers when CMRS carriers terminate IXC traffic. Because both 
carriers charge their customers for the service they provide, it does 
not necessarily follow that IXCs receive a windfall in situations where 
no compensation is paid for access service provided by a CMRS carrier. 
Nor do we believe that terminating access charges to CMRS carriers are 
necessarily imputed in IXCs' retail rates. The fact that the industry 
practice for 15 years has been for CMRS carriers to recover costs from 
their end users, together with the highly competitive nature of the 
interexchange market, makes it unlikely that an IXC that does not pay 
access charges to CMRS carriers somehow ``overcharges'' its customers.
    We need not address Sprint PCS's claims under sections 201(b) or 
202(a) at this time. Until the court determines the respective 
obligations of the parties, in particular whether AT&T has any 
obligation to pay Sprint PCS under a contract, the Commission has no 
basis on which to assess whether AT&T is subject to sections 201(b) or 
202(a) in these circumstances and, if so, whether its actions violate 
those statutory provisions.
    In addition to questions presented by the district court regarding 
our present policy on CMRS access charges, the pleadings filed in 
response to the declaratory ruling petitions raise a number of issues 
that relate either to the prospective treatment of CMRS-IXC 
interconnection or to issues beyond the scope of those presented for 
Commission resolution in the primary jurisdiction referral. Our order 
today clarifies requirements under our existing rules. Suggestions for 
changes to those rules will be addressed in our pending Intercarrier 
Compensation proceeding. Our goal in the Intercarrier Compensation 
proceeding is to move toward a unified compensation regime that 
eliminates the opportunity for arbitrage due to different regulatory 
treatment of different types of traffic. At that time we will address 
CMRS carriers' requests to be placed on equal footing with wireline 
carriers, whether through bill-and-keep or some other compensation 
mechanism.
    In the interim, IXCs and CMRS carriers remain free to negotiate the 
rates, terms and conditions under which they will exchange traffic. 
Given the mutual benefit that CMRS and IXC customers realize when CMRS 
carriers terminate calls from IXCs, we anticipate that these 
negotiations will be conducted in good faith and prove fruitful for 
both sets of carriers. To the extent that carriers encounter problems 
with this regime, we encourage them to raise any concerns in the 
pending Intercarrier Compensation proceeding so that we may consider 
those concerns in any future compensation regime we may adopt.
    Accordingly, it is ordered that, pursuant to the authority 
contained in sections 4(i), 201, and 332 of the Communications Act, as 
amended, 47 U.S.C. 154(i), 201, and 332, and section 1.2 of the 
Commission's rules, 47 CFR 1.2, the Petitions for Declaratory Ruling 
filed by AT&T and Sprint PCS are denied to the extent set forth herein.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 02-19180 Filed 7-29-02; 8:45 am]
BILLING CODE 6712-01-P