Posted:  06/2000

Frontier Won’t Let Dead Dogs Lie; Appeals Ruling
By Kim Sunderland

Frontier Communications Services Inc.
(www.frontiercorp.com) filed an appeal with a Washington federal court seeking to overturn an FCC
(www.fcc.gov) decision that could cost the IXC tens of millions of dollars.

Frontier wants the U.S. Court of Appeals for the D.C. Circuit
(www.cadc.uscourts.gov) to throw out the FCC’s April decision that requires Frontier to pay compensation to LEC payphone service providers
(PSPs). The April ruling struck down Frontier’s attempts to have the commission review earlier orders on these payments.

Specifically, the FCC has refused to review its orders in Bell Atlantic-Delaware
(www.bell-atl.com), et al., v. Frontier Communications Services Inc., et al., and Ameritech Illinois
(www.ameritech.com), Pacific Bell (www.pacbell.com), et al., v. Frontier Communications Services Inc., et al. In those orders, the FCC granted formal complaints brought by several
BOCs–which are also PSPs–claiming that Frontier had failed to pay payphone compensation.

Section 276 of the Telecommunications Act of 1996 and FCC rules require IXCs to compensate PSPs for certain types of calls made from their pay phones. The FCC’s pay phone order dictates that IXCs receiving calls originating from payphones should compensate the PSP because the IXCs are the primary beneficiaries of such calls. The FCC also concluded that LEC PSPs are eligible to receive compensation for completed calls originated from their payphones once the LEC “certifies” that it has complied with compensation eligibility requirements.

“This statute requires the BOCs to take certain steps in order to meet the FCC’s definition of being certified,” explains Michael
Shortley, associate general counsel for Global Crossing North America (www.globalcrossing.com), the parent company of Frontier. “There has been a lot of debate over the term ‘certification,'” says
Shortley, who’s spearheading this case for Frontier.

Shortley contends the PSPs in this case had not met Section 276 requirements for compensation from Frontier. Once they did, Frontier paid them immediately, he says.

Payment apparently did not come fast enough for the BOCs, which said they had written to Frontier to document they qualified to receive the payments. When Frontier withheld payment, the BOCs filed complaints with the FCC.

Shortley says, “Just taking their word for it that they’re certified is not enough.”

The FCC says the cases turn on the question of whether the commission’s requirement that a LEC “be able to certify” compliance entitled Frontier to withhold payments to the LECs. And in fact Frontier had no such right, the FCC rules.

In light of that finding, the FCC directed its Enforcement Bureau to investigate whether action should be taken against Frontier. The commission says it is “troubled by self-help actions” Frontier took in refusing to compensate the PSPs, rather than compensating them and bringing any disputes to the commission for resolution.