20030220Complainants Reply Brief.pdf

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Conley Ward ISB #1683
GIVENS PURSLEY LLP
277 North 6th Street, Suite 200
O. Box 2720
Boise, ID 83701
[phone]
[phone] (fax)
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UTILI r liS COt1r;i!'S.SJON
Morgan W. Richards
MOFFAT THOMAS
US Bank Plaza Bldg.
101 S. Capital Blvd., 10th Floor
Boise, ID 83701
[phone]
[phone] (fax)
Thomas 1. Moorman
KRASKIN, LESSE & COSSON, LLC
2120 L Street, N., Suite 520
Washington D.C. 20037
[phone]
[phone] (fax)
S:\MACS\CEW\IT A \Qwest\Final Reply Brief.doc
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IDAHO TELEPHONE ASSOCIATION
CITIZENS TELECOMMUNICATIONS
COMP ANY OF IDAHO, CENTURYTEL OF
IDAHO, CENTURYTEL OF THE GEM STATE
, )
POT LA TCH TELEPHONE COMPANY and
ILLUMINET, INe. CASE NO QWE-02-
Comp lainants
QWEST CORPORATION
Respondent.
COMPLAINANTS' REPLY BRIEF
TABLE OF CONTENTS
INTRODUCTION ..........................................................................,................................................
ARGUMENT...................................................................................................................................
II.
III.
IV.
VI.
VII.
The Commission has ample jurisdiction to grant the relief Complainants request ............
There is no "filed rate doctrine" issue in this proceeding....................................................
Qwest's SS7 Catalog charges are not "identical" to its FCC tariff, nor
are they being properly applied........................................................................................ ..
Qwest's agreements with other carriers govern the proper
method ofrecovering SS7 costs associated with inter-company traffic ............................
Qwest's suggestion that Illuminet is not the transport
agent for its carrier/customer s SS7 signalling is without merit........................................
The FCC's tariff filing requirements are not at issue in this case......................................
Qwest's argument that the Complainants can choose to avoid
Qwest's unlawful conduct and the imposition ofumeasonable
charges is irrelevant, umeasonable and anticompetitive on its face ..................................
CONCLUSION............... ........................ .....
........ ............ ....... ........ .............................. ...... ...........
Table of Contents - i
INTRODUCTION
The basic issue in this proceeding is relatively simple. Under the guise of "unbundling
its access charges into message and signaling components, Qwest Corporation ("Qwest") has
introduced entirely new Signaling System No.7 ("SS7") message charges within its Southern
Idaho Access Service Catalog ("Catalog ), the implementation of which violates the basic
principle that determines whether and how Idaho carriers must compensate each other for inter-
company traffic. Although this inter-carrier compensation principle is embedded in a complex
web of laws, regulations, contracts and industry traditions, it is in essence very simple: When
traffic travels between two or more telecommunications carriers, the carrier whose retail end user
customer originates the call must compensate all other carriers that transport and/or terminate
that call because it is the carrier that serves the retail end user that causes the costs associated
with the call to be incurred. I This inter-carrier compensation principle can, with equal validity,
be stated in the negative-a telecommunications carrier does not charge another carrier for
network access unless the other carrier s end user customer initiates the call in question.
Even though modem technology now allows the transmission of call set up and tear down
instructions out-of-band via the SS7 network, those signals are nevertheless a necessary and
inseparable component of the underlying voice and data messages. Why? Because virtually no
end user traffic would be completed without the SS7 messages being exchanged by the carriers
who initiate those SS7 messages. Accordingly, applicable law and policy considerations compel
the conclusion that inter-carrier compensation for SS7 signaling message costs should follow the
same principle that governs compensation for the underlying end user call.
I The sole exception is Extended Area Service ("EAS") traffic, where the Commission requires "bill and keep
treatment for obvious policy reasons. See Complainants Post-Hearing Brief at 1 0-11.
Qwest's attempt to charge other companies for Qwest's SS7 signaling message costs
without regard to the origination or nature of the call, is totally at odds with this fundamental cost
causation principle that governs all other aspects of inter-carrier compensation. Qwest initially
attempted to defend its practice of imposing SS7 message charges on any message that "touches
its system" by arguing that SS7 signaling is a separate network and thus not subject to the usual
rules regarding inter-carrier compensation. Late in the proceedings, when it became obvious that
there is no rational basis to support Qwest's position , Qwest adopted a significant and revealing
shift in its position.
Qwest now concedes, as it must, that it is not appropriate to assess access charges for SS7
signaling that is required for the completion of local, EAS, and intraMTA CMRS traffic. This
concession is not remarkable since the record and common sense would reach this result in any
event. Yet Qwest ties this obvious conclusion to a requirement that is akin to taking a regulatory
hostage" - Qwest will agree not to assess these charges so long as it can keep the windfall from
its past unlawful conduct and, on an ongoing basis, continue to reap a lesser degree of unlawful
windfall. Specifically, Qwest would have this Commission bless Qwest's continued billing of its
SS7 signaling message charges to aJJ toll traffic irrespective of the nature of the traffic or its
origination.
Thus, under Qwest's new proposal , the Catalog s SS7 message charges would apply to
all toll traffic originating or terminating on Qwest's network as well as interexchange carrier
IXC") end user traffic carried jointly by Qwest and one or more other Local Exchange Carriers
LECs
) ("
jointly provided access " which is commonly referred to as "meet point billing
traffic ). While this reduces the level of the injustice Qwest is seeking to perpetrate, it by no
means eliminates it. Qwest's new proposal continues to violate both the existing inter-carrier
compensation principle and traditional cost causation principles by wrongfully imposing SS7
signaling message charges on other LECs and CMRS providers for two types of traffic they did
not originate -- Qwest originated toll and jointly provided access/meet point billing traffic.
Qwest's attempt to justify this perverse result is neither particularly coherent nor at all
persuasive. Qwest first argues that the Commission lacks jurisdiction to grant the relief
requested because access charges are "deregulated" and SS7 signaling is not a
telecommunication service." Qwest Post Hearing Memorandum (hereafter cited as "Qwest
Memo ) at 5-6; 8-10. With respect to the SS7 charges imposed prior to Qwest's change of
position, Qwest contends the Commission lacks jurisdiction to order the cancellation or refund of
such charges because the "filed rate doctrine" precludes such an order. As later sections of this
Brief will demonstrate, however, Qwest'sjurisdictional arguments are illogical , mutually
contradictory, and irreconcilable with the relevant statutory provisions of the Idaho Code.
Qwest's remaining factual and legal arguments are no more convincing than its ill-
conceived jurisdictional theories. Qwest begins its Memorandum with the assertion that its
revised SS7 proposal is identical to its FCC tariff (id. at 4-5) and it concludes by insisting its
application of the Catalog s SS7 message charges is appropriate. Id. at 29-33. Sandwiched
between these two sections of its Memorandum, Qwest argues that: (1) existing contracts with
other LECs do not govern the compensation arrangements for SS7 service, and even if they did
they are not relevant because Illuminet is not the agent of its carrier/customers (id. at 13-19), (2)
the Complainants could avoid the disputed charges by becoming Qwest customers (id. at 19-24),
and (3) its Catalog overrules otherwise applicable inter-carrier compensation agreements. These
2 As the Complainants have repeatedly stated , they do not dispute the assessment of SS7 message charges where the
toll traffic is being generated by one of their presubscribed end user toll customers and terminates on Qwest'
system, because this charge is in accordance with the general cost causation compensation principle.
arguments are premised on misstatements of fact and are irreconcilable with applicable law and
policy. Accordingly, Qwest's positions should be rejected by the Commission.
ARGUMENT
The Commission has ample jurisdiction to grant the relief Complainants request.
Qwest's argument that the Commission lacks jurisdiction over the subject matter of this
Complaint rests on two different, but equally mistaken, premises. First, Qwest contends that
with the restriction of its SS7 charges to toll traffic , it is simply mirroring the FCC's order that
allowed it to unbundle interstate access charges. Thus, according to Qwest, the Commission
lacks jurisdiction because access charges are "deregulated." Second, Qwest contends that SS7
signaling is not a "telecommunication service" and the Commission therefore lacks jurisdiction
to regulate the manner in which its SS7 Catalog charges are applied. This is simply a new spin
on Qwest s argument, discredited during the hearings, that SS7 signaling constitutes a new
network, separate and distinct from the Public Switched Telephone Network. Both contentions
however, are without merit and can readily be dismissed.
At the outset, it is obvious that Qwest's "unbundling" hypothesis is hopelessly
irreconcilable with Qwest's "separate network" argument. It is fundamentally illogical for
Qwest to contend, on the one hand, that it is merely unbundling pre-existing access service
charges and, in the next breath, argue that the resulting unbundled charge has nothing to do with
telecommunications service. "Access service" is expressly included in the statutory definition of
telecommunication service.See Idaho Code 9 62-603(13). IfSS7 charges are simply an
unbundled element of access service charges, then there is no basis for Qwest to suggest that SS7
signaling is not a Title 62 telecommunications service.
Equally illogical is the ultimate consequence arising from Qwest's theory. If, as Qwest
contends, the Commission has no subject matter jurisdiction over SS7 message charges because
SS7 is not a "telecommunication service " then it necessarily follows that Qwest's Catalog filing
of SS7 message charges is void ab initio because the Commission does not have general
jurisdiction to determine or impose rates for activities other than those expressly regulated under
Title 61 or Title 62 of the Idaho Code. See e.g., Lemhi Tel. Co. V. Mountain States Tel. Tel.
Co.98 Idaho 692 , 571 P.2d 753 (1977). In the absence of Commission jurisdiction, Qwest
would have no authority to collect SS7 message charges from anyone, because tariff filings that
purport to set charges for services outside the Commission s ratemakingjurisdiction are a nullity
and unenforceable. See Boise Valley Traction Co. v. Ada Coun(v, 38 Idaho 350 222 P. 1035
(1923). In short, Qwest's assertion that the Complainants are legally bound to pay the SS7
message charges contained in its Catalog cannot be reconciled with Qwest's simultaneous
insistence that the Commission does not have jurisdiction to determine if and how such Catalog
revisions should be applied. Not only is Qwest's position inherently contradictory and contrary
to law , it is also nonsensical. If the Commission were to accept Qwest's theory, Qwest would be
free to file and collect Catalog charges from other companies for virtually anything, and the
Commission would be powerless to intervene.
Despite the fact that a lack of Commission jurisdiction would effectively frustrate
Qwest s attempt to assess the disputed SS7 message charges, Complainants cannot in good
conscience agree that the Commission lacks jurisdiction over this matter because Qwest's
position is clearly contrary to applicable Idaho statutes. Title 62 is replete with provisions that
grant the Commission jurisdiction and authority to receive, hear and dispose of complaints such
as this one. See Idaho Code Sections 62-605, 62-608, 62-609 , 62-614 and 62-615. As the
Complainants pointed out in their Post Hearing Brief, Section 62-614 speaks directly to the type
of case now before the Commission:
(1 )
(2)
If a telephone corporation providing basic local exchange service
which has exercised the election provided in section 62-604(2),
Idaho Code, and any other telephone corporation subject to title 61
Idaho Code, or any mutual, nonprofit or cooperative telephone
corporation, are unable to agree on any matter relating to
telecommunication issues between such companies, then either
telephone corporation may apply to the commission for
determination of the matter.
Upon receipt of the application, the commission shaH have
jurisdiction to conduct an investigation, and upon request of either
party, to conduct a hearing and, based upon evidence presented to
the commission to issue its findings and order determining such
dispute in accordance with applicable provisions of law and in a
manner which shall best serve the public interest.
Qwest's attempts to remove the instant complaint from the purview of Section 62-614 are
not persuasive. First, Qwest argues that Illurninet is the only company currently being assessed
SS7 charges, and Illuminet is not a "telephone corporation" entitled to bring a complaint under
Section 62-614. This argument ignores the obvious fact that the overwhelming majority of the
Complainants are indisputably telephone corporations entitled to invoke the Commission
jurisdiction under this statute. Moreover, the statute does not, as Qwest implicitly suggests
restrict complaining parties to only those who receive bills directly from Qwest. Section 62-614
is not a "billing dispute" statute. Rather, this statute grants the Commission general jurisdiction
and authority to resolve "any matter relating to telecommunication issues between such
companies.!d. (emphasis supplied). Here the "matter" is before the Commission on the
complaint of several telephone corporations. The fact that the matter involves a dispute about
the improper assessment of charges passed through to those telephone corporations by their
intermediary agent does not deprive the Commission of jurisdiction to resolve "any matter
involving two or more telephone corporations.
Second, Qwest attempts to distinguish Section 62-614 from the present case by noting
that Section 62-614 requires the Commission to determine such dispute "in accordance with
applicable provisions oflaw " Qwest then follows this observation with the conclusory
allegation that
(tJhe applicable provisions oflaw, however prevent the Commission from
regulating Qwest's provision of SS7 signaling associated with toll traffic
, a Title 62 service. In sum, 9 62-614 does not confer jurisdiction on
the Commission to override the law and regulate the terms under which
Qwest provides Title 62 services to other telephone corporations.
Qwest Memo at 6 (emphasis original). Qwest provides no citation of authority for this
remarkable assertion, but it apparently is based on the assumption that an election of price
deregulation of toll traffic necessarily deprives the Commission of jurisdiction over the terms
and conditions under which such services are provided. Qwest's assumption is unfounded and
insupportable.
The Idaho Legislature made it quite clear that the Title 62 deregulation option is confined
only to price deregulation. Section 62-622(5) states:
The commission shall determine the non-economic regulatory
requirements for all telephone corporations providing basic local exchange
service or designated as an eligible telecommunications carrier pursuant to
sections 62-61 OA through 62-610F, Idaho Code including, but not limited
, such matters as service quality standards, provision of access to carriers
providing message telecommunications service filing of price lists
customer notice and customer relation rules. (Emphasis added).
As a provider of basic local exchange service, Qwest is obviously subject to this statute and to
continuing Commission plenary j Ulisdiction over all regulatory issues other than the price of its
Title 62 offerings.
Similarly, Section 62-605(5) provides as follows:
For any telecommunication service which was subject, on
the effective date (July 1 , 1988) of this act, to title 61 , Idaho Code
and which at the election of the telephone corporation became
subject to this chapter, the commission shall have continuing
authority to review the quality of such service, its general
availability, and terms and conditions under which it is offered.
Upon complaint to the commission and after notice to the
telephone corporation providing such service and hearing, the
commission finds that the quality, general availability or terms and
conditions for such service are adverse to the public interest, the
commission shall have authority to negotiate or require changes in
how such telecommunication services are provided. In addition, if
the commission finds that such corrective action is inadequate, it
shall have the authority to require that such telecommunication
services be subject to the requirements of title 61 , Idaho Code
rather than the provisions of this chapter.
Like Section 62-622(5), Section 62-605(5) makes it clear that the Commission has continuing
authority to review the quality of telecommunication service, its general availability, and the
terms and conditions under which it is offered, even after a telephone corporation elects Title 62
regulation. Section 62-605 not only retains general Commission jurisdiction over non-economic
matters involving Title 62 carriers, it also provides for the more draconian option of effectively
canceling a company s Title 62 election. If the Commission opts to exercise its authority
regulate Qwest pursuant to this statutory authority, there are numerous code sections in Title
that would establish jurisdiction in this case, including, but not limited to, Idaho Code Sections
61-307 61-501 61-502 61-503 61-504 61-612 61-622, 61-622A, 61-623 , 61-624, and 6l-641.
Qwest attempts to escape the purview of Section 62-605 by arguing that SS7 is a new
service that was not in existence in 1 988, and the statute therefore does not apply because SS7
was not previously subject to the Commission s Title 61 jurisdiction. This position ignores the
fact that, when the act was passed, the Commission had plenary jurisdiction over all aspects of
Qwest's services , and this certainly included signaling because signaling of some type has
always been used to ensure proper routing and completion of end user traffic. See, e.Tr. 303
LL. 7 through 304, LL. 20.
Moreover, as Qwest admits in its Memorandum, SS7 was "'unbundled' from switched
access service " Qwest's Memo at 9 , which was clearly subject to Title 61 in 1988. Accordingly,
the fact that Qwest has now imposed a separate rate element for intrastate SS7 messages does not
make it any less a feature of switched access service. If the simple "unbundling" and renaming
of services can unilaterally deprive the Commission of jurisdiction, the Commission could easily
be deprived of virtually all of its authority, in direct contravention of the legislative intent
expressed in Section 62-605 and other provisions. Such a result contradicts any rational public
policy, let alone rational construction of the applicable statutes. Accordingly, Qwest's theories
regarding the lack of Commission jurisdiction should be rej ected.
II.There is no "filed rate doctrine" issue in this proceeding.
Qwest's contention that granting the reliefrequested by Complainants violates the "filed
rate doctrine" or "constitutes unlawful retroactive ratemaking" is both illogical and contrary to
the relevant law. In the first place, it suffers from the same defect inherent in Qwest's argument
that the Commission lacks jurisdiction to resolve the complaint. Qwest cannot simultaneously
claim that the Commission has no jurisdiction over the subject matter, and at the same time argue
that the Commission is bound by regulatory policies and doctrines, such as the filed rate
doctrine, that are applicable only to services provided under regulated tariffs. Moreover
Qwest's reliance upon the filed rate doctrine is based on a fundamental misconception about the
nature of that rule of law.
Qwest's Memorandum contains a long string of citations supporting the proposition that
neither a utility nor its customer can enforce a contract for rates other than those approved by the
Commission and in effect at the time. 3 Qwest further contends that the Commission cannot alter
a filed tariff rate except prospectively and that neither a carrier nor its customer can enforce
terms and conditions that deviate from those filed in a tariff. See Qwest Memo at 10-12. What
Qwest fails to recognize, however, is that these decisions are not relevant to this complaint.
First, the filed rate doctrine restricts regulatory review only where there has been an
active regulatory determination of a just and reasonable rate that binds the regulated utility and
its customers with the force oflaw. See Arkansas Louisiana Gas Co. v. Hall 453 US. 571 101
S. Ct. 2925 (1981). The Commission obviously made no such determination with respect
Qwest's SS7 signaling charges. Qwest merely filed its Catalog SS7 message rate structure and it
went into effect.
Second, since the proper implementation of the Catalog s SS7 message rate structure is
the essence of this proceeding, there is no "deviation" from the rates under a properly
implemented Catalog SS7 message structure. See Qwest Memo at 26. Thus, Qwest's reliance
on American Telephone Telegraph Co. v. Central Office Telephone, Inc.524 US. 214 (1998)
is misplaced.
Third, Complainants are not challenging the unbundling of SS7 signaling charges or the
level ofQwest's rates. Rather, the Complainants are alleging that the Catalog/tariff charges are
not applicable to local, EAS and intraMTA CMRS end user traffic (as Qwest now concedes) as
well as to Qwest-originated toll and meet point billing traffic.Under these circumstances, the
3 As Qwest notes, the filed rate doctrine is codified in Section 61-313 , Idaho Code. Qwest fails to point out
however, that it contains an explicit provision that allows telephone and cable companies to enter into contracts with
other common caniers that deviate from the tariff rates, so long as those rates are "common to all common caniers
of like class.4 Qwest argues that because other "customers" have paid the rate and not complained, Complainants are seeking
special treatment.See Qwest Memo at 10, 12. Qwest presented no evidence as to the identity of these other
customers." Clearly the fact that other customers may have Sli ffered an injustice in silence or in ignorance that they
were wrongly charged is no reason to reject an otherwise valid complaint, and, in any event, there is no evidence in
the record to support a finding of discrimination.
filed rate doctrine is not implicated because that rule of law does not preclude a regulator from
finding either that the rates were unlawful ab initio or that the rates do not apply in a particular
situation.
One of the cases cited by Qwest in its Memorandum, in fact makes precisely this point.
In Brown v. MCI World Com Network Services, Inc.277 F.3d 1166 (2002), the plaintiff argued
that there is no authorization within the tariff to charge the $10 fee, and that the fee therefore
violated the tariff.' Id. at 1173 (citation omitted). The court therefore concluded that
, "
Brown
claim is not precluded by the filed-rate doctrine.!d. As the court explained, while "(tJhe filed-
rate doctrine precludes courts from deciding whether a tariff is reasonable. . . it does not
preclude courts from interpreting the provisions of a tariff and enforcing a tariff." 277 F.3d at
1171- 72.
The distinction drawn by the court in Brown is also codified in the Idaho statutes.
Section 61-641 states:
When complaint has been made to the commission concerning any
rate, fare, toll, rental or charge for any product, or commodity, furnished
or service performed by any public utility, and the commission has found
after investigation, that the public utility has charged an excessive or
discriminatory amount for such product, commodity or service, the
commission may order that the public utility make due reparation to the
complainant therefore, with interest from the date of collection; provided
no discrimination will result from such reparation.
This section also clearly refutes Qwest's argument that the Commission cannot correct past
billing errors without nmning afoul of the filed rate doctrine. The Commission can not only
determine whether a tariff has been properly applied in the past, it can also order reparations for
prior biJJing errors. Thus , the relief that Complainants seek falls squarely within the rule
announced in Brown and codified in Section 61-641. As in Brown the Complainants are
contending that there is "no authorization in the tariff' for the charges Qwest has assessed. This
is doubly true of the prior charges on local , EAS, and intraMT A CMRS traffic, where Qwest has
now publicly conceded in effect that these charges were improper.
Accordingly, for the foregoing reasons, Qwest's arguments regarding the filed rate
doctrine are baseless. The Commission has ample jurisdiction to entertain this Complaint, to
order Qwest to correct its abusive misapplication of its Catalog, and to order reparations with
interest, and the filed rate doctrine does not bar this proper result.
III.Qwest'SS7 Catalog charges are not "identical" to its FCC tariff, nor are they being
properly applied.
Qwest insists that it's "Catalog offering for SS7 services is identical to its FCC-approved
tariff in the rates, terms, and application to call set up messages." Qwest Memo at 4. Qwest'
assertion is patently false.
The FCC's order only allowed LECs to "unbundle pre-existing access charges into a
per-minute switched access charge and a per-message SS7 signaling componentS Applying this
same principle to Idaho intrastate traffic would confine SS7 charges to those messages that are
otherwise subject to access charges. In the case of interchanged traffic with other LECs, Qwest
would only be permitted to bill SS7 charges for that LEC's pre-subscribed toll end user messages
that terminate on Qwest s system, and Complainants do not object to the application of SS7
charges to this specific class of intrastate end user toll traffic. But Qwest is not , in fact
following the principle embedded in the FCC's decision. Instead, Qwest is assessing SS7
signaling charges on traffic where it is not permitted to charge other LECs access charges, i.
on Qwest originated toll and meet point billed traffic (and, prior to its concession , local , EAS and
5 In fact, the FCC made clear in its decision allowing Qwest' to implement its interstate SS7 message structure that
Qwest' itself limited its unbundling to exchange access. See US West Petition to Establish Part 69 Rate Elements
for SS7 Signaling, Order. CCB/CPD 99-, DA 99-1474, released December 23 1999 Q\\'(:st SS7 Waiver Order
That FCC discussion specifically notes Qwest's ability "to assess rate elements on each slvitchl!d access originating
or terminating call atlmzpt.
. . .
!d. at para. 6 (emphasis added).
intraMT A CMRS caJJs). This practice is not in any sense "identical" to the FCC approved tariff
because the FCC did not envision nor have reason to consider the creation of new SS7 charges
on traffic that previously was not subject to access charges.
Qwest's misapplication of its SS7 charges is also at odds with the FCC tariff in one other
critical aspect. The FCC's order rigorously followed the cost causation principles discussed in
the introductory section of this Reply Brief. The FCC's order authorizes Qwest to collect SS7
charges from IXCs when the origination or termination of their traffic makes demands on
Qwest's system. Such requirement is entirely reasonable since an IXC whose customer places a
call causes the SS7 message costs to be incurred, and the IXC is the party coJJecting the revenue
for that call. Under these circumstances, it is entirely appropriate for Qwest to demand from the
IXC compensation for the all of Qwest's SS7 message costs incurred by Qwest on that IXC'
behalf.
These same considerations simply do not apply in the case of Qwest originated toll or
meet point billed traffic. Qwest attempts to gloss over this obvious fact by repeatedly
characterizing IJJuminet as its "customer" who "purchases" SS7 services out of the Catalog. See
g.,
Qwest Memo at 33. Accordingly, Qwest argues that it is only fair that IJJuminet "should
6 Qwest implies that the fCC's
Qwest SS7 Waiver Order permitted Qwest to implement a Percent Interstate Use
factor rather than installing the necessary metering and measurement equipment required by the FCC's Access
Charge Reform Order at para. 253. See Qwest Memo at 33.As explained by Complainants, however, the FCC'
requirements, while instructive, do not address the issues before the Commission because of the distinct types of
intrastate end user traffic types at issue in this proceeding (see Complainants Post-Hearing Brief at J 5-16) and
clearly do not preempt the Commission s independent consideration of the issues raised in this proceeding.
Moreover, Qwest's current argument cannot be reconciled with either the FCC' statements that Qwest "made
investments to provide its network with the capability to assess rate elements on each switched access originating or
terminating call attempt, rather than the duration of the calL" (Qwest SS7 Waiver Order at para. 6) or Qwest's
testimony in this proceeding that ". . . Qwest made a substantial investment to update its systems so that signaling
costs could be assessed and recovered based on a customer actual usage of the SS7 signaling l/L'!wor!c" McIntyre
Testimony at 5 (12-l4)(emphasis added). Tr. 394, LL. 12-14. Further, Qwest's apparent post-hoc eff011s to justify
its improper implementation of the Catalog s SS7 rate structure cannot be reconciled with the FCC's customer-
impact analysis requirement. See Access Charge Reform Order 12 FCC Red 15982 16090 (para. 253). See
Complainants Post-Hearing Brief at 16.
pay for that use id. at 31 , because Qwest has no other alternative to recover its costs. Id. at 33.
Qwest is wrong in all respects.
The standard dictionary definition of a "customer" is "a person who buys goods or
services from a shop or business." Fowler & Fowler, The Concise Oxford Dictionary (8th ed.
1991) at 286. As the record demonstrates, Illuminet's sole function is to transport SS7 signals to
and from its carrier/customers. With respect to its actions being addressed in the instant
complaints, Illuminet is in fact nothing more than a conduit. Illuminet has no independent use
for the SS7 messages that are required to complete end user traffic because Illuminet provides no
end user service. Thus, when a Qwest presubscribed toll end user initiates a toll call to one of
Illuminet's carrier/customers , Illuminet does nothing more than accept the associated SS7 signal
for transport. The same thing occurs in the case of meet point billed traffic, except that in these
cases it is the IXC who generates the caJl and causes signaling costs to be incurred. In both
cases, Illuminet purchases no SS7 message services whatsoever from Qwest (and for that matter
neither do the Illuminet carrier/customers). Nor does Illuminet, or its carrier/customers, use
Qwest's facilities or collect any revenue from such calls. To characterize Illuminet as a
customer" under these circumstances is therefore erroneous and misleading, and to charge
Illuminet for its uncompensated assistance to Qwest in transporting the SS7 messages required to
complete a third party IXC's toll traffic or Qwest-originated toll calls is patently unfair and
umeasonable.8 If Qwest is not, in fact, receiving sufficient compensation from these calls to
7 Other than the links and ports, which all parties acknowledge are not at issue in this case.8 Qwest avers that the Commission should somehow ignore this unlawful result because the charges at issues are
smaller than the access charges that Qwest must pay the Idaho ILECs for terminating access" and thus do not
disproportionately burden ILECs." Qwest Memo at 29. Not only is Qwest's effort to misfocus attention from its
unlawful behavior disturbing, but the over $1 000 000 worth of SS7 message unlawfully assessed by Qwest to
Illuminet and all of its carrier/customers (which include lLECs) (see Tr. 206, LL. 1-6) hardly be considered
insignificant as Qwest implies.
recover its SS7 costs, it should adjust its end user and IXC charges in an appropriate manner
rather than seek to foist its costs off on to third parties.
IV.Qwest's agreements with other carriers govern the proper method of recovering
SS7 costs associated with inter-company traffic.
Qwest's contention that SS7 cost recovery is not subject to the contractual arrangements
that govern all other inter-company charges is a common theme throughout its Memorandum.
Complainants have demonstrated the fallacy of Qwest's contentions in considerable detail at the
hearings and in Complainants' Post Hearing Brief , and Complainants are confident the
Commission will give those demonstrations proper consideration without their repetition in this
Brief. However, one new argument advanced by Qwest requires a brief response. At page 32 of
its Memorandum, Qwest observes that Complainants do not cite a single instance of a meet point
billing agreement that "states that SS7 caJJ set up charges will not be assessed on messages
associated with meet-point-billing traffic." While this maybe true, it does not support Qwest's
ultimate hypothesis that Complainants have cited no authority to support their position.
The reason why meet point billing agreements do not specifically address SS7 message
charges is that Complainants could not have reasonably anticipated Qwest's attempts to impose
new SS7 message charges, and they certainly could not have envisioned an unreasonable
extension of these charges to LECs that participate in meet point billing arrangements. Contrary
to Qwest's mistaken view , Complainants' assumption that traditional compensation
arrangements include signalling costs was, and is , well founded.
SS7 messaging has been traditionally acknowledged to be an indispensable and integral
component of the public switched network see Elkhart Tel. Co., Inc. Southwestern Bell Tel.
Co.Opinion and Order 11 FCC Rcd 1 051 ('1 3) (1995), and, in fact, the Idaho definition of
telecommunication service" specifically includes signaling. See Idaho Code 9 62-603(13).
Moreover, the FCC's cost-recovery principles that require the costs of SS7 to be treated as a
general network upgrade (see Complainants ' Post Hearing Brief at 18 citing Access for 800
Service Report and Order, 4 FCC Rcd. 2824, 2832 (1989)) would be rendered meaningless ifthe
treatment of SS7 signaling does not, as Qwest contends, follow the regulatory treatment of the
end user traffic that an SS7 message supports.
Consequently, since SS7 signaling is an indispensable component of the end user traffic
simple logic and common sense dictate that existing regulatory directives and agreements should
apply to inter-carrier compensation for SS7 signaling costs. To suggest, therefore, that the
Complainant's have provided no "authority" to support their argument is meaningless.
Qwest's suggestion that Illuminet is not the transport agent for its
carrier/customer s SS7 signalling is without merit.
Qwest further argues that, even if existing contractual relationships govern SS7
compensation arrangements, those agreements cannot bar its charges to Illuminet because
Illuminet's status as SS7 transport agent for its carrier/customers is a "fiction.See Qwest
Memo at 13. Qwest's argument is defective in two respects. First, it mistakenly assumes that
llJuminet s agency status is crucial to Complainants ' case. Second , it rests on a fundamentally
mistaken view of agency law.
With respect to the first point, even assuming, arguendo that Qwest is correct that
llJuminet is not an agent (an assumption that the record does not support), the proper assessment
of SS7 messages should nonetheless be determined in accordance with the rules governing inter-
carrier compensation for costs associated with the associated message, without regard to the
method by which the signals are transported. Thus, Complainants would be entitled to the
requested relief even if Illuminet transported its carrier/customers ' SS7 signals as an independent
contractor. Accord, Provision of Directory Listing Information under the Telecommunications
Act of 1934 As Amended First Report and Order, 16 FCC Rcd 2736 2748 (n.73)(2001).
Illuminet is simply providing transport that its carrier/customers could provide for themselves.
But by using Illuminet they can transport their SS7 signals more efficiently and at a lower cost to
society as a whole. The underlying traffic, including the associated signals, nevertheless remains
the carrier/customers' regardless of the means of transport. Under these circumstances
, "
the
agencylindependent contractor distinction is not relevant and. . . the rights of the
(agentlindependent contractor J are derivative of its carrier principal." Id.
Furthermore, Qwest's insistence that Illuminet is not the agent of its carrier/customers is
simply wrong as a matter oflaw. Under Idaho law, agency is "a relationship resulting from the
manifestation of consent by one person to another that the other shaJJ act on his behalf and
subject to his control, and consent by the other so to act." Herbst v. Both of Dairies, Inc.110
Idaho 971 973; 719 P.2d 1231 1233 (Idaho Ct. App. 1986). The overt act necessary to create an
agency relationship is completed when the "principal confers authority upon the agent to act for
the principal" Hilt v. Draper 122 Idaho 612 , 616, 836 P.2d 558 562 (Idaho Ct. App. 1992). The
scope of the agency depends on the agreement between the principal and agent and cannot be
altered by third parties who have dealings with the agent. See ES. Harper Co. v. General
Insurancc Co. of America 91 Idaho 767, 430 P.2d 658 (1967). Thus, Qwest's suggestion (see
Qwest Memo at 14) that it can determine the scope of agency betvveen IJJuminet and its
carrier/customers is wrong. See also Landvik by Landvik v. Herbert 130 Idaho 54, 936 P.2d 697
(Idaho Ct. App. 1997).
In the present case, it is difficult to envision a more complete expression ofthe parties
intention to create an agency relationship, and the evidence of that relationship could hardly be a
fiction " created for litigation purposes because it predates the present proceedings. The
Complainants have provided multiple forms of evidence in addition to the direct testimony ofthe
principals-- e., the LOAs, the actions of Complainants during the past two years and the letter
from Illuminet in November, 2000 to Qwest (Exhibit 406) - that collectively demonstrate the
existence and scope of the agency. Moreover, there is nothing unusual about the agency concept
in the telecommunications industry. For example, the ELIIQwest ICA (Exhibit 205) approved
by this Commission, mentions the word "agent" numerous times, which is testament to the fact
that Qwest knew ELI would, like many new entrants, use agents to handle many of its needs.
According to Mr. McIntyre, Qwest's SGAT also liberally allows agency and Qwest recognizes
that telephone companies use agents. Tr. 495 , LL. 15-18.
Finally, this agency relationship was repeatedly confirmed in open hearings. On direct
examination and in response to Qwest's cross-examination , the agency between Illuminet and its
carrier/customers was acknowledged both by the principal carrier/customers and by the agent
Illuminet:
IlIuminet is the ". . . SS7 service provider agent in Idaho. . ." for the other
complainants. (Tr. 22, LL. 13-15.
IlJuminet ". . . serves as their agent with respect to SS7 signaling services
contemplated under the ICA with Qwest." (Tr. 32 , LL 11-13.
. . . IlIuminet stands in the shoes of ELI for SS7 message signaling. . .." (Tr.
, L. 6.
. . . Illuminet represents it carrier/customers in all matters regarding SS7 . . . .
(Tr. 62, LL. 8-
However, the agency relationship goes beyond the verification of point codes.
IlIuminet conducts all negotiations and issues all orders for the services required
from other parties to provide SS7 services for its customers. . . ." (Tr. 87 , LL.
13-15.
IlIuminet is ELI's agent "for SS7 network services." (Tr. l27, LL. 8-10.
The scope of the agency is not "limited to the utilization of point codes." (Tr.
127, LL. 7-19.
Arranging for the LOA from its carrier/customers designating Illuminet as that
carrier/customer s agent to conduct all negotiations and issue orders for ISUP
signaling." (Tr. 211 , LL. 2-
Illuminet is the SS7 network signaling agent for its carrier/customer." (Tr. 229
LL. 26-27.
Thus, the clear evidence demonstrates that Illuminate is the SS7 transport agent for its carrier
customers, and is entitled to assert the inter-company compensation rights of its carrier/customer
principa1s.
VI.The FCC's tariff filing requirements are not at issue in this case.
In a misguided attempt to refute Complainants' contention that the existing inter-carrier
agreements govern whether and how SS7 message charges should be assessed, Qwest's suggests
that Complainants are seeking "to impose an impermissible cross-reference between Qwest's
Access Service Catalog and their interconnection agreements." Qwest Memo at 25. This
suggestion cannot be reconciled with the facts or applicable law.
First, Qwest has not shown, nor could it, that the FCC's tariffing rules are relevant to this
proceeding. And, in fact, Qwest has admitted the same. See Qwest Brief at 25 ("(tJhis
Commission does not have a rule similar to FCC rule 61.74(a) . . . .) (footnote omitted).
Second, the relief being sought by Complainants need not require any "cross-referencing
of other agreements that Qwest has in place with certain of the Complainants. Complainants
9 Qwest also devotes considerable attention in its Memorandum to an attempt to show that Illuminet is not a
third party beneficiary of its carrier/customers' contracts. This is a "strawman" argument. Complainants never
contended that Illuminet is a third party beneficiary, and the doctrine has no bearing on Complainants' contention
that inter-carrier compensation for SS7 signaling is governed by the contractual relationship between the carriers
regardless of the manner in which the signals are h'ansported, Illuminet gains no benefit from one of its
carrier/customer s agreements with Qwest independent of the benefits that the Illuminet carrier/customer receives
and those benefits are derived from the agency relationship in existence between Illuminet and its carrier/customers.
Accordingly, whether Illuminet is a third party beneficiary is irrelevant.
point to the agreements which are on the record, or may be officially noticed, as evidence that
those agreements provide for the complete compensation between Qwest and the Illuminet
carrier/customers for the covered traffic, including the necessary components of such traffic (e.
the SS7 messages), and that here the Catalog does not apply to such traffic. In addition, Qwest's
own actions contradict its argument because Qwest's suggestion that local, EAS and intraMT A
CMRS SS7 messages are to be excluded from the Catalog s rates on a going -forward basis
necessarily concedes that the tariff must be implemented in a manner that honors existing
contracts and regulatory constraints. See Qwest Memo at 2, n.
Finally, Qwest's argument rests on a complete misunderstanding of the law. The very
FCC decision that Qwest cites actually supports the conclusion that Qwest cannot file a tariff that
unilaterally alters the terms and conditions of its pre-existing agreements. See also Complainants
Post-Hearing Brief at 11-13. In fact, the FCC twice specifically affirmed this conclusion:
Using the tariff process to circumvent the section 251 and 252
processes cannot be aJJowed. In this respect, we find the tariff to
be umeasonable in another respect.
Bell Atlantic-Delaware, Inc., et at. v. Global NAPs, Inc.File No. E-99-, FCC 99-381 , 18 CR.
1213, 1221 (para. 23) (1999).
As the Order observes
, "
r u Jsing the tariff process to circumvent
the section 251 and 252 processes cannot be allowed.
Bell Atlantic-Delaware, Inc., et at. v. Global NAPs, Inc.File No. E-99-, FCC 00-107 - FCC
Rcd _19 C.R. 1333 , 11337 (para. 14)(2000). Thus, Qwest's analogy to FCC actions actually
supports rather than questions the action Complainants request the Commission to take.
The FCC's rulings are, of course, merely an application of the Sierra Mobile doctrine.
which prevents utilities and commissions from altering a utility contract, unless an extremely
difficult public interest test is met. In Idaho, this doctrine is known as the Agricultural Products
rule, after the case in which the Idaho Supreme Court adopted the Sierra Mobile doctrine. See
Agricultural Products Corp. v. Utah Power Light Co.98 Idaho 23 557 P.2d 617 (1976). As
applied to the present case, the Agricultural Products rule clearly prohibits Qwest's attempt to
abrogate its inter-company compensation agreements by the filing and implementation of the
Catalog s SS7 message rate structure. Accordingly, the Commission should dismiss Qwest's
suggestions that it is an impermissible cross referencing to cite the relevant contracts in these
circumstances.
VII.Qwest's argument that the Complainants can choose to avoid Qwest's unlawful
conduct and the imposition of unreasonable charges is irrelevant, unreasonable and
anticompetitive on its face.
Qwest's Memorandum repeats at considerable length its arguments advanced during the
hearings to the effect that the Complainants, other than IlJuminet, have options available to them
that would enable them to avoid the SS7 charges in question. As Qwest states the proposition in
its Memorandum
If they no longer find that the benefits of purchasing services from
Illuminet outweigh the costs, they can either negotiate interconnection
agreements to purchase SS7 as a UNE or, in the case of the ILECs who
qualify, can enter into infrastructure sharing agreements directly with
Qwest.
Qwest's Memo at 34
The Complainants have previously explained in their testimony and Post Hearing Brief
why the "choices" offered by Qwest are unacceptable and unworkable, and that discussion wiJJ
not be repeated here. See Complainants Post-Hearing Brief at 29-30. Suffice it to say that the
choices" Qwest offers are, as a practical matter, illusory.
Furthermore, the alleged "choices" are completely irrelevant to these proceedings. It is
self evident that unlawful conduct cannot be defended by asserting that the victim could avoid
the consequences by reconfiguring its business in the manner desired by the perpetrator. Such a
proposition is not only unjust and umeasonable, it is also doubly reprehensible in this case
because it is clearly anti-competitive.
CONCLUSION
This proceeding poses a straightforward issue - has Qwest properly implemented its
intrastate SS7 message rate structure so that the charges it has assessed and will continue to
assess are lawful. The only reasonable answer to this question must be "no." Qwest cannot
seriously defend its misconduct when it is clear that Qwest's implementation of the SS7 message
rate stmcture at issue ignores the fact that: (1) the SS7 message rate structure is an integral
component of the end user traffic it supports, and (2) that it is imposing Catalog SS7 message
rates on entities that are not serving the end user who causes the SS7 messages to be generated
and the SS7 costs to be incurred. Regardless of Qwest ' s efforts to suggest otherwise, this is the
essence of this proceeding and it has nothing to do with Qwest's SS7 message rates. It does
however, have everything to do with Qwest's improper implementation of the Catalog s SS7
message rates and the lawful exercise of the Commission s jurisdiction to redress Qwest's
unlawful conduct. Accordingly, the Commission can and should reject outright Qwest's
arguments and grant the relief Complainants request.
Respectfully submitted this 20th day Febmary, 2003.
GIVENS PURSLEY LLP
CO! e W
Attorneys for Complainants
MOFFAT THOMAS
KRASKIN, LESSE & COSSON, LLC
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 20th day of February 2003, I caused to be served a true
and correct copy of the foregoing by the method indicated below, and addressed to the following:
Jean Jewell
Idaho Public Utilities Secretary
472 W. Washington Street
O. Box 83720
Boise, ID 83720-0074
- U.S. Mail Fax -1L By Hand
Mary S. Hobson, Esq.
Stoel Rives LLP
101 S. Capitol Blvd., Suite 1900
Boise, ID 83702-5958
US. Mail - Fax -1L By Hand
Thomas J. Moorman
KRASKIN, LESSE & CaSSON, LLC
2120 L Street, N., Suite 520
Washington, D.e. 20037
.2L U.S. Mail Fax - By Hand
F. Wayne Lafferty
LKAM Services Inc.
2940 Cedar Ridge Drive
McKinney, TX 75070
.2L US. Mai1 Fax - By Hand
Ms. Gail Long
Manager, External Relations
TDS Telecom
O. Box 1566
Oregon City, OR 97045-1566
.2L US. Mail Fax - By Hand
Mr. Ted Hankins
Century Telephone Enterprises, Inc.
O. Box 4065
Momoe, LA 7121 1 -4065
.2L US. Mail Fax - By Hand
Mr. Lance Tade
Citizens Telecommunications
4 Triad Center, Suite 200
Salt Lake City, UT 84180
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Morgan W. Richards
Moffatt Thomas
101 South Capitol Blvd loth Floor
Boise, ID 83701
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Clay Sturgis
Moss Adams LLP
601 West Riverside, Suite 1800
Spokane, W A 99201-0663
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Richard Wolf
Illuminet, Inc.
4501 Inte1co Loop SE
O. Box 2909
Olympia, W A 98507
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Tina Smith