**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of : )

)

C.F. COMMUNICATIONS CORP., et al., ) File Nos. E-89-170, E-89-171,

Complainants ) E-89-172, E-89-179, E-89-180,

) E-89-181, E-89-182, E-92-97,

v.  ) E-93-34, E-93-35, E-93-36, E-93-37,

) E-93-38, E-93-39, E-93-40, E-93-41, ) E-93-42, E-93-43, E-93-44,
E-93-45,

CENTURY TELEPHONE OF ) E-93-50, E-93-56, E-93-57, E-93-58,

WISCONSIN, INC., et al., ) E-93-59, E-93-62, E-93-73, E-93-74,

Defendants. ) and E-93-81

.

**MEMORANDUM OPINION AND ORDER ON REMAND**

**Adopted: April 7, 2000 Released: April 13, 2000**

By the Commission:

**I. INTRODUCTION**

**1.** In this Memorandum Opinion and Order on Remand, we grant 29
formal complaints brought by independent payphone providers (IPPs)
alleging that the defendant local exchange carriers (LECs)[^1] violated
sections 201(b) and 202(a) of the Communications Act of 1934, as
amended,[^2] and Part 69 of the Commission\'s rules,[^3] by improperly
assessing end user common line (EUCL) access charges upon the
complainants. The cases are before us as a result of a decision of the
U. S. Court of Appeals for the District of Columbia Circuit vacating a
previous Commission order denying these complaints and remanding the
cases to the Commission for further consideration, consistent with that
decision.[^4]

######### II. PROCEDURAL HISTORY

**2.** CFC originally filed complaints against 13 LEC defendants. The
complaints

against 6 of those defendants were dismissed on joint motion of the
parties after those defendants

agreed to be bound by the final determination in the remaining
cases.[^5] After the filing of the initial 13 complaints, CFC and
several other IPPs filed 52 additional formal complaints raising the
same allegations raised by CFC in its initial complaints. The Commission
did not consolidate the additional 52 formal complaints with the initial
complaints.

**3.** In the *Bureau Order*, addressing the initial seven formal
complaints filed by CFC, the Commission\'s Common Carrier Bureau
(Bureau) found that the defendants had properly assessed the EUCL charge
on CFC\'s payphone lines.[^6] In arriving at that decision, the Bureau
concluded that CFC did not provide \"public telephone\" service under
section 69.2(ee) of the Commission\'s rules and, thus, was not exempt
from the EUCL charge as other public payphones. Rather, the Bureau found
that CFC was providing \"semi-public\" telephone service as described in
Part 69 of the Commission\'s rules and, therefore, the LECs were allowed
to assess EUCL charges to CFC\'s payphones.[^7] In addition, the Bureau
determined that CFC was also subject to the EUCL charge because it was
an \"end user\" under section 69.2(m) of the Commission\'s rules. CFC\'s
application for review of the *Bureau Order* was denied by the
Commission, applying the same reasoning as the *Bureau Order*.[^8]

**4.** As detailed below, CFC appealed the Commission\'s decision to the
U. S. Court of Appeals for the District of Columbia Circuit. Subsequent
to the filing of CFC\'s appeal, the Commission denied the 52 additional
formal complaints that had been filed after the initial complaints.[^9]
The Commission\'s *CFC II* order relied upon its analysis in *CFC I*.
The IPPs also appealed to the D.C. Circuit a number of the formal
complaints denied in the Commission\'s *CFC II* decision.

**5.** In an order directly resolving only the *CFC I* appeals, the
court ruled that the Commission had misapplied the section 69.2(ee)
definition of \"public telephone,\"[^10] as well as the

term \"semi-public\" payphone.[^11] The court found that the Commission
had incorrectly categorized

all IPP payphones as semi-public, thereby subjecting the IPPs to the
EUCL charge.[^12] The court

also concluded that the Commission\'s basis for distinguishing between
IPP and LEC payphones was not consistent with the Commission\'s prior
orders and rules, and that \"\[t\]he Commission has not adequately
justified the distinction it has drawn between CFC\'s payphones and
LEC-owned payphones.\"[^13] The court stated that the Commission had
\"improperly discriminated between similarly situated phone services
without a rational basis.\"[^14]

**6.** In addition, the court ruled that, in concluding that CFC was an
"end user" subject to the EUCL charge, the Commission had misconstrued
certain terms contained in the section 69.2(m) definition of \"end
user.\"[^15] The court held that the Commission\'s interpretation of
certain terms contained in that definition was \"plainly
erroneous.\"[^16] Accordingly, the court vacated and remanded *CFC I* to
the Commission for further proceedings consistent with the court\'s
order. In light of the Court of Appeals\' decision, the Commission
requested and was granted voluntary remand of the then pending appeal of
its *CFC II* order.[^17] In this proceeding, the Commission will address
all of the cases appealed in the *CFC I* and *CFC II* orders.

**7.** In a related matter, approximately 3,000 informal complaints from
IPPs raising the same issues involved in the instant complaints are
pending. Specifically, the complainants allege that the defendant LECs
have illegally assessed EUCL charges upon complainants. In connection
with these informal complaints, the complainants have filed a motion to
consolidate the informal and formal complaints into one proceeding.[^18]

**8.** We note that the amendments made to the Commission's rules
following passage of the Telecommunications Act of 1996 mandate that
both the IPPs and the LECs pay the EUCL charge for all of their
payphones.[^19] Consequently, the issues addressed in this order will
only have retrospective application.

######### III. DISCUSSION

**A. Access Reform Proceeding**

9.  To place its decision in the proper context, the D.C. Circuit
    reviewed in its order

certain aspects of the Commission's access reform proceeding. As the
D.C. Circuit laid out in its opinion, the Commission in 1983 released
rules governing the charges through which LECs

would be compensated for providing IXCs with access to the LECs\' local
exchange facilities.[^20] The

Commission decided that, as a general matter, \"end users\" placing
calls should bear the cost of the access charges.[^21] The Commission\'s
rules required that most subscribers be assessed a monthly, flat-rate
charge for the \"end user common line\" element, permitting LECs to
recover a significant amount of the non-traffic sensitive (NTS) costs
associated with the subscribers\' loops.

**10.** At that time, the Commission had to determine how to enable LECs
to recover their investment in payphone lines that they owned and
operated. Payphones required special treatment because the end users of
payphones consisted of the \"transient general public,\" rather than the
subscribers, as in the case of private business or residential
telephones. At first, the Commission determined that LECs would recover
their payphone investments solely through coin calls placed by end
users. Under this scheme, however, LECs were not able to recover their
investment from the many end users who used their payphones to make
non-coin calls, such as collect, credit card or third-party calls,
causing either an inadequate recovery for the LECs or a disproportionate
burden on end users paying by coin.

**11.** On reconsideration, the Commission decided not to assess any
charge on end users of public payphones. Rather, for the reasons
identified above, the Commission decided that LECs would recover the NTS
costs of operating their payphone lines from a carrier common line (CCL)
element, which in turn was recovered from the switched access charges
imposed on IXCs and interstate calls in general. Thus, the Commission
decided that public payphone users would no

longer pay for the NTS costs of operating public payphones, but that
those costs would in effect be subsidized by all interstate callers.

12. The Commission, however, did not exempt all payphones from EUCL
    charges.

Although it excused \"public\" payphones from the charge, it determined
that \"semi-public\"

payphones would be subject to the charge. When it originally announced
the public/semi-public distinction, the Commission explained that
\"\[a\] pay telephone is used to provide semi-public telephone service
when there is a combination of general public and specific customer need
for the service, such as at a gasoline station or pizza parlor.\"[^22]
By contrast, \"\[a\] pay telephone is used to

provide public telephone service when a public need exists, such as at
an airport lobby, at the option

of the telephone company and with the agreement of the owner of the
property on which the phone is placed.\"[^23] The Commission determined
that NTS costs associated with semi-public payphones should be
\"recovered from subscribers to that service in the same manner that
costs associated with an ordinary business subscriber line are
recovered\" because \"\[t\]hose fixed costs can be recovered from an
identifiable business end user through flat charges.\"[^24]

**13.** At the time the Commission developed this scheme for payphone
access charges, the only existing payphones were owned by LECs.
LEC-owned payphones are connected by special \"coin lines\" to an LEC
central office. A processor located at the central office then does most
of the work: determining the cost of the call, timing the call, telling
the user how much money to deposit, and performing additional tasks.
Because they are not capable of processing and supervising calls on
their own, LEC-owned payphones are considered to be \"dumb.\"

**14.** In 1984, the Commission permitted payphones not owned by LECs to
enter the market. Unlike LEC-owned payphones, the new independent
payphones were \"smart,\" capable of processing and supervising calls by
means of a microprocessor located inside the phone. Therefore, and again
distinct from the LEC-owned payphones, these \"smart\" payphones were
attached to ordinary telephone lines. Callers encounter independent
payphones in the same places where they would find LEC-owned payphones,
such as street corners, airports, shopping malls, and rural \"mom and
pop\" stores.[^25]

**B. IPP Payphones Should Not Automatically Be Treated As \"Semi-Public
Payphones**\"

**15.** In the *CFC I Order*, the Commission determined that CFC\'s
payphones were not \"public telephones\" as that term is defined in
section 69.2(ee), and thus did not qualify for the exemption from the
EUCL charge that was accorded to public telephones by the Commission\'s

rules.[^26] Rather, the Commission concluded that CFC\'s payphones were
\"semi-public\"

payphones, and therefore were subject to the EUCL charge. The court
concluded that the Commission incorrectly applied both the \"public\"
and \"semi-public\" definitions.

**16.** Because the *First Reconsideration Order* created a distinction
between \"public\" and \"semi-public\" payphones in deciding whether a
payphone should be assessed a EUCL charge, the

Commission had to determine whether CFC\'s payphones were \"public\" to
determine whether they qualified for the exception created for such
payphones.[^27] To make this determination, the Commission applied the
definition of \"public telephone\" contained in Part 69 of the
Commission\'s rules, which sets forth rules for computation, assessment,
and collection of charges for interstate access services. Section
69.2(ee) defines a \"public telephone\" as a \"telephone provided by a
*telephone company* through which an end user may originate interstate
or foreign telecommunications for which he pays with coins or by credit
card, collect or third number billing procedures.\"[^28] At the time of
the *CFC I Order*, a \"telephone company\" was defined in Part 69 of the
Commission\'s rules as \"a carrier that provides telephone exchange
service as defined in section 3(r) of the Communications Act of
1934.\"[^29] In the *CFC I Order*, the Commission found that CFC\'s
payphones were not \"public\" because CFC was not a \"telephone
company.\"[^30]

**17.** The court rejected the Commission\'s analysis. The court found
that the \"public telephone\" definition of section 69.2(ee) was
established for different purposes than how the term was used in the
*First Reconsideration Order*. The court also noted that the definition
was promulgated several years after the Commission adopted its access
charge rules. The court found that the section 69.2(ee) definition of
\"public telephone\" was intended to clarify what types of payphone
investments LECs could recover. As the court held, the \"public
telephone\" definition of section 69.2(ee) was designed to clarify that
LECs were not entitled to include independent payphone costs when
calculating their investment in payphone equipment. Specifically,
section 69.2(ee) mandated that LECs could only recover their investment
in \"public telephones\" that they owned and controlled, not the
investment associated with independent telephones that were owned by
others. Thus, the court found that the \"public telephone\" definition
of section 69.2(ee) was not designed to address the same concerns as the
\"public/semi-public\" distinction established in the *First
Reconsideration Order*; namely, what types of payphones should be
exempted from assessment of EUCL charges. Consequently, the court stated
that, if the Commission was going to use the section 69.2(ee) definition
in this context, the Commission should have shown some \"rational
connection\" between section 69.2(ee) and the public/semi-public
telephone distinction in

the *First Reconsideration Order*. The court concluded that the
Commission had \"not shown any

legally significant difference between \'public\' payphones owned by an
LEC and those of the independent payphone providers.\"[^31]

**18.** In addition, the court concluded that the Commission misapplied
the definition of \"semi-public\" payphone set forth in the *First
Reconsideration Order*. The court stated that the

Commission erred in classifying the IPP payphones as \"semi-public\"
solely because the payphone lines associated with those phones *could
be* used for private use.[^32] Instead, the court stated that the
Commission should have focused on how the payphone lines were *actually*
used.[^33] According to the court, the *First Reconsideration Order*,
\"which introduced the distinction between \'public\' and
\'semi-public\' for purposes of the EUCL charge, does not mention this
\'capability of use\' distinction, and further suggests that the key
distinction was meant to be actual use.\"[^34] The court stated that the
Commission had not provided a sufficient basis for distinguishing
between LEC payphones and IPP payphones, or the lines associated with
the respective payphones, to justify classifying all IPP payphones as
semi-public.[^35]

**19.** As noted by the court, the Commission previously misapplied the
definition of "public telephone" in the context of NTS cost recovery for
IPP payphones. When considered in its intended context, section 69.2(ee)
is logical because it clarifies that LECs may recover only their
investment in \"public telephones\" that they own and control, and not
independent telephones that are owned by others. This distinction,
however, bears no logical nexus to the reason the Commission established
an exemption from assessment of EUCL charges for \"public payphones,\"
but left \"semi-public payphones\" subject to the charges. As explained
above, \"public payphones\" were exempted because the Commission found
there was no readily identifiable end user for most calls from such
payphones, and, therefore, there was no practical way to assess fairly
EUCL charges on all end users from public payphones.[^36] \"Semi-public
payphones,\" on the other hand, did have a readily identifiable end
user: the business on whose premises the payphone was located and which
used the payphone, at least partially, for business purposes.[^37] Thus,
the distinction set forth in the *First Reconsideration Order* had
nothing to do with whether the payphone was owned by a \"telephone
company,\" as required by the definition in section 69.2(ee), rather
than by an independent payphone provider. Indeed, at the time that order
was issued, only LECs were allowed to provide payphone service.

**20.** Similarly, as noted by the court, the Commission\'s previous
order was erroneous in basing its evaluation that CFC\'s payphones were
\"semi-public\" on the way in which payphone lines could be used, rather
than an evaluation of how the payphones themselves were used.[^38] That
independent payphones were capable of being connected to regular
subscriber lines, while LEC payphones were typically connected to coin
lines, has no bearing on the rationale set forth by the Commission for
the establishment of the EUCL exception for \"public payphones.\"[^39]
As we have emphasized previously, that exception recognized that, due to
the transient nature of payphone users, there was typically no
identifiable end user from whom the charge could be recovered equitably.
On the other hand, the Commission allowed the assessment on
\"semi-public\" payphones because there was an identifiable end
user.[^40] Accordingly, it is clear that the dichotomy set forth in the
*First Reconsideration Order* required us to evaluate the manner in
which the payphone was used \-- *e.g.*, whether it was predominantly
used in a manner that allowed for identification of an end user.
Applying the test set forth by the D.C. Circuit, *viz*, the manner in
which the payphone is actually used, the record is clear that LEC and
independent payphones are indistinguishable in the manner in which they
are held out for public use.[^41] Accordingly, we find that the LECs
imposed an unreasonable charge in violation of section 201(b) by
classifying all IPP payphones as semi-public and assessing EUCL charges
against IPP payphones that were deployed in the same manner as LEC-owned
\"public payphones.\"

**C. CFC Is Not An \"End User\" For Purposes of Section 69.2(m)**

**21.** As noted above, the Commission previously determined that CFC\'s
payphones also were subject to the EUCL because CFC was an \"end user\"
pursuant to section 69.2(m) of the Commission\'s rules. The court,
however, rejected the reasoning behind the Commission\'s determination
and concluded that the Commission\'s determination was clearly
erroneous. Because the Commission previously addressed the issue of
whether CFC was an "end user" and because the court considered this
issue in its order, we will review this issue. Nevertheless, we note
that, based on the reasoning outlined in section III.B. above, we now
find that irrespective of whether CFC were an "end user" the appropriate
distinction to apply to determine whether the EUCL would apply to CFC's
payphones was the "public/semi-public" distinction.

22. Section 69.2(m) provides that \"a carrier other than a telephone
    company\" is an end

user when it \"offers telecommunications services exclusively as a
reseller\" and all of its \"resale transmissions \... originate on the
premises of such reseller.\"[^42] In the previous order, the Commission
found that, in the context of section 69.2(m), the payphone itself
constituted the \"premises.\"[^43] Alternatively, the Commission stated
that once CFC had placed a payphone in a particular location, it had
\"limited legal control\" over that location so that it became CFC\'s
premises for purposes of section 69.2(m).[^44] Based on the
determination that CFC\'s transmissions did

originate on its premises, the Commission concluded that CFC was an end
user for purposes of section 69.2(m).[^45]

**23.** With regard to the Commission\'s determination that the
payphones themselves could constitute \"premises\" for purposes of
section 69.2(m), the court stated that \"\[t\]he term \'premises,\' as
used in this context, traditionally refers to real property and its
appurtenances.\"[^46] The court emphasized that the agreements CFC
typically had with various location owners specifically designated the
telephones, booths, and equipment associated with the payphones as
\"personal property.\"[^47] The court stated that the Commission had not
provided a rationale under which

personal property located on real property owned by another could be
considered \"premises.\" The court also rejected the Commission\'s
conclusion about how CFC\'s limited legal control over the area in which
its payphones are located made CFC a premises owner under section
69.2(m). The court said that \"\[i\]f any location in which a 'reseller'
has the capacity to originate a call becomes the premises, that
requirement of the rule excludes nothing.\"[^48] The court stated that
such an interpretation violated the principle of statutory construction
that requires construction \"so that no provision is rendered
inoperative or superfluous, void or insignificant.\"[^49]

**24**. In light of the court\'s ruling, we now find that CFC and the
other IPPs cannot be considered \"end users\" under section 69.2(m),
because they do not own the premises where their payphones are located.
Pursuant to the court\'s determination, we find that the word
\"premises\" in the context of section 69.2(m) requires that there be
some type of ownership or tenancy of the physical space in which the
payphone is situated, before an IPP can be considered a premises owner.
Given the court's finding that CFC's agreements specifically designated
its payphones as personal property, it appears that CFC never intended
to acquire an interest in the premises where

its payphones were located. Because CFC was not a premises owner, we
conclude that it was not

an \"end user\" within the meaning of section 69.2(m).

**25**. Nevertheless, irrespective of whether CFC was an "end user," we
now find that the primary determination the Commission should have made
was whether CFC's payphones were "public" or "semi-public." As outlined
in Sections III.A.-B. above, the Commission had established specific
requirements with regard to collection of EUCL from payphone owners.
Consequently, the Commission should have focused on these payphone
specific requirements, rather than reviewing the more general
requirements for determining who qualified as an "end user" for purposes
of assessing the EUCL.

**D. Damages**

**26.** Having decided that the LECs\' practice of assessing EUCL
charges on all CFC payphones violated section 201(b) and the
Commission\'s access charge requirements, we reject defendants\'
arguments asserting that they should not have to pay damages even if
they previously assessed EUCL charges improperly. We note that some of
these claims have been asserted by defendants with little or no legal
support, and we respond to such claims accordingly.

**1. Defendants Cannot Evade the Payment of Damages by Arguing that the
Commission\'s Rules Required them to Impose the EUCL on all IPP
Payphones**

**27.** As an initial matter, we reject defendants\' arguments that an
award of damages here would be inappropriate because they were acting in
accordance with Commission rules. As the D.C. Circuit has ruled, the
Commission\'s access charge orders did not, in fact, require carriers to
assess the EUCL charge indiscriminately on all IPP-owned payphones.
Although only LEC-owned payphones were allowed at the time, the D.C.
Circuit has found that the *First Reconsideration Order* set forth
standards by which LECs were to evaluate whether individual IPP
payphones should be classified as \"public\" or \"semi-public." The
record indicates that the defendants chose to assess EUCL charges on all
IPP payphones without regard to where they were located or the manner in
which they were used. In light of the D.C. Circuit's opinion and the
record evidence that there was no significant distinction in the manner
in which LEC and IPP payphones were deployed, we have found the LECs'
practice by the LECs to be unreasonable. The complainants are,
accordingly, entitled to damages.

28. Nor do we find persuasive defendants\' reliance on two informal
    letter rulings of

Commission staff supporting their position.[^50] These unpublished
letter rulings by a staff analyst are not binding on the Commission.
Indeed, our rules specifically establish that general policy statements
included in correspondence to individuals need not be published and
\"may not be relied

upon, used, or cited as precedent, except against persons who have
actual notice of the document in

question . . . .\"[^51] There is no evidence that any of the parties to
this matter had actual knowledge of

these letters. Moreover, the timing of these letters belie defendants\'
argument. The record

demonstrates that the defendants began the practice in question before
either of these letters was issued. Additionally, this complaint was
first filed by CFC approximately one month after issuance of the second
of these letters, thus putting defendants on notice that the practice
was under challenge. For similar reasons, we reject defendants\'
argument that damages are inappropriate because they relied on the
Commission\'s previous decision in this proceeding.[^52] Complainants
timely appealed these decisions, and defendants were on notice of these
appeals. Accordingly, complainants are entitled to damages relating back
to the filing of their original complaints.[^53]

**29.** We also reject GTE\'s, Sprint\'s, and Ameritech\'s claim that
the EUCL charge was a prescribed rate, thereby prohibiting the award of
a retroactive refund pursuant to *Arizona Grocery Co. v. Atchinson,
Topeka & Santa Fe Railway Co. et al.*[^54] *Arizona Grocery* does not
apply to the

instant case. The *First Reconsideration Order* did not establish that
the EUCL was a prescribed rate with regard to \"public telephones.\" To
the extent the LECs were given any directive with regard to these lines
it was to recover the NTS costs associated with them through the carrier
common line charge. Pursuant to the court\'s ruling, we find the
defendants were not following the Commission\'s rules, as properly
interpreted, when they assessed the EUCL charge on all IPP payphones.

**2. Defendants\' \"Equitable\" Arguments are Not Persuasive**

**30.** Defendants\' claim that a grant of damages here would
effectively allow the

IPPs to have used the network without contributing towards its costs
reflects a misunderstanding of the Commission\'s access charge
rules.[^55] One of the goals behind these rules was, to the extent
possible, to recover costs from the actual cost causer. The Commission
made the policy determination that public payphones would not be
assessed a EUCL charge because there was no fair and practical mechanism
for passing the charge on to the end user callers.[^56] Instead, the
Commission opted to \"apportion those costs among the interexchange
carriers upon whose service these customers rely to make their
interstate calls.\"[^57] The Commission therefore exempted all public
payphones from the EUCL charges. As the court stated, \"the
Commission\'s express reason

for exempting public payphones from EUCL charges applies to CFC\'s
payphones as well as to

LEC-owned payphones.\"[^58]

**31.** In addition, we find unpersuasive the assertion that it would be
inequitable to require a refund because the defendants would then have a
revenue shortfall.[^59] As the Supreme Court has previously stated:
\"The company having initially filed the rates and either collected an
illegal return or failed to collect a sufficient one must, under the
theory of the Act, shoulder the hazards incident to its action including
not only the refund of any illegal gain but also its losses where its
filed rate is found to be inadequate.\"[^60] Consistent with the Supreme
Court\'s reasoning, we note that defendants chose to assess the EUCL
charge on the public payphones of their competitors, without imposing a
similar charge on defendant payphones. The Commission\'s access

charge orders provided them with the opportunity to recover the costs
associated with these lines through the CCL charge on long distance
carriers, as they did for their own payphones.[^61]

**3. Requirement of showing actual injury.**

**32.** We also reject GTE\'s contention that complainants have failed
to show actual

injury.[^62] Complainants have been assessed charges contrary to
Commission rules. GTE\'s reliance on an ICC rate case is inapposite. In
that case, the Supreme Court held that the plaintiff coal company, which
had paid the lawful tariffed rate, was not automatically entitled to a
refund simply because others had paid less than the lawful rate.[^63]
Rather, the coal company would have to prove that it had been damaged by
the railroad having charged lower rates to competing carriers.[^64] The
Court recognized that the amount of damages, if any, could be higher
than, lower than, or perhaps even equal to, the difference in the
charged rates. The Court, therefore, refused to accept the differential
as the measure of damages.[^65] Unlike the ICC case, complainants in
this case were not paying a lawful charge. To the contrary, in this
case, complainants are entitled to damages because

the defendants were prohibited under the Commission\'s rules from
assessing *any* EUCL charges on

the payphone lines at issue here.

**4. Calculus of Damages**

**33.** Based on our section 208 authority, we bifurcate the liability
and damages portions of this case.[^66] Given the time lag between the
filing of the initial complaints and the filing of this order, we will
allow the complainants to file supplemental complaints for damages. In
their supplemental complaints, complainants will have to provide
evidence sufficient to prove among other things, how many of their
payphones were in fact \"public payphones,\" under the definition
established in the *First Reconsideration Order*, as clarified here.
Based on the current record, it is our belief that the vast majority of
IPP payphones were \"public\" payphones under the *First Reconsideration
Order*. In *CFC I*, the Commission recognized that it was \"not CFC\'s
intent to provide private service via its payphones.\"[^67] Similarly,
the court found that \"CFC\'s payphones are indistinguishable from
LEC\'s payphones from a consumer\'s point of view.\"[^68]

**34.** We recognize that the IPPs may have difficulty, after so many
years, in calculating

the exact number of public and semi-public payphones they had.
Consequently, we encourage the parties to consider proxies that can be
used to obtain a reasonable estimation of that number. In this regard,
we note that evidence in the Commission\'s *Payphone Compensation
Proceeding* suggests that, due to the manner in which LECs and IPPs
deployed payphones prior to the 1996 Act, the ratio of IPP public to
semi-public phones should, at a minimum, be no less than the ratio of
LEC public to semi-public phones.[^69] Thus, the ratio of their own
payphones to which LECs assessed EUCL charges may be an appropriate
starting point for the damages inquiry. We direct the parties to address
this potential method for calculating damages in their supplemental
briefs.

**35**. To facilitate any settlement discussions that might ensue from
this decision, we temporarily waive the requirement that supplemental
complaints for damages be filed within 60 days after public notice of
this decision.[^70] Instead, we request all parties to attend a status
conference to be held at the Commission at 2:00 pm on June 13,
2000.[^71] At this status conference, parties should be

prepared to discuss any progress that has been made with regard to
settlement. In addition, to the extent there is no progress on
settlement, parties should be prepared to discuss whether the damages
portion of this case is suitable for referral to an Administrative Law
Judge, pursuant to our rules.[^72] At the status conference, Commission
staff will provide a date by which the complainants must file their
supplemental complaints for damages.

**E. Statute of Limitations**

**36.** Various parties have raised issues relating to the statute of
limitations for obtaining damages in this proceeding.[^73] Pursuant to
the Act, complaints for damages are subject to a two year statute of
limitations.[^74] Thus, each complainant's damages here are limited to
those accruing no more than two years prior to the date on which its
complaint was filed with the Commission.

Under the Commission\'s rules, any person wishing to file a section 208
complaint may file either an informal complaint or a formal
complaint.[^75] If an informal complainant is not satisfied with the
carrier\'s response, it may file a formal complaint pursuant to section
1.721 of the Commission\'s rules.[^76] Under section 1.718, the formal
complaint is deemed to relate back to the filing of the informal
complaint if the formal complaint is: 1) filed within six months from
the date of the carrier\'s response to the informal complaint; 2) makes
reference to the date of the informal complaint; and 3) is based on the
same cause of action as the informal complaint.[^77] If the unsatisfied
informal complainant fails to file a formal complaint within the six
month period, the complainant is deemed to have abandoned the
unsatisfied informal complaint.[^78]

**37.** In light of the foregoing, we reject BellSouth\'s assertion that
the Commission\'s rules prevent a complainant who has filed a formal
complaint within six months of the carrier\'s response to its informal
complaint from recovering damages dating back two years from the filing
of its informal complaint. Section 1.718 clearly provides for such a
\"relating back.\"[^79] Similarly, we reject complainants\' argument
that this \"relating back\" provision is dependent upon when the
Commission had \"disposed\" of an informal complaint. Rather, the clear
language of section 1.718 of the rules allows for \"relating back\" of
damages only if a complainant files a formal complaint within 6 months
\"from the date of the carrier\'s report.\"[^80]

**F. Complainants\' Motion to Consolidate**

**38.** On June 15, 1998, various informal complainants filed a motion
to consolidate all of the formal and informal complaints pending with
the Commission regarding improper assessment of EUCLs on the IPPs.[^81]
We hereby deny this motion for consolidation. The Commission\'s rules
provide for different treatment for formal and informal complaints. We
find that granting the motion to consolidate would potentially allow the
informal complainants to circumvent the formal complaint filing
process.[^82] Petitioners have not demonstrated that waiver of these
rules would be in the public interest.

**39.** In the interests of administrative efficiency, however, the
Commission staff

previously issued a waiver order tolling the six month relation back
requirement contained in section 1.718 of the Commission\'s rules for a
number of informal complaints.[^83] Pursuant to the

waiver order, any formal complaint relating to issues raised in this
proceeding that was required under section 1.718 to be filed after June
15, 1998, will be deemed to relate back to the filing date of the
relevant informal complaint if it is filed with the Commission no later
than 90 days after a final nonappealable order has been entered in this
remand proceeding.[^84]

######### IV. CONCLUSION AND ORDERING CLAUSES

**40.** For the reasons discussed above, we conclude that the LECs\'
imposition of EUCL charges on the complainants violated section 201(b)
of the Act and Part 69 of the Commission\'s rules.

**41.** ACCORDINGLY, IT IS ORDERED, pursuant to Sections 4(i), 201(b),
and 208 of the Communications Act of 1934, as amended, 47 U.S.C. §§
154(i), 201(b), and 208, that the formal complaints filed by C.F.
Communications Corp. and the other independent payphone providers listed
in Appendixes A to this order ARE GRANTED.

**42.** IT IS FURTHER ORDERED, pursuant to Sections 4(i) and 208 of the
Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i) and 208,
that C.F. Communications Corp.\'s motion to consolidate this proceeding
with the informal complaints filed before the Consumer Protection Branch
IS DENIED.

43. IT IS FURTHER ORDERED that C.F. Communications Corp. and the other

independent payphone providers listed in Appendix A to this order, in
accordance with Section

1.722 of the Commission\'s Rules, 47 C.F.R. § 1.722, MAY FILE
supplemental complaints

concerning damages at a time to be determined at a status conference to
be held at the Commission on June 13, 2000.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

APPENDIX A

Alcazar Ltd.

American Payphone, Inc.

Ascom Communication, Inc

B.D.A. Sales Inc.

Bell Telephone Co. of Pennsylvania

Best Payphones, Inc.

C&P Telephone Co. of Maryland

C&P Telephone Co. of Virginia

C.F. Communications Corp.

Carolina Telephone Co.

Century Telephone of Wisconsin, Inc.

Crescent Communications

GTE Florida, Inc.

GTE North, Inc.

GTE South, Inc.

Just Telephone Inc.

Kayson Communication

Michigan Bell Telephone Co.

Millicom Services Co.

Mosinee Telephone Co.

New Jersey Bell Telephone Co.

NYPAY Communications Co.

New York Pay Phone Systems, Inc.

New York Telephone Co.

North West Telephone Co.

Southern Bell Telephone and Telegraph

Southwestern Bell Telephone Co.

Telebeam Telephone

Turtle Lake Telephone Co.

United Telephone Co. of Florida

United Telephone Co. of Pennsylvania

Utelco, Inc.

Wisconsin Bell, Inc.

[^1]:     ^?^ The parties to this proceeding are listed in Appendix A to
    this Order.

[^2]:     ^?^ 47 U.S.C. §§ 201(b) and 202(a). Telecommunications Act of
    1996, Pub. L. No. 104-104, 110 Stat. (1996) (the Act).

[^3]:     ^?^ 47 C.F.R. §§ 69.1 *et seq.* Unless otherwise indicated,
    all C.F.R. references herein are to the 1998 edition. We refer to
    prior C.F.R. provisions in instances where the prior rules were
    different than the current rules.

[^4]:     ^?^ *C.F. Communications Corp. v. FCC*, 128 F.3d 735 (D.C.
    Cir. 1997) (*Appeals Court Decision*); *see also C.F. Communications
    Corp. v. FCC*, No. 97-1202, slip op. (D.C. Cir. 1997).

[^5]:     ^?^ *C.F. Communications Co. v. Central St. Tel. Co., et.
    al.*, 5 FCC Rcd 177 (1990).

[^6]:     ^?^ *C.F. Communications Corp. v. Century Telephone of
    Wisconsin, Inc. et. al*., 8 FCC Rcd 7334, 7335-36 (1993) (*Bureau
    Order*).

[^7]:     ^?^ *Bureau Order*, 8 FCC Rcd at 7336.

[^8]:     ^?^ *C.F. Communications Corp. v. Century Telephone of
    Wisconsin*, *Inc., et. al.*, 10 FCC Rcd 9775 (1995) (*CFC I*).

[^9]:     ^?^ *C.F. Communications Corp., et. al. v. Michigan Bell
    Telephone Co., et. al.*, 12 FCC Rcd 2134 (1997) (*CFC II*).

[^10]:     ^?^ *Appeals Court Decision*, 128 F.3d at 740-741.

[^11]:     ^?^ *Id*. at 741-742.

[^12]:     ^?^ *Id.*

[^13]:     ^?^ *Id.* at 741.

[^14]:     ^?^ *Id.* 128 F.3d at 740.

[^15]:     ^?^ *Id.* at 739.

[^16]:     ^?^ *Id.*

[^17]:     ^?^ *C.F. Communications Corporation v. FCC*, No. 97-1202,
    slip op. (D.C. Cir. 1997).

[^18]:     ^?^ Motion to Consolidate Complaint Proceedings and Establish
    Binding Procedures to Resolve all Outstanding Legal Issues and
    Request for Rule Waiver, File E- 89-170 (filed June 15, 1998).

[^19]: ^?^ *See Implementation of the Pay Telephone Reclassification and
    Compensation Provisions of the Telecommunications Act of 1996*,
    First Report and Order, 11 FCC Rcd 20541, ¶ 187 (1996) (*First
    Payphone Order*); *Implementation of the Pay Telephone
    Reclassification and Compensation Provisions of the
    Telecommunications Act of 1996*, Report and Order on
    Reconsideration, 11 FCC Rcd 21233, ¶ 207 (1996).

[^20]:     ^?^ *See Appeals Court Decision*, 128 F.3d at 736-37; *see
    also MTS and WATS Market Structure*, Third Report and Order, 93 FCC
    2d 241, 242-243 (1983) (*Access Charge Order*), modified on recon.,
    97 FCC 2d 682 (1983) (*First Reconsideration Order*) modified on
    further recon., 97 FCC 2d 834 (1984), aff\'d and remanded in part
    sub nom., *National Ass\'n of Regulatory Util. Comm\'rs v. FCC*, 737
    F.2d 1095 (D.C. Cir. 1984).

[^21]:     ^?^ Under section 69.2(m), an \"end user\" is:

    > any customer of an interstate or foreign telecommunications
    > service that is not a carrier except that a carrier other than a
    > telephone company shall be deemed to be an \"end user\" when such
    > carrier uses a telecommunications service for administrative
    > purposes and a person or entity that offers telecommunications
    > services exclusively as a reseller shall be deemed to be an \"end
    > user\" if all resale transmissions offered by such reseller
    > originate on the premises of such reseller.

    47 C.F.R. § 69.2(m). *See* 47 C.F.R. § 69.5(a) (stating that
    \"\[e\]nd user charges shall be computed and assessed upon public
    end users\"); *see also* section 69.104(a) (\"A charge . . . shall
    be assessed upon end users that subscribe to local exchange
    telephone service, Centrex or semi-public coin telephone service to
    the extent that they do not pay carrier common line charges.\").

[^22]:     ^?^ *Appeals Court Decision*,128 F.3d at 737 (quoting *First
    Reconsideration Order* at 704 n.40).

[^23]:     ^?^ *Id.* (quoting *First Reconsideration Order* at 704
    n.41).

[^24]:     ^?^ *Id.* (quoting *First Reconsideration Order* at 706).

[^25]:     ^?^ *Id.* (citations to the relevant Commission orders can be
    found in the *Appeals Court Decision*).

[^26]:     ^?^ A \"\[p\]ublic telephone is a telephone provided by a
    telephone company through which an end user may originate interstate
    or foreign telecommunications for which he pays with coins or by
    credit card, collect or third number billing procedures.\" 47 C.F.R.
    § 69.2(ee); *see also* 47 C.F.R. § 69.2(hh) (1993) (\"telephone
    company\" was defined as \"a carrier that provides telephone
    exchange service as defined in section 3(r) of the Communications
    Act of 1934.\"). At the time of issuing the *CFC I Order*,
    \"public\" telephones were not subject to EUCL charges. 47 C.F.R. §
    69.104(a) (1993); *see also* *MTS and WATS Market Structure*, 97 FCC
    2d 682, 703-06 (1983) (\"public\" payphones exempted from EUCL
    charges).

[^27]:     ^?^ Under the *First Reconsideration Order*, the key criteria
    for determining whether a payphone is subject to the EUCL charge is
    whether the phone is a \"public\" or \"semi-public\" payphone.
    *First Reconsideration Order*, 97 FCC 2d at 704-706.

[^28]:     ^?^ 47 C.F.R. § 69.2(ee) (emphasis added).

[^29]:     ^?^ 47 C.F.R. § 69.2(hh) (1993). The Bureau in this
    proceeding found that CFC was a reseller. *Bureau Order*, 8 FCC Rcd
    at 7336.

[^30]:     ^?^ *CFC I*, 10 FCC Rcd at 9779.

[^31]:     ^?^ *Appeals Court Decision*, 128 F3d at 740.

[^32]:     ^?^ *Id*. at 740-741. The Court found that the Commission
    erroneously focused on the \"technical point\" of whether CFC\'s
    payphones were connected to regular subscriber business lines rather
    than the coin lines attached to LEC-owned payphones. *Id*. at 740.

[^33]:     ^?^ *Appeals Court Decision*, 128 F.3d at 740-41.

[^34]:     ^?^ *Id*. at 741 (citing *First Reconsideration Order*, 97
    FCC 2d at 704 n.40).

[^35]:     ^?^ *Id.* at 740-41.

[^36]:     ^?^ *First Reconsideration Order*, 97 FCC 2d at 704-06.

[^37]:     ^?^ *Id.* at 706.

[^38]:     ^?^ *CFC I*, 10 FCC Rcd at 9780.

[^39]:     ^?^ Thus, we find to be irrelevant Ameritech\'s claim that
    the services and lines provided to the IPPs were different from
    those provided to the LECs. *Ameritech Ex Parte* at 6. As noted
    above, the Court has stated that the key distinction was not the
    type of line provided but how the phones were actually used.

[^40]:     ^?^ In fact, the *First Reconsideration Order* notes that a
    \"semi-public\" payphone would typically have an end user identified
    in the directory listings. *First Reconsideration Order* at 704
    n.40.

[^41]:     ^?^ *See* *Appeals Court Decision*, 128 F.3d at 741 (Court
    noted that \"the record reflects that CFC\'s payphones are
    indistinguishable from LEC\'s payphones from a consumer\'s point of
    view\" . . . and that \"at oral argument, counsel for the Commission
    conceded that a consumer making a call from a bank of payphones
    would have no idea whether that phone was independently owned or
    owned by an LEC.\"); *see also* *CFC I*, 10 FCC Rcd at 9780 (stating
    that \"we recognize that it is not CFC\'s intent to provide private
    service via its payphones.\").

[^42]:     ^?^ 47 C.F.R. § 69.2(m).

[^43]:     ^?^ *CFC I*, 10 FCC Rcd at 9778.

[^44]:     ^?^ *Id.*

[^45]:     ^?^ *Id.* at 9779.

[^46]:     ^?^ *Appeals Court Decision*, 128 F.3d at 739.

[^47]:     ^?^ *Id*.

[^48]:     ^?^ *Id*.

[^49]:     ^?^ *Id.*, quoting *Mail Order Ass\'n of America v. United
    States Postal Service*, 986 F.2d 509, 515 (D.C. Cir. 1993).

[^50]:     ^?^ *See* GTE Reply Brief at 5, n.11; BellSouth Brief at 6,
    n.17 (both briefs citing Letter from Anita J. Thomas, Informal
    Complaints and Public Inquiries Branch, Enforcement Division, Common
    Carrier Bureau, to Lance Norris, Vice President, American Payphones,
    Inc. (Sept. 14, 1988); Letter from Anita J. Thomas to LeRoy A.
    Manke, Manager, Coon Valley Farmers Telephone Company (April 4,
    1989)); *see also* Ameritech Ex Parte at 2-3 (characterizing these
    letters as \"Commission decisions\").

[^51]:     ^?^ 47 C.F.R. § 0.445(e).

[^52]:     ^?^ *See, e.g.,* GTE Brief at 6-7, 10.

[^53]:     ^?^ *See* 47 U.S.C. § 402(h).

[^54]:     ^?^ *Arizona Grocery Co. v. Atchinson, Topeka & Santa Fe
    Railway Co. et al.*, 284 U.S. 371 (1932) (*Arizona Grocery*).

[^55]:     ^?^ BellSouth Brief at 7-8; Bell Atlantic Brief at 3-4;
    Ameritech Ex Parte at 10.

[^56]:     ^?^ *First Reconsideration Order*, 97 FCC 2d at 705.

[^57]:     ^?^ *Id.*

[^58]:     ^?^ *Appeals Court Decision*, 128 F.3d at 741.

[^59]:     ^?^ GTE Brief at 9-10.

[^60]:     ^?^ *FPC v. Tennessee Gas Trans. Co.*, 371 U.S. 145, 152-53
    (1962); *see also* *In the Matter of 1997 Annual Access Tariff
    Filings*, Memorandum Opinion and Order on Reconsideration 13 FCC Rcd
    10597, 10601 (1998) (quoting *Tennessee Gas* and stating that \"a
    carrier cannot ultimately recoup its losses from a rate the
    Commission ultimately determines has been set unjustly or
    unreasonably low, or offset such losses against refunds owed for
    rates that were set too high.\").

[^61]:     ^?^ *See* Bell Atlantic Brief at 4; Ameritech Ex Parte at
    10-11 (asserting that defendants should be allowed to recover the
    loss in revenue from other access service customers).

[^62]:     ^?^ GTE Brief at 11-14.

[^63]:     ^?^ *Pennsylvania Railroad Co. v. Int\'l Coal Mining Co.*,
    230 U.S. 184, 202 (1913).

[^64]:     ^?^ *Id.* at 203.

[^65]:     ^?^ *Id.*

[^66]:     ^?^ Pursuant to section 208(a) of the Act, the Commission has
    previously found that it has the discretion to bifurcate liability
    and damages issue on its own motion. *See Implementation of the
    Telecommunications Act of 1996: Amendment of Rules Governing
    Procedures to be Followed When Formal Complaints Are Filed Against
    Common Carriers*, 12 FCC Rcd 22497, 22575 (1997).

[^67]:     ^?^ *CFC I* at 9780.

[^68]:     ^?^ *Appeals Court Decision* at 741.

[^69]:     ^?^ *See, e.g., First Payphone Order,* 11 FCC Rcd at ¶ 12
    n.28 (1996); *see also* *Implementation of the Pay Telephone
    Reclassification and Compensation Provisions of the
    Telecommunications Act of 1996*, Third Report and Order, 14 FCC Rcd
    2545, n.67 (1999).

[^70]:     ^?^ 47 C.F.R. § 1.722 (b)(2)(ii).

[^71]:     ^?^ We will inform the parties via letter of the exact
    location of the status conference.

[^72]:     ^?^ 47 C.F.R. § 1.722(d)(1).

[^73]:     ^?^ BellSouth Brief at 5; Complainants Brief at 17-19.

[^74]:     ^?^ 47 U.S.C. § 415.

[^75]:     ^?^ 47 U.S.C. § 208 and 47 C.F.R. § 1.711.

[^76]:     ^?^ 47 C.F.R. § 1.718.

[^77]:     ^?^ *Id.*

[^78]:     ^?^ *Id.*

[^79]:     ^?^ *Id.*

[^80]:     ^?^ *Id.*

[^81]:     ^?^ Motion to Consolidate Complaint Proceedings and Establish
    Binding Procedures to Resolve all Outstanding Legal Issues and
    Request for Rule Waiver, File E-89-170 (filed June 15, 1998).

[^82]:     ^?^ *See, e.g.,* 47 C.F.R. § 1.1105(1)(c).

[^83]:     ^?^ *Informal Complaints Filed By Independent Payphone
    Service Providers Against Various Local Exchange Carriers Seeking
    Refunds of End User Common Line Charges*, File No. 89-170, DA
    99-1854, Common Carrier Bureau (rel. Sept. 10, 1999) (*Waiver
    Order*).

[^84]:     ^?^ *Waiver Order* at ¶ 5.