United States Court of Appeals 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 8, 2016 Decided November 18, 2016 

No. 15-1059 

AT&T CORP., 

PETITIONER

v. 

FEDERAL COMMUNICATIONS COMMISSION AND UNITED 

STATES OF AMERICA, 

RESPONDENTS

BANDWIDTH.COM, INC., ET AL., 

INTERVENORS

On Petition for Review of an Order of the Federal 

Communications Commission 

Joseph Guerra, argued the cause for petitioner. With him 

on the briefs were Peter D. Keisler, James P. Young, Kwaku 

A. Akowuah, Gary L. Phillips, and David L. Lawson. 

Sarah E. Citrin, Counsel, Federal Communications 

Commission, argued the cause for respondents. On the brief 

were William J. Baer, Assistant Attorney General, Robert B. 

Nicholson and Robert J. Wiggers, Attorneys, Jonathan B. 

Sallett, General Counsel, Federal Communications 

Commission, David M. Gossett, Deputy General Counsel, 

Jacob M. Lewis, Associate General Counsel, Richard K. 
2

Welch, Deputy Associate General Counsel, and Lisa S. Gelb, 

Counsel. James M. Carr, Counsel, entered an appearance. 

Christopher J. Wright, argued the cause for intervenors. 

With him on the brief were John T. Nakahata, Timothy J. 

Simeone, Stephen W. Miller, Joshua M. Bobeck, Charles A. 

Zdebski, and Jeffrey P. Brundage. John R. Grimm entered an 

appearance. 

Before: ROGERS, Circuit Judge, and WILLIAMS and 

RANDOLPH, Senior Circuit Judges. 

Opinion for the Court filed by Senior Circuit Judge

WILLIAMS. 

WILLIAMS, Senior Circuit Judge: This case arises from 

the ongoing transition of American telephony to the Internet. 

The process creates challenges to a regulatory system 

designed for the pre-Internet world, the familiar “public 

switched telephone network” or “PSTN.” We deal here with 

the fees that local exchange carriers (“LECs”) can charge 

inter-exchange carriers (“IXCs”) for certain services they 

provide, in coordination with providers of Voice over Internet 

Protocol (“VoIP”), for the completion of “inter-exchange” 

calls. Resolution of the dispute turns on how the disputed 

services are to be classified. The Federal Communications 

Commission says that they are end-office switching services. 

Petitioner AT&T says that they are tandem switching services. 

The prescribed rates for the latter have generally been lower; 

AT&T has no objection to paying them. 

Two decisions of the Commission are critical. First, in 

2011 the Commission made a broad effort to update its system 

for regulating intercarrier compensation. In re Connect 

America Fund, 26 FCC Rcd. 17663 (2011) (the 

“Transformation Order”). That order produced definitions of 
3

“End Office Access Service” and “Tandem-Switched 

Transport Access Service,” stated in subsections (d) and (i), 

respectively, of 47 C.F.R. § 51.903. The parties focus on 

subsection (d), providing: 

End Office Access Service means: 

(1) The switching of access traffic at the carrier’s end 

office switch and the delivery to or from of such traffic to 

the called party’s premises; 

(2) The routing of interexchange telecommunications 

traffic to or from the called party’s premises, either 

directly or via contractual or other arrangements with an 

affiliated or unaffiliated entity, regardless of the specific 

functions provided or facilities used; or 

(3) Any functional equivalent of the incumbent local 

exchange carrier access service provided by a nonincumbent local exchange carrier. 

§ 51.903(d). Subsection (i), governing tandem switching 

access service, employs similar “functional equivalent” 

language. 

 The Transformation Order recognized that LECs 

partnered with VoIP providers to supply these services. It 

therefore specified that a LEC could collect for provision of 

access services “regardless of whether the [LEC] itself 

delivers such traffic to the called party’s premises or delivers 

the call . . . via contractual or other arrangements with an 

affiliated or unaffiliated provider of interconnected VoIP 

service.” § 51.913(b). In short, the Transformation Order

allowed a VoIP provider and its LEC partner (collectively, 

“VoIP-LEC”) to charge for providing the “functional 

equivalent” of end-office switching services, or tandem 

switching services, as the case might be.
4

In the second decision, In re Connect America Fund, 30 

FCC Rcd. 1587, 1588, ¶ 2 (2015) (the “Declaratory Ruling”), 

the Commission wrestled with the contention of AT&T, an 

IXC, that the disputed services do not qualify as end-office 

access. The Commission ruled that the disputed services are 

indeed end-office access under subsection (3) of § 51.903(d). 

Id. at 1588-89, ¶ 3. It presented its ruling as an interpretation 

of the Transformation Order. 

AT&T challenges the Declaratory Ruling on two 

grounds. First, it argues that the ruling cannot be upheld as an 

interpretation of the Transformation Order. On this issue we 

must uphold the Commission unless its proffered 

interpretation is “plainly erroneous or inconsistent with the 

regulation.” Auer v. Robbins, 519 U.S. 452, 461 (1997) 

(quotation omitted). If the Declaratory Ruling fails that test, 

then imposition of the fees would require a change in the 

Commission’s rules, which could occur only through the usual 

notice-and-comment rulemaking under the Administrative 

Procedure Act, 5 U.S.C. § 553. In the end, we find that the 

Declaratory Ruling does not disclose the Commission’s 

reasoning with the requisite clarity to enable us to sustain its 

conclusion. S.E.C. v. Chenery Corp., 318 U.S. 80, 94 (1943); 

see Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. 

Auto. Ins. Co., 463 U.S. 29, 50 (1983). We therefore vacate 

and remand the order to the Commission for further 

explanation. 

AT&T also contends that it was arbitrary and capricious 

of the Commission to apply its “interpretation” retroactively, 

thus requiring AT&T to pay end-office switching charges for 

access services it received before the Declaratory Ruling. On 

the view we take of the first claim, we need not reach this 

issue here. 
5

* * * 

We now double back to describe the disputed services. 

We start with end-office and tandem switching in a pure 

PSTN environment, and then move to the services’ respective 

places in the mixed universe of Internet and PSTN. 

The PSTN depends on time-division multiplexing 

(“TDM”) technology, which allows multiple calls to travel 

simultaneously over shared equipment before being separated 

onto individual lines. When a subscriber “originates” a longdistance call in the PSTN context, that call must travel from 

the subscriber’s premises over the subscriber’s line (“loop” in 

PSTN parlance) to an end-office switch, which will link the 

call to trunk lines, where it will travel in TDM format along 

with other conversations. For the called party, the process is 

similar, with an end-office switch moving the call from a 

trunk line to the subscriber’s line, thus enabling the call to be 

terminated. (Termination doesn’t refer to the end of the phone 

call, but to its reaching the called party.) The Commission has 

long regulated the rates for this access because of a risk that 

LECs would charge the IXCs monopolistic prices. See In re 

Access Charge Reform, Seventh Report & Order, 13 FCC 

Rcd. 9923, 9935-36, ¶¶ 30-34 (2001). A similar risk exists 

along the network of trunk lines running between the endoffice switches for the calling and called parties. See In re 

Access Charge Reform, Eighth Report & Order, 19 FCC Rcd. 

9108, 9116-17, ¶ 17 (2004). “Just as the loop runs from 

[customer premises] terminals to local switches, the trunks run 

from the local switches to centralized, or tandem, 

switches . . . , which operate much like railway switches, 

directing traffic into other trunks.” Verizon Communications, 

Inc. v. F.C.C., 535 U.S. 467, 490 (2002); see also In re Access 

Charge Reform, First Report & Order, 12 FCC Rcd. 15982, 

16051, ¶ 158 (1997). The Commission regulates switching 

costs in this second context as well. 
6

The Commission has set the ceiling on rates chargeable 

by a “competitive” LEC at the rates charged by the incumbent 

LEC with which it competes. (The incumbent LECs are 

mostly descendants of the “Baby BOCs”—the Bell Operating 

Companies that were split off from the old AT&T on the 

occasion of its break-up. The focus here is on competitive 

LECs, or “CLECS”; except as necessary we refer to the two 

interchangeably.) In the PSTN context, the chargeable 

switching rate depends on the function of the switching 

service. Thus, the Commission has said, the benchmark 

switching rate “is [1] the end office switching rate when a 

competitive LEC originates or terminates calls to end users 

and [2] the tandem switching rate when a competitive LEC 

passes calls between two other carriers.” In re Access Charge 

Reform, PrairieWave Telecomms., Inc. Petition, 23 FCC Rcd. 

2556, 2558, ¶ 6 (2008) (bracketed numbers added). In PSTN, 

then, end-office switching occurs between a trunk line and the 

subscriber’s line, while tandem switching occurs between 

trunk lines. 

Given their TDM heritage these access charges do not 

map cleanly onto VoIP-PSTN traffic, which the Commission 

defined in the Transformation Order as “traffic exchanged 

over PSTN facilities that originates and/or terminates in IP 

format.” 26 FCC Rcd. at 18006, ¶ 940. There the 

Commission adopted the general principle that LECs could 

“charge the relevant intercarrier compensation for functions 

performed by it and/or by its retail VoIP partner, regardless of 

whether the functions performed or the technology used 

correspond precisely to those used under a traditional TDM 

architecture.” Id. at 18026-27, ¶ 970. That focus on functions 

of course undergirds the reliance on “functional equivalent[s]” 

in § 51.903(d), (i). 

The Transformation Order also explicitly asserted the 

application of its rules across technologies, saying that LECs 
7

are entitled to compensation for performing functions “using, 

in whole or in part, technology other than TDM transmission 

in a manner that is comparable to a service offered by a local 

exchange carrier.” 47 C.F.R. § 51.913(b). 

To understand the application of that principle, and the 

present claims, we now must examine VoIP-PSTN services 

provided by a VoIP-LEC. The universe of these provider 

partnerships is divided into two—“facilities-based” and “overthe-top.” Declaratory Ruling, 30 FCC Rcd. at 1588, ¶ 2. 

Facilities-based service occurs when a VoIP provider such as 

a cable company owns or leases the physical infrastructure 

connecting directly to subscribers’ homes and offices and thus 

completes the “last mile” of the call. Id. at 1592, ¶ 11 n.35. 

This is closely parallel to the equivalent PSTN process; the 

charges levied by these providers are not at issue here. 

Over-the-top VoIP providers do not connect directly to 

the last mile transmission network. Id. at 1588, ¶ 2. They 

“require the end user to obtain broadband transmission from a 

third-party provider.” Id. at 1592, ¶ 11 n.35 (citation 

omitted). Thus, suppose a call from a PSTN calling party to 

an over-the-top VoIP subscriber. The call will make its way 

via the calling party’s IXC to some intermediate point, at 

which the VoIP-LEC provider will “convert[] the call from 

TDM to IP format.” AT&T Corp. v. YMax Communications 

Corp. 26 FCC Rcd. 5742, 5746, ¶ 7 (2011) (“YMax I”). Now 

taking the form of data packets, the call will then proceed over 

the Internet until it reaches the network of the called party’s 

Internet service provider (“ISP”). Id. That ISP will then 

direct the data packets to the called party’s customer premises 

equipment—which in YMax I were (perhaps typically) a VoIP 

device and a landline handset. See id. at 5744, 5746, ¶¶ 4, 7.

The Commission issued the Declaratory Ruling to 

resolve petitioner AT&T’s contention that the Transformation 
8

Order did not require it to pay over-the-top VoIP-LECs the 

end-office switching rate. 30 FCC Rcd. at 1594-95, ¶ 16. 

AT&T argued there, and argues here, that the Transformation 

Order authorizes LECs to obtain end-office switching charges 

only if they actually interconnect with the last-mile network 

leading into a customer’s home, a condition satisfied in the 

PSTN world and by facilities-based providers in the IP world. 

Id. 

AT&T bolstered the argument by reference to RAO Letter 

21, 7 FCC Rcd. 5205 (1992), a staff document that identified 

eight “basic switching functions,” id. at 5205 & n.1. One of 

these eight functions is “[i]nterconnection [which] connects 

subscriber line to subscriber line or subscriber line to trunk,” 

while the remaining seven cover activities such as, 

“[a]ttending [which] monitors for off-hook signals,” 

“[i]nformation receiving,” and “[i]nformation transmitting.” 

Id. at n.1. In 1997, the Commission clarified the letter by 

stating that out of the eight functions, “interconnection, i.e., 

the actual connection of lines and trunks, is the characteristic 

that distinguishes [end-office] switches from other central 

office equipment.” In re Petition for Reconsideration, RAO 

21, 12 FCC Rcd. 10061, 10067, ¶ 11 (1997).

The Declaratory Ruling “recognize[d] that elements” of 

the RAO “decisions emphasize, among other things, the 

function of connecting lines and trunks in end-office 

switching,” but dismissed arguments based on these decisions 

as “necessarily tied to TDM-based technologies.” 

Declaratory Ruling, 30 FCC Rcd. at 1606, ¶ 38. It treated 

interconnection, formerly the sine qua non of end-office 

switching, as a mere technical exigency of TDM networks and 

not an inherent function of end-office switching. Id. at 1602, 

¶ 30. 
9

Instead the Commission selected from RAO Letter 21

what it called an “aggregation of functions,” specifically “call 

control, i.e., the functions necessary to ensure call set-up, 

conduct and take-down,” and pronounced this the functional 

equivalent of end-office switching. 30 FCC Rcd. at 1601, 

¶ 28 (emphasis omitted). Finding that over-the-top VoIP 

services “undoubtedly provide the call intelligence associated 

with call set-up, supervision and management” because these 

services “determine call destination and directly code the call 

for receipt and decoding by the called party,” it concluded that 

over-the-top VoIP providers supply “the functional equivalent 

of end-office switching.” Id. at 1602, ¶ 29 & n.105.

Its justification for the shift from interconnection rested in 

large part on a claim that the Transformation Order had 

ushered in a “new functional equivalence approach” that was 

not bound by “preexisting, technology-specific, TDM-based 

guidance for determining functional equivalency.” 30 FCC 

Rcd. at 1600, ¶ 26 & n.98. This “new” approach, the 

Declaratory Ruling explained, requires a “holistic look at how 

calls are delivered to the end user” rather than a comparison of 

“key physical switching functions.” Id. at 1600-1601, ¶¶ 26-

27 (explaining that a test based on “physical functions” is too 

“narrow” an interpretation of the Transformation Order). The 

Commission rooted this new standard in a passage from the 

Transformation Order saying that the functions or 

technologies used “do not need to correspond precisely to 

those used under a traditional TDM architecture.” 30 FCC 

Rcd. at 1600, ¶ 26 n.98 (quoting Transformation Order, 26 

FCC Rcd. at 18026-27, ¶ 970) (internal quotation marks 

omitted). The Commission also found support for this 

approach in certain general statements the agency had 

previously made about functional equivalence, a concept with 

a long history in telecommunications regulation, which we 

need not recount here. See 30 FCC Rcd. at 1148, ¶ 27 n.100 

(citing precedents); see also id. at 1150, ¶ 31 & n.114.
10

 AT&T argues that the Commission misapplied this 

functional equivalence concept. As we saw, the Declaratory 

Ruling proclaimed the standard to be “new,” to require a 

“holistic look at how calls are delivered to the end user,” and 

not to require precise physical identity. But those 

propositions don’t tell us much about what functional 

equivalence does mean. This seems to turn on a comparison 

of the functions performed by PSTN end-office switches and 

by over-the-top VoIP-LECs. The Declaratory Ruling said 

that those entities’ provision of “call control” and call 

intelligence did the job. Declaratory Ruling at 1601, ¶ 28. 

This poses a key question: if those are the critical functions, 

what distinguishes end-office switching from tandem 

switching? 

AT&T assails the Commission’s failure to explain why 

the activities of over-the-top VoIP-LECs should be classified 

as end-office rather than tandem switching. “They [the VoIPLEC partners] perform only some limited subset of the call 

control functions performed traditionally by all types of 

switches.” Pet’r Br. at 10 (emphasis added). Indeed, AT&T 

had posed that problem in the proceedings leading to the 

Declaratory Ruling, clearly enough so that the Commission 

noted that it had argued that the services of the VoIP-LECs 

“‘more closely resemble tandem switching’ than end office 

switching.” Declaratory Ruling, 30 FCC Rcd. at 1604, ¶ 33. 

Having explicitly noted AT&T’s position, the Declaratory 

Ruling never again mentioned tandem switching. And at oral 

argument counsel for the agency was unable to point to any 

Commission language, in the Declaratory Ruling or 

elsewhere, indicating that call intelligence is not performed by 

tandem switches. Oral Argument at 32:06. 

When the Commission applies the functional equivalence 

test, it necessarily draws a line around “the essential 

function[s]” of a service. See In re Investigation of Special 
11

Access Tariffs of Local Exchange Carriers, 12 FCC Rcd. 

7026, 7041, 7052, ¶¶ 27, 48 (1997) (explaining that under 

“functional equivalence test,” services were not “like” when 

they failed to share an “essential function”); see In re Cellexis 

Internat’l, Inc. v. Bell Atlantic NYNEX Mobile Sys., Inc., 16 

FCC Rcd. 22887, 22894, ¶ 19 (2001) (“[I]t is the purpose of a 

technical configuration, not the configuration itself, that is 

relevant in determining functional equivalence.”). The 

Declaratory Ruling held that “call control” was the essential, 

defining purpose of end-office switching while 

“interconnection” was not. 30 FCC Rcd. at 1601-1602, ¶¶ 28-

30 (defining call control as “the intelligence associated with 

call set-up, supervision and management”). AT&T contends 

that this defining function is not defining at all. As we 

mentioned above, AT&T asserts that over-the-top VoIP-LECs 

“perform only some limited subset of the call control 

functions performed traditionally by all types of switches.” 

Pet’r Br. at 10.

Indeed, the Declaratory Ruling never explained its 

references to call set-up and the intelligence associated with it. 

But in prior rulings the Commission had repeatedly referred to 

“call set-up” in terms that seem to encompass the services of 

tandem switches, e.g., speaking of it as the process of 

“establish[ing] transmission paths over which telephone calls 

are carried.” In re Ameritech Operating Cos., 11 FCC Rcd. 

3839, 3841, ¶ 4 (1996). Call set-up determines the route 

necessary to get from the calling party’s phone to the called 

party’s phone. In a TDM phone call, this route is determined 

by a signaling network, such as the SS7 network. In re HighCost Universal Serv. Support, 24 FCC Rcd. 6475, 6642, ¶ 327 

n.848 (2008) (“SS7 is an out-of-band signaling system that is 

separate from, but runs parallel to, the public switched 

telephone network (PSTN) and is used to set up call paths 

between calling and called parties.”); In re Access Charge 

Reform, First Report & Order, 12 FCC Rcd. 15982, 16087, 
12

¶ 244 (1997) (“[S]ignaling networks like SS7 establish and 

close transmission paths over which telephone calls are 

carried.”); see generally Transformation Order, 26 FCC Rcd. 

at 17892-96, ¶¶ 708, 715-17 (discussing different types of 

signaling networks, including SS7, Multi-Frequency 

signaling, and IP signaling). 

In the most common type of signaling network, the call 

set-up process relies on databases: “[S]witch[es] [] send 

queries . . . to call-related databases, which return customer 

information or instructions for call routing to the switch.” In 

re Application of GTE Corp., 15 FCC Rcd. 14032, 14121, 

¶ 189 n.431 (2000). Thus the “intelligence associated with 

call set-up” exists not in end-office switches, but in these 

“call-related databases.” To the extent that end-office 

switches possess any of the “intelligence associated with call 

set-up,” that intelligence appears to be shared with tandem 

switches. Both end-office and tandem switches are, for 

signaling purposes, “service switching points . . . capable of 

originating, transmitting, and receiving SS7 messages for call 

set-up and database transactions.” Ameritech, 11 FCC Rcd. at 

3840-41, ¶ 3; see In re Access Charge Reform, First Report & 

Order, 12 FCC Rcd. at 16045, ¶ 145 (indicating that both 

end-office and tandem switches “process or formulate signal 

information”). 

Because both tandem and end-office switches process 

“intelligence associated with call-setup,” the Declaratory 

Order’s functional equivalence analysis fails to distinguish 

between them. If end-office switches traditionally perform 

functions A (call set-up) and B (interconnection between 

trunks and loops), while tandem switches perform functions A 

(call set-up) and C (interconnection between trunks), it is 

wholly arbitrary to say (without more) that the call set-up 

activity of VoIP-LECs is the functional equivalent of endoffice switching but (implicitly) not the equivalent of tandem 
13

switching. Which is it—one, the other, or both? And what 

language in the Transformation Order gives the answer? 

The Transformation Order prescribed entirely different 

consequences for services that are the functional equivalent of 

end-office switching and of tandem switching. Besides 

assigning them separate definitions, see 47 C.F.R. 

§ 51.903(d), (i), it provided for different rate ceilings. 

Compare 47 C.F.R. § 51.907(g)(1) (end-office access service) 

with id. § 51.907(g)(2) (tandem switch service). In case the 

Transformation Order’s rules did not insist on the distinction 

between them clearly enough, the Commission drew a picture, 

illustrating the two types of switching as occurring separately 

at different stages of a call’s path. Figure 13, 26 FCC Rcd. at 

18112, ¶ 1306. So far the Commission has not pointed to 

anything in the Transformation Order from which a reader 

would understand that it meant for specific services provided 

by over-the-top VoIP-LEC providers to qualify as the 

functional equivalent of end-office switching and not tandem 

switching.

The Commission’s muddled treatment of functional 

equivalence requires vacatur and remand. But judicial 

economy suggests that we address some of AT&T’s other 

arguments to avoid re-litigation of identical issues in a 

subsequent petition. AT&T claims that language in the 

Transformation Order itself, and in Commission decisions 

before and after the ruling, illustrate that references to endoffice switching services cannot be read as broadly as 

necessary to sustain the Declaratory Ruling. 

In the preamble to the Transformation Order (the 

“concise general statement of [the rules’] basis and purpose” 

required by 5 U.S.C. § 553(c)), the Commission explained 

that it was adopting rules to make clear that a carrier may 

impose origination and termination charges when it “uses 
14

Internet Protocol facilities to transmit . . . traffic to or from the 

called party’s premises.” 26 FCC Rcd. at 18025, ¶ 969 

(emphasis added) (brackets omitted). It went on to say, 

“[O]ur rules do not permit a LEC to charge for functions 

performed neither by itself or its [VoIP] partner.” Id. at 

18027, ¶ 970. On their face these passages seem to deny an 

over-the-top provider authority to charge end-office switching 

rates. As we’ve pointed out, the Commission acknowledged 

that VoIP providers do not supply a last-mile connection and 

their end-users must obtain broadband transmission from 

others.

The Commission replies that the passage is “not itself a 

rule,” so that the Commission is free to deviate from its 

apparent meaning. Resp. Br. at 21-22. But at the very least, 

an agency’s “expla[nation] in the Federal Register” provides 

evidence of the agency’s “intent at the time of the regulation’s 

promulgation.” Consolidation Coal Co. v. Fed. Mine Safety 

& Health Review Comm’n, 136 F.3d 819, 821-22 (D.C. Cir. 

1998) (quoting Thomas Jefferson Univ. v. Shalala, 512 U.S. 

504, 512 (1994)). An interpretation at odds with the agency’s 

expressed intent at the time of adoption enjoys no judicial 

deference. Comcast Cable Communications, LLC v. F.C.C., 

717 F.3d 982, 1003 (D.C. Cir. 2013). 

The Commission also contends that the preamble 

language is ambiguous; its theory for ambiguity is that most 

IXCs other than AT&T mutely paid the charges when billed 

by the VoIP-LECs. Parties’ silent decisions not to incur the 

cost of litigation seem a relatively remote basis for claiming 

ambiguity, which in common parlance is a matter of language. 

Nonetheless, the Transformation Order might conceivably 

have been using “transmit” in the sense of helping to cause 

another party to make the ultimate transmission.
15

AT&T also cites two decisions relating to YMax 

Communications Corp., an over-the-top VoIP provider. In the

first, AT&T Corp. v. YMax Communications Corp. 26 FCC 

Rcd. 5742 (2011) (“YMax I”), which we’ve already 

mentioned, AT&T successfully resisted YMax’s claim to endoffice switching fees. The pure holding of YMax I was 

narrow: that an over-the-top VoIP provider could not levy 

end-office switching charges based on a tariff that described 

end-office switching purely in TDM terms. “The fundamental 

problem [with YMax’s position] appears to be that YMax 

chose to model its Tariff on common language in LEC access 

tariffs, even though the functions YMax performs are very 

different from the access services typically provided by 

LECs.” YMax I, 26 FCC Rcd. at 5748, ¶ 14. Relying on the 

tariff’s references to “End User station loops” and “end user 

lines”—language drawn from the TDM world—the 

Commission found that the tariff contemplated charges only 

for TDM services. Id. at 5755-59, ¶¶ 36-45. And under the 

filed rate doctrine YMax could charge only for services 

specified in the tariff. Id. at 5748, ¶ 12 (quoting 47 U.S.C. 

§ 203(a), (c)). 

In addition to its holding on YMax’s tariff language, the 

Commission hinted that YMax’s access charges might have 

failed to satisfy the functional equivalence standard but 

stopped short of addressing that issue. 26 FCC Rcd. at 5743, 

¶ 1 n.7 (“[W]e emphasize that this Order addresses only the 

particular language in YMax’s Tariff and the specific 

configuration of YMax’s network architecture . . . .”). 

The Commission also refused to “address issues 

regarding the intercarrier compensation obligations, if any, 

associated with [VoIP] traffic in this Order.” Id. 

The Commission cited YMax I with a “cf.” signal in the 

Transformation Order, 26 FCC Rcd. at 18027, ¶ 970 n.2028, 
16

and AT&T reads the citation as intended to illustrate that the 

services of an over-the-top VoIP do not qualify for end-office 

switching fees. The Commission insists here, as it did in the 

Declaratory Ruling, that the citation served merely as “part of 

a discussion of measures taken to prevent double billing.” 30 

FCC Rcd. at 1604, ¶ 34 n.126. The evidence is mixed, but we 

find the Commission’s interpretation reasonable. 

After the Transformation Order another matter involving 

YMax led the Commission’s Wireline Competition Bureau to 

amend one of the order’s rules. Shortly after the order was 

published, YMax sought “confirmation of its interpretation” 

that it need only provide “some portion of the interconnection 

with the PSTN” to qualify for the “full benchmark rate” of 

access charges, “even if [the rate] includes functions that 

neither [the LEC] nor its VoIP retail partner are actually 

providing.” In re Connect America Fund, 27 FCC Rcd. 2142, 

2144, ¶ 4 (2012) (“YMax II”). The Bureau noted that YMax’s 

request “highlight[ed]” a potential conflict between two of the 

Transformation Order’s rules. See id. at 2144, ¶ 5. While 47 

C.F.R. § 51.913(b) prevents VoIP-LECs from “charg[ing] for 

functions not performed by the [LEC] itself or the . . . VoIP” 

provider, the Transformation Order amended 47 C.F.R. 

§ 61.26(f) to provide an apparently much laxer standard: 

If a CLEC provides some portion of the switched 

exchange access services . . . [and] if the CLEC is listed 

in the database of the Number Portability Administration 

Center as providing the calling party or dialed number, 

the CLEC may assess a rate equal to the rate that would 

be charged by the competing ILEC for all exchange 

access services required to deliver interstate traffic to the 

called number. 

Transformation Order, 26 FCC Rcd. at 18226 (emphasis 

added) (amending § 61.26(f)). Thus, as YMax argued, 
17

§ 61.26(f) seemed to allow carriers to bill for services not 

provided, as long as they performed “some portion” of the 

total services required to deliver a call. The Bureau rejected 

YMax’s interpretation of § 61.26(f) on the grounds that it 

could lead to “double billing”; it amended the rule to make 

clear that § 61.26(f) “is limited by section 51.913(b).” YMax 

II, 27 FCC Rcd. at 2144, ¶¶ 4-5; see id. at 2149 (amending 

§ 61.26(f) with the qualifier “to the extent permitted by 

§ 51.913(b)”). 

AT&T asks us to read YMax II in light of both YMax’s 

letter to the Bureau and its filings in YMax I, which the 

Bureau did not cite. AT&T assumes that the Bureau read the 

“some portion” phrase in YMax’s letter as a specific reference 

to all the capabilities, including call control, that YMax had 

detailed in prior filings to the Commission. From this AT&T 

claims that “it is inconceivable that the Bureau would have 

denied” YMax’s request if the Transformation Order allowed 

a charge for end-office switching services merely on the basis 

of a VoIP-LEC’s providing call control. Pet’r Br. at 33-34. 

We find the argument a stretch. It is just as likely that the 

Bureau interpreted “some portion” to mean unspecified 

functions falling short of “call control.”

While neither YMax decision is a holding in favor of 

AT&T’s view, YMax I represents the Commission’s apparent 

understanding of the “commonly understood meaning[]” of 

end-office switching around the time of the Transformation 

Order. See YMax I, 26 FCC Rcd. at 5758, ¶ 43. The 

Commission was remarkably clear, even emphatic, in its 

statement about end-office switching. Charges for such 

switching, it said, “are authorized by law to allow local 

exchange carriers to recover the substantial investment 

required to construct the tangible connections between 

themselves and their customers throughout their service 

territory.” Id. at 5757, ¶ 40 & n.117. It therefore presents an 
18

additional problem with the Commission’s attempted 

application of the Transformation Order’s functional 

equivalence standard, besides the ones already discussed. 

Here we note that the Declaratory Ruling also falls down 

in its effort to explain why VoIP-LECs’ failure to provide 

interconnection is not fatal to the claim that they provide the 

functional equivalent of end-office switching. As we saw, the 

RAO guidance and YMax I both appear to identify end-office 

switching as supplying actual or physical interconnection. 

See id. Indeed, the Declaratory Ruling acknowledged that 

interconnection is “critical” to end-office switching in a TDM 

call, but found that it was “not require[d]” in VoIP-PSTN 

calls. 30 FCC Rcd. at 1602, ¶ 30. The ruling’s only 

explanation for why interconnection is “not require[d]” is that, 

in VoIP-PSTN calls, “the customer is separately paying for 

[the] broadband connection, which interconnects” the call. Id. 

That the customer is paying for the broadband interconnection 

doesn’t support the conclusion that interconnection is 

unnecessary for end-office switching—it merely indicates that 

it is provided by a party other than a VoIP-LEC. Even 

assuming that the Transformation Order cast off 

interconnection as a remnant of “preexisting, technologyspecific, TDM-based guidance for determining functional 

equivalency,” Declaratory Ruling, 30 FCC Rcd. at 1600, ¶ 26 

n.98, that reading would still require the Commission to 

provide some distinctive “functional equivalence” criterion in 

its place. On the record before us, the Commission has not 

done so. 

The Declaratory Ruling is accordingly 

 Vacated and remanded.