Opinion ID: 185839
Heading Depth: 3
Heading Rank: 1

Heading: Total as a sham entity

Text: 14 Section 201(b) of the Act declares unlawful any [communication common carrier's] charge, practice, classification, or regulation that is unjust or unreasonable. The Commission found that Atlas created Total as a sham entity designed solely to extract inflated access charges from IXCs, and that this artifice constitutes an unreasonable practice ... in violation of section 201(b) of the Act. Order, 16 F.C.C.R. 5726 at ¶ 16. Atlas/Total does not quarrel with the underlying facts upon which the Commission based its determination that Total was a sham entity. Rather, Atlas/Total argues that the FCC's finding that Total was a sham entity because it was not truly independent of Atlas is inconsistent with many past FCC rulings concerning affiliates of dominant carriers, such as those allowing an affiliate to sell cellular or interexchange service. In response, the Commission points out that those rulings involved an affiliate offering a competitive service; the provision of access service by an ILEC, in contrast, is subject to dominant carrier rate regulation, which would be circumvented if an ILEC could offer access service through an affiliate. The Commission also argues that because Total is not independent of Atlas, those prior decisions do not apply. 15 We agree with the Commission in both respects. None of the cases cited by Atlas/Total supports the proposition that an ILEC may create an alter ego to provide access service in the same geographic area as the ILEC and thereby avoid regulation as a dominant carrier. If accepted, Atlas/Total's argument would enable every ILEC completely to avoid dominant carrier regulation by a mere artifice. In this respect, it is noteworthy that, although the Commission determined that Atlas created Total to increase access charges for calls to Audiobridge, id., Atlas/Total does not argue on appeal that Total had any other purpose, or indeed that it had any economic substance at all. Clearly, the entire arrangement was devised solely in order to circumvent regulation of Atlas as a dominant carrier, deserves to be treated as a sham, and cannot benefit from precedents set with respect to legitimate affiliates. 16