FCC Rejects Some AT&T BDS Tariffs, Will Probe Others; Verizon's Deemed Lawful

FCC staff rejected some AT&T business data service tariffs and will probe others, but found Verizon's BDS tariff changes are lawful and can take effect, said an agency spokesman Friday. The AT&T tariffs the Wireline Bureau rejected involve "all or nothing" and related "circuit portability" contract conditions for BDS customers seeking discounts, while the tariffs to be investigated involve shortfall penalties for not meeting volume commitments and early termination fees (ETFs) for not satisfying term commitments. CLECs and Sprint objected to the Bell tariff changes -- which responded to a previous FCC order -- as a "rate hike sneak attack" (see 1607110066). Some commission watchers thought the agency was likely to suspend and investigate the tariff filings of both companies (see 1607140003).

"Because we conclude that AT&T’s tariff revisions related to the aggregation of all purchases under a single plan constitute a restructured service for which AT&T has failed to make the required showing and violate the Commission’s Tariff Investigation Order, we reject Ameritech Transmittal No. 1847 proposed Section 7.4.13(A), PBTC [Pacific Bell Telephone Company] Transmittal No. 539 proposed Sections 7.4.18(E), and SWBT [Southwestern Bell Telephone Company] Transmittal No. 3428 proposed Section 7.2.22(E) as patently unlawful," said an order signed by Wireline Bureau Chief Matt DelNero. "We agree with the position taken by Birch and Windstream that AT&T’s proposed revisions constitute a restructured service. By 'grandfathering' portability, AT&T is plainly modifying the manner in which it is charging for services, ensuring that customers pay higher shortfall and early termination penalties and decreasing the provisioning options available to customers."

The bureau directed AT&T to file tariff revisions compliant with the previous order within 30 days. "The tariff revisions shall remove in each case the relevant language requiring customers to aggregate all of their purchases under a single plan," the order said. "Should AT&T file tariff revisions grandfathering portability for either new or existing customers, we direct AT&T to treat such filings as a restructured service and file the appropriate materials required by section 61.49(e) of our rules. In addition, if AT&T files tariff revisions grandfathering portability for existing customers of the PBTC and SWBT plans, by prohibiting the renewal of such plans, we direct AT&T to make a substantial cause showing. We note that until such tariff revisions are filed, the tariff language requiring the aggregation of all of a customer’s purchases in a single plan and the removal of its renewal clause, have been found to be unlawful by the Commission and are thus unenforceable by AT&T."

Competitors also said AT&T's proposed reduced ETFs and shortfall penalties were still too high under the earlier FCC order. "Because we conclude that substantial questions of lawfulness exist regarding how AT&T revised the shortfall and early termination penalties contained in the PBTC and SWBT proposed tariff revisions, we suspend those provisions for one day and set for investigation the question of whether AT&T complied with the Tariff Investigation Order, in revising its shortfall and early termination penalties," said another order signed by DelNero. If AT&T's charges are later found to be unlawful, it can be ordered to provide refunds.

“We commend the FCC for rejecting AT&T’s attempt to eliminate cost saving portability plans that bring flexibility and lower costs to competitive wholesale providers and the business customers they serve. It was a rate hike sneak attack pure and simple, and we are pleased the FCC rejected this bullying display of market power," emailed Incompas General Counsel Angie Kronenberg. “Rate hike sneak attacks only create greater urgency for the FCC to take comprehensive action to reform the business data service reform this year. Business customers want lower prices and more choices, not rate hike threats.” AT&T and Verizon didn't comment.