6. Disposition of the Complaint

We have determined that Sprint PCS is not entitled to the transiting rates which are based on the Interconnection Factors found in the ICAs of some other carriers. AT&T did not discriminate against Sprint PCS because all the carriers with the same transiting rates as Sprint PCS were treated the same; none of them had their transiting rates modified.

We conclude that Sprint PCS is required to pay AT&T the rate for transit that is specified in the parties' ICA.

According to AT&T's complaint, in July 2007, Sprint PCS began withholding payments to AT&T to reimburse itself for amounts that Sprint PCS previously paid for transiting since October 2004. Also, since July 2007, Sprint PCS refused to make payments on bills for services other than transiting, in order to take back from AT&T payments that Sprint PCS made to AT&T for transiting since October 2004. AT&T states that Sprint PCS' actions were in conflict with the provisions of the ICA. We agree. This is clearly in violation of Section 8.2.2 of the ICA that requires parties to "pay to each other all undisputed charges due each other within thirty (30) days of the date the statement was rendered (bill date) for those charges." Where charges are subject to a bona fide dispute between the parties, "the disputing Party shall, within 30 days after the bill due date, give written notice to the billing Party of the amounts it disputes, the specific details and reasons for disputing each item."¹¹ Sprint PCS unilaterally withheld payment of 2007 bills in an attempt to retrieve payments it made in 2004-2006. For the bulk of the challenged charges, Sprint PCS failed to give notice within
30 days of billing of the disputed amounts and the reasons for disputing those amounts.

Also, Section 8.2.7.2 of the ICA provides "Neither Party may request credit for any billing by the other Party pursuant to this Agreement more than nine
(9) months after the date of the bill on which the service or facility was billed. If the request for credit leads to a billing dispute, such dispute shall be in accordance with Section 17." Sprint PCS is attempting to retrieve payments it made in 2004-2006, which is more than 9 months after bills for that time were issued. That violates the requirement in Section 8.2.7.2.

In this case, Sprint PCS has unilaterally awarded itself credits for past payments Sprint PCS has made to cover transit charges. This a clear violation of the ICA. Sprint PCS must request credits from AT&T, not decide unilaterally that it should not have paid AT&T's prior bills and then withhold current payments to recover prior undisputed payments.

Sprint PCS has violated the terms of its ICA with AT&T by withholding payment, in violation of §§ 8.2.2 and 8.2.7.2 of the ICA. Sprint PCS is required to immediately pay AT&T any and all amounts AT&T has billed that Sprint PCS has withheld.

In its Comments on the PD, AT&T states that the rate of interest awarded in the PD¹² is legal error because the Commission has held that, if a contract is silent on the applicable interest rate, proper rate of interest for breach of an ICA is the statutory rate mandated by Section 3289(b) of the California Civil Code. AT&T cites the Commission's own words:

Under Civ. Code § 3289, unless the terms of a contract provide otherwise, the legal rate of prejudgment interest for breach of contract is 10 percent per annum. (D.01-09-053, mimeo, at 3.)

AT&T points to Section 8.2.6.2 of the ICA between and Sprint PCS that states the applicable interest on billed amounts that are not paid when due is "the lesser of (i) one and one-half percent (1½%) per month or (ii) the highest rate of interest that may be changed under Applicable Law." According to AT&T, because the 10% per annum rate specified by Section 3289(b) is less than a rate of 1½% per month (which translates to 18% on a per annum basis), the proper interest rate to be applied is 10%.

In its Reply Comments on the PD, Sprint PCS points out that under the ICA Sprint PCS does not owe interest on "disputed" amounts, instead, Sprint would owe "late payment charges" to AT&T. According to Sprint PCS, AT&T's reliance on Section 8.2.6.2 of the ICA is misplaced. By its terms, Section 8.2.6.2 applies only to undisputed amounts not paid when due. Sprint PCS asserts that the proper section of the ICA the applies to disputed billing amounts is
Section 17.7 "Resolution of Billing Disputes," which reads as follows:

17.7.2 When a billing dispute is resolved in favor of the billing Party, the following will occur within thirty (30) days:

17.7.2.1 Late payment charges will be paid by the disputing Party on any amount not paid that is found to be due according to the Dispute Resolution.

Sprint PCS says it is important to note that these sections do not assess interest charges. Accordingly, AT&T's reliance on California Civil Code
Section 3289(b) is inapplicable because that section specifically addresses interest charges, not late payment charges.

Sprint PCS notes that the ICA makes a distinction based on whether the "billing Party" or the "disputing Party" prevails. The "billing Party" pays interest if the "billed Party" prevails (under Section 17.7.1.1 of the ICA), but the "disputing Party" only pays "late payment charges" if the "billing Party" prevails (under Section 17.7.2 of the ICA). Sprint PCS concludes that since the ICA used the word "interest" when assessing charges against the "billing Party," but used the term "late payment charges" when assessing charges against the "disputing Party," it must be presumed that the distinction was intentional. We concur with Sprint PCS' conclusion that AT&T incorrectly relied on
Section 8.2.6.2 of the ICA when it determined that interest should be paid on the amount Sprint PCS owes AT&T.

Section 17.7.2 establishes that "late payment charges" will apply when assessing charges against the disputing Party. Sprint PCS indicates that the ICA does not identify the appropriate late payment charges to be paid by the disputing Party in the event of a billing dispute where the billing Party prevails. Sprint concludes that the Commission should determine the appropriate late payment charges to be paid by Sprint PCS. Sprint PCS states that the 3-month commercial paper rate published in the Federal Reserve Statistical Release H.15 would be an appropriate rate for late payment charges. We agree.

Sprint PCS shall immediately pay to AT&T late payment charges, from when the amounts were originally withheld, at the three-month commercial paper rate published in the Federal Reserve Statistical Release H.15.on the payments withheld by Sprint PCS.

¹¹ California Agreement for Interconnection by and between Sprint PCS and Pacific Bell Telephone Company, § 8.2.2.

¹² Interest set on "the three-month commercial paper rate published in the Federal Reserve Statistical release H.15."