ALJ/JLG/MOD-POD/tcg Mailed 2/11/2005

Decision 05-02-022 February 10, 2005

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Mpower Communications Corp. (U-5859-C), Complainant, vs. Pacific Bell Telephone Company (U-1001-C), Defendant.

Case 02-09-045 (Filed September 27, 2002)

John L. Clark, Attorney at Law, for Mpower
Communications Corp., Complainant.

Michael J. Kass, Attorney at Law, for Pacific Bell Telephone Company, Defendant.

Martin Mattes, Attorney at Law, for California Payphone Association, Intervenor.

OPINION RESOLVING COMPLAINT

1. Summary

In today's decision, we find Pacific Bell Telephone Company (SBC California) indirectly rebated tariffed charges in violation of Pub. Util. Code § 532.

Specifically, SBC California and complainant Mpower Communications Corp. (Mpower) compete in providing lines to payphone service providers. As relevant to this complaint, SBC California pays to an independent third-party aggregator of affiliated payphone service providers¹ the compensation owed under federal rules for calls that are made by means other than depositing coins, including calls to its 800 "platform." SBC California offered a limited-term "Fast Start Program" and paid fixed "compensation" owed to payphone service providers by crediting amounts designated by the aggregator. Mpower asserts these payments are unlawful rebates of tariffed charges owed to SBC California by the payphone service providers, while SBC California states they are lawful compensation under the federal rules.

Section 532 provides that no public utility shall charge other than its tariffed rates. Both direct and indirect rebates are impermissible. Federal law requires carriers to compensate payphone service providers for "non-sent paid" calls, generally 800 "platform" and access code calls. We find one of the four payments at issue, the "new line added" component of the "New Connect Award," is an indirect rebate, and we order SBC California to terminate its "Fast Start Program." The payment is identical to the installation charge, was directly paid by SBC California to payphone service providers within a month of verification, and was accounted for as "contra revenue," a credit to the COPT access line tariffed charge. The evidence is insufficient to find the other payments constitute indirect rebates.