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MCI COMMUNS. CORP. v. AT&T

December 31, 1973

MCI COMMUNICATIONS CORPORATION et al., Plaintiffs,
v.
AMERICAN TELEPHONE AND TELEGRAPH COMPANY and the Bell Telephone Company of Pennsylvania, Defendants


Newcomer, District Judge.


The opinion of the court was delivered by: NEWCOMER

NEWCOMER, District Judge.

The Parties

 1. Plaintiffs are MCI Communications Corporation, MCI Telecommunications Corporation, MCI-New York West, Inc., Interdata Communications, Inc., and Microwave Communications, Inc.

 2. Plaintiffs are communications common carriers specializing in the interstate transmission of voice and data by microwave. Plaintiffs offer their services primarily to businesses and government agencies whose intra-organizational volume of communication warrants full-time private circuits between their branches which are located in different states as well as with their out-of-state customers. MCI competes in the offering of these services, called "private line services," with other interstate common carriers, including AT&T's Long Lines Department.

 3. MCI Communications Corporation, the parent of the other plaintiffs, does not itself provide any transmitting services.

 4. MCI has 13,000 stockholders.

 5. Some of the services MCI proposes to offer are directly competitive to AT&T interstate offerings, while others may be interstate services not offered by AT&T.

 6. MCI also competes, in a sense, with corporations which create their own private microwave communications system.

 7. The specialized common carriers like MCI serve with special communications services the corporations which do not have sufficiently great communications needs to warrant building their own private microwave systems.

 8. The MCI network has now been extended to include St. Louis, Chicago, South Bend, Toledo, Detroit, Cleveland, Pittsburgh, Philadelphia, Newark, New York City, and will soon reach Baltimore, Washington, D.C., Akron, Tulsa, Oklahoma City, and Dallas.

 9. MCI constructs microwave radio systems, which consist of various terminals and repeaters spaced approximately 20 to 25 miles apart which relay radio signals to transmit voice, data, facsimile or other communications services between designated cities. In each of the cities where MCI has a terminal and offers its service, MCI leases circuits from the local telephone company to link MCI's terminal to its customers' premises.

 10. Except for the coincidence that a customer of MCI may be located in the same building as an MCI terminal, interconnections with local loops provided by the local telephone company monopolies are necessary for the provision of point-to-point private line interstate business communications service by MCI.

 11. Defendants are American Telephone and Telegraph Company (hereafter "AT&T") and its subsidiary, The Bell Telephone Company of Pennsylvania (hereafter "Bell of Pa."), both of which are communications common carriers subject to the Communications Act of 1934, as amended.

 The Services in Dispute

 12. As of November 14, 1973, MCI had under lease from Bell System companies 488 local distribution circuits to MCI terminals in eleven major cities along its routes, including Philadelphia and Pittsburgh. 327 of those circuits are already terminated in Bell System PBX's or key telephone sets, and 91 are to be terminated therein later.

 13. However, Bell of Pa., as well as other local Bell companies have refused to provide MCI with four kinds of interconnection necessary for services which MCI appears authorized to provide and which MCI claims are provided to MCI's competitors. Those kinds of services for which interconnection is necessary are Foreign Exchange Service (FX), Common Carrier Switching Arrangements (CCSA), "interexchange" service, i.e., linkage between Bell defined metropolitan areas and areas more distant from MCI's towers, and "transiting" service, or the interconnection of the transmitting and receiving facilities of MCI and another common carrier.

 14. FX (Foreign Exchange) service is a form of "switched" service, which allows a businessman located in one state to, in effect, maintain a local phone within another state. Under Foreign Exchange service, a businessman can be reached by customers in a different state and can himself reach another state through a telephone line which has the appearance to those customers of being a local telephone in their city.

 15. As a specific example of a refusal by Bell to provide interconnection for interstate private line specialized common carrier service of the FX type, Bell of Ohio, the week preceding the hearing, on orders from AT&T, refused to permit MCI service to the Chilton Corporation. Another example was a refusal by Illinois Bell for Cone Mills.

 16. Common Control Switching Arrangement (CCSA) is a private line system for linking the various offices of a large company through large switches on a local telephone company's premises instead of through the PBX switches on the customers' premises.

 17. Although the private line circuits furnished in CCSA are provided for the exclusive use of the CCSA customer, the switching machines are shared with other private line service customers and message telecommunications service (MTS) and wide area telecommunication service (WATS) customers.

 18. A specific example of a refusal by Bell to provide interconnection for interstate private line specialized common carrier service of the CCSA type arose when Illinois Bell refused to interconnect an MCI long haul interstate circuit in Chicago for the Westinghouse CCSA private line system.

 19. Both FX and CCSA require interconnection with Bell terminating equipment on Bell premises; in other words, rather than merely interconnecting MCI's micro-wave towers to either Bell or customer owned equipment on MCI's customers' premises, the interconnections necessary to permit FX and CCSA requires Bell to interconnect MCI's customers with Bell's central switching facilities.

 21. The approval of the hi-lo tariff by the FCC is not a legal pre-requisite for the AT&T's furnishing of interexchange interconnection to MCI.

 22. As specific examples of refusal by Bell to provide interconnection for interstate private line specialized common carrier service to communities outside Bell's local distribution area, service to St. Charles and St. Peters, near St. Louis, have both recently been refused by Southwestern Bell. An MCI customer, Santa Fe Pipeline, was lost (either to AT&T Long Lines or to Western Union) as a result of this refusal by Bell to permit interconnection.

 23. Transiting is the provision of telephone company facilities to interconnect the terminals of two different specialized common carriers. Bell has refused to permit transiting interconnection between specialized common carriers. Customers cannot use N-Triple-C from Omaha to Chicago, and MCI from Chicago to New York, because Illinois Bell refuses to provide circuits from the N-Triple-C terminal to the MCI terminal. The terminals are approximately one mile apart.

 24. Mr. Woods, of Bell, stated that Bell would be willing to modify its tariffs to provide for transiting service.

 Negotiations between MCI & AT&T to Date

 25. Following the FCC's orders in the MCI case (Docket 16509) and in Docket 18920, Illinois Bell and Southwestern Bell negotiated and entered into interim contracts with MCI, which permitted MCI to connect its Chicago and St. Louis microwave terminals to the customers' premises and thus provided overall MCI service from a customer's premises in one city to that customer's premises in another city (end-to-end service). The interim contracts also provided for special construction and special facilities on an individual case-by-case basis where required.

 26. MCI commenced operations between Chicago and St. Louis in January 1972, and has placed or is about to place additional routes in operation between Chicago and New York via Pittsburgh, from Washington to New York via Philadelphia and from St. Louis southwest to Dallas during the latter half of 1973.

 27. AT&T and MCI have been negotiating since March of 1971 concerning the kinds of interconnection that would be provided MCI and the terms and conditions of their provision.

 28. During the latter part of the summer of 1973, AT&T broke off negotiations with MCI and submitted tariffs for approval by the state Public Utilities Commissions in those states where MCI sought interconnection terminating in Bell supplied equipment. Pending state approval of these tariffs, Bell refused to provide interconnection to MCI if such interconnection terminated in Bell supplied equipment. These tariffs now appear to have been approved in every state except New Jersey.

 29. On November 12, 1973, AT&T filed, under protest, tariffs covering interconnection terminating in Bell supplied equipment with the FCC.

 31. In no state does MCI get interconnection for FX, for CCSA, for transiting, or for service outside the local distribution area.

 The Situation in Pennsylvania

 32. Under a written agreement dated May 14, 1973, Bell of Pa. agreed to lease local distribution facilities to MCI from the latter's terminals in Philadelphia and Pittsburgh to any point in the Philadelphia and Philadelphia Suburban Exchanges and the Pittsburgh and Pittsburgh Suburban Exchanges, respectively, consisting of 714 and 516 square miles, respectively.

 33. Although the contract negotiated between Bell of Pa. and MCI had been signed May 14, 1973, it was not until the last week in August of 1973 that Bell of Pa. got down to preparations for filing an application with the Pennsylvania Public Utilities Commission for a state tariff to cover MCI's interstate communications services.

 34. Pursuant to this agreement, at the time defendants filed their tariffs with the Pennsylvania PUC, Bell of Pa. had already filled MCI's orders for 66 of the 95 circuits requested at Philadelphia and Pittsburgh, and plans to fill by their respective due dates the orders for 26 of the remaining 29 circuits. The 3 circuit orders that Bell of Pa. has refused to fill are orders to serve customers outside the local distribution areas.

 35. Pending approval of the tariffs submitted to the Pennsylvania Utilities Commission by Bell of Pa., no interconnection was provided to MCI's customers in Pennsylvania.

 36. The approval of Bell of Pa.'s tariffs by the Pennsylvania Utilities Commission will allow Bell of Pa. to restore its previous interconnections to MCI's customers and to fill those orders placed with it by MCI, save for the three circuit orders noted in finding No. 34, supra.

 37. MCI has an unspecified number of orders involving FX, CCSA, and interexchange services which it would place with Bell of Pa. but for Bell's stated policy of refusing interconnection in relation to such services.

 Jurisdiction

 38. Plaintiffs petition this Court to issue a preliminary mandatory injunction to compel the defendants, and AT&T's telephone operating company subsidiaries, to interconnect their communications systems to certain facilities of plaintiffs so as to permit plaintiffs to provide the services specified in Exhibit 2 to the Complaint, viz., (1) foreign exchange service ("FX"); (2) transiting facilities, to interconnect the local terminal facilities of one or more specialized common carriers; (3) common control switching arrangements ("CCSA"); (4) interexchange connection to customers' premises located outside the local distribution areas of the telephone companies serving those areas.

 39. Plaintiffs claim that this Court has jurisdiction under § 406 of the Communications Act of 1934, 47 U.S.C. § 406.

 40. Section 406 requires, inter alia, that a common carrier's violation of a provision of the Communications Act prevents plaintiff from receiving similar communications services on similar terms or conditions as other customers of the common carrier.

 41. Western Union has, for years, had interconnection with the local telephone companies for the provision of specialized business communications.

 43. Western Union obtains numerous types of interconnections and services from Bell operating companies that are not available to MCI. Included among them are interexchange facilities, special circuits such as wide-band, unloaded wire pairs, and interconnection for service to nearby communities outside the Bell local distribution area.

 44. The following privileges are afforded to Western Union by AT&T under Contract No. 1 but are not made available to MCI:

 
(a) Western Union can order special circuits and equipment including wideband carrier.
 
(b) Western Union can obtain pole attachments and duct space for carrier distribution.
 
(c) Western Union can connect with other carriers.
 
(d) Western Union can connect between premises of multiple customers.
 
(e) Western Union can connect between multiple premises of a single customer or multiple locations on single premises of a customer.
 
(f) Western Union can connect between interexchange circuits of Western Union or between such circuits and its offices such as a business office.
 
(g) Western Union has guaranteed availability of circuits in any exchange area and AT&T has guaranteed expeditious construction if the facilities requested do not exist.
 
(h) Western Union can specify a particular gauge of wire, per pair of wires in a cable or per wire on open wire.
 
(i) Western Union's contract has a duration of five years with an automatic renewal and can only be terminated by five years written notice.
 
(j) Western Union is not limited to a local distribution area as is MCI.
 
(k) Western Union has service access to all exchanges operated by the Bell System.

 45. MCI has been trying explicitly to get equal treatment with Western Union from Bell at least since September of 1972.

 46. Under AT&T's Interstate Private Line Tariff 260, AT&T Long Lines, in conjunction with the local telephone companies, can provide FX or CCSA service in any area of the country. AT&T Long Lines is also free to serve communities outside of Bell defined local distribution areas.

 47. Long Lines provides the operating companies the ability to connect, as MCI can, but it is able to connect directly to CCSA switches while MCI is not, despite the fact that the circuit between the switches is a full-time circuit in the case of both Long Lines and MCI.

 48. AT&T Long Lines provides no services completely on its own. While the Bell witnesses asserted that the local Bell telephone companies don't provide interconnection for AT&T Long Lines service offerings such as FX and CCSA, but that they provide the services together, in partnership, some form of interconnection, whatever it is called, appears necessary for the Long Lines Department interstate circuits and the local Bell telephone company distribution to be able to work together in the provision of the Tariff 260 private line services. AT&T Long Lines is a functional competitor of MCI in this sense, since both provide point-to-point interstate private service, and since both depend on interconnection by the local telephone companies to complete ("terminate") their service.

 49. Local Loops are provided by the local telephone companies for the provision at AT&T Long Lines Department of point-to-point private line interstate business communications services comparable to those MCI seeks to provide.

 50. Other independent communications companies, such as independent (non-Bell) telephone companies, regularly interconnect with Bell companies for ...


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