united states district court for the eastern district … · case 1:11-cv-02457-cba -jma document 1...

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK

CABLEVISION LIGHTPATH, INC., ) a Delaware corporation; )

CABLEVISION LIGHTP ATH- CT, INC.; ) a Delaware corporation; ~

CABLEVISION LIGHTPATH-NJ, INC., ) a Delaware corporation; )

BRESNAN BROADBAND OF COLORADO, LLC,) a Col()ra<io corporation; )

BRESNAN BROADBAND OF MONTANA, LLC; j a Montana corporation;

BRESNAN BROADBAND OF UTAH, LLC, ~ a Utah corporation; and )

BRESNAN BROADBAND OF WYOMING, LLC, ) a Wyoming corporation;

Plaintiffs,

vs.

VERIZON NEW YORK INC., a New York Corporation;

VERIZON NEW JERSEY INC., a New Jersey Corporation; and

MCI COMMUNICATIONS d/b/a VERIZON BUSINESS, INC.,

a Delaware Corporation;

Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Civil Action No. ----

COMPLAINT FOR DECLARATORY RELIEF AND DAMAGES

Plaintiffs Cablevision Lightpath, Inc., Cablevision Lightpath- NJ, Inc., Cablevision

Lightpath- CT, Inc., Bresnan Broadband of Colorado, LLC, Bresnan Broadband of Montana,

LLC, Bresnan Broadband ofUtah, LLC, and Bresnan Broadband of Wyoming, LLC

("Plaintiffs")- all corporate affiliates of Cablevision Systems Corporation ("Cablevision") that

provide telecommunications services- bring this action against Defendants Verizon New York,

Inc., Verizon New Jersey, Inc., and MCI Communications, Inc. d/b/a Verizon Business, Inc.

(collectively "Verizon" or "Defendants"), and hereby allege as follows:

Case 1:11-cv-02457-CBA -JMA Document 1 Filed 05/20/11 of 47

Introduction

1. This is an action to collect payment for telecommunications services that

Plaintiffs provide to Verizon. Cablevision and Verizon are direct competitors for voice, video,

and broadband services. Although they are competitors, Cablevision and Verizon must use each

other's networks to facilitate calls made by their customers. For example, when a Verizon

customer calls a Cablevision customer, Verizon needs access to Cablevision's network to

complete the call. And when a Cablevision customer calls a Verizon customer, Cablevision

needs access to Verizon's network. This network access is governed by the Communications

Act, state telecommunications laws, and regulations established by the Federal Communications

Commission ("FCC") and relevant state commissions. Pursuant to these rules, Plaintiffs have

entered into interconnection agreements- formal contracts- with Verizon New York, Inc. and

Verizon New Jersey, Inc., which establish rates for network access. Also pursuant to these

requirements, Plaintiffs have filed tariffs with the FCC and the relevant state regulatory

commissions specifying rates and conditions for carriers such as MCI Communications, Inc. with

whom they do not have interconnection agreements. V erizon has known of Plaintiffs' rates for

years, has paid those rates for years without objection, and itself assesses virtually identical

charges- both on Plaintiffs and on other telecommunications providers.

2. In recent months, Verizon has refused to pay Plaintiffs' contractual and tariffed

rates for network access with respect to all traffic exchanged between them. Verizon's asserted

basis for this action is that some of the traffic at issue originates or terminates in Internet

Protocol, even though Plaintiffs interconnection agreements with V erizon and Plaintiffs' tariffs

define and set pricing for the services at issue without any limitation that would exclude calls

that involve Internet Protocol technology: Verizon has instead paid a sharply reduced rate that

Verizon has unilaterally claimed is appropriate- even as Verizon itself continues to charge

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Plaintiffs the higher, unreduced rates specified in Verizon 's contracts and tariffs for the same

services. Under both Cablevision's tariffs and Cablevision's interconnection agreements with

Verizon, Verizon owes Cablevision at least $7,922,709 for services already provided, and this

number is steadily increasing as V erizon continues to use Plaintiffs' network to originate and

complete calls without paying the price for such access. Plaintiffs are precluded by FCC

requirements from ceasing to provide Verizon the services at issue.

3. Plaintiffs bring this action to collect the amounts Verizon owes for network

access. Plaintiffs also seek a declaratory judgment expressly confirming Plaintiffs' rights to

charge the amounts stated in their tariffs, as well as expressly confirming that Plaintiffs'

agreements with V erizon validly require Verizon to pay Plaintiffs' invoiced rates for network

access.

The Parties

The Plaintiffs

4. Plaintiff Cablevision Lightpath, Inc. is a Delaware corporation with its principal

place of business at 200 Jericho Quadrangle, Jericho, NY. Cablevision Lightpath, Inc. is a local

exchange carrier (or "LEC") that provides telecommunications services to retail and wholesale

customers in the state ofNew York.

5. Plaintiff Cablevision Lightpath - CT, Inc. is a Delaware corporation with its

principal place of business at 200 Jericho Quadrangle, Jericho, NY. Cablevision Lightpath- CT,

Inc. is a LEC that provides telecommunications services to retail and wholesale customers in the

state of Connecticut.

6. Plaintiff Cablevision Lightpath- NJ, Inc. is a Delaware corporation with its

principal place of business at 200 Jericho Quadrangle, Jericho, NY. Cablevision Lightpath- NJ,

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Inc. is aLEC that provides telecommunications services to retail and wholesale customers in the

state ofNew Jersey.

7. Plaintiff Bresnan Communications of Colorado, LLC is a Colorado Corporation

with its principal place ofbusiness at 1111 Stewart Avenue, Bethpage, NY. Bresnan

Communications of Colorado, LLC is a LEC that provides telecommunica,tions services to retail

and wholesale customers, and Voice Over Internet Protocol ("VoiP") services to retail

customers, in the state of Colorado.

8. Plaintiff Bresnan Communications ofMontana, LLC is a Montana Corporation

with its principal place of business at 1111 Stewart Avenue, Bethpage, NY. Bresnan

Communications of Montana, LLC is aLEC that provides telecommunications services to retail

and wholesale customers, and VoiP services to retail customers, in the state of Montana.

9. Plaintiff Bresnan Communications of Utah, LLC is a Utah Corporation with its

principal place of business at 1111 Stewart Avenue, Bethpage, NY. Bresnan Communications of

Colorado, LLC is aLEC that provides telecommunications services to retail and wholesale

customers, and V oiP services to retail customers, in the state of Utah.

10. Plaintiff Bresnan Communications ofWyoming, LLC is a Wyoming Corporation

with its principal place of business at 1111 Stewart Avenue, Bethpage, NY. Bresnan

Communications of Wyoming, LLC is aLEC that provides telecommunications services to retail

and wholesale customers, and VoiP services to retail customers, in the state of Wyoming.

The Defendants

11. Defendant Verizon New York, Inc. is a New York corporation with its principal

place ofbusiness at 140 West Street, New York, NY. Verizon New York, Inc. is aLEC that

provides telecommunications services in the States ofNew York and Connecticut.

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12. Defendant Verizon New Jersey, Inc. is a New Jersey corporation with its

principal place ofbusiness at 540 Broad Street, Newark, New Jersey. Verizon New Jersey, Inc.

is aLEC that provides telecommunications services in the State ofNew Jersey.

13. Defendant MCI Communications Services, Inc. d/b/a Verizon Business, Inc. is a

Delaware corporation with its principal place of business in Ashburn, VA. MCI

Communications Services, Inc. is an interexchange carrier- more commonly known as a "long

distance carrier"- that provides interexchange (or "long-distance") telecommunications services

nationwide, including the states in which the Plaintiffs operate.

Jurisdiction And Venue

14. This Court has subject matter jurisdiction over Plaintiffs' claims against Verizon

arising under Plaintiffs' federal tariff and their interconnection agreements pursuant to 28 U.S.C.

§ 13 31. Verizon' s failure to abide by the terms of its interconnection agreements with Plaintiffs

and by the terms of Plaintiffs' federal access tariff, including its withholding of payment based

on its purported dispute of Plaintiffs' charges, gives rise to claims under federal law, including

federal common law and the federal Communications Act. See 47 U.S.C. § 201(b) & §§ 206-

207.

15. This court has subject matter over Plaintiffs' claims arising under state law,

including claims under Plaintiffs' state access tariffs and price lists, pursuant for 28 U.S.C. §

1367(a).

16. This Court has personal jurisdiction over Defendants Verizon New York, Inc. and

MCI Communications, Inc. under N.Y. Civ. P.L.R. §§ 301 and 302, and over Defendant Verizon

New Jersey, Inc. under§ 302, based on their provision of telecommunications services in the

state and to end-users in the state. Defendant Verizon New York, Inc. is headquartered within

New York, resides and does business in New York, and directly serves customers in New York.

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Defendant MCI Communications, Inc. interconnects with carriers in New York and directly

serves customers in New York. All three Defendants transact business in the state ofNew York

by directing calls to and from both Cablevision's and Verizon's New York customers. And all

three Defendants have caused harm in New York by breaching their obligations under

interconnection agreements, tariffs, and price lists to remit payment to Plaintiffs, who are located

in New York.

17. This court further has personal jurisdiction over all Defendants because all

Defendants are, for jurisdictional purposes, all the same company- Verizon Communications,

Inc.- that is headquartered in New York and is subject to general jurisdiction in New York

under N.Y. Civ. P.L.R. § 301. Each Defendant is owned and controlled, either directly or

indirectly, by Verizon Communications, Inc., and, upon information and belief, the Defendants

are financially interdependent. For jurisdictional purposes, therefore, this Court has jurisdiction

over each defendant.

18. Venue is proper in this District under 28 U.S.C. § 1391(b)(l) and§ 1391(c). Each

Defendant has directed calls into this district, is subject to personal jurisdiction in this district,

and each therefore resides in this district for purposes of the federal venue statute.

FACTS AND NATURE OF DISPUTE

A. REGULATORYBACKGROUND

19. The market for telecommunications services at issue in this case is regulated by

various statutes, rules, and regulations promulgated by the FCC and by public utility

commissions within each state. The FCC regulates the market for interstate services pursuant to

the federal Communications Act, 47 U.S.C. § 151 et seq., and state administrative agencies

impose comparable regulations, pursuant to state telecommunications laws, with respect to

intrastate services.

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20. As relevant here, there are two types of carriers that provide telecommunications

services: LECs, commonly known as "local phone companies," which provide services within

local calling areas, and Interexchange Carriers ("IXCs"), commonly known as "long-distance

carriers," which provide services between local calling areas.

21. LECs serve end-users, such as residential and business customers. However,

LECs also provide a number of services to other carriers (typically referred to as "carrier-to

carrier services") to other LECs and to IXCs. When a customer of aLEC makes a call to the

customer of another LEC in the same local calling area, the called party's LEC must provide

access to its network to the calling party's LEC. Similarly, when a customer of an IXC makes a

long-distance call (whether inter- or intrastate), the IXC needs to obtain access to both the calling

party's LEC and the called party's LEC in order to complete the call.

22. Network access between LECs directly exchanging traffic is governed by a

slightly different framework than is network access for IXCs. With respect to traffic exchanged

directly between LECs, the Communications Act requires LECs to enter interconnection

agreements governing the terms and pricing of access to one another's networks, along with

numerous other concomitant obligations. See 47 U.S.C. § 25l(a)(l) & (b)(5). Moreover,

because the markets of LECs that overlap with each often extend beyond local calling areas, such

interconnection agreements may address not only local traffic, but also long-distance traffic

(both inter- and intrastate) that is exchanged directly between the two LECs.

23. The rights and obligations ofiXCs with respect to access to LECs' networks are

governed by tariff. Access for interstate calls are governed by tariffs that LECs are required to

file with the FCC, which set forth the pricing and conditions of those services. See 47 U.S.C.

§ 203(a). Access for calls within a single state are governed by tariffs that LECs file with the

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relevant state commission, or by other means such as price lists or contracts, pursuant to state

law and regulations.

B. PLAINTIFFS' SERVICES

24. Cablevision is a leading provider of video, data, and voice services throughout the

New York metropolitan area, where it competes directly against Verizon. Cablevision is also the

parent of Bresnan Communications, a leading provider of video, data, and voice services

throughout the states of Colorado, Montana, Utah, and Wyoming. Cablevision provides voice

services through several affiliate companies.

25. Plaintiffs Cablevision Lightpath, Inc., Cablevision Lightpath- NJ, Inc., and

Cablevision Lightpath- CT, Inc. (collectively the "CLI Plaintiffs") are each registered LECs in

the states in which they provide service. The CLI Plaintiffs provide a range of services,

including some services to and in connection with another Cablevision affiliate, Optimum Voice

LLC ("OV"). OV provides a retail voice service to residential customers using a technology

known as "Voice over Internet Protocol" or "VoiP." VoiP differs from the methodology

traditionally used by the public switched telephone network, which is commonly referred to as

"circuit switching." Unlike circuit switching, in which a path between callers is held open

throughout the call, VoiP breaks a call into numerous Internet Protocol packets and sends them

over a broadband network to be reassembled for the called party. This process is invisible to the

customer, and (except for some advanced features made possible because of the use ofVoiP) a

customer generally experiences using OV's retail VoiP service to be substantially the same as a

traditional circuit-switched service. Circuit-switched calls are transmitted and exchanged using a

format commonly known as "Time Division Multiplexing" (or "TDM").

26. The CLI Plaintiffs' services to and in connection with OV enable OV's end-users

to reach customers of other carriers and vice versa. For example, when an OV customer calls a

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Verizon customer, OV converts the call from VoiP to TDM, and one of the CLI Plaintiffs then

delivers the call to Verizon for routing to its customer. Similarly, when a Verizon customer calls

an OV customer, Verizon hands the call offto one ofthe CLI Plaintiffs in TDM, which in turn

routes the call to OV, where the call is converted to VoiP for delivery to the OV customer.

27. Unlike OV, the CLI Plaintiffs do not themselves provide a residential VoiP

service. In addition to services provided to OV, the CLI Plaintiffs provide TDM carrier-to

carrier services, circuit-switched service to enterprise customers, and VoiP services to a very

small number of enterprise customers.

28. Bresnan Communications, a corporate affiliate of Cablevision, likewise provides

voice services through its local affiliates in each state in which it operates. Plaintiffs Bresnan

Communications of Colorado, LLC, Bresnan Communications of Montana, LLC, Bresnan

Communications ofUtah, LLC, and Bresnan Communications of Wyoming, LLC (collectively

the "Bresnan Plaintiffs"), are each registered LECs in the states in which they provide service.

29. The Bresnan Plaintiffs, like the CLI Plaintiffs, provide TDM carrier-to-carrier

services. In addition, they also provide retail VoiP and circuit-switched services directly to

residential and commercial customers. Although Verizon does not provide local service in the

Bresnan Plaintiffs' service areas, it does provide long-distance service. When a Bresnan Plaintiff

VoiP customer places a call for which Verizon is the IXC, the Bresnan Plaintiff converts the call

from VoiP to TDM, and then routes it to Verizon. Likewise, when a caller on another carrier's

network places a call to a Bresnan Plaintiff customer using V erizon as its IXC, Verizon routes

the call in TDM to the Bresnan Plaintiff, which then coverts it to VoiP and delivers it to the

Bresnan Plaintiff customer directly.

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C. PLAINTIFFS' PROVISION OF CARRIER-TO-CARRIER SERVICES TO VERIZON

30. All Plaintiffs provide carrier-to-carrier services, such as the network access at

issue in this Complaint, to Verizon, as well as to other telecommunications carriers. Depending

on factors such as the end-points of the call, these services fall under a variety of regulatory

designations (e.g., interstate access, intrastate access, or local traffic subject to reciprocal

compensation), but in all instances the essential nature ofthe service is to provide Verizon with

access to Pli:tintiffs' networks to originate and terminate calls. .AU ofthe services provided by

Plaintiffs to Verizon involve the exchange of traffic in traditional TDM format, irrespective of

whether the call is a traditional circuit-switched phone call on both ends, a VoiP call on both

ends, or a VoiP call on one end and a circuit-switched call on the other.

31. Much of the network access that Plaintiffs provide to Verizon is governed by

formal interconnection agreements. In accordance with federal law, see 47 U.S.C. §§ 251-53,

the CLI Plaintiffs have negotiated interconnection agreements with Verizon in New York,

Connecticut, and New Jersey, where Verizon provides local service as well as long-distance

service. Specifically, Plaintiff Cablevision Lightpath, Inc. has entered into an interconnection

agreement in New York with Defendant Verizon New York, Inc.; Plaintiff Cablevision Lightpath

- CT, Inc., has entered into an interconnection agreement in Connecticut with Defendant Verizon

New York, Inc. (which is Verizon's LEC for Connecticut as well as New York); and Plaintiff

Cablevision Lightpath- NJ, Inc., has entered an interconnection in New Jersey with Defendant

Verizon New Jersey, Inc .. 1 These agreements include provisions regarding the terms under

which the CLI Plaintiffs provide Verizon access to Plaintiffs' network for local as well as long-

distance calls (both inter- and intrastate).

1 In order to avoid inconveniencing the Court with the size ofthese agreements, which are quite voluminous, Plaintiffs are not attaching them to the Complaint, but can provide them upon request.

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32. For access to the CLI Plaintiffs' networks with respect to local calls, each of these

interconnection agreements requires the relevant Verizon LEC to pay specific "reciprocal

compensation" rates, as required 47 U.S.C. § 251(b)(5). See New York Interconnection

Agreement at Section 1.68; New Jersey Interconnection Agreement at Section 1.65; Connecticut

Interconnection Agreement at Sections 1.50, 1.70 and 1.87. For access to the CLI Plaintiffs'

networks with respect to long-distance calls, the interconnection agreements require the relevant

Verizon LECs to pay "access charges" at the rates specified in Plaintiffs' tariffs. See New York

Interconnection Agreement at Interconnection Attachment Section 8.1; New Jersey

Interconnection Agreement at Section 20.1 & Attachment A at 97; Connecticut Interconnection

Agreement at Sections 1.76 and 5.91.

33. Access to Plaintiffs' networks for Defendant MCI Communications, Inc. is

governed by Plaintiffs' tariffs, price lists, and contracts. The CLI Plaintiffs have filed a tariff

with the FCC for interstate calls, and with each relevant state regulatory authority for intrastate

calls. The Bresnan Plaintiffs have likewise filed a tariff with the FCC for interstate calls, and has

either filed a tariff, filed a price list, or contracted for the provision of intrastate service in

accordance with the law of each state in which they operate. These tariffs and price lists state the

rates and conditions under which all Plaintiffs provide access to their networks to other carriers,

such as Verizon. In New York and New Jersey, where the majority ofthe disputed charges

between Plaintiffs and V erizon arise, the CLI Plaintiffs have adopted the identical terms and

conditions as the relevant portions ofVerizon's own intrastate tariffs that define the nature of the

network access services being provided.

34. Plaintiffs regularly exchange substantial call volumes with each Verizon

Defendant pursuant to the agreements and/or tariffs above, and Verizon regularly uses Plaintiffs'

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services pursuant to the terms ofthe agreements and/or tariffs. Verizon has been well aware of

Plaintiffs' rates for those services for years, and, until recently, has paid those rates without

objection.

D. VERIZON'S REFUSAL TO PAY FOR SERVICES RENDERED

35. Beginning in late 2010, each Defendant ceased paying Plaintiffs' invoices for

access to Plaintiffs' networks, disputing the Bresnan Plaintiffs' invoices in August 2010 and the

CLI Plaintiffs' invoices in December 2010 and January 2011. Verizon' s claimed basis for the

"dispute[s]" was that the traffic exchanged between Plaintiffs and Verizon is "IP-originated" or

"IP-terrninated," and that Plaintiffs' charges were therefore improper. See August 27,2010

Letter from Donna Donahue to Mr. Curt Black, "Re: Compensation for VOIP [sic] Traffic"

(attached as Exhibit A); December 20,2010 Email from Wanda B. Sierra to Thomas Flahive,

"Cablevision NY 11/10 Dispute Letter" (attached as Exhibit B); December 20, 2010 Email from

Wanda B. Sierra to Thomas Flahive, "Cablevision NJ 11110 Dispute Letter" (attached as Exhibit

C); December 14, 2010 Letter from Donna Donahue to Dawn Sullivan, "Re: Compensation for

VOIP [sic] Traffic" (attached as Exhibit D); January 6, 2011 Letter from Donna Donahue to

Dawn Sullivan, "Re: Compensation for VOIP [sic] Traffic" (attached as Exhibit E). Verizon has

instead indicated that it will pay only a very-reduced charge of $.0007 per minute- a rate that

Verizon has unilaterally claimed is appropriate. This is far below the invoiced charges for

Plaintiffs' services. For instance, with respect to New York and New Jersey, the two states

where the majority of the disputed charges arise, $.0007 per minute represents only

approximately 18% of the invoiced rate for Cablevision' s network access service for interstate

calls, 3% for long-distance intrastate calls in New York, and 4% for long-distance intrastate calls

in New Jersey. At the same time, Verizon continues to charge Plaintiffs the higher, unreduced

12


rates specified in Verizon's contracts and tariffs for the same services, even when the traffic at

issue is "IP-originated" or "IP-terminated."

36. Although the basis for Verizon's refusal to pay the required rates is that certain

traffic is "IP-originated" or "IP-terminated," Verizon has ceased paying Plaintiffs' invoiced rates

for all traffic- including traditional circuit-switched traffic that is not carried in VoiP format for

any portion of a call's path.

37. Moreover, all traffic exchanged between Verizon and Plaintiffs is exchanged

entirely in TDM format, whether or not a particular call is carried in VoiP format for any part of

its path. In fact, Verizon refuses to interconnect with Plaintiffs using VoiP technology, thereby

forcing Plaintiffs- at substantial expense -to convert any VoiP traffic to TDM format before

Verizon will accept it. Verizon insists on this conversion to TDM even though Verizon converts

many ofthese calls back into VoiP for delivery to customers that Verizon serves using VoiP

technology.

38. Because all traffic exchanged between Verizon and Plaintiffs is exchanged in

TDM, the services that Plaintiffs provide to Verizon for access to Plaintiffs' networks are

identical regardless whether a voice customer on either end of a call is ultimately served pursuant

to VoiP or circuit-switched technology. Therefore, the network access services that Plaintiffs

provide to Verizon are no different from the carrier-to-carrier services LECs and IXCs have long

been required to purchase in order to access another LEC's network.

3 9. Verizon' s refusal to pay the invoiced rates for Plaintiffs' services is inconsistent

with Verizon's own conduct. Where Verizon provides the same network access services to other

telecommunications carriers, including Plaintiffs and including other carriers that carry some or

all VoiP traffic, Verizon continues to charge the higher, unreduced rates stated in its

13


interconnection agreements and tariffs for those services. Verizon does so even though portions

ofVerizon's own network include the use ofVoiP.

40. Moreover, Verizon has repeatedly- before this court, before the FCC, and before

state regulatory agencies -vigorously contended that the use of VoiP technology does not

exempt carriers from paying otherwise-applicable network access and related charges. For

instance, before the New York Public Service Commission, Verizon contended that a carrier that

used VoiP technology was obligated to pay Verizon's charges for access to Verizon's network in

New York notwithstanding the carrier's use ofVoiP technology, arguing that "it is irrelevant that

the term 'VoiP' does not appear in the tariff and that VoiP as a technology may not even have

existed when the tariff was originally drafted," because "the issue is whether the language of the

tariff is broad enough to encompass VoiP traffic, as it clearly is." See Response ofVerizon New

York Inc. to the Complaint and Petition, at 19, Petition ofGlobal NAPs, Inc. for a Declaratory

Ruling Against Verizon New York Inc.for Unauthorized Billing of Switched Access Usage

Services for Termination ofVoice Over Internet Protocol Traffic, No. 08-C-0181 (N.Y. Pub.

Serv. Comm'n, Mar. 20, 2008). Likewise, before the FCC, Verizon argued that under existing

law, "voice telephone calls'' that VoiP carriers "exchange[] with local telephone companies are

subject to access charges." See Comments ofthe Verizon Telephone Companies, at 6, In re

Level 3 Communications LLC Petition Forbearance Under 47 US. C. § 160(c) from Enforcement

of 47 US. C.§ 251 (g), Rule 51.701 (b)(l), and Rule 69.5(b), WC Docket No. 03-266 (FCC Mar.

1, 2004). And finally, in an action before this Court seeking network access charges from a

carrier that used VoiP technology, Verizon contended that when a carrier using VoiP technology

is "obtaining a two-point communication path from its equipment to a Verizon end-user

customer ... it is obtaining a switched access service under the tariff, and ... is contractually

14


obligated to pay that amount." See Plaintiffs' Memorandum of Law in Opposition to

Defendants' Motion to Dismiss, at 10-11, Verizon New York, Inc. v. Global Naps, Inc., No. 07-

CV-4459(ENV)(RML) (E.D.N.Y. Apr. 4, 2008). Verizon's current attempt to avoid payment of

these exact charges, therefore, represents a reversal in Verizon' s long-held position based solely

on Verizon's interest in avoiding payment.

41. Verizon' s purported "dispute" further lacks any basis in law. Federal and state

---- ------- - ---- ·- --- ----- -- ----- -

law both authorize Plaintiffs to assess the charges at issue for access to Plaintiffs' networks, and

require Defendants to pay them.

42. Moreover, Verizon's purported "dispute" is inconsistent with its contractual

obligations to the CLI Plaintiffs under its interconnection agreements. Those agreements define

and set pricing for the relevant services that Plaintiffs provide to Verizon without any limitation

that would exclude calls that involve VoiP technology.

43. With respect to New York, the Interconnection Agreement between Verizon New

York, Inc. and Cablevision Lightpath, Inc. provides that calls "originated on one Party's network

and terminated on the other Party's network" are subject to reciprocal compensation charges, and

that "interstate and intrastate Exchange Access, Information Access, exchange services for

Exchange Access or Information Access, and Toll Traffic, shall be governed by the applicable

provisions ofthis Agreement and applicable Tariffs." New York Interconnection Agreement

§ 1.68 and at Interconnection Attachment§ 8.1. Nothing about this language depends upon the

technology used to complete the calls, or excludes calls that use VoiP technology from Verizon's

payment obligations.

44. Likewise, the New Jersey Interconnection Agreement between Verizon New

Jersey, Inc. and Cablevision Lightpath- NJ, Inc. specifies that reciprocal compensation charges

15


are due on "the transport and termination of all telecommunications traffic, excluding exchange

access, information access, and exchange services for such access," and that "Exchange Access

Service" is to be billed at Cablevision's tariffed rates. See New Jersey Interconnection

Agreement at§§ 1.65, 20.1 & Attachment A at 97. Again, nothing in these contractual terms

would exclude calls using VoiP technology from Verizon's payment obligations. The same is

true with respect to traffic exchanged in Connecticut between Verizon New York, Inc. and

Cablevision Lightpath _::_ CT, Inc. ~See conJ;ecticui Interconnection Agreement § 1. 50 (defining

"local traffic" as "traffic that is originated by a Customer of one Party on that Party's network

and terminates to a Customer of the other Party on that other Party's network, within a given

local calling area, or expanded area service (EAS) area"); id. § 1.70 (subjecting "transport and

termination of Local Telephone Exchange Services Traffic" to reciprocal compensation

obligations); id. § 1.87 (defining "Telephone Exchange Service Traffic" as a "Local Traffic call

where such call was not carried by a third party as either a presubscribed call ( 1 +) or a casual

dialed (lOXXX) or (1010XXX) call"); id. § 5.9.1 (providing that "Switched Exchange Access

Service ... shall continue to be governed by the terms and conditions of the applicable federal

and state tariffs"). Therefore, Verizon's contractual obligations to the CLI Plaintiffs do not vary

with the technology ultimately used to originate or terminate calls exchanged between the

earners.

45. Plaintiffs' federal tariffs, and state tariffs and price lists (which are in many cases

identical, in relevant part, to Verizon's own tariffs) likewise require the payment of network

access charges without any limitation as to the technology ultimately used to originate or

terminate the call. They define the access services that Cablevision provides to V erizon in

generic terms that do not exclude calls involving VoiP technology. For instance, the federal

16


tariff filed by the CLI Plaintiffs subjects traffic to charges so long as it is "[a]ccess to the

switched network of an exchange carrier for the purpose of originating or terminating

communications," which the CLI Plaintiffs clearly provide to Verizon. Cablevision Lightpath

Tariff FCC No.4 at 6? The same is true ofthe federal tariff filed by the Bresnan Plaintiffs,

which broadly subjects to network access charges the provision of a "two-point communications

path between a Customer's premises and an end user's premises" that "provides for the ability to

~~· --~--~-·-·· -- -~-·-···~--~~--·-~----·--···-~·····-· --c--- ... -~-.~~-~- ~-------- ~--··-·-····-·-----·-···· -·--··-· ··-··------·-----·-·····

originate calls from an end user's premises to a Customer's premises and to terminate calls from

a Customer's premises to an end user's premises ... ,"which, again, is not limited by the

technology used by either party to originated or terminate the call. Bresnan Communications

Access Services Tariff, FCC No.1§ 3.1, at 34. Plaintiffs' various state tariffs and price lists

contain similar provisions, none of which exclude the use of VoiP technology as part of the

provision of network access services. See, e.g., Verizon PSC NY TariffNo. 11 § 6.1 (Verizon's

New York tariff adopted by Plaintiffs in relevant part); Verizon B.P.U. NJ Tariff No.2§ 6.1

(Verizon's New Jersey tariff adopted by Plaintiffs in relevant part); Southern New England

Telephone Company Connecticut Access Tariff at§ 4.1.1 (Southern New England Telephone's

Connecticut Tariff adopted by Plaintiffs in relevant part); Bresnan Broadband of Colorado, LLC

Colorado PUC TariffNo. 2 at 5, 24; Bresnan Broadband of Utah, LLC Access Service Price List,

at 34; Bresnan Broadband of Wyoming, LLC, Wyoming P.S.C. TariffNo. 1, at 35.

46. Verizon' s refusal to pay Plaintiffs applicable rates for services they have provided

-and continue to provide- has caused Plaintiffs at least $8,613,398 in damages thus far, and

continues to cause over a million dollars in additional damages each month. In addition, V erizon

2 As with Plaintiffs' Interconnection Agreements (see note 1 supra), Plaintiffs' relevant tariffs and price lists are publicly available, yet too voluminous to attach to this Complaint without unduly burdening the court. In the event copies of the materials are required, Plaintiffs can provide them upon request.

17


is responsible for late fees and other costs under its interconnection agreements and Plaintiffs'

tariffs. Plaintiffs have explained to Verizon that its refusal to pay Plaintiffs' charges is not

supported by law. See September 10,2010 Letter from K.C. Halm to Earl Hurter, "Re: Verizon

Business' Liability to Bresnan Communications for Originating and Terminating Switched

Access Charges" (attached as Exhibit F); January 27, 2011 Letter from Leo Maese to Donna

Donahue and Wanda B. Sierra, "Re:·Compensation for VoiP Traffic" (attached as Exhibit G).

Plaintiffs have also demanded payment from V erizon, and V erizon has refused.

47. Plaintiffs have also sought to reach a solution with Verizon that would result in

Verizon's payment of Plaintiffs' invoices. However, Verizon has been unwilling to do so, and

Plaintiffs are forced to bring this action to collect the amounts owed and to obtain a declaration

of their rights under their interconnection agreements and tariffs going forward.

Claims For Relief

Count I- Nonpayment of Tariffed Charges (Federal Tariff) (Against MCI Communications, Inc.)

48. Plaintiffs repeat and reallege every allegation contained in paragraphs 1 through

4 7 as if fully set forth herein.

49. Plaintiffs have tariffed, in accordance with the Communications Act and FCC

regulations, the services they provide to other carriers to complete and/or originate interstate

calls. Plaintiffs have complied in all material respects with their obligations under the tariffs.

50. Plaintiffs' tariffs are legally binding and valid contracts under federal law, which

MCI Communications, Inc. entered by taking interstate access and related services from

Plaintiffs under its federal tariffs. MCI Communications, Inc. materially breached those

obligations by refusing to pay the rates required by the tariffs, and has refused to remedy this

deficiency despite Plaintiffs' demands for payment. MCI Communications, Inc.'s nonpayment

18


of tariffed charges gives rise to a cause of action under the Communications Act, 47 U.S.C. §

206, as well as under federal common law. In addition, MCI Communications, Inc.'s

withholding payment for Plaintiffs' charges while this dispute is pending is an unreasonable

practice unlawful under 47 U.S.C. § 201(b).

51. Plaintiffs have been harmed by MCI Communications, Inc.'s failure to pay

amounts due under the tariffs, which currently amount to $1,503,344 and continue to accrue. In

addition, MCI Communications, Inc. is also responsible for late charges due and accruing under

the tariffs and for the costs and expenses, including attorneys' fees, incurred and to be incurred in

this action to collect the amounts that it owes to Plaintiffs.

Count II- Nonpayment of Tariffed Charges (State Tariffs and Price Lists) (Against AU Defendants)


51 as if fully set forth herein.

53. Plaintiffs have tariffed, in accordance with New York, New Jersey, Connecticut,

Colorado, and Wyoming law, the services they provide to other carriers to complete and/or

originate intrastate calls, assess charges under Utah law for such services by means of a filed

price list, and assess charges under Montana law for such services by means of contractual

arrangements. Plaintiffs have complied in all material respects with their obligations under each

tariff and price list, and under state law.

54. Plaintiffs' tariffs and price lists are legally binding and valid contracts under New

York, New Jersey, Connecticut, Colorado, Utah, and Wyoming law, which Verizon entered by

taking interstate access and related services from Plaintiffs under the tariffs and price lists.

Likewise, Verizon and Bresnan Broadband of Montana, LLC have a contract for the provision of

intrastate access services by virtue ofVerizon's knowingly requesting and taking such services,

19


to its own benefit, with full knowledge (from both the parties' course of conduct and from

Plaintiffs invoices) ofthe price that Bresnan Broadband of Montana, LLC charged and expected

to be paid for such services. Verizon materially breached those obligations by refusing to pay

the rates required by the tariffs and price lists, and has refused to remedy this deficiency despite

Plaintiffs' demands for payment. V erizon' s nonpayment of tariffed and listed charges gives rise

to a cause of action under the laws of the states of New York, New Jersey, Connecticut,

Colorado, Montana, Utah, and Wyoming.

55. Plaintiffs have been harmed by Verizon's failure to pay amounts due under the

tariffs and price lists; which currently amount to $2,780,782 and continue to accrue. In addition,

V erizon is also responsible for late charges due and accruing under the tariffs and for the costs

and expenses, including attorneys' fees, incurred and to be incurred in this action to collect the

amounts that Verizon owes to Plaintiffs.

Count Ill- Breach of Interconnection Agreements (Against Verizon New York, Inc., and

Verizon New Jersey, Inc.)



57. The New York, New Jersey, and Connecticut interconnection agreements

between Verizon and the CLI Plaintiffs are valid and enforceable agreements under federal law

and/or under the laws of the States ofNew York, New Jersey, and Connecticut. The CLI

Plaintiffs have complied in all material respects with their obligations under the agreements.

58. The interconnection agreements between Verizon and the CLI Plaintiffs each

require V erizon to pay Plaintiffs for the exchange of local traffic at reciprocal compensation rates

specified in the agreements, and, for non-local traffic, to pay Plaintiffs for access charges at the

rates specified in Plaintiffs' relevant state and federal tariffs.

20


59. Verizon has materially breached the interconnection agreements by taking service

from the CLI Plaintiffs without paying the rates required therein, and has refused to remedy this

deficiency despite the CLI Plaintiffs' demands for payment.

60. Verizon has further breached the implied covenant of good faith and fair dealing

by refusing to pay invoices without a good-faith basis for a dispute, and by adopting

unreasonable constructions of the interconnection agreements' terms that deprive the CLI

·--··- ----- ----- ----·--- ----~-~-·------····---.. ---··------------------··-- -----~

Plaintiffs of the benefits for which they bargained.

61. The CLI Plaintiffs have satisfied all conditions precedent under the agreements to

bringing suit to recover Verizon's balance.

62. The CLI Plaintiffs have been harmed by Verizon' s failure to pay amounts due

under the agreements, which currently amount to $4,329,272 and continue to accrue. In

addition, Verizon is also responsible for late charges due and accruing under the agreement and

for the costs and expenses, including attorneys' fees, incurred and to be incurred in this action to

collect the amounts that Verizon owes to Plaintiffs.

Count IV - Quantum Meruit (Against AU Defendants)



64. Plaintiffs are entitled to be compensated for their services under the doctrine of

quantum meruit.

65. Plaintiffs performed services for Verizon in good faith. Verizon accepted each of

the services provided by Plaintiffs for its own benefit, as it used Plaintiffs' services to complete

and/or originate calls for which Verizon received compensation.

21


66. Plaintiffs had a reasonable expectation of compensation for the services they have

provided to V erizon, as specified by the relevant rates and pricing in Plaintiffs' interconnection

agreements with Verizon and in their filed federal tariffs, state tariffs, and price lists. Such a

reasonable expectation was also created by Verizon's seventeen-year course of dealing in

accepting and paying those rates to access the CLI Plaintiffs' network to exchange traffic with

the CLI Plaintiffs, including seven years during which the traffic exchanged included traffic

or1i1naifng or terminated as VoiP. Plaintiffs' reasonable-expectation is-~eflectedin the rates and

prices in their tariffs, price lists, and interconnection agreements, and the reasonableness of

Plaintiffs' expectation is confirmed by Verizon's charging comparable prices for similar or

identical services when Verizon provides them. V erizon accepted service from Plaintiffs

knowing that Plaintiffs expected to receive compensation at those tariffed and contractual rates.

67. Plaintiffs are entitled to the value of the services they provided to Verizon, and

have been damaged by Verizon's refusal to provide such compensation.

Count V- Unjust Enrichment (Against AU Defendants)



69. Plaintiffs are entitled to be compensated for their services under the doctrine of

unjust enrichment.

70. Verizon benefitted at Plaintiffs' expense by receiving services from each Plaintiff,

including service for the exchange of local traffic as well as interstate and intrastate access to

Plaintiffs' network.

22


71. Verizon benefitted from the services provided by Plaintiffs, as it used Plaintiffs'

services to originate and/or complete calls for which Verizon received compensation. Plaintiffs

expended time, money, and effort to provide these services.

72. Equity and good conscience require restitution. Verizon accepted the services

that Plaintiffs provided, knowing full well that Plaintiffs expected compensation therefore, and

benefitted from those services. Moreover, the parties have had an unbroken course of conduct

---- ----------·-·--

over the course of several years during which Verizon acquiesced-to-Plaintiffs' rates and pricing····

without objection- while Verizon itself charged similar rates to Plaintiffs and to others. This

included not only a seventeen-year course of conduct as between Verizon and the CLI Plaintiffs,

but a seven-year course of conduct during which the traffic exchanged between Verizon and the

CLI Plaintiffs has included traffic originating or terminating as VoiP.

73. Plaintiffs are entitled to the value of the services they provided to V erizon, and

have been damaged by Verizon's refusal to provide such compensation.

Count VI- Declaratory Judgment (Against All Defendants)



75. Plaintiffs and Verizon have a present and ongoing dispute concerning Verizon's

obligations to pay charges for network access under the parties' interconnection agreements,

Plaintiffs' federal tariffs, and Plaintiffs' state tariffs and price lists. As Plaintiffs continue to

provide these services to Verizon notwithstanding the existence ofthe present dispute, and are

legally obligated to continue doing so, damages will continue to accrue in the absence of

clarification from the Court regarding Plaintiffs' right to assess the relevant charges on Verizon

in the future. In addition, further escalation ofthe dispute and accrual ofVerizon's unpaid debts

23


to Plaintiffs, absent a clarification of the parties' respective rights and obligations by the Court,

could leave Plaintiffs with no choice but to terminate or limit its services to Verizon, which

would have the effect of subjecting Plaintiffs to enforcement action by the FCC and

inconveniencing countless third parties not before the Court.

76. Because of the foregoing, Plaintiffs seek a declaratory judgment pursuant to 28

U.S.C. § 2201 setting forth the rights and obligations of the parties, and declaring that traffic

exchanged between Plaintiffs and Verizon remains subject to compensation obligations in the

Plaintiffs' federal tariffs, state tariffs, and price lists, irrespective of whether Plaintiffs or their

affiliates (or Verizon or its affiliates) originate or terminate any calls using VoiP technology. In

addition, the CLI plaintiffs seek a declaratory judgment affirming that their interconnection

agreements with V erizon validly require the payment of Cablevision' s network access charges.

WHEREFORE, Plaintiffs pray for judgment against Defendants as follows:

A. Under Counts I through V, for an amount to be determined, which currently

stands at $8,613,398 dollars and continues to accrue, plus additional late fees and costs as

applicable;

B. Under Count VI, for declaratory relief setting forth Verizon's obligations to pay

for traffic exchanged under Plaintiffs' relevant tariffs and interconnection agreements with

Verizon;

C. For attorneys' fees under the Communications Act and as otherwise provided

under law and under the parties' agreements;

D. For pre- and post-judgment interest according to law;

E. For such other and further relief, including the costs and disbursements of this

action, as this Court deems proper and just.

24


Dated: May 20, 2011

Respecg1tll!Siubl1}itteg_,_, ~

By: ,~~6~"~----_--.__,_ Susan!. Koh\mann

~-· \ SUSAN J. K01tL'MANN (No. SK-1855) JENNER & BLOCK LLP 919 3rd Ave, 37th Floor New York, NY 10022-3908 Telephone: (212) 891-1600 Fax: (212) 891-1699 [email protected]

SAMUEL L. FEDER (OfCounse[) LUKE C. PLATZER (Of Counsel) DANIEL I. WEINER (OfCounse[) JENNER & BLOCK LLP 1099 New York Ave, N.W., Suite 900 Washington, DC 20001 Telephone: (202) 639-6000 Fax: (202) 639-6066 sfeder@j enner. com lp latzer@j enner. com dweiner@j enner .com

Attorneys for Plaintiffs

25


From: Bridqett.moran@verizonbusiness .com [mailto: Bridqett.moran@verizonbusi ness. com] Sent: Friday, August 27, 2010 12:40 PM To: Black, Robert C. Cc: [email protected]; [email protected]; lcmclaims@verizon business. com Subject: Bresnan Broadband Dispute Notification

.[claim Number ]T000000000065 072, T000000000065 073, T000000000065075, T00000000006507 6, TOO 0000000065077,T000000000065078[/claim Number]

Mr. Black,

Please see attached dispute notification and supporting detail for invoices billed August 2010.

Bridgett L. Moran Financial Planning & Analysis V erizon Business


Mr. Curt Black Bresnan Broadband 1860 Monad Road Billings, MT 59102

Re: Compensation (or VOJP Traffic

Dear Mr. Black:

I am writing to notify you that Verizon is disputing a portion of the intercarrier compensation charges that your company billed toVerizon.

Consistent with two recent federal district court rulings, V erizon does not believe that IPoriginated or IP-terminated traffic is subject to switched access tariffs or related charges.1 Accordingly, Verizon disputes your company's intercarrier compensation charges for this type of traffic and has rerated the intercarrier compensation charges that your company has billed on IP-originated or IPterminated traffic down to a rate of$0.0007 per minute of use, which is the most generally accepted rate in the industry. Attachment A to this letter details the billing account numbers, the specific minutes of use that Verizon has re-rated, and the amount of the charges that V erizon is disputing and withholding.

Verizon looks forward to entering into a commercial agreement with your company that establishes reciprocal rates, terms, and conditions for the exchange of this traffic, and which will resolve this dispute. Verizon invites your company to contact Earl Hurter at [email protected], as soon as possible so we can arrange a meeting to make progress towards a resolution of this matter.

Very truly yours,

Donna Donahue V erizon Business Manager Usage Analysis

1 InPAETECv. CommPartners, LLC, No. 08-0397, slip. op. (D.D.C. Feb. 18, 2010), the court ruled that VoiP traffic that undergoes a net protocol conversion from Internet Protocol format to Time Division Multiplexing ('TDM") format is an information service, and that access tariffs do not apply to information services. In MetTe! v. GNAPs, No. 08·cv-3829, 2010 WL 1326095 (S.D.N.Y. Mar. 31, 2010), the court decided not to apply tariffed switched access charges to VoiP traffic but rather decided that the local exchange carrier was entitled to receive the reasonable value of the benefit it conferred on a VoiP provider, under the equitable theory of unjust enrichment.


Sutaria, Ajax B.

From: Sent: To: Cc: Subject: Attachments:

Dear Thomas Flahive:

Sierra, Wanda B. [[email protected]] Monday, December 20, 2010 3:35PM Thomas Flahive lib, boston Cablevision NY 11/10 Dispute Letter Cablevision_NY _ CablevisionNY _11-12-1 0_ Sum Rpt_v1. rtf

This letter is notification that Verizon- New York is disputing charges totaling $611,873.59 on Invoice 1190 dated November 12, 2010 for account CablevisionNY.

INVOICE CHARGES DISPUTED

Verizon is disputing $3,073.71 in taxes that arebeing billed.Verizon is tax exempt for reciprocal compensation inall states.

Verizon is disputing $245,946.80 for an imbalance in reported Minutes ofUse (MOUs). During November 2010, Cablevision billed Verizon for terminating the following minutes:

250,474,132 MOU for Tandem from 10/1/2010 to I 0/31/2010

Based on data from Verizon's measurement systems, the traffic Cablevision terminated for Verizon was 165,459,682 MOUs. Verizon is disputing the difference between the MOUs billed by Cablevision, and the Verizon measured MOUs.

Verizon may request that Cablevision provide Records of the calls completed in a 24 hour period during the current Bill Period covered on this invoice. Verizon may also request that Cablevision provide a spreadsheet or file that contains the information used as the basis for assigning the jurisdiction of calls that terminated on the Cablevision network.

Verizon requests that Cablevision issue a credit to Verizon for the disputed amount.

Verizon is also disputing $362,853.08 ofthe intercarrier compensation charges that Cablevision billed to Verizon on invoice number 1190.

Consistent with two recent federal district court rulings, Verizon does not believe that IF-originated or IF-terminated traffic is subject to switched access tariffs or related charges.i[l] Accordingly, Verizon disputes Cablevision's intercarrier compensation charges for this type of traffic and has re-rated the intercarrier compensation charges that Cablevision has billed on IF-originated or IF-terminated traffic down to a rate of $0.0007 per minute of use, which is the most generally accepted rate in the industry. The Invoice Summary Attachment to this letter details the billing account number, the specific minutes of use that Verizon has re-rated, and the amount of the charges that Verizon is disputing and withholding.

Verizon wants to work with Cablevision in resolving outstanding billing disputes between our companies and looks forward to entering into a commercial agreement with Cablevision that establishes reciprocal rates, terms, and conditions for the exchange of IF-originated or IP-terminated traffic, and which will resolve this dispute. Please contact me at 617-342-2015 at your earliest convenience to discuss the disputes on this invoice.

Sincerely,


Wanda Sierra

i[IJ In PAETEC v. CommPartners, LLC, No. 08-0397, slip. op. (D.D.C. Feb. 18, 2010), the court ruled that VoiP traffic that undergoes a net protocol conversion from Internet Protocol format to Time Division Multiplexing ("TDM") format is an information service, and that access tariffs do not apply to information services. In MetTe! v. GNAPs, No. 08-cv-3829, 2010 WL 1326095 (S.D.N. Y. Mar. 31, 201 0), the court decided not to apply tariffed switched access charges to VoiP traffic but rather decided that the local exchange carrier was entitled to receive the reasonable value of the benefit it conferred on a VoiP provider, under the equitable theory of unjust enrichment.

2


Sutaria, Ajay B.

From: Sent: To: Cc: Subject: Attachments:

Dear Thomas Flahive:

Sierra, Wanda B. [[email protected]] Monday, December 20, 2010 3:34PM Thomas Flahive lib, boston Cablevision NJ 11/1 0 Dispute Letter Cablevision_NJ_ VZ-NJ-MOU _11-15-1 0 _SumRpt_ v1. rtf

This letter is notification that Verizon- New Jersey is disputing charges totaling $555,458.55 on Invoice 111510 dated November 15, 2010 for account VZ-NJ-MOU.

INVOICE CHARGES DISPUTED

Verizon is disputing $166,506.28 for an imbalance in reported Minutes ofUse (MOUs). During November 2010, Cablevision billed Verizon for terminating the following minutes:

27,360,192 MOU for EO Local Switching from 10/1/2010 to I 0/31/20 I 0 50,900,384 MOU for Tandem from 1011/2010 to 10/31/201

Based on data from Verizon's measurement systems, the traffic Cable vision terminated for Verizon was 59,110,766 MOUs. Verizon is disputing the difference between the MOUs billed by Cablevision, and the Verizon measured MOUs.

Verizon may request that Cablevision provide Records of the calls completed in a 24 hour period during the current Bill Period covered on this invoice. Verizon may also request that Cablevision provide a spreadsheet or file that contains the information used as the basis for assigning the jurisdiction of calls that terminated on the Cablevision network.

Verizon requests that Cab1evision issue a credit to Verizon for the disputed amount.

Verizon is also disputing $388,952.27 of the intercarrier compensation charges that Cablevision billed to Verizon on invoice number 111510.

Consistent with two recent federal district court rulings, Verizon does not believe that IF-originated or IF-terminated traffic is subject to switched access tariffs or related charges.i[ 1] Accordingly, Verizon disputes Cablevision's intercarrier compensation charges for this type of traffic and has re-rated the intercarrier compensation charges that Cablevision has billed on IF-originated or IF-terminated traffic down to a rate of $0.0007 per minute of use, which is the most generally accepted rate in the industry. The Invoice Summary Attachment to this letter details the billing account number, the specific minutes of use that Verizon has re-rated, and the amount of the charges that Verizon is disputing and withholding.

Verizon wants to work with Cablevision in resolving outstanding billing disputes between our companies and looks forward to entering into a commercial agreement with Cablevision that establishes reciprocal rates, terms, and conditions for the exchange of IF-originated or IP-terminated traffic, and which will resolve this dispute. Please contact me at 617-342-2015 at your earliest convenience to discuss the disputes on this invoice.

Sincerely,


Wanda Sierra

i[IJ In PAETEC v. CommPartners, LLC, No. 08-0397, slip. op. (D.D.C. Feb. 18, 2010), the court ruled that VoiP traffic that undergoes a net protocol conversion from Internet Protocol format to Time Division Multiplexing ("TDM") format is an information service, and that access tariffs do not apply to information services. In MetTe! v. GNAPs, No. 08-cv-3829, 2010 WL 1326095 (S.D.N.Y. Mar. 31, 201 0), the court decided not to apply tariffed switched access charges to VoiP traffic but rather decided that the local exchange carrier was entitled to receive the reasonable value of the benefit it conferred on a VoiP provider, under the equitable theory of unjust enrichment.

2


December 14, 2010

Ms. Dawn Sullivan Cablevision Lightpath, Inc. 200 Jericho Quadrangle Jericho, NY 11753

Re: Compensation {or VOIP Traffic

Dear Ms. Sullivan,

I am writing to notify you that Verizon is disputing a portion of the intercarrier compensation charges that your company billed to Verizon.

Consistent with two recent federal district court rulings, Verizon does not believe that IPoriginated or IP-tem1inated traffic is subject to switched access tariffs or related charges. 1 Accordingly, Verizon disputes your company's intercarrier compensation charges for 1his type of traffic and has rerated the intercarrier compensation charges that your company has billed on IP-originated or IPtenninated traffic down to a rate of$0.0007 per minute of use, which is the most generally accepted rate in the industry. Attachment A to this letter details the billing account numbers, the specific minutes of use that Verizon has re-rated, and the amount of the charges that Verizon is disputing and withholding.

V erizon looks forward to entering into a commercial agreement with your company that establishes reciprocal rates, tenns, and conditions for the exchange of this traffic, and which will resolve this dispute. Verizon invites your company to contact Earl Hurter at [email protected], as soon as possible so we can arrange a meeting to make progress towards a resolution of this matter.

Very truly yours,

Donna Donahue V erizon Business Manager Usage Analysis

1 In PAETEC v. CommPartners, LLC, No. 08-0397, slip. op. (D.D.C. Feb. 18, 2010), the court ruled that VoiP traffic that undergoes a net protocol conversion from Internet Protocol format to Time Division Multiplexing ("TDM") format is an information service, and that access tariffs do not apply to information services. In MetTel v. GNAPs, No. 08-cv-3829, 2010 WL 1326095 (S.D.N.Y. Mar. 31, 2010), the court decided not to apply tariffed switched access charges to VoiP traffic but rather decided that the local exchange carrier was entitled to receive the reasonable value of the benefit it conferred on a VoiP provider, under the equitable theory of unjust enrichment.


January 6, 2011

Ms. Dawn Sullivan Cablevision Lightpath, Inc. 200 Jericho Quadrangle Jericho, NY 11753

Re: Compensation (or VOIP Traffic

Dear Ms. Sullivan,

I am writing to notify you that Verizon is disputing a portion of the intercarrier compensation charges that your company billed to Verizon.

Consistent with two recent federal district court rulings, Verizon does not believe that IForiginated or IF-terminated traffic is subject to switched access tariffs or related charges. 1 Accordingly, Verizon disputes your company's intercarrier compensation charges for this type of traffic and has rerated the intercarrier compensation charges that your company has billed on IF-originated or IPterminated traffic down to a rate of $0.0007 per minute of use, which is the most generally accepted rate in the industry. Attachment A to this letter details the billing account numbers, the specific minutes of use that Verizon has re-rated, and the amount of the charges that Verizon is disputing and withholding.

Verizon looks forward to entering into a commercial agreement with your company that establishes reciprocal rates, terms, and conditions for the exchange of this traffic, and which will resolve this dispute. Verizon invites your company to contact Earl Hurter at [email protected], as soon as possible so we can arrange a meeting to make progress towards a resolution of this matter.

Very truly yours,

Donna Donahue Verizon Business Manager Usage Analysis

1 In PA.ETEC v. CommPartners, LLC, No. 08-0397, slip. op. (D.D.C. Feb. 18, 2010), the court ruled that VoiP traffic that undergoes a net protocol conversion from Internet Protocol format to Time Division Multiplexing ("TDM") format is an information service, and that access tariffs do not apply to information services. In MetTe! v. GNA.Ps, No. 08-cv-3829, 2010 WL 1326095 (S.D.N.Y. Mar. 31, 2010), the court decided not to apply tariffed switched access charges to VoiP traffic but rather decided that the local exchange carrier was entitled to receive the reasonable value of the benefit it conferred on a VoiP provider, under the equitable theory of unjust enrichment.


i :1 Davis \(Vright L~itw Trema1ne LLP

September 10, 2010

VIA E-MAIL AND OVERNIGHT DELIVERY Mr. Earl Hurter V erizon Business 205 North Michigan Ave. Room 1100 Chicago, IL 60601

Suite 800 1919 Pennsylvania Avenue NW Washington, DC 20006-3401

K.C. Halm 202.973.4287 tel 202.973.4499 fax

[email protected]

Re: Verizon Business' Liability to Bresnan Communications for Originating and Terminating Switched Access Charges

Dear Mr. Hurter:

I have been engaged by Bresnan Communications, and is affiliates Bresnan Broadband of Colorado, LLC, Bresnan Broadband of Montana, LLC, Bresnan Broadband of Utah, LLC, and Bresnan Broadband of Wyoming, LLC (collectively, "Bresnan"), to pursue collection of the access charges incurred by Verizon Business ("V erizon") through its use of switched access services provided by Bresnan. Accordingly, this letter responds to the recent correspondence from Ms. Donna Donahue of Verizon Business ("Verizon") to Mr. Curt Black, of Bresnan, concerning Verizon' s liability for originating and terminating switched access services rendered by Bresnan.

Your letter cites two recent cases in New York and the District of Columbia as support for the assertion that Verizon "does not believe that IP-originated or IP-terminated traffic is subject to switched access tariffs or related charges." Based upon this broad, and unsupported, claim Verizon Business has disputed Bresnan's recent access billings, and withheld payment of properly billed access charges.

Verizon's dispute of these charges is hereby denied for the reasons set forth in the paragraphs below. The applicable Bresnan FCC and intrastate access tariffs establish that any customer may withhold amounts disputed in good faith for up to ninety days, or until Bresnan informs the customer that Bresnan has denied the dispute. Once a billing dispute is denied, the customer must immediately pay the disputed amount to Bresnan. Accordingly, because Bresnan hereby denies Verizon's dispute of these charges, Verizon must immediately remit payments within thirty days of receipt of this letter. Failure to remit such payments will subject these

DWT 15344743v3 0101665-000004


charges to late payment charges and other appropriate penalties, which may include disconnection or discontinuance of service to V erizon Business.

Verizon's dispute of these charges is denied because the legal position taken by your company is not consistent with applicable law.

1. The Cited Decisions Are Not Binding on Bresnan and the Access Services It Offers In Other Jurisdictions

First, as you know, the two federal court decisions cited in your letter are not binding on Bresnan, whose access services are provided in jurisdictions other than the District of Columbia and New York. Bresnan's lawfully filed and effective tariffs are binding upon carriers that obtain interstate services pursuant to Bresnan's filed and effective FCC tariff, and upon carriers (like Verizon) that obtain intrastate access services from Bresnan in Colorado, Wyoming, Montana. Therefore, the cited decisions have no precedential effect, and cannot be used by V erizon to avoid paying for the access services provided by Bresnan in the jurisdictions listed above.

Furthermore, Judge Robertson's opinion in the PAETEC case is currently on appeal at the D.C. Circuit. See In re PaeTec Communications, Inc., Case No. 10-8002 (D.C. Cir. filed May 13, 2010). As such, the status ofthat decision is uncertain even within the district in which it was entered. Likewise, Judge Rakoffs decision in MetTe! is also not in any sense "fmal" and may well be reversed in its district of origin or by a higher court as well.

2. Factual Distinctions Limit Any Remaining Precedential Value ofthe Cited Decisions

Second, there is no evidence that Verizon's traffic shares the same characteristics ofthe traffic at issue in the PAETEC or MetTe! decision. For example, in both cases the access services user (the interexchange carrier delivering IP-based toll traffic for termination to the local networks) delivered such traffic in IP format. However, in this case, we believe that Verizon is delivering TDM-based traffic to Bresnan for termination on Bresnan's local network. The traffic is received as TDM, via a third party incumbent LEC tandem, and accepted as such onto Bresnan's local network. Thus, there can be no claim that the traffic is not telecommunications traffic subject to the access charge regime.

Furthermore, the PAETEC decision clearly ruled that TDM-based traffic is subject to the access charge regime, and that interexchange carriers are liable for the access services used to terminate or originate such traffic. Certain Bresnan service offerings employ only TDM-based technologies. Therefore, there can be no doubt that the traffic provisioned over such TDM-based circuits is subject to Bresnan's lawful, binding, tariffs.

Accordingly, for the reasons set forth above, Verizon's dispute of Bresnan's access charges are rejected. Payment of the invoices setting forth such charges must be promptly remitted to Bresnan in order to avoid escalation of this matter to federal or state courts, or the appropriate administrative agency.

- 2-DWT 15344743v3 0101665-000004


I would appreciate a prompt reply to this correspondence providing confirmation that Verizon will remit payment of the disputed charges. Please provide a response within ten calendar days, or no later than September 20, 2010.

Thank you for your prompt attention to this matter.

Sincerely,

~ K.C. Halm

cc: Donna Donahue, Mgr., Verizon Business Sandy Soundararajan, Counsel, Verizon Business Alex Harris, Vice President, Bresnan Jerry Lambert, Counsel, Bresnan

- 3 -DWT 15344743v3 0101665-000004


Optimum Light path

-------------------------------------

January 27, 2011

Donna Donahue Manager- Usage Analysis Verizon Business 205 North Michigan Ave Room 1121 South Chicago, Illinois 6o6o1

Wanda B. Sierra Billing Specialist Verizon Finance- Local Interconnection Billing 125 High Street Boston, MA 02110

Re: Compensation for VoiP Traffic

Dear Ms. Donahue and Ms. Sierra:

I am writing in response to Ms. Donahue's letters of December 14, 2010 and January 6, 2011 on behalf ofVerizon Business, as well as Ms. Sierra's letters of December 20, 2010 on behalf ofVerizon New York Inc. and Verizon New Jersey, Inc. (collectively "Verizon LECaffiliates") to Thomas Flahive. Your letters purport to dispute and withhold "a portion" of the charges that Verizon Business and Verizon LEC affiliates (collectively "Verizon") owe to Cablevision Lightpath, Inc. ("Cablev1sion") for access services provided by Cablevision beginning with October usage. Your letters take the position that "IF-originated or IF-terminated traffic" is not "subject to switched access tariffs or related charges" and dispute Cablevision's properly-billed charges on that basis. Verizon's challenges are rejected, and its claim is disallowed.1

At the outset, although your letters purport to dispute only charges billed under "switched access tariffs" for "IP-originated or IP-terminated traffic," Verizon is withholding payment for a very substantial amount of additional traffic that plainly fails to meet this criteria, and there is no basis for withholding payment for such traffic even under Verizon's own claim.

(1) Much of Cablevision's traffic is traditional telecommunications traffic that is not carried in IP on the networks of any Cablevision affiliate.

1 Ms. Sierra's letters also dispute application of taxes on and the number ofMinutes of Use (MOUs) billed to Verizon LEC affiliates for traffic exchanged during October 2010. This dispute will be addressed separately.

200 Jericho Quadrangle, Jericho, NY 11753 • www.optimumlightpath.com


(2) Verizon has also withheld payment for local traffic between Cab1evision and Verizon LEC affiliates- even though those affiliates are parties to interconnection agreements ("I CAs") plainly requiring the payment of agreedupon reciprocal compensation rates for such traffic. Apart from the dispute regarding billed MOUs, your letters indicate that Verizon has unilaterally rerated these charges with absolutely no stated justification, in violation of Verizon's obligation under the applicable ICAs to provide "detailed" and "specific" grounds for all disputed charges. See NY ICA § 9.1; NJ ICA § 29.8.3; CT ICA § 30.9.3.

Second, even with respect to Cablevision's charges for traffic exchanged pursuant to its "switched access tariffs" for traffic that is carried in IP on some part of its transmission path, your arguments are without merit., All of the traffic at issue was exchanged between Cablevision and Verizon in TDM, pursuant to all of the regulatory requirements of our various interconnection arrangements and state and federal regulatory regimes applicable to such traffic. 2 Verizon accepted Cablevision's services under valid federal and state tariffs; Verizon is also bound by I CAs obligating it to exchange toll traffic with Cablevision at those tariffed rates. Verizon is thus required to pay the charges therein. Although your letter is framed as a billing dispute, Verizon is in fact merely challenging Cablevision's filed, tariffed rates for its services. As you know, both the filed rate doctrine and Verizoh's interconnection agreements prohibit Verizon from contesting Cablevision's tariffed rates in this manner. Moreover, Verizon has knowingly paid access charges for aU traffic - including traffic that is carried in IP on some part of its transmission path - as required by the I CAs and under Cablevision's tariffs for years, and the operative language of the ICAs and tariffs have not changed. This longstanding course of dealing further undermines Verizon's claims.

The nvo legal authorities on which Verizon relies, Paetec v. CommPartners, LLC, No. 08-0397, slip op. (D.D.C. Feb. 18, 2010) (11Paetec"), andMetTel v. GNAPs, No. 08-cv-3829, 2010 WL 1326095, *4 (S.D.N.Y. Mar. 31, 2010) ("MetTel"), do not support Verizon's position. To begin with, in neither case were the parties subject to contractual relationships requiring compensation for the exchange of traffic, including traffic that may be carried in IP on some part of its transmission path, as Verizon is here. Additionally, these two isolated federal district court cases, one of which is presently on appeal, are not even binding law in their own districts, and neither's reasoning has ever been adopted or endorsed by the FCC.

In any event, neither Paetec nor MetTel supports Verizon's simplistic assertion that "IF-originated or IF-terminated traffic" is not "subject to switched access tariffs or

2 Cablevision has repeatedly sought opportunities to arrange for the exchange ofiP~ originated and IF-terminated traffic with Verizon in native fonnat, fi·ee ofthe high costs and inefficiencies that bear on the exchange ofTDM formatted traffic under our existing regulated Interconnection Agreements. Verizon has refused to do so, insisting that all traffic- including any IP traffic that could be exchanged on terms and with technology that is mutually advantageous to the parties- be subject to the regulatory framework for TDM traffic in our I CAs and tariffs.


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related charges." Both cases dealt instead with the much narrower question of whether traffic originated as VoiP and terminated in TDM is subject to terminating access charges levied by a traditional LEC. But that scenario is not at issue here.

More importantly, any suggestion in Paetec and MetTel that VoiP traffic may be, in some instances, exempt from access charges under the FCC's "ESP Exemption" is

contrary to clear FCC regulations. IXCs that use local exchange switching facilities to provide interstate telecommunications services, as Verizon does with respect to Cablevision's facilities, are categorically subject to access charges. See 47 C.F.R. § 69.5(b). As Verizon has previously acknowledged, the ESP exemption is wholly inapposite in such circumstances: "the ESP exemption is a narrowly-crafted policy designed to apply in one particular circumstance - where ESPs obtain access to the local exchange in order to sell their services to PSTN customers - that bears no resemblance to VoiP communications .... " Comments ofVerizon, In the Matter of Petition of Feature Group IP for Forbearance; In the Matter of Petition ofEmbarqfor Forbearance, WC Docket Nos. 07-256, o8-8, at 12 n.30 (filed Feb. 19, 2008). And the ESP exemption has never applied to intrastate access charges. See Southwestern Bell Tel. Co. v. FCC, 153 F.3d 523, 543 (8th Cir. 1998); In re Northwestern Bell Telephone Company Petition for Declaratory Ruling, Memorandum Opinion and Order, 2 FCC Red 5986, 5988 (1987).

For the reasons stated, Verizon's challenges to Cablevision's access and related charges are rejected, and Verizon's claim is disa11owed. Verizon's unilateral withholding violates federal and state law, including principles of good faith and fair dealing. If Verizon fails to remit payment on amounts due immediately, Cablevision will pursue aU available remedies.

Finally, Verizon continues to seek compensation .from Cablevision for the exchange of traffic at longstanding TDM rates, even as it refuses to pay for such traffic when delivered to Cablevision. Accordingly, pending resolution of this dispute, and without waiver of any of its rights, beginning with Verizon's invoices for October usage that reflect intercarrier compensation rates Verizon is now rejecting, Cablevision will likewise make payments at the lower $0.0007 rate and will (1) place the difference between the $o.0007 rate and the intercarrier compensation rates Verizon is now rejecting in escrow and (2) expressly direct the escrow agent to pay over a11 escrowed amounts to Verizon as soon as it is confirmed that the rates under which Verizon and Cablevision have exchanged traffic for the last eight years remain due and payable under the ICAB, tariffs, and applicable law. While Cablevision believes the $0.0007 rate is arbitrary and has no basis in existing law, it would be the height of unfairness for Cablevision to pay Verizon agreed-upon rates while Verizon wrongfully pays Cablevision at $o.ooo7.

Cablevision likewise insists that with respect to the integrity of this dispute, Verizon also place similarly disputed amounts in escrow, see NJ ICA § 29.8.3, CT ICA § 30·9·3,


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Please contact Michael Olsen, Senior Vice President, Cablevision Systems Corporation at [email protected], no later than February 2, 2o;n, to discuss these matters. Cablevision designates Mr. Olsen as its representative for good fa~th negotiations pursuant to the dispute resolution provisions of the New York, New Jersey1

and Connecticut ICN;. See NY ICA § 9.1; NJ ICA § 29.8.4; CT ICA, § 30.94. In the event Veri:wn fails to contact Mr. Olsen or the parties cannot resolve this dispute through negotiation, CabJevh:;ion will take aU further action necessary to enf<;m~e its rights.

Thaul\ you for your prompt attention to this matter.

~~ Leo Maese Cablevision Lightpath, Inc. goo Jericho Quadrangle Jedcho, NY 1,1753

cc: Earl Hunter Michael Olsen Thomas Flahive


united states district court for the eastern district … · case 1:11-cv-02457-cba -jma document 1...

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