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06/12/80 Diamond International v. Federal Communications

June 12, 1980




Before ROBINSON and MIKVA, Circuit Judges, and JUNE L. GREEN,* United States District Court Judge for the District of Columbia.


Petition for Review of an Order of the Federal Communications commission.



Diamond International Corporation (Diamond) petitioned this court to review a ruling by the Federal Communications Commission which dismissed Diamond's complaint against the American Telephone and Telegraph Company and its local subsidiary, New York Telephone Company (New York Tel.). Diamond Int'l Corp. v. American Tel. & Tel., 70 F.C.C.2d 656 (1979). At issue is the lawfulness of certain charges billed to Diamond, pursuant to a New York Tel. intrastate tariff, *fn1 arising from the installation of Diamond's interstate private line network.

Diamond maintains that the only appropriate charges are those set forth in AT& T's interstate private line Tariff FCC No. 260. Thus, Diamond argues that the charges under New York Tel.'s intrastate tariff constitute "double billing." Moreover, Diamond contends that the Communications Act of 1934, 47 U.S.C. §§ 151-609, requires that the disputed charges be included in an interstate tariff, 47 U.S.C. § 203, and that the charges billed to Diamond are unreasonably discriminatory in violation of section 202(a) of the Act, 47 U.S.C. § 202(a). *fn2 The Commission ruled that the services for which Diamond was charged were not included in AT&T's interstate tariff and were properly in New York Tel.'s intrastate tariff. We hold that the Commission acted within its statutory authority and that its conclusions were not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. *fn3

Diamond's corporate headquarters in New York City has private branch exchange service *fn4 furnished by New York Tel. In 1972, Diamond ordered a private telephone network, including twenty-two interstate private lines which were subsequently connected to Diamond's PBX switchboard in New York.

In its simplest form, an interstate private line network consists of two components an interstate transmission line and a station terminal capable of gaining access to the line and alerting the other end. The parties agree that AT&T Tariff FCC No. 260 covers this basic service in its entirety. In the instant case, Diamond ordered a more sophisticated system which has some dial signaling and switching capability. That additional capability enables a caller to ring a particular point on Diamond's network without ringing every other point on the circuit. In order to provide this feature, New York Tel. had to modify the PBX equipment in Diamond's headquarters. As a result, New York Tel. has imposed additional charges in its billings to Diamond for PBX service. Those charges are claimed by New York Tel. and AT&T to reflect the enhanced capability of Diamond's PBX in accordance with New York Tel.'s intrastate tariff.

Believing the additional charges to be unlawful, Diamond complained informally to the Commission. The Chief of the Commission's Tariffs Branch responded to Diamond in a letter, stating in relevant part:

Based on the information before us at this time, it is our view that the charges in dispute are charges for service associated with your company's Private Branch Exchange system rather than your company's interstate channel network. As you know, charges for P.B.X. service are set forth in tariffs filed with the various state regulatory agencies and are not subject to the jurisdiction of this Commission. Therefore, we do not feel that we can pursue this matter further under our rules pertaining to informal complaints. Your company is entitled, however, to file a formal complaint with this Commission in order to determine the jurisdictional aspect of this matter or you may wish to pursue this matter with the New York Public Service Commission.

(Letter from Paul S. Darling to Richard L. Wagner (May 22, 1975), at J.A. 30)

Diamond chose to pursue its complaint first with the New York Public Service Commission (State Commission). Following an informal hearing, the State Commission's hearing officer concluded that the charges were appropriate and in accordance with New York Tel.'s intrastate tariff. The State Commission affirmed the hearing officer's conclusion.

On July 20, 1976, Diamond filed a formal complaint before the Federal Communications Commission, raising questions concerning the interpretation of AT&T Tariff FCC No. 260 and challenging the State Commission's jurisdiction to permit a tariff charge on equipment used to gain access to an interstate service. The Commission declared that "(sections) 2.5 and 3.2.2(c)(3) of AT&T Tariff No. 260 clearly state that termination to a PBX at no additional charge is provided only when the PBX is not arranged for dial signaling." *fn5 70 F.C.C.2d at 658. Having determined that Diamond's PBX's had been altered to allow some dial signaling and switching capability, the Commission found that AT&T's interstate tariff did not include charges for the PBX modifications.

We find the Commission's reading of AT&T Tariff FCC No. 260 to be reasonable, based upon factors within the Commission's expertise, and thus, entitled to deference. See, e.g., Western Union Tel. Co. v. FCC, 541 F.2d 346, 351 (3rd Cir. 1976), cert. denied, 429 U.S. 1092, 97 S. Ct. 1104, 51 L. Ed. 2d 538 (1977). Section 2.5 defines the terminal equipment offered by AT&T and section 3.2.2(c) (3) speaks of the charge for that ...

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