Prepaid Card Provider Seeks Stay, Dismissal of AT&T Access Charge Suit

A few months ago, AT&T sued IDT Corp. for failing to pay access charges allegedly due on local-dialed prepaid calling cards. As we expected, IDT has moved the court to stay, or in the alternative, dismiss, AT&T’s action. IDT contends that the FCC, not the court, should decide whether access charges apply to this type of call. In a strategic move, IDT seeks a stay of the case, rather than referral of AT&T’s complaint to the FCC for resolution.

The case bears watching because AT&T appears to be using the IDT litigation as a test case before proceeding with actions it has threatened against other providers. If IDT is successful, AT&T likely will have to present its case directly to the FCC, perhaps by filing a petition for declaratory ruling, or maybe by bringing a formal complaint before the Enforcement Bureau. Alternatively, AT&T may switch approaches and seek to recover access charges from the CLECs to whom it hands off the calls.

In the meantime, AT&T has continued to send monthly demands to prepaid card providers, allegedly calculating the amount of access charges due from the carrier. We are not aware of any other cases AT&T has filed against prepaid card providers. Yet.

Follow the jump for a discussion of the pleadings on IDT’s motion.

In its motion, IDT criticizes AT&T’s lawsuit as a transparent attempt to use litigation to undermine ongoing regulatory proceedings pending before the FCC.” Citing to the Arizona Dialtone petition for reconsideration, which remains pending, IDT seeks a stay until the FCC resolves the issues within the greater framework of its other carrier compensation-related decisions.” Notably, IDT seeks a stay, rather than referral of the complaint to the FCC. IDT thus joins AT&T in avoiding asking the FCC to resolve the claim.

As an alternative, IDT claims that AT&T’s complaint should be dismissed for failure to plead a claim on which relief can be granted. In this portion of its motion, IDT attacks AT&T’s tariff-based theory of recovery. IDT notes that AT&T fails to cite any specific tariff provisions that it breached, and asserts that AT&T has not alleged that IDT subscribed to any AT&T access service.

AT&T’s opposition claims, as AT&T has asserted in disputes with other prepaid card providers, that the FCC has conclusively decided” that access charges apply to prepaid cards, so there is no reason for a stay. AT&T reads the June 2006 Prepaid Calling Card order as establishing a comprehensive order mandating access charges for all types of prepaid calling card traffic.

Regarding IDT’s motion to dismiss, AT&T both claims that the violation is in trying to evade the AT&T LECs’ switched access tariffs altogether” and that IDT has constructively ordered” service under its tariff.

In the reply brief, IDT does a good job responding to AT&T’s constructive ordering claim. Pointing out that IDT receives service from CLECs, not from AT&T, IDT claims it could not have constructively ordered service from AT&T. IDT relies on precedent from Advamtel involving CLEC access charges that AT&T (operating as an IXC) refused to pay. IDT asserts that the requirements for constructive ordering are not satisfied because IDT has not interconnected with AT&T and AT&T delivers service to a third party, not to IDT’s premises” as required under the tariff.

Briefing was completed on December 29. We will be watching for further developments.