Hypercube Rebuffed by California Judge on Access Charge Claims, Withdraws Related Complaint in Texas

Hypercube Telecom was dealt a setback and set itself back in separate actions in California and Texas. Hypercube, a competitive local exchange carrier, is in a long-running dispute with interexchange carrier Level 3 Communications. In California, a utility commission administrative law judge dismissed a Hypercube claim against Level 3. And Hypercube withdrew a complaint against Level 3 in Texas, where utility commission staff had prepared a recommendation that commissioners there dismiss Hypercube’s complaint.

In her April 16 order, California Public Utility Commission Administrative Law Judge Regina DeAngelis recommended that the agency dismiss a complaint by Hypercube seeking affirmation of its practice of using its state interstate access tariff to charge its switched access rate for access services, data base query services and 8YY call routing to Level 3 for termination to Level 3 customers. Picked up by Hypercube at CMRS switching centers operated by wireless carriers with which Hypercube has contracts, the calls are delivered to an incumbent local exchange carrier for routing to Level 3. Since November 2007, Level 3 has been boycotting payments to Hypercube, alleging that the CLEC’s charges are unlawful under Hypercube’s tariff and federal law. Hypercube has responded with demands that Level 3 pay bills and late charges that it tallies at about $5.5 million.

"Level 3 would prefer Hypercube not be involved in the routing of 8YY calls to Level 3’s customers,” the judge wrote. “In response to Level 3’s expressed preference for Hypercube to cease its involvement with these calls, Hypercube has requested that Level 3 block calls coming from Hypercube to avoid additional billing. As an engineering matter, however, Level 3 contends that blocking is untenable as Level 3 is unable to identify in real time the particular calls that pass through Hypercube on their want to the ILECs and then to Level 3.” Although Hypercube’s California tariff requires Level 3 and other interexchange carriers to block calls to reject service from Hypercube, “Level 3 has not implemented blocking because blocking remains infeasible,” Judge DeAngelis said.

In May Hypercube filed a complaint to the California commission seeking to enforce its claim against Level 3. The commission initially decided to hold hearings. Months of filings and counter-filings by both companies preceded a January suspension of planned hearings before the judge “due to ongoing and unresolved discovery issues,” DeAngelis wrote. “Upon review of the existing pleadings, we found no material facts in dispute and concluded that the case may be resolved on the existing pleadings."

Examining FCC precedent, DeAngelis said the federal agency “has long held that CMRS carriers may not file tariffs for call origination or termination but, instead, the CMRS carrier must establish an independent right to compensation.” She said Hypercube hasn’t alleged sufficient facts to establish its right to collect originating access charges from Level 3.

The case moves to the California commission. Under state law, the agency can’t take up the matter in less than 30 days from the recommendation’s April 16 mailing date. Hypercube didn’t respond right away for a request for comment.

In Texas, Hypercube had filed a complaint with the utility commission rooted in the same dispute. Level 3 moved to dismiss on grounds that a petition by Level 3 asking the FCC for a declaratory ruling on inserted CLECs’ charges takes precedence under the pre-emption clause of the U.S. Constitution. In its March 29 recommendation, the staff said Level 3’s motion to dismiss should be upheld because Hypercube hasn’t made its case, but said it doesn’t think Level 3’s pre-emption clause argument holds water.

"Hypercube’s traffic originates from customers of wireless carriers with which it has an agreement for the calls to be routed to Hypercube and for which the wireless carrier receives compensation,” the staff said. That runs contrary to FCC policy that unless a CMRS carrier has a contract with an interexchange carrier, a CLEC has no right to collect access charges. “Any agreement between Hypercube and the wireless carrier that provides remuneration for access charges falls squarely within what the FCC has declared they will not condone,” the staff said.

"The lack of docketing by the FCC makes it very unlikely that the FCC will act on the petition in the foreseeable future, if it [sic] all, and therefore Level 3’s petition with the FCC does not support dismissal of Hypercube’s complaint,” the commission staff wrote in its recommendation. “The likelihood of the FCC acting on Level 3’s petition being remote at best, the request for a stay of the proceeding based on the FCC filing should be denied.”