California CLEC Sues AT&T

A CLEC that claims to have helped SBC California, now part of the new AT&T Inc. conglomerate, enter the long-distance market in the Golden State is suing the RBOC for breach of contract.

Fones4All, a provider gearing its local phone service toward low-income and minority subscribers, said today AT&T then SBC Communications Inc has reneged on a 2002 agreement regarding reciprocal compensation.

The CLEC said AT&T denies it ever made such an agreement with Fones4All; AT&T would not comment on the lawsuit.

In 2001 and 2002, SBC California sought state and federal permission to offer long-distance service in California. Fones4All says SBC California promised that, if the CLEC would support SBCs attempts, SBC would pay Fones4All for the costs it incurred in receiving calls from then-SBC customers.

Fones4All agreed, and also was able to negotiate its own tariff rates with then-SBC California, said outside counsel, Ross Buntrock, adding carriers typically were not able to do that. In its lawsuit, Fones4All maintains the agreement part of which is on paper, and part of which was oral, Buntrock said — went smoothly until Sept. 26, 2005, when then-SBC said it would no longer pay. Fones4All claims SBC demanded a refund of the $2.6 million it already had paid Fones4All under the reciprocal compensation agreement, and refused to pay an additional $1.6 million the CLEC says it is owed.

Buntrock said AT&T has told Fones4All the reciprocal compensation agreement never existed, that the CLEC was overbilling the RBOC, and that then-SBC did not send as many minutes to Fones4All that Fones4All said it carried.

In the wake of AT&Ts announcement that it will acquire BellSouth, I urge regulators and the courts to carefully consider the impact of the merger on small local phone providers like Fones4All, said Bettina Cardona, president and CEO of Fones4All, in a news release. With revenues of almost $44 billion, AT&T can afford to take unfair and illegal actions against small phone providers with the hopes of eventually running them out of business. But in the long run its the consumers of California, and especially the overlooked poor and largely minority customers Fones4All serves, who will pay unless the legal system and regulators step in to protect them.

AT&T Inc. www.att.com
Fones4All www.fones4all.com