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                            Before the
                Federal Communications Commission
                      Washington, D.C. 20554

In the Matter of                        )    
                                   )
Communique Telecommunications, Inc.     )
d/b/a Logicall                     )
Application for Review of the      )
Declaratory Ruling and Order       )
Issued by the Common Carrier Bureau     )
                                   )    
InterContinental Telephone Corp.   )
Petition for Declaratory Ruling on )
National Exchange Carrier          )
Association, Inc.                  )
Tariff F.C.C. No. 5                )
Governing Universal Service Fund   )
and Lifeline Assistance Charges    )

                 MEMORANDUM OPINION AND ORDER 

Adopted:   April 22, 1999                                   Released:  August 9, 1999


By the Commission:  Commissioner Furchtgott-Roth issuing a statement.

                       I.  INTRODUCTION 

     1.  In this Memorandum Opinion and Order, we deny InterContinental Telephone
Corporation's (ICTC) petition for declaratory ruling and interim relief challenging the authority of the
National Exchange Carrier Association (NECA) to bill and collect the Universal Service Fund (USF)
and Lifeline Assistance (LA) charges contained in NECA's Tariff F.C.C. No. 5, as agent for its
member local exchange carriers (LECs).  We also dismiss as late-filed a related application filed by
Communique Telecommunications, Inc., d/b/a Logicall (Communique) that seeks review of a
declaratory ruling issued by the Commission's Common Carrier Bureau (Bureau).  While we dismiss
Communique's application as being untimely, we will treat the arguments raised in Communique's
application as comments, because they raise issues similar to those presented by ICTC. 
     
                         II. BACKGROUND

     2.  In the 1983 Access Charge Order, the Commission established a system of tariffed
charges for the recovery by LECs of the costs they incur in the origination and termination of
interstate telephone calls.  This system replaced the settlements and division of revenues process
administered by AT&T prior to the break up of the Bell System pursuant to the Modification of Final
Judgment (MFJ).  The Commission directed the creation of NECA to prepare access charge tariffs,
distribute access charge revenues, and administer programs for the recovery of: (1) carrier common
line (CCL) charges on behalf of all LECs; (2) subscriber line charges; and (3) all other access
charge elements on behalf of LECs that chose to join in the tariff filed on their behalf by NECA.  

     3.  In 1984, the Commission adopted the USF rules to promote "universally available
telephone services at reasonable rates."  NECA was chosen to administer the USF for high cost
assistance and provide for the recovery of USF costs through the nationwide common line tariff and
pooling process.  In 1985, the Commission adopted the Lifeline Assistance (LA) program which
permits waiver of up to $3.50 of the subscriber line charge in conjunction with state telephone
assistance programs for qualifying low income households.  In 1987, the Commission adopted an
additional Lifeline plan called Link-Up America and eliminated mandatory participation in the
common line tariff and pooling arrangements administered by NECA.

     4.    From July 1992 to January 1995, the time relevant to the claims at issue, for those LECs
choosing to participate in the tariff filed by NECA for common line and other access rate elements,
NECA filed a tariff that includes the USF and LA charges.  The access tariff filed by NECA states
that the tariff is issued by the participating LECs.  The tariff also includes various enforcement
("self-help") provisions that authorize LECs to refuse to provide additional applications for access
service, refuse to complete pending orders for access service, or disconnect access service to IXCs
based on nonpayment of USF and LA charges.  Under the NECA tariff, IXCs that use local
exchange switching facilities for interstate or foreign telecommunications services were to be assessed
separate charges for the USF and LA programs if they have .05 percent or more of the total
nationwide subscriber lines that are presubscribed to an interexchange carrier for "1+" service. 
IXCs were to be assessed USF and LA charges based on their total number of presubscribed lines. 
Since 1989, the tariffs of LECs outside the NECA pool have cross-referenced the USF and LA
provisions of the tariff filed by NECA, including the self-help provisions.  
     
     5.  On November 17, 1994, ICTC received notification from NECA that ICTC's presubscribed
line count was 84,534 lines, representing 0.06 percent of the nationwide total as of June 30, 1994. 
In January of 1995, ICTC received its first invoice from NECA for USF and LA charges in the
amount of  $43,813.97.  On May 5, 1995, ICTC filed its petition for declaratory ruling contending
that NECA did not have the authority to tariff, bill, collect, or institute any form of collection
procedure against ICTC in connection with the USF and LA charges contained in NECA's tariff.

     6.  Starting in July 1992, Communique refused to pay USF and LA charges assessed to it
pursuant to the tariff filed by NECA.  As of January 1993, this amounted to $265,030.76. NECA
subsequently informed Communique that NECA might serve it and the LECs with written notice of
such nonpayment of USF and LA charges.  Pursuant to the tariff, upon 30 days written notice to
Communique, the LECs could proceed to implement the self-help measures set forth in the NECA
tariff filed on their behalf, such as disconnection or refusal to provide new access services.  On April
21, 1993, Communique filed its petition for declaratory ruling and interim relief, contending that
NECA does not have authority to file tariffs on behalf of its member LECs and requesting abatement
of NECA's threatened self-help enforcement by its member LECs during the review of its petition.
     
     7.  The Bureau Order denied Communique's petition and found that NECA is authorized
under the Commission's rules to file tariffs, and to bill and collect the USF and LA charges contained
in NECA's Tariff F.C.C. No. 5, as agent for its member LECs.  The Bureau Order concluded that,
as a consequence of the divestiture and the MFJ, the Commission in the Access Charge Order
replaced AT&T with NECA as tariff filing agent.  The Bureau Order did not find it necessary to
reach the issue of whether the self-help provisions contained in Section 2.1.8 of the tariff filed by
NECA are lawful, finding instead that the issue should be addressed in the complaint process, if
necessary, rather than through a request for declaratory ruling.  Additionally, the Bureau Order
denied Communique's request for interim relief to prevent the LECs from enforcing the self-help
provisions.  Communique filed its application for review on June 27, 1995. 
     
                         II.  PLEADINGS

     8.  ICTC and Communique contend that the Bureau Order erred in determining that NECA
is authorized under section 203 of the Communications Act of 1934, as amended (Act), to act as
a tariff filing agent.  ICTC seeks a declaratory ruling that NECA lacks authority under the Act to
tariff, bill, and collect USF and LA charges on behalf of its member LECs and that it has no authority
to enforce the self-help measures.  Both ICTC and Communique deny that they owe NECA the
outstanding USF and LA amounts, arguing that, because NECA is without authority to tariff these
charges, NECA may not collect them on behalf of its member LECs.  They assert that these charges
have not been tariffed by those LECs.  In addition, they argue that AT&T's pre-divestiture role as
tariff filing agent for most LECs may not be extended to NECA because section 203 only applies to
common carriers and that, although AT&T is a common carrier, NECA is not.  Petitioners argue
that nothing in the express language of section 203 or any other sections of the Act allows for
extension of the tariff filing requirement to non-carriers or the discharge of a common carrier's duties
by a non-carrier.  ICTC cites to two judicial decisions, MCI Telecommunications v. AT&T and
Southwestern Bell v. FCC, that allegedly support this position.  MCI Telecommunications
invalidated the Commission's permissive de-tariffing policy for non-dominant interstate carriers, and
Southwestern Bell invalidated the Commission's rules allowing carriers to file a range of rates, as
violative of the statutory mandate under section 203(a) that every common carrier file schedules
showing all charges.  According to ICTC, these court decisions require the Commission "to apply
only the express language and clear meaning of section 203" and, therefore, prohibit the Commission
from interpreting that section to apply to non-common carriers.  

     9.  ICTC and Communique also challenge the lawfulness of the self-help provisions in NECA's
tariff.  ICTC argues that, under the Supreme Court's holding in Reiter, self-help remedies may not
be invoked when the reasonableness of the rate is challenged.  ICTC asserts that Reiter requires that
the reasonableness of the underlying rates must be decided before it can be required to pay the USF
and LA charges.  ICTC and Communique additionally raise claims of equitable estoppel.  They
contend that NECA is equitably estopped from enforcing the self-help provisions against petitioners
because NECA did not take such action against Allnet for nonpayment of  USF and LA charges.
 
     10.  ICTC and Communique further contend that their constitutional right to equal protection
would be violated if NECA enforces the self-help provisions in its tariff.  They assert that they would
not have direct recourse against NECA because the courts have held that formal complaints pursuant
to sections 206-208 of the Act may not be brought against NECA or other non-common carriers. 
Communique and ICTC further argue that any section 208 complaint brought against NECA would
be dismissed, resulting in refiling of a complaint against the LECs.  ICTC acknowledges, however,
that "such a complaint is not ripe . . . [because] member-LECs have not . . . threatened any remedial
actions."  ICTC also argues that its equal protection rights are violated because, in imposing a
threshold of .05 percent of presubscribed lines as the basis for USF contributions, the Commission
fails to take into account "the disproportionate and discriminatory impact" on small IXCs in contrast
to larger IXCs.  According to ICTC, "the charge per line for ICTC represents a much larger
percentage of its revenue per line than the same charge represents for much larger IXCs."  
     
     11.  ICTC claims further that "endemic problems" afflicting the USF and LA programs have
eliminated any correlation between the funds raised and universal service.  ICTC therefore contends
that there is no rational basis for "the continued imposition of the USF regulatory scheme on ICTC." 
ICTC claims that the USF program no longer serves its purpose of assisting small to medium-sized
LECs in high cost areas because the largest LECs now receive USF funds.  ICTC alleges that Pacific
Bell, the only incumbent LEC that provides interstate exchange access service to ICTC, is one of the
largest LECs to receive USF funds.  ICTC also contends that its petition should be granted because,
as indicated by the Commission's review of the USF program begun in a 1994 Notice of Inquiry,
there are allegedly significant problems with the USF funding mechanism that make it ineffective in
fulfilling the goals of universal service.  Moreover, ICTC contends that NECA's resizing and
adjustment procedures have unreasonably inflated the amount of USF payments made by IXCs. 
ICTC claims that NECA's USF and LA funds are under investigation by the Commission for possible
"padding" pursuant to a 1993 Order Designating Issues for Investigation.  Thus, ICTC asserts that
the Commission should not allow NECA to collect USF and LA funds until the Commission deems
them to be reasonable.     
          
     12.  ICTC also argues that the USF and LA charges constitute an unlawful tax in violation
of Article I, Section 7 of the U.S. Constitution.  ICTC contends that because there is no longer any
relationship between the amounts collected and the need for the funds, the USF and LA charges are
now a tax.  ICTC also claims these charges are a tax because there was no explicit statutory authority
to establish funding mechanisms for these programs.
     
     13.  Finally, both ICTC and Communique argue that the Bureau Order should be declared
null and void because the Bureau exceeded its delegated authority in deciding purportedly novel
issues and that, therefore, de novo review is required by the Commission.  They claim as novel
issues: (1) the ability of a carrier's agent, that is not itself a common carrier, to file and enforce tariffs
without being subject to the remedies available under Title II; (2) claims of equitable estoppel; (3)
alleged violations of equal protection rights; and (4) interpretation of Supreme Court precedent in
Reiter.

     14.  In its opposition, NECA asserts that the Communique application should be denied as
untimely.  USTA argues that the USF and LA programs, upheld by the courts, have been a matter
of settled law and policy for years.  Both USTA and NECA refer to the Bureau Order as being
dispositive of the identical issues raised in ICTC's petition.  NECA contends further that ICTC
offers no new facts or arguments to suggest an outcome different from the decision reached in the
Bureau Order denying Communique's petition for declaratory ruling.  
     
                        III. DISCUSSION 
                                
     A.   Communique's Application for Review

     15.  Communique's application for review was filed one day late.  In an accompanying
motion to accept the late filed application, Communique states that it "inadvertently" missed the filing
deadline, that no party would be prejudiced by the one-day delay, and that the public interest would
be served by the Commission's review of the purportedly novel issues raised in its underlying petition
for declaratory ruling.
     
     16.  Our rules require that applications for review of decisions issued by the Commission's
Bureaus and Offices acting pursuant to delegated authority be filed within 30 days from the date of
public notice of such decisions.  Enforcement of our procedural rules, including periods for filing
applications for review, is necessary in order for the Commission to manage its decision making
process in an efficient manner.  Communique's assertion of inadvertence does not constitute a
sufficient justification for its late filing.  Accordingly, we deny its motion for leave to file that
application.  Because, however, the matters raised in Communique's application for review are similar
to those raised by ICTC, we will treat the arguments raised by Communique as comments on the
ICTC petition.
     
     B.   ICTC's Petition for Declaratory Ruling

          1.  Duly Tariffed USF/LA Charges

     17.  ICTC argues that it has no obligation to pay the USF/LA charges required by NECA's
member LECs because "such charges have not been tariffed in the federal tariffs filed by those LECs"
as required by section 203 of the Act.  ICTC's assertion that the USF and LA charges are not
tariffed by the LECs is incorrect.  The tariff on its face states that the issuing carriers are the LECs
themselves, not NECA.  In filing these tariffs, NECA is carrying out its duties as an agent under
section 69.601(a) of the Commission's rules "to prepare and file access charge tariffs on behalf of all
telephone companies that do not file separate tariffs or concur in a joint access tariff of another
telephone company for all access elements."  Contrary to ICTC's contention, NECA is not usurping
the functions of a Title II common carrier by filing tariffs for its members.  Rather, as expressly
authorized by Commission rule, NECA is operating as their administrative agent.  ICTC itself
acknowledges as much, stating that NECA acts "only as a mere agent for member-LECs." 
Therefore, the USF/LA charges are not "untariffed charges" as ICTC claims, but are charges
imposed under tariffs issued by the LECs.

     18.  ICTC further claims that, because NECA is not a common carrier, any charges that it files
on behalf of the issuing LECs are not duly tariffed.  ICTC thus challenges the validity of section
69.601(a) of the Commission's rules which, since 1983, has required that NECA prepare and file
access charges on the behalf of certain of its members.  ICTC's arguments are unpersuasive.  As
discussed in detail below, the use of tariff filing agents under section 69.601(a) of the Commission's
rules is consistent with section 203 of the Act, with longstanding industry practice, and with the
Commission's authority under section 4(i) of the Act.

     19.  Section 203 of the Act does not preclude issuing carriers from employing agents that are
non-carriers to prepare and file tariffs on their behalf.  To the contrary, as the Commission observed
in the Access Charge Order, section 203(a) establishes a role for agents in tariff filings.  Section 203
both exempts a connecting carrier from the tariff filing requirement, and obligates an issuing carrier
to file tariffs that show all interstate charges "for itself and its connecting carriers."  Thus, section
203, in effect, affirmatively requires the issuing carrier to act as a tariff filing agent for a connecting
carrier.  Consequently, Congress necessarily anticipated the use of agents to carry out certain
requirements of section 203.  Moreover, as the Commission stated in the Access Charge Order, the
failure to authorize the transfer of tariff filing functions from AT&T to a new entity (NECA) "would
be creating an unnecessary conflict between the regulatory scheme and the MFJ" in the post-
divestiture environment.  The Commission found there that its actions in authorizing NECA to
function as agent for its member LECs were authorized not only by section 4(i), but by the express
powers granted under section 203(b)(2), which gives the Commission the discretion to "modify" any
requirement of section 203, including the tariff filing requirement, "for good cause shown."  Nothing
in the arguments presented by ICTC merits a contrary conclusion.  

     20.  Longstanding industry practice and administrative precedent support our holding that
section 203 does not forbid the use of tariff filing agents.  Common carriers have employed agents
to file tariffs since 1934, when the Act was enacted.  Until 1983, AT&T served as "tariff agent for
the entire industry."  Since 1983, when the Commission by rule mandated NECA's creation, NECA
has filed tariffs for LECs that neither file their own tariffs nor concur in tariffs filed by other carriers. 
Thus, the use of tariff filing agents has been an accepted industry practice for more than 60 years,
and, at least since 1983, this practice has been by the Commission's express direction. 

     21.  Further, sections 4(i) and 203(b)(2) of the Act give the Commission statutory authority
to provide for the filing of tariffs by agents of carriers, as the Commission has done by promulgation
of section 69.601(a) of its rules.  Section 4(i) of the Act authorizes the Commission to "perform any
and all acts, make such rules and regulations, and issue such orders, not inconsistent with this Act,
as may be necessary in the execution of its functions."   The Court of Appeals in New England
Telephone concluded that this "wide-ranging source of authority" authorizes agency action which is
not specifically enumerated in the Act, but which is "appropriate and reasonable" in fulfilling its
regulatory responsibilities.  In Lincoln Telephone,  the Court of Appeals held that section 4(i) gave
the Commission authority to require a connecting carrier -- an entity expressly exempt from the tariff
filing requirement in section 203 -- to file a tariff.  Similarly, section 4(i) is broad enough to empower
the Commission to authorize carriers to use agents to file tariffs on their behalf.  Use of agents to file
tariffs for LECs can reduce burdens on both carriers and the Commission and facilitate compliance
with section 203.  For the reasons stated in the Access Charge Order, establishment of NECA to file
tariffs for its members and to collect USF and LA charges has been reasonably necessary for the
accomplishment of our objectives under the Act and is therefore authorized by sections 4(i) and
203(c). 

     22.  We find further that ICTC's reliance on MCI Telecommunications is misplaced.  In MCI
Telecommunications, the Commission sought to create a permissive de-tariffing policy for non-
dominant carriers by eliminating the requirement that these carriers file tariffs. The Court found that
the tariff filing requirement was the heart of the Title II system of common carrier regulation and that
permissive de-tariffing would be a fundamental change to the regulatory scheme envisioned under the
Act.  Consequently, the Court concluded that the changes to the system of mandatory tariffing
adopted by the Commission were not within the scope of modifications authorized by section
203(b)(2) of the Act.  The Court's holding in MCI Telecommunications is inapposite.  This is not
a case in which the Commission has eliminated or significantly narrowed the LECs' obligation to file
tariffs for interstate services.  Rather, NECA is acting as an agent for its LEC members by completing
the administrative task of filing a tariff for them. Thus, the LECs' tariff filing requirement is still
fulfilled through their use of an agent, NECA.  As discussed above, nothing in the Act expressly
prohibits carriers from complying with this statutory obligation by means of an agent that files the
required tariff on behalf of the incumbent LECs that participate in that tariff.

     23.  Similarly, we find ICTC's reliance on Southwestern Bell to be misplaced.  At issue in
Southwestern Bell was the Commission's proposed policy of permitting non-dominant carriers to file
with the Commission a range of rates rather than fixed rates.  The Southwestern Bell court found that
the Commission's proposal would violate the mandate of the Act that every telephone common carrier
file schedules showing all charges, and that the Commission's proposal was not authorized under
section 203(b)(2) which allows the Commission to modify rate schedule filing requirements.  In the
present matter, the carriers are not attempting to file a range of rates.  Instead, they file schedules
showing the charges for all of their interstate services, through their agent, NECA. 
          
          2.  NECA's Authority to Bill and Collect Charges  
     
     24.  We also reject ICTC's contention that the LECs are barred by the Act from using NECA
as an agent to bill and collect USF and LA charges.  There is nothing in section 203 which colorably
suggests that Congress intended to prohibit carriers from using agents to enforce provisions of their
tariffs.  Indeed, in its petition ICTC itself concedes, "as an agent, NECA may perform the mechanical
tasks of effecting the billing and collecting of certain charges just as LECs and private billing
companies do for IXCs."  We agree.

     25.  Further, we reject ICTC's assertion that all billing and collection activity under these
tariffs is inherently unlawful because the USF and LA provisions are "untariffed charges" that are not
set forth in tariffs filed by Title II exchange carriers.  To the contrary, as noted above, the
participating member LECs are the issuing carriers for this tariff, and the disputed charges are
specified in the tariff NECA has filed on their behalf.  The LECs that are not listed as issuing carriers
in that tariff have filed their own tariffs that contain language explicitly cross-referencing the USF and
LA provisions in the NECA tariff.  Thus, contrary to ICTC's contention, the USF and LA charges
are lawfully tariffed charges.

     26.  We also find unpersuasive ICTC's argument that, in this instance, NECA should not be
allowed to bill and collect charges because NECA would "be immune to the liabilities for violating
Title II of the Act" because it is not a common carrier subject to complaint liability under sections 206
through 209 of the Act.  Although some provisions of the Act protect ratepayers and others benefit
common carriers, there is "no statutory entitlement to a perfectly balanced regulatory scheme." 
ICTC's notion of absolute symmetry in carrier and ratepayer remedies is not embodied in the Act. 
NECA's alleged immunity from formal complaint liability thus does not render unlawful tariff
provisions authorizing it to bill and collect charges.  In addition, ICTC's contention ignores the fact
that NECA is an agent of Title II carriers.  As a ratepayer, ICTC has a statutory right to file a
complaint against NECA's principals, the LECs, for any conduct of their agent alleged to constitute
a violation of the Act or the Commission's rules, policies, or orders.  As ICTC explained in its
petition, "a holding that NECA itself, as a mere agent, is not subject to complaints for violations of
the Act [would] not in any way negate the violations of the Act of the jurisdictional carriers" that
participate in NECA's tariff.
     
           3.  NECA Tariff's Self-Help Provisions

     27.  We decline to rule here upon the lawfulness of the self-help provisions in NECA's tariff. 
ICTC stated that none of the LECs has "threatened any remedial actions to force collections of (the
USF and LA) charges for ICTC's access services."  Thus, by its own representations, ICTC has not
been harmed, and may never suffer harm, from the tariff provisions it challenges in its petition.  If any
LEC that participates in NECA's tariff actually employs the self-help tariff provisions against ICTC,
ICTC can file a complaint invoking the Commission's mandatory jurisdiction to adjudicate the
lawfulness of those provisions.  We believe generally that it is preferable for the Commission to
determine the lawfulness of tariff provisions in complaint actions under sections 206-209 or tariff
investigations under sections 204-205 -- where the affected carriers are mandatory parties -- rather
than in declaratory rulings.  Thus, we do not rule upon the lawfulness of the self-help provisions here.

     28.  We reject ICTC's contention, however, that Reiter bars the LECs as a matter of law from
invoking the self-help provisions if customers do not pay the USF and LA charges.  Both the self-
help provisions and the USF and LA provisions are set forth in effective tariffs on file with the
Commission.  Under the well-established "filed rate" doctrine -- which was reaffirmed in Reiter --
effective tariff provisions are binding both upon the carrier and the customer until the Commission
or a court of competent jurisdiction finds them to be unlawful.  While the filed rate doctrine sets the
tariffed rate as the "legal" rate, that rate is not necessarily the "lawful" rate; an actual finding by the
agency or a court of competent jurisdiction that the legal rate is unreasonable "disentitle[s] the carrier
to collection of that rate."  In Reiter, the Supreme Court determined that where a collection action
was pending before the court, the court had to consider the customer's claim that the filed rate was
unreasonable before it could order that customer to pay that rate.  Accordingly, Reiter merely gives
the customer a right to have its claim that the filed rate is unlawful adjudicated at the same time the
carrier seeks judicial or administrative enforcement of the filed rate.  Reiter did not hold that a filed
rate is unenforceable simply because a customer makes an unadjudicated claim that the rate is
unlawful.  Nor did Reiter require an advance administrative or judicial determination of lawfulness
as a prerequisite to the carrier's self-enforcement of a tariff provision.  Thus, we hold that the Reiter
case does not render unenforceable the self-help provisions as a matter of law.

            4.  Other Issues

     29.  We also reject the claims of equitable estoppel asserted by ICTC and Communique.  First,
we are doubtful that carriers can be estopped from enforcing or complying with valid tariff
provisions.  Even if this doctrine were applicable, the facts would not support its invocation here. 
Traditionally, equitable estoppel has been used to prevent a party from taking a position that is
inconsistent with earlier conduct when he was aware that his adversary would rely upon the prior
inconsistent conduct, thus causing his adversary to be placed at a disadvantage.  To prove a claim
of equitable estoppel, the aggrieved party must show that he justifiably relied upon the conduct of the
party sought to be estopped, changed his position in reliance, and will suffer injury unless the
adversary is estopped from repudiating the prior inconsistent conduct.   In this case, Communique
and ICTC allege that NECA is equitably estopped from enforcing any of its self-help provisions
against them because NECA failed to invoke disconnection, a self-help option, against another
carrier, Allnet,  for nonpayment of USF and LA charges.  Assuming this allegation to be true, it
does not provide a justifiable basis upon which ICTC or Communique could assume that carriers
would ignore provisions permitting self-help against ICTC or Communique, as set forth in valid tariffs
filed with the Commission.  Nor have ICTC and Communique shown that they altered their own
conduct so as to rely to their detriment on NECA's actions with respect to Allnet.  The only change
in their own conduct alleged by ICTC and Communique is their refusal to satisfy their USF and LA
obligation.  The failure to pay one's lawful debts does not constitute detrimental reliance.  Thus, ICTC
and Communique have not shown that NECA or its members are equitably estopped from invoking
the self-help provisions in question.

     30.  We also reject ICTC's contention that it should not have to pay tariffed USF and LA
charges billed by NECA for the dates at issue because the USF funding mechanism generally is an
allegedly ineffective method of achieving universal service goals and imposes excessive burdens on
the IXCs.  The USF funding mechanism was established by the Commission in a rulemaking
proceeding more than ten years ago and was upheld by the Court of Appeals in Rural Telephone
Coalition, FCC, 838 F.2d 1307, 1316 (D.C. Cir 1988), as a reasonable means of promoting universal
service.  The LECs that participate in the NECA tariff did not act unlawfully by filing and
maintaining tariffs that implement the provisions of Part 36 of the Commission's rules.  To the
contrary, the carriers have an obligation to comply with the Commission's rules until such time as they
are repealed or amended under the procedures set forth in the Administrative Procedure Act. 

     31.  The fact that the Commission in the 1994 Notice of Inquiry initiated review of these
programs does not provide a basis for assuming that these programs are not fulfilling their purposes. 
The Commission reviews its regulatory programs from time to time and the Commission's initiative
in this area does not invalidate existing programs or regulations, or excuse ICTC from fulfilling its
legal obligations to contribute to these funds.  We note that the Commission is in the midst of a
comprehensive rulemaking on universal service.  Thus, the Commission in effect already has
granted ICTC's request that the Commission "revisit the USF policies and programs at this time." 
Further, we reject ICTC's claim that it should be excused from paying USF and LA charges merely
because certain large LECs, such as Pacific Bell, ICTC's only interstate exchange access provider,
may receive USF support.  ICTC states that the fact that large LECs receive universal service funding
support runs counter to the primary purpose of the universal service rules -- to support low and
medium sized LECS in high costs areas.  ICTC misstates the purpose of the universal service fund. 
The universal service fund was established to ensure the delivery of affordable telecommunications
service to all Americans.  During the period at issue, universal service funding was distributed on a
service area basis and was not based on the overall size of the LEC.  LECs received funding for high
cost service areas and did not receive funding for low cost service areas, during the period at issue. 
Thus, during the period at issue, large LECs could receive universal service support for high cost
areas in order to further the Act's universal service goals.  In any event, contrary to ICTC's assertion,
Pacific Bell did not receive any USF support during the period from 1990 to 1995.

     32.  We do not consider it appropriate here to address ICTC's claim that it should be excused
from paying USF and LA charges because NECA's resizing and adjustment procedures allegedly
inflate the amount of USF payments made by IXCs.  If ICTC believes that the rates in the NECA
tariff are unlawful, it may file a complaint pursuant to section 208 of the Act, in which the affected
carriers would be mandatory parties.  The fact that the Commission has initiated review of NECA's
resizing and adjustment procedures in its 1993 Order Designating Issues for Investigation does not
justify ICTC's refusal to pay the tariffed USF charges.  To the extent the Commission subsequently
determines that any portion of these charges is unlawful, carriers that paid them may be eligible for
refunds.

     33.  We also reject ICTC's several contentions that the imposition of the USF and LA charges
violates its right to equal protection under the Fifth Amendment.  ICTC bears an extremely heavy
burden to establish that its treatment violates constitutional equal protection guarantees.  An
administrative "classification that neither proceeds along suspect lines nor infringes fundamental
constitutional rights must be upheld against equal protection challenge if there is any reasonable
conceivable state of facts that could provide a rational basis for the classification." This standard
is a "paradigm of judicial restraint." The Supreme Court has held that "[a] classification does not
fail rational-basis review because it is not made with mathematical nicety or because in practice it
results in some inequality."

     34.  We find no merit to ICTC's argument that its equal protection rights are violated because
in filing tariffs NECA is exercising Title II rights, but is not subject to liabilities under sections 206-
209.  First, NECA is not exercising any Title II rights as a carrier independent of its member LECs. 
Rather, it is the LECs that are exercising their rights through NECA, their agent.  It is not NECA,
but the LECs, the issuers of the tariff filed on their behalf by NECA, that would actually employ the
self-help provisions contained in NECA's tariff.  If any such LEC ever initiated such action, ICTC
would have full recourse to its rights under sections 206-209 to file a formal complaint against that
LEC.  Second, the reason NECA is not subject to liability as a common carrier is that, under Title II,
NECA is not a common carrier.  Consequently, the classification established by our rules are rational
and do not support ICTC's assertions that it is subject to disparate treatment, let alone the type of
invidious discrimination proscribed by the Fifth Amendment.

     35.  We also reject ICTC's argument that its equal protection rights have been violated as a
result of USF and LA charges being assessed only on IXCs with .05 percent or more of the total
nationwide presubscribed lines.  According to ICTC, this scheme "fails to take into account the fact
that the charge per line for ICTC represent a much larger percentage of its revenue per line than the
same charge represents for much larger IXCs."  ICTC's claim that the USF funding mechanism
"disproportionately affects" smaller IXCs subject to USF charges does not colorably establish that
its equal protection rights were violated.  Under the rational basis test, agencies are entitled to
substantial deference when they "engage in a process of line-drawing" in the area of economic
regulation.  As the Supreme Court has stated:

          Defining the class of persons subject to a regulatory requirement --
          much like classifying governmental beneficiaries -- inevitably requires
          that some persons who have an almost equally strong claim to favored
          treatment be placed on different sides of the line, and the fact that the
          line might have been drawn differently at some points is a matter of
          legislative rather than judicial consideration. . . . Such scope of
          coverage provisions are an unavoidable component of most economic
          or social legislation. . . .[The legislature] had to draw the line
          somewhere . . . This necessity renders the precise coordinates of the
          resulting legislative judgement virtually unreviewable. 
               
While Beach involved a legislative classification, courts have recognized that the same deferential
standard applies in evaluating the constitutionality of administrative classifications.   

     36.  The Commission required widespread participation in universal service support, while
recognizing that at some point it would become administratively unworkable for every carrier to
participate regardless of its size.  Accordingly, it adopted a 0.05 percent threshold to reasonably
balance these considerations. Although ICTC may have preferred the Commission to have adopted
a higher threshold for participation (so that it would continue to be exempt from the USF payment
obligation), the line chosen by the Commission has a rational basis.  Any threshold chosen by the
Commission will likely affect some IXCs differently than others, but the Constitution does not
demand that economic regulation affect every common carrier uniformly.  Therefore, under the
deferential standard set forth in Beach, the reasonable threshold set by the Commission for supporting
these programs does not create any equal protection violation.

     37.  Similarly, the fact that USF and LA charges are based on the carrier's number of
presubscribed lines relative to the total number of presubscribed lines nationwide does not create an
equal protection claim.  As previously determined by the Commission, relative shares of presubscribed
lines provide a reasonable basis for allocating contributions to the USF and LA programs. 
Although carriers may experience different average revenues per line, and this may result in higher
or lower relative USF and LA contributions as a percentage of average revenues per line, ICTC has
not shown that assessing USF and LA charges based on the number of lines is inherently inequitable. 
Because there is a rational basis for assessing USF and LA charges based on the relative shares of
presubscribed lines, ICTC has not shown any basis for an equal protection claim on this point.

     38.  We also reject ICTC's contention that the USF and LA charges are an unconstitutional
tax.  Sections 1 and 4(i) of the Communications Act, pursuant to which the Commission established
the USF, do not run afoul of the Origination Clause of the Constitution because they are not revenue
bills that must originate in the House of Representatives.  Courts have held that a "revenue bill" for
purposes of the Origination Clause is a statute whose primary purpose is to raise revenue, "and not
[a bill] for other purposes which may incidentally create revenue." In Rural Telephone v. FCC, the
U.S. Court of Appeals noted the same distinction in determining whether a regulation is a tax.  The
court discussed the contention that the goal of the Commission's universal service program was to
raise revenue and, accordingly, it rejected the carriers' claims that universal service was a tax not
authorized by Congress.  The universal service programs at issue were part of an interrelated set of
programs and rules designed to assure that the costs of universal service are borne efficiently and
equitably by IXCs.  The charge is not rendered a tax by the fact that NECA collects it for the
purpose of distributing universal service cost support.  "The mere fact that a statute raises revenues
does not imprint upon it the characteristics of a law by which the taxing power is exercised." The
Supreme Court has explained that a statute that "creates a particular government program and that
raises revenue to support that program, as opposed to a statute that raises revenue to support
Government generally, is not a' Bil[l] for raising revenue' within the meaning of the Origination
Clause." The primary purpose of the USF and LA programs is to further the goal of promoting
universal telephone service, not to raise general revenues.  During the period at issue, the
Commission crafted its universal service programs to make communications services available to all
Americans at reasonable rates as one of the Commission's obligations set forth in section 1 of the
Act.  The USF and LA charges that NECA collected were dedicated solely to the recovery of USF
costs and funding of LA and Link-Up America.  They were not used for general government
operations. Thus, these programs do not constitute a tax under the standards of Rural Telephone and
other controlling case law.

     39.  We are also unpersuaded by ICTC's argument that the USF and LA charges at issue
are a tax because Congress did not provide an explicit statutory basis for the establishment of
revenues to fund the USF and LA programs.  The Court of Appeals in Rural Telephone expressly
held that the Commission has authority under sections 1 and 4(i) of the Act to establish the USF "to
further the objective of making communication service available to all Americans at reasonable
charges."  The fact that the Congress did not, prior to the Telecommunications Act of 1996,
provide explicit authority to establish universal service programs does not make the universal service
program a tax.  Far from questioning the Commission's authority to provide for universal service
by regulation, section 254 of the Communications Act indicates that Congress recognized and, we
believe, implicitly approved of the preexisting program as a valid baseline to which changes could be
made.  Section 254(a)(1) directs the Commission to "institute and refer to a Joint Board a proceeding
under section 410(c) to recommend changes to any of its regulations in order to implement" universal
service pursuant to sections 214(e) and 254.  In addition, section 254(j) indicates that Congress did
not intend by statute to require changes to the preexisting LifeLine program.  Thus, the 1996 Act
demonstrates that Congress was aware of the preexisting universal service program and intended to
build on that foundation, not erase it.  ICTC has failed to show that the USF and LA collections are
unrelated to the goal of universal service or that the collections are used for other governmental
purposes.  To the contrary, the USF and LA programs and collections contribute to the
accomplishment of our universal service goals by providing assistance to telephone companies
operating in high cost areas and to persons eligible for the LA program.  Thus, we reject ICTC's view
that these programs are a tax.

     40.  We additionally deny ICTC's request for interim relief from any enforcement of the tariff
filed by NECA on behalf of its member LECs.  At such time as any LEC seeks to take enforcement
actions against ICTC or Communique, either carrier may request a stay of any such action. Until
that time, it would be premature to entertain such a request.

     41.  Finally, had Communique's application for review not been dismissed as late filed, we
would in any event have rejected its argument that the Bureau's decision exceeded its delegated
authority.  Communique has failed to show that any of the matters before the Bureau was sufficiently
novel as to exceed the Bureau's authority.  In particular, the Bureau acted within the scope of its
delegated authority in interpreting the Commission's decisions in the Access Charge Order, as well
as in other orders that established NECA and authorized NECA to file tariffs on behalf of its member
LECs and to administer and collect the USF and LA payments.  In any event, any improper
delegation would have been rendered harmless because the Commission itself fully considered these
matters in the instant order.

                     IV.  ORDERING CLAUSES

     42.  Accordingly, IT IS ORDERED, pursuant to section 5(d) of the Administrative
Procedures Act, 5 U.S.C.  554 and section 1.115 of the Commission's Rules, 47 C.F.R.  1.115, that
the Motion for Leave to File Application For Review filed by the Communique Telecommunications,
Inc. d/b/a Logicall IS DENIED.

     43.  IT IS FURTHER ORDERED, pursuant to section 5(d) of the Administrative Procedures
Act, 5 U.S.C.  554 and sections 1.4 and 1.115 of the Commission's Rules, 47 C.F.R.  1.4, 1.115,
that the Application for Review filed by Communique Telecommunications, Inc. d/b/a Logicall IS
DISMISSED as late filed.

     44.  IT IS FURTHER ORDERED, pursuant to section 5(d) of the Administrative Procedure
Act, 5 U.S.C  554 and section 1.8 of the Commission's Rule, 47 C.F.R.  1.8, that the Statement
Withdrawing Comments filed by Frontier Communications Services, Inc., formerly Allnet
Communication Services, Inc. IS GRANTED.

     45.   IT IS FURTHER ORDERED, pursuant to section 5(d) of the Administrative Procedures
Act, 5 U.S.C.  554 and section 1.8 of the Commission's Rules, 47 C.F.R.  1.8, that the Motion to
Strike Statement Withdrawing Comments filed by Communique Telecommunications, Inc. d/b/a
Logicall IS DENIED.

     46.   IT IS FURTHER ORDERED, pursuant to section 5(d) of the Administrative Procedures
Act, 5 U.S.C.  554, sections 4(i), 203, 217, and 303(r) of the Communications Act, 47 U.S.C. 
4(i), 203, 217, and 303(r) and section 1.2 of the Commission's Rules, 47 C.F.R.  1.2, that the
Petition for Declaratory Ruling and Interim Relief filed by InterContinental Telephone Corp. IS
DENIED.


                              FEDERAL COMMUNICATIONS COMMISSION



                              Magalie Roman Salas
                              Secretary
     
                     SEPARATE STATEMENT OF
              COMMISSIONER HAROLD FURCHTGOTT-ROTH

      Re: In the Matter of: Communique Telecommunications, Inc. d/b/a Logicall Application for
     Review of the Declaratory Ruling and Order Issued by the Common Carrier Bureau.

     I support today's Order denying the petition for declaratory ruling and interim relief, but
write separately to clarify one concern.  Intercontinental Telephone Corporation's petition had
argued that the Commission's pre-1996 Telecommunications Act universal service scheme was an
unconstitutional tax.  This Order rejects that contention.  I write separately merely to point out
that the issue raised by the petitioner is distinct from a similar issue that I have raised previously. 
As I have described on several occasions, I believe that the universal service contributions relating
to the schools and libraries program, at least to the extent  they are providing support for non-
telecommunications services to non-telecommunications carriers, may not be fairly characterized
as mere "fees" and are unconstitutional "taxes."  These issues, however, were not raised in the
petition.  


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