Cellexis International Inc. said it has filed a formal complaint with the Federal Communications Commission against Bell Atlantic Nynex Mobile after it notified the prepaid cellular reseller of its intention to terminate interconnection and introduced its own prepaid service.
Cellexis also has filed a motion asking the FCC to bar Bell Atlantic Nynex from disconnecting the company from the network until a ruling is made.
Cellexis currently provides prepaid cellular service to customers in the Washington, D.C./Baltimore area by interconnecting its switch to Bell Atlantic Mobile’s network. In October, Bell Atlantic Nynex notified Cellexis of its intention to disconnect the Tempe, Ariz.-based reseller from its network on Feb. 19, said Cellexis. Bell Atlantic Nynex this fall introduced its own prepaid cellular service at 99 cents per minute, confirmed Jim Gerace, director of public relations for Bell Atlantic Nynex. Cellexis said it has been charging 49 cents per minute for its service.
“Bell Atlantic Nynex Mobile cannot succeed in selling its own prepaid service at $1 per minute unless its eliminates competition from Cellexis at 49 cents per minute,” said Cellexis President Doug Fougnies. “This is why we believe Bell Atlantic Nynex Mobile is cutting off our interconnection.” The company’s “attempt to shut out Cellexis demonstrates the potential for anticompetitive conduct when Bell Atlantic (Corp.) and Nynex (Corp.) merge,” Fougnies added.
In November 1995, Cellexis said it became an authorized reseller for the Washington/Baltimore area after Bell Atlantic Nynex urged the company to offer its prepaid product there. According to Cellexis’ complaint, Bell Atlantic Nynex attempted to limit the scope of the reseller agreement to a 90 day trial period through an addendum. The company said it would not agree to the new terms, prompting Bell Atlantic Nynex to notify Cellexis it was terminating Cellexis’ right to use its system. Cellexis brought suit in U.S. District Court for the District of Columbia, and in February 1996, entered into a Memorandum of Understanding with Bell Atlantic Nynex in an effort to end the dispute, said the complaint. The MOU called for Cellexis to further enter into a service trial agreement with Bell Atlantic Nynex for a period of one year, which ends Feb. 19.
“We had a trial going with Cellexis. That trial came to an end, and we then decided not to proceed any further,” said Gerace. “We satisfied the obligations of the agreement with Cellexis … We have no obligation to interconnect.”
Not so, says Cellexis, which claims the Bell operating company has violated the Communications Act and the Telecommunications Act of 1996. Cellexis has contended in its complaint that Bell Atlantic Nynex’s refusal is discriminatory under the Communications Act because Bell Atlantic Nynex interconnects equipment to its own system to provide prepaid services and the company allows other third parties to interconnect to the mobile telephone switching office. Bell Atlantic Nynex’s action also violates the Telecommunications Act because Congress imposed a mandatory obligation on all telecommunications carriers, including commercial mobile radio carriers, to interconnect directly or indirectly with other telecommunications carriers, the complaint said.
Bell Atlantic Nynex said it could not comment on Cellexis’ allegations, but according to the complaint did state in a December letter to Cellexis that it believed it was not in violation of the Communications Act or FCC policy.
Cellexis said it has attempted to make interconnection agreements with other carriers in the Washington/Baltimore area. The reseller recently filed a complaint against Southwestern Bell Mobile Systems for its denial of interconnection, and efforts to negotiate an agreement with Sprint Spectrum L.P. have similarly failed, said Cellexis.
NextWave Telecom Inc., which won 63 C-block personal communications services licenses at auction, recently entered into a definitive agreement to sell Cellexis 5 billion minutes of airtime during the next 10 years from its network. One of NextWave’s markets includes the Washington/Baltimore area, but the company may not activate that market before February.
“If NextWave is successful, that’s when Bell companies will find out about competition,”said Fougnies. Bell companies don’t want to give anyone the ability to compete, he added. “I can compete with an interconnection. If you’re not interconnected, you don’t even have a product.”
Cellexis said it has invested heavily in bringing its prepaid service to the Washington/Baltimore market. Re-entering the market at a later date will be impossible, it said.
Cellexis currently provides prepaid service to Boston, Phoenix and Tucson, Ariz., Albuquerque, N.M., Denver, Salt Lake City, Seattle and San Francisco.