Judge Disarms Two Goliaths in Transcom vs. AT&T Case
Court backs Transcom’s status as enhanced services provider and rejects SBC’s contention
IRVING, Texas – May 11, 2005 – Two giants, AT&T and SBC, ganged up on the little guy, Transcom, but this time the little guy won. The United States Bankruptcy Court in Dallas ruled in favor of Transcom and against SBC and AT&T on Transcom’s status as an enhanced services provider (ESP), paving the way for Transcom to resume its service agreement with AT&T and giving Transcom the validation it needs to continue doing business.
“For months we have been held hostage by SBC’s intimidation. They had been telling all Transcom customers and suppliers that we did not qualify for the ESP exemption and to stop doing business with us,” said Transcom CEO Scott Birdwell. “This ruling gave us the vindication we needed to continue doing business by offering quality services to our customers. SBC did considerable damage with their tactics, but we’re still here and ready to serve our loyal customer base.”
The saga began in April 2004 when the FCC ruled that a specific service offered by AT&T did not qualify for the ESP exemption. SBC used this AT&T ruling against legitimate ESPs, like Transcom, alleging that they were acting unlawfully. SBC pressured AT&T and other Transcom vendors and customers to stop doing business with Transcom. Coincidentally, right before the announced merger with SBC, AT&T asked Transcom to produce a ruling on their status within a period of days. Transcom was forced to seek the protection of the bankruptcy court due to SBC’s economic pressure and predatory practices. As part of the bankruptcy process, Transcom sought vindication of its position that it was an ESP entitled to the exemption, and the court agreed. In its ruling the Court clearly outlined the unique factors that qualify Transcom for the ESP exemption.
“The next step for us is to let our customers and suppliers in on the good news,” Birdwell said. “As we always have maintained, competition and innovation is a good thing, and with this ruling, our customers and suppliers can feel safe doing business with us again.”
With the pending mergers between both AT&T and SBC and Verizon and MCI, there is a growing concern that competition in the market place will be quashed and innovation cast to the side. This was evidenced by the testimony of a group of competitive local exchange carriers to the Senate Judiciary Committee last month where it was estimated that the two giants will control 80 percent of the market.
“SBC was acting in a monopolistic fashion with us – like a big bully, to put it more plainly,” adds Birdwell. “We bring an innovative solution to the market, and we are taking away customers from SBC. SBC can’t drive us out of business, and with this new ruling, we are here to stay. On a bigger scale, we feel like this was a victory for free enterprise and for the little guy.”
About Transcom Enhanced Services
Transcom Enhanced Services (TES) is a leading enhanced service provider specializing in the modification of the form and content of telephone calls and other communications to improve bandwidth efficiency, reduce costs and facilitate the development and provision of advanced applications. Established in 2003, TES uses state-of-the-art technology and a secure, privately managed packet-switched network to deliver cost-effective custom voice-over-IP solutions and converged IP applications to carriers and enterprise customers all over the world. More information is available at
http://www.transcomus.com/.
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Timeline of events:
September 23, 2003 Ex Parte evidence submitted by Transcom in the AT&T petition distinguishing its services from those of AT&T
April 21, 2004 FCC rules that a specific AT&T service does not qualify for the ESP exemption, but reserves judgment on other, different services.
May 27, 2004 Transcom service is certified to AT&T as enhanced/information service per AT&T requirements.
July 22, 2004 AT&T announces it will no longer take local customers.
September 23, 2004 SBC sues Transcom and other companies for back access charges.
October 15, 2004 AT&T told Transcom that it had been contacted by SBC; Transcom requested copies of the documentation and AT&T refused to provide the information.
October 29, 2004 Transcom makes a presentation to SBC affirming Transcom’s ESP standing
January 24, 2005 AT&T sent letter to Transcom stating that SBC had again contacted them and provided information that made it appear Transcom was violating their local services agreement.
January 26, 2005 Transcom responded, again asked for the information provided by SBC and reinforced its status as a legitimate ESP. AT&T again refuses to disclose the information it later uses as a basis to refuse service to Transcom.
January 28, 2005 AT&T demanded Transcom produce either a ruling from a regulatory authority or court on their status or a letter from SBC stating they were terminating traffic lawfully by February 4, 2005.
January 28, 2005 AT&T demanded that disputed billings be paid and a six-figure deposit made within 48 hours or their relationship would be immediately terminated; this demand was in violation of the original agreement between AT&T and Transcom.
January 31, 2005 SBC announced its intention to purchase AT&T.
February 1, 2005 Transcom told AT&T that it was ready to respond to allegations and willing to work to resolve any issues if it only knew what questions it had to answer.
February 2, 2005 AT&T declared Transcom in default because of non-payment of disputed billings and deposit.
February 14, 2005 AT&T suspends service with Transcom.
February 18, 2005 Transcom declares Chapter 11 bankruptcy because of pressure from SBC suit and AT&T suspension.
April 28, 2005 United States Bankruptcy Court for the Northern District of Texas rules that Transcom is, in fact, an enhanced services provider, rejecting AT&T and SBC’s claims to the contrary.
