A few months ago, AT&T sued IDT Corp. for failing to pay access charges allegedly due on local-dialed prepaid calling cards. As we expected, IDT has moved the court to stay, or in the alternative, dismiss, AT&T’s action. IDT contends that the FCC, not the court, should decide whether access charges apply to this type of call. In a strategic move, IDT seeks a stay of the case, rather than referral of AT&T’s complaint to the FCC for resolution.

The case bears watching because AT&T appears to be using the IDT litigation as a test case before proceeding with actions it has threatened against other providers. If IDT is successful, AT&T likely will have to present its case directly to the FCC, perhaps by filing a petition for declaratory ruling, or maybe by bringing a formal complaint before the Enforcement Bureau. Alternatively, AT&T may switch approaches and seek to recover access charges from the CLECs to whom it hands off the calls.

In the meantime, AT&T has continued to send monthly demands to prepaid card providers, allegedly calculating the amount of access charges due from the carrier. We are not aware of any other cases AT&T has filed against prepaid card providers. Yet.

Follow the jump for a discussion of the pleadings on IDT’s motion.

In its motion, IDT criticizes AT&T’s lawsuit as “a transparent attempt to use litigation to undermine ongoing regulatory proceedings pending before the FCC.” Citing to the Arizona Dialtone petition for reconsideration, which remains pending, IDT seeks a stay until the FCC resolves the issues “within the greater framework of its other carrier compensation-related decisions.” Notably, IDT seeks a stay, rather than referral of the complaint to the FCC. IDT thus joins AT&T in avoiding asking the FCC to resolve the claim.

As an alternative, IDT claims that AT&T’s complaint should be dismissed for failure to plead a claim on which relief can be granted. In this portion of its motion, IDT attacks AT&T’s tariff-based theory of recovery. IDT notes that AT&T fails to cite any specific tariff provisions that it breached, and asserts that AT&T has not alleged that IDT subscribed to any AT&T access service.

AT&T’s opposition claims, as AT&T has asserted in disputes with other prepaid card providers, that the FCC has “conclusively decided” that access charges apply to prepaid cards, so there is no reason for a stay. AT&T reads the June 2006 Prepaid Calling Card order as establishing a comprehensive order mandating access charges for all types of prepaid calling card traffic.

Regarding IDT’s motion to dismiss, AT&T both claims that the violation is in trying “to evade the AT&T LECs’ switched access tariffs altogether” and that IDT has “constructively ordered” service under its tariff.

In the reply brief, IDT does a good job responding to AT&T’s constructive ordering claim. Pointing out that IDT receives service from CLECs, not from AT&T, IDT claims it could not have constructively ordered service from AT&T. IDT relies on precedent from Advamtel involving CLEC access charges that AT&T (operating as an IXC) refused to pay. IDT asserts that the requirements for constructive ordering are not satisfied because IDT has not interconnected with AT&T and AT&T delivers service to a third party, not to IDT’s “premises” as required under the tariff.

Briefing was completed on December 29. We will be watching for further developments.

Prepaid Card Provider Seeks Stay, Dismissal of AT&T Access Charge Suit