Halo Wireless Defeated in Missouri, Faces Further Investigation

"There is a possibility that Halo has violated Missouri regulations above and beyond what is in the complaint,” Missouri PSC Chairman Kevin Gunn said in an interview Wednesday. The PSC will continue to examine Halo and Transcom Enhanced Service’s lack of certification and legal problems, the order said. Transcom is another Texas-based company with what the order calls “overlapping ownership” and direct partnership in the condemned actions. “The Commission will direct its Staff to complete an investigation into any unlawful actions by Halo and Transcom and to file a complaint seeking penalties if the results of Staff’s investigation support such action,” the PSC said. The problems with certification are “Missouri-specific,” and are a part of the reason the commission has the authority to enforce against Halo, Gunn told us. “We don’t do a lot of stuff in the telecom world anymore because we've been deregulated."

The order “authorizes and directs the Respondents [local exchange carriers] to immediately begin blocking Halo’s traffic.” The commission judged Halo’s interconnection agreement with AT&T Missouri to be “discriminatory and contrary to the public interest,” it said. In June, Halo defended itself before the Missouri commission with extensive testimony (http://bit.ly/T3m4Fp) by then-Chief Operating Officer Russell Wiseman, who recently left the company. The commission should “look past the baseless allegations, gross distortions, and abject hyperbole” of Halo’s opponents and recognize “that Halo interpreted and applied telecommunications laws and rules in a novel, but legal way, in order to bring real tangible value to Missouri consumers” (http://bit.ly/Nm5wnf). As Halo converted July 19 to Chapter 7, “I am no longer an authorized representative of the company,” Wiseman told us. Halo declared Chapter 11 bankruptcy in August 2011, which courts ruled in June shouldn’t stop state commissions from pursuing Halo (CD July 30 p5). Neither Halo nor Transcom commented.

AT&T has pursued Halo in multiple state commissions for allegedly violating an interconnection agreement by avoiding access charges, although in Missouri Halo was first to bring the issue before the state commission. Halo filed a complaint in April “in response to the traffic blocking requests made by the RLEC Respondents and AT&T Missouri” and the carriers responded with their own concerns, the order said. The PSC staff and commissioners failed to see Halo’s complaint as valid and officially denied it. “Numerous LECs argue that Halo Wireless, Inc. ('Halo'), together with an affiliated company called Transcom, is engaged in an access charge avoidance scheme wherein it routes a landline call onto a wireless network, allegedly ‘enhances’ it, then returns it to the landline network, having changed the accompanying data so that the origination of the call is misidentified,” Missouri PSC staff said in a July 23 brief (http://bit.ly/MRD7vi). “Halo asserts that this ‘wireless-in-the-middle’ or ‘enhanced-services-in-the-middle’ call routing changes the nature of the call into a wireless or enhanced services call, a position with which the LECs and the Staff most strenuously disagree.” The Wednesday order said the FCC “expressly rejected Halo’s ‘wireless-in-the middle” argument.'” The PSC agreed with staff’s recommendation that Missouri’s rural carriers block Halo and Transcom traffic immediately and receive any damages they're entitled to for unpaid access charges, that AT&T Missouri be excused from the “breached and unenforceable” interconnection agreement and that the commission judge Transcom and Halo to be operating in Missouri without “requisite certification."

"I am fine with the order,” said Missouri Commissioner Terry Jarrett at Wednesday’s PSC meeting. He said he has a “serious concern that they may have violated our law.” The commissioners considered the bankrupt state of Halo and the implications that may have for its ability to pay penalties and noted that Transcom is still operating within Missouri without any certification. The four Missouri commissioners unanimously approved the order and the further investigation into Halo’s potential violations.

The order questioned Halo’s assertions. “Halo presented no call analysis to support its claims, nor did it present any evidence of how much of the traffic it delivers (if any) originates on wireless devices with CPNs that the LERG shows as landline,” it said. The commission said AT&T Missouri has “has met its burden to proof the allegations within its counterclaim by the preponderance of the evidence.” The Wisconsin Public Service Commission ruled against Halo July 27 and said AT&T Wisconsin should be entitled to pursue Halo for violating its agreement and that Halo should pay access charges (CD July 30 p5). AT&T Missouri submitted the Wisconsin decision to the Missouri PSC in a notice of supplemental authority (http://bit.ly/Mc2JNh) on the same day it was issued. The Missouri ruling is overall quite similar to that of Wisconsin and continues a battle between Halo and AT&T being played out in several other state commissions.

Missouri’s commissioners were “all on the same page” throughout the process, Gunn said. It’s “a thorough order,” he said, which “speaks for itself” and has “a good record on which to base” its findings after “extensive” hearings.