In a victory for the Local Exchange Carriers (LECs), last week the U.S. District Court for the Northern District of Texas, Dallas Division, ruled that the LECs’ access charges were lawful and dismissed the lawsuits filed by the interexchange carriers (IXCs). JSI has been assisting clients since early 2014 with these “intraMTA” billing disputes involving wireless calls that have been routed via an IXC and originate and terminate within the same Major Trading Area (MTA). In these disputes, the IXCs claim that these calls should fall under the bill-and-keep intercarrier reciprocal compensation mechanism and seek reimbursement for any access paid. Two of the IXCs, Sprint and Verizon, filed lawsuits in several states against LECs. In some cases, these and other IXCs have been withholding payments for the portion of the bills that they claim are not legitimate.

Lawsuit Arguments

In the lawsuits, Sprint and Verizon erroneously argued that because FCC rules do not allow access to be charged between LECs and wireless carriers for intraMTA calls, LECs therefore are not allowed to charge IXCs access on wireless intraMTA calls delivered to and from IXCs. The LECs, on the other hand, said that Sprint and Verizon must pay the access charges because the intraMTA calls are included in access tariffs filed with the FCC (otherwise known as the “filed rate doctrine”).

The federal court agreed with the LECs and found that while the FCC’s 1996 Local Competition Order prohibits LECs from imposing access charges on wireless carriers, nothing in that order “explicitly supersedes” the access charges that LECs impose on IXCs. The court also found that in the USF-ICC Transformation Order, the FCC only “clarified” payment arrangements between LECs and wireless carriers and did not address payment arrangements between LECs and IXCs for intraMTA wireless traffic. The court concluded that Sprint and Verizon “have pointed to no FCC regulation that explicitly supersedes the authority of LECs to impose such access fees.”

The court also dismissed Sprint and Verizon’s claims that state tariffs do not allow access charges for intrastate intraMTA calls. The court found that the IXCs did not provide any provisions of state law, federal law or a specific filed state tariff that prohibit the intraMTA access charges on intrastate calls. The court, however, gave Sprint and Verizon an additional 28 days to file more specific claims citing actual state laws or state tariff in individual states.

The court concluded by addressing a separate motion filed by AT&T which sought to dismiss or stay the cases pending referral to the FCC. The court ruled that such action was not necessary as “there are no substantial issues for the FCC to decide.” The court then affirmed its ruling by stating, “LECs are entitled to rely on the filed rate doctrine because it is lawful under federal law to charge IXCs access fees for access services that the LECs provide to enable the IXCs to exchange interstate wireless intraMTA calls.” Since the lawsuits were consolidated to the district court, this decision applies to all states.

What now?

This is a big win for LECs. Although Sprint and Verizon likely will appeal the decision to the 5th U.S. Circuit Court of Appeals and may request a stay by the appellate court, the district court’s strong ruling provides firm ground for LECs to argue that the intraMTA carrier billing disputes by IXCs are not valid. Sprint and Verizon have 30 days to appeal the decision or request reconsideration. Assuming the decision stands, Sprint and Verizon are liable for the access charges for all the intraMTA calls.

If you have any questions or would like any assistance with next steps, please contact Valerie Wimer at 301-459-7590 or Lans Chase at 770-569-2105.

Source: JSI e-Lert