The US District Court for the Northern District of Texas (Dallas Division) dismissed with prejudice lawsuits filed by long distance carriers against hundreds of LECs. Sprint Services and MCI Communications Services / Verizon Select Services alleged that the LECs continued to charge access fees on intraMTA wireless calls and that this was a violation of federal law. They also claim state-law breach of contract. In their opinion, the court found the long distance giants failed to plead plausible claims in dismissing the federal-law claims with prejudice. It will allow the carriers to replead their state law claims.
Background. IntraMTA wireless calls exchanged between LECs and wireless (“CMRS”) providers have been subject to reciprocal compensation since February 8, 1996. Long distance providers have recently alleged that some of the traffic they deliver to LECs is actually intraMTA wireless. In many cases, the IXCs have withheld some portion of access charges based on their own calculation of the percentage of minutes which they determine to be intraMTA. This self-help was their method to address current traffic, but the litigation was the tool by which they could seek refunds of amounts previously paid to LECs.
The Decision. Basically this boiled down to a case of whether the court agreed that any intraMTA wireless call was “local” for intercarrier compensation purposes, and whether that status also applied to IXCs that were part of the call routing. The court found that IXCs were always subject to access charges for this type of traffic, and nothing the FCC has done since February 8, 1996 has expressly changed this arrangement. The changes made to implement the intraMTA rule were specifically addressing non-access traffic. Access traffic – like that handled by the IXCs was not altered.
ICORE Opinion. This courts provided what seems like a rare win for the LEC industry. While leaving the door open for repleading the state law claims and continuing to allow “aggregators” to possibly avoid access charges, the court ruling harms the IXCs – particularly those currently employing self-help remedies. Even if they choose to not appeal this decision, smart money would have the IXCs rebrand themselves as “aggregators” in their ongoing attempts to avoid access charge payments. For more information, contact Chris Ulmer at 610-928-3903 or via email to culmer@icorellc.com.
