Cbeyond Files Suit Against Verizon, Alleging ‘Re-Rate’ of Tariffs
Cbeyond Communications has filed a breach-of-contract suit against Verizon, alleging that Verizon “unilaterally” lowered its intercarrier compensation rates. Verizon owes $900,000 dating to last August and costs “are continuing to increase,” Cbeyond said in its suit, filed in federal court in Atlanta on Tuesday. Verizon declined to comment for this story, but in January the company announced a deal with Bandwidth.com that charges Bandwidth.com $0.0007 to connect voice over Internet protocol calls. That’s the same rate Cbeyond claims Verizon is now paying to connect Cbeyond VoIP. Verizon told Cbeyond that it was “re-rating” the tariffs last August, Cbeyond’s lawsuit claims.
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At least three other IP-based CLECs are locked into similar disputes with Verizon, Cbeyond General Counsel Bill Weber told us. “I wouldn’t be surprised if there are other suits,” he said. Verizon hasn’t said what its counter-argument is, but in its negotiations with Cbeyond it has forwarded two court decisions -- Paetec Communications v. CommPartners LLC, No. 08-0397 in the D.C. Circuit and Manhattan Telecom v. Global Naps, No. 08-3829 from the Southern District of New York -- in which VoIP was not subject to intercarrier comp tariffs, Weber said. Cbeyond doesn’t do business in either district, Weber added.
"Fundamentally, this dispute and disputes like this one … all arise out of the fact that the FCC has never classified VoIP despite the fact that they've been asked to do it seemingly dozens of times,” Weber said Wednesday in a phone interview. In January, when the Bandwidth.com deal was announced, Stifel Nicolaus analysts predicted that Verizon was “looking to put downward pressure on intercarrier compensation in the marketplace” in “the absence of reform.” “The existence of such deals with low VoIP rates could help Verizon make arguments for why rural carriers … should be willing to back proposals to drive down access charges and other ICC rates through a regulatory glide path,” Stifel analysts wrote.
VON Coalition Executive Director Glenn Richards declined to comment on the Cbeyond lawsuit, but said he expected the FCC will deal with VoIP traffic soon. “A bill and keep system or a transition that moves rates closer to zero will go a long way toward ending these disputes between carriers concerning IP traffic,” Richards said.
But the FCC’s pending rulemaking notice that deals with intercarrier comp -- and is asking how to treat VoIP -- also “discouraged companies from self-help in the intercarrier comp area while the NPRM is pending,” Weber said. FCC spokesman Mark Wigfield declined to discuss Cbeyond’s lawsuit, but he said that “one of the primary purposes of intercarrier compensation reform is to reduce arbitrage-related disputes and litigation, which will free up resources for investment and innovation that will ultimately benefit consumers.”