LECs, IXCs Push FCC To Rule Their Way on IntraMTA Payment Dispute

The LEC Coalition -- which includes incumbent LECs and CLECs, some cable-owned -- urged FCC officials to rule that IXCs aren't entitled to local reciprocal compensation arrangements and must pay higher long-distance access charges when using LEC access trunks to connect traffic to mobile/commercial mobile radio services (CMRS) carriers within an MTA, said an ex parte filing posted May 18 in docket 14-228. “Considering the disruption to the industry and potential dollars at stake, we’re hopeful the FCC will act soon,” a LEC official told us.

Level 3, Sprint and Verizon/MCI -- the IXCs battling with the LECs -- met with some of the same FCC officials recently to ask the agency to “reiterate” that its intraMTA rule for LEC-CMRS reciprocal compensation “applies to all traffic exchanged between a LEC and a CMRS provider in the same MTA, regardless of whether an IXC is involved,” said a Sprint ex parte filing in the docket. The FCC, Level 3, Sprint and Verizon had no comment for this story.

The FCC in 2011 ordered intercarrier compensation rates be phased down to zero, but access charges are still generally higher than reciprocal compensation rates as the transition continues.

Sprint and Verizon have filed dozens of lawsuits over intraMTA traffic in the last year making monetary claims, including seeking retroactive payments, against hundreds of LECs in federal courts around the country. The LECs responded by filing motions to dismiss the suits. "These claims are contrary to decades-long, well-established practices followed by the entire industry, including the very same companies making the claims," Eric Einhorn, Windstream senior vice president-government affairs, told us.

U.S. District Court in Cedar Rapids, Iowa, referred the issue to the FCC in October, but the U.S. Judicial Panel on Multidistrict Litigation consolidated the cases in U.S. District Court in Dallas. Briefing in the consolidated case will be completed by July and the judge plans oral argument in August or September, the Sprint filing said. In their dismissal motions, the LECs and AT&T suggested the courts seek an FCC opinion. “I'd bet heavily that it gets referred to the FCC," a LEC attorney said. "It's a complicated issue affecting the entire industry. Why wouldn't the court want to know the FCC's view?"

The LEC Coalition in November filed a petition for declaratory ruling asking the FCC “to confirm” that the intraMTA rule -- under which calls within an MTA (the country is divided into 51 of them) exchanged between LECs and CMRS mobile carriers are subject to reciprocal compensation -- doesn't apply to LEC charges to IXCs exchanging traffic with LECs via tariffed switched access services.” Petitioners asked the FCC to rule against IXC attempts to “misapply the intraMTA rule to avoid paying access charges and to claim entitlement to substantial retroactive refunds.” The LECs said Level 3, Sprint and Verizon have little backing and even they "cannot explain why they voluntarily paid access charges for years for purported intraMTA traffic in spite of their (newfound) contention that such charges are unlawful.”

If the FCC sides with the IXCs, it should do so prospectively only because a "retroactive change in widespread industry practice would be contrary to law [and] manifestly unjust," the LECs said. Rural groups are adamant the FCC disallow IXC retroactive refunds or damages, given past IXC practices, the absence of prior IXC notice for the change, and the lack of current IXC cooperation in identifying intraMTA traffic, said a WTA ex parte filing. The LEC attorney thought the FCC would be reluctant to upset past LEC access revenues, given the disruption it could cause, particularly for small rate-of-return carriers that could demand offsetting compensation.

Level 3, Sprint and Verizon cited FCC 2011 intercarrier-compensation changes that said the intraMTA rule covers "all traffic exchanged between a LEC [and] a CMRS provider that originates and terminates in the same MTA … regardless of whether the two end carriers are directly connected or exchange traffic indirectly via a transit carrier.” They also said a 2007 8th U.S. Circuit Court of Appeals ruling in Alma Communications Co. v. Missouri PSC “explodes" LEC arguments that IXC-connected intraMTA calls are long-distance calls, and said LEC petitioner reply comments effectively “concede" the intraMTA rule applies when a LEC-originated call is carried by an IXC to a wireless provider. “That concession is fatal" to LEC arguments for receiving higher access charges for identical calls going from mobile to LEC networks,” they said.

"They've got their orders and precedent, and we've got ours," responded the LEC attorney: "But we're right."

AT&T wants the agency to act “as quickly as possible.” The company said granting the LEC petition would be consistent with 19 years of IXCs paying LECs access charges for intraMTA traffic. But AT&T said if the FCC takes that approach, it should issue a narrow ruling so it doesn't encourage parties to engage in “access stimulation,” whereby IXCs are hit with access charges for creative LEC traffic routing. If the commission sides with the IXCs, AT&T said it should apply the ruling only prospectively, and only to the extent IXC and mobile providers can verify the intraMTA traffic.