Sprint ordered to pay $13.7M to CenturyLink for VoIP call termination fees

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The U.S. Court of Appeals for the Fifth Circuit affirmed the judgment in favor of CenturyLink in the amount of $13.7 million, plus post-judgment interest.

Sprint has been ordered by the U.S. Court of Appeals for the Fifth Circuit to pay $13.7 million to CenturyLink in unpaid call termination fees, striking another blow to the company’s effort to use FCC rules to not have to pay smaller service providers to connect consumer VoIP calls.

The U.S. Court of Appeals for the Fifth Circuit affirmed the judgment in favor of CenturyLink in the amount of $13.7 million, plus post-judgment interest, for underpaying the telco to connect VoIP calls.

In delivering its decision, the Fifth Circuit argued that it wasn’t right that Sprint paid CenturyLink’s CenturyTel unit for VoIP calls via “steeply discounted” connection rates rather than paying standard telephone connection rates established by state regulators and the FCC.

RELATED: Verizon sides with Sprint in $12.5M CenturyLink VoIP dispute

“We are pleased with the Fifth Circuit’s decision, and we think the Court got the analysis just right,” said Michael Lockerby, the lead attorney for CenturyLink, in a statement.

"The Fifth Circuit’s decision is the first appellate decision concerned the compensation owed for interstate Voice over Internet Protocol calls, an issue that the telecommunications industry has debated for years," according to the statement.

Beginning in 2009, Sprint stopped paying CenturyTel tariffs to connect users’ VoIP calls in various states such as Missouri and Louisiana. Instead, the service provider paid lower rates that the FCC designed for ISP-bound calls.

According to Foley & Lardner, which represented CenturyLink in this case, Sprint based its position on a new interpretation of telecommunications regulations—an interpretation with which CenturyLink did not agree.

By unilaterally lowering the rate it would pay for connecting VoIP calls to CenturyLink's local telephone networks to 7 cents per minute, CenturyLink argued that Sprint violated the Communications Act. Sprint countered that it used a “self-help" means of recovering the difference between 7 cents per minute and the charges previously paid to CenturyLink.

The Fifth Circuit rejected those lower rates, arguing that Sprint should have paid traditional tariff rates for VoIP calls. Additionally, the court said that Sprint acted unreasonably in trying to get back millions of dollars from CenturyTel for VoIP connections it made before 2009.

Neither Sprint nor CenturyLink would provide a comment to FierceTelecom about the settlement.

Interestingly, Sprint previously received support from Verizon. Verizon said in a brief filed at the U.S. Court of Appeals for the Fifth Circuit in October 2016 that the FCC precedent points to the fact that if a customer fails to pay what it owes under a carrier’s tariff, it does not violate the Communications Act, even when that customer is a carrier. The telco added that this is why service providers can’t file complaints at the FCC when they want to collect unpaid amounts billed under tariffs. At that time, CenturyLink dismissed Verizon’s claims, pointing out that the service provider did not provide any compelling evidence to back up its argument.

This is the second blow Sprint has been dealt with over the VoIP connection issue. Earlier in June, the U.S. Court of Appeals for the Eighth Circuit upheld an Iowa district court’s finding that the Iowa Utilities Board could approve and enforce VoIP connection rates that Windstream was seeking from Sprint.