Sprint has found an unlikely ally in Verizon, which has asked an appellate court to nullify a lower court decision that requires the service provider to pay CenturyLink $12.5 million in unpaid local VoIP connection fees.
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In a court decision, U.S. District Judge Robert James sided with CenturyLink and ordered Sprint the fees to the telco’s local units after Sprint refused to pay fees for connecting VoIP calls to local networks.
According to Law360 (sub. req.), James’ decision favored CenturyLink's claims that Sprint was obligated to pay federal and state telecommunications taxes for the use of local telephone network facilities to complete long-distance calls.
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.
Verizon said in its brief to the U.S. Court of Appeals for the Fifth Circuit 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.
According to Verizon, the FCC has jurisdiction to adjudicate claims that a carrier has violated the Communications Act, but not those that a carrier-customer has violated a carrier-provider’s tariff through non-payment.
“The district court’s decision not only conflicts with on-point FCC precedent, but also is contrary to standard practice within the communications industry," Verizon said in its brief. “A carrier-customer often withholds payment on current invoices in order to offset its past payment of earlier-invoiced tariffed charges that it later disputes. Verizon does so as a carrier-customer purchasing tariffed services; its carrier-customers do the same when they dispute charges Verizon bills under its own tariffs. The decision … would upset that well-settled practice and create considerable uncertainty in the communications industry."
CenturyLink was quick to dismiss Verizon’s claims, saying that the service provider did not provide any compelling evidence to back up its argument.
“'Standard' or not, such ‘self-help’ has been uniformly condemned by the FCC, state public utility commissions, and at least one other U.S. Court of Appeals," CenturyLink said. “The questions of law to be decided by this court have nothing to do with whether the district court’s award of attorneys’ fees in this case would ‘disrupt well-accepted practices in the communications industry.'"