In a somewhat unusual case, the FCC tried to convince a U.S. Appe...
In a somewhat unusual case, the FCC tried to convince a U.S. Appeals Court, D.C., panel Mon. that it had properly interpreted a pair of interconnection contracts that dated back to 1996 while acting on behalf of the Va.…
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State Corp. Commission (VSCC). The oral argument before Chief Judge Douglas Ginsburg and Judges Judith Rogers and David Tatel focused on the complex issue of how to determine whether calls were local, and thus subject to reciprocal compensation. The case stemmed from an appeal by Starpower Communications of an FCC decision that those contracts didn’t require Verizon to pay reciprocal compensation to Starpower for Internet-bound calls. The FCC had preempted an VSCC in ruling on the dispute because the state regulators chose not to act. To add to the complexity, Starpower wasn’t one of the original parties in negotiating the contracts. The company had opted into existing contracts between Verizon and 2 other companies, MCI and MFS, that required the FCC to try to interpret the intent of those parties when they negotiated the original contracts. Starpower opted into the MFS contract in 1998 and, when that contract was terminated, in late 1999 entered into an MCI contract. The basic question was whether the contract language, as well as Va. law and precedent, supported the FCC’s decision to bar the payment of reciprocal compensation for those calls. The FCC had ruled that Internet-bound calls were interstate in nature and the contracts called for reciprocal compensation payments only for local calls. FCC attorney Richard Welch argued that the contract language used Commission terms such as “end-to-end” in describing the test for whether a call was local or interstate, making it clear the contract deferred to the FCC’s view of the jurisdiction of an Internet call. The agency has used these terms for a long time and their meaning is clear to many in the industry, the agency contended. However, the judges asked whether the FCC action had been true to earlier rulings by the VSCC and other states, some of which were in favor of reciprocal compensation payments for local calls. One of the issues raised by parties was whether the FCC, because it was filling in for the state commission, had to follow state law, Ginsburg said.