Supreme Court Confirms the FCC's Ability to Interpret the Scope of its Own Authority and Allows the Antenna Siting Application "Shot Clock" To Remain in Effect

In a much anticipated decision with potentially widespread ramifications across all federal agencies charged with implementing federal statutes, the United States Supreme Court has permitted the so-called “shot clock” rules of the Federal Communications Commission (“FCC” or “Commission”) applicable to wireless siting applications to remain in effect. By a 5-4 margin on May 20, 2013, in City of Arlington, Texas v. Federal Communications Commission, the High Court affirmed that when the FCC interprets an ambiguous provision of a statute that concerns the scope of the FCC’s regulatory authority, that interpretation is entitled to the same Chevron deference as its interpretation of any other ambiguous statutory provision unambiguously within the agency’s regulatory bailiwick. Under Chevron, if a federal “statute is silent or ambiguous with respect to the specific issue [before an agency], the question for the [reviewing] court is whether the agency’s answer is based on a permissible construction of the statute.” Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). If the agency’s construction of the ambiguous provision is permissible, then the agency’s interpretation is entitled to judicial deference.

Justice Antonin Scalia delivered the opinion of the Court joined by four other justices. Justice Breyer concurred with the Court’s opinion in part and concurred in the judgment. Chief Justice Roberts delivered a dissenting opinion joined by two other justices. The differences among the three opinions are rather fine. Distinguishing among the opinions arguably requires almost as much “mental acrobatics,” to use the majority’s term, as the majority sought to avoid stating that no dichotomy exists, in terms of the deference to which an agency is entitled, between interpretations regarding the scope of an agency’s authority under a statute it administers and interpretations applying the jurisdiction the agency clearly has. Read our full summary of the opinion here.

The impact of the Court’s decision in City of Arlington will go far beyond the bounds of the FCC’s declaratory ruling adopting the antenna siting “shot clock.” The decision is not easily limited to the facts in the case before the Court and will likely affect court review of federal agency actions generally, not just those of the FCC. For example, the pending appeals of the FCC’s 2010 Net Neutrality Order which we have previously covered in this blog involve questions of the Commission’s interpretation of its own authority. City of Arlington may also have the effect of emboldening agencies to make decisions that “push the jurisdictional envelope” under the statutes they administer. In almost any situation involving the scope of the Commission’s authority, where the Act is at least potentially ambiguous as to the FCC’s authority to adopt the regulations in question, parties will need to take heed of City of Arlington.
 

Second Circuit Finds That ILEC Transit Service Is Governed by Section 251(c)(2) and Subject to Lower TELRIC Rates

Barbara Miller contributed to this post.

Last week, a federal appellate court issued a decision signaling a significant victory for Competitive Local Exchange Carriers (“CLECs”) that rely on Incumbent Local Exchange Carriers (“ILECs”) for transiting services in order to interconnect indirectly with other local carriers. Southern New England Tel. Co. v. Comcast Phone of Connecticut, Inc. et al., Docket No. 11-2332-cv (2d Cir. May 1, 2013).

The United States Court of Appeals for the Second Circuit (the “Court” or “Second Circuit”) held, among other things, that when an ILEC provides transit services between two indirectly interconnecting CLECs, Section 251(c)(2) of the Communications Act of 1934, as amended (the “Act”), applies and the CLEC’s are entitled to transit rates based on Total Element Long-Run Incremental Cost (“TELRIC”). The Court’s opinion affirmed a decision of the U.S. District Court for the District of Connecticut (“District Court”) which, in turn, upheld a Connecticut Department of Public Utility Control (“DPUC”) decision. The Court limited the direct application of its holding to the parties to the contract that was the subject of the suit – AT&T and Pocket Communications – but the implications of the opinion are much broader as ILECs have maintained for years that transit services do not fall within the scope of Section 251(c)(2) and are subject to market, not TELRIC, pricing.

Continue Reading...

Appeals Court Rules that Federal Courts May Hear Interconnection Agreement Claims in the First Instance

Barbara Miller co-authored this post.

This week, the Fourth Circuit issued an important decision concerning the jurisdiction and role of federal courts in the interpretation and enforcement of state-approved Interconnection Agreements (“ICAs”).  In Central Telephone Co. v. Sprint Communications Co., the Fourth Circuit held that plaintiffs are not required to bring claims relating to the interpretation and enforcement of state-approved ICAs to a state commission before they can be heard in federal court.  Instead, the court ruled that a party may bring a claim for breach of contract in federal court directly.  This decision opens a new option for parties seeking to interpret and enforce ICAs, at least in the states within the Fourth Circuit (which encompasses Maryland, Virginia, North Carolina, South Carolina and West Virginia).  

Continue Reading...

Sixth Circuit Rules That States May Fashion ILEC Interconnection Obligations under Section 251(a)

In an interconnection decision that may have implications beyond its facts, a federal appellate court ruled that State public utility commissions (“State Commissions”) may rely on Section 251(a) in resolving interconnection disputes involving incumbent local exchange carriers (“ILECs”). On March 28, 2013, the U.S. Court of Appeals for the Sixth Circuit ruled that ILECS have interconnection obligations under Section 251(a) of the Communications Act of 1934, as amended (the “Act”), which State Commissions can enforce in Section 252 interconnection arbitrations. Affirming a judgment of the U.S. District Court for the Southern District of Ohio and an arbitration decision of the Public Utilities Commission of Ohio (“PUCO”), the Court found that an ILEC’s interconnection obligations are not limited by those expressly set forth in Section 251(c), as AT&T had argued. Rather, the Court held that a State Commission can impose obligations on an ILEC under Section 251(a), including an obligation to establish a point of interconnection (“POI”) on the network of a requesting interconnecting competitive local exchange carrier (“CLEC”). Significantly, this is the first decision of which we are aware by a federal appellate court expressly finding that a State Commission can impose obligations on an ILEC under Section 251(a) that differ from the ILEC-specific obligations of Section 251(c)(2).

Continue Reading...

Court Rules for ISP in Deep Packet Inspection Lawsuit

Barbara Miller co-authored this post.

A few years back, the use of deep packet inspection software – software that examines individual data packets in a broadband transmission – to deliver targeted advertising was a hot topic in regulatory and privacy circles.  Those activities spawned a series of cases against the DPI companies and their Internet Service Provider (“ISP”) partners.  In one such case, the ISP just won an important victory closing a potentially troublesome area of liability.  On December 28, 2012, in Kirch v. Embarq Management Co,  the Tenth Circuit held that an ISP was not liable under the Electronic Communications Privacy Act of 1986 (“ECPA”) for authorizing an online advertising company to collect and use certain customer electronic information for the purpose of targeted direct online advertising.  This ruling effectively ends this particular case against Embarq and likely will close a chapter in the deep-packet inspection saga.  However, because the Tenth Circuit’s finding is closely tied to the facts of this case, ISPs should carefully consider potential liability under the ECPA for any actions involving the collection of customer information for purposes other than provision of ISP services.

Continue Reading...

What FCC v. Fox Television Means for Non-Broadcasters

In FCC v. Fox Television Stations, Inc., the US Supreme Court reversed FCC indecency fines against two TV broadcast networks.   The decision has garnered a lot of attention in the broadcast industry and conventional media (and rightly so).   News stories describe the decision as a clear victory for broadcasters.  Many commentators also noted the apparently shaky ground of the 1978 Pacifica decision finding George Carlin’s “Filthy Words” monologue indecent.   (Including this decidedly non-legal discussion.) These are topics of great interest to the broadcast industry.

For all its significance in the broadcast world, the decision is equally significant for non-broadcasters.  In Fox Television, the Supreme Court sets a high bar for FCC enforcement of general obligations under the Communications Act, not just the FCC’s indecency standard.  As a result, Fox Television will constrain the FCC’s enforcement abilities in several prominent areas of common carrier regulation as well.  Most significantly, we believe that Fox Television limits the FCC's ability to impose fines for violations of Section 201(b)'s prohibition on unjust and unreasonable practices.  Unless the FCC has provided fair notice to common carriers of the conduct required under Section 201(b), it may not impose sanctions in the enforcement context.

Continue Reading...

FCC Issues Clarification, Warning about Call Blocking Practices

Responding to complaints by rural LECs that call blocking has increased, the FCC yesterday issued a clarification and a stern warning to carriers not to block, choke or restrict calls to other carriers’ customers. While call completion issues can occur for a variety of reasons, allegations of “blocking” have arisen in a number of access charge disputes and other forms of telecommunications litigation that we track.

The FCC’s declaratory ruling serves as a warning that carriers involved in such disputes should not intentionally block or restrict the ability of callers to reach their intended destinations. It also appears to create affirmative obligations to correct call completion problems that are occurring.

Continue Reading...

VoIP Access Charge Appeal To Proceed After Nearly Two Year Delay

A long time ago, we posted about a decision of the US District Court in DC declaring that VoIP traffic was not subject to access charges and the strange coalition that asked the Court of Appeals to review the case.  Now, after a nearly two year delay caused by one of the litigants' bankruptcy, the appeal is moving forward.  Since the FCC refuses to rule whether access charges applied to VoIP (even as it has recently applied interstate access rates to VoIP prospectively), this case could have an important impact on many current access charge disputes.

Continue Reading...

FCC Again Supports CLECs in 1996 Act Litigation

One of the trends in 2011 has been the rise in amicus filings by the FCC in litigation matters.  This trend is fueled, no doubt, by the Supreme Court's determination in Talk America v. Michigan Bell earlier this year that such interpretations by the agency are entitled to deference by the courts.

The latest example of this once again involves interpretation of the FCC's rules for the provision of unbundled network elements ("UNEs").  In the latest amicus brief, the FCC agrees with CLECs that a BOC is required to permit the commingling of section 271 elements with UNEs obtained via section 251(c)(3). 

Continue Reading...

FCC ICC/USF Reform Order Published in Federal Register

This morning, the FCC's November 18, 2011 High-Cost USF and Intercarrier Reform Compensation Order was published in the Federal Register triggering an effective date of December 29, 2011 for all parts of the Order and rule changes adopted therein, except for the information collection requirements contained in some of the rules adopted.   Those information collection requirements will not become effective until approved by the Office of Management and Budget.  A subsequent Federal Publication will be made announcing the effective dates of those sections.  A copy of today's Federal Register publication is available here.

FCC Releases Text of Intercarrier Compensation Order

Late yesterday, the FCC released the text of its USF Reform and Intercarrier Compensation Reform Order, which it adopted on October 27.  The FCC's rules, among other things, transition terminating access charges to zero, apply access to VoIP-PSTN traffic, adopt rules addressing access stimulation (prevalent in free conferencing, for example), and tackling the problem of phantom traffic.  

The order is 759 pages long, with over 2,500 footnotes and 84 pages of rules.  As we warned, the impact of these rules on individual business plans is highly fact-specific.  We encourage you to contact your advisor to learn more. 

Continue Reading...

DC Circuit to Decide Net Neutrality Appeals

The same circuit that decided the Comcast case will decide the net neutrality appeals after all. Yesterday, the Judicial Panel on Multidistrict Litigation announced that the D.C. Circuit had been selected by random selection (i.e., lottery) for the net neutrality appeals.  The other cases will be consolidated with the D.C. Circuit case.

Net Neutrality Litigation Moves to Lottery

With the September 23rd publication of the Net Neutrality Order in the Federal Register, appeals of the order could finally be filed.  As expected, multiple parties filed appeals in multiple districts, and the choice of circuit will now be decided by lottery under the Judicial Panel on Multijurisdiction Litigation rules.  Verizon has again asserted that the case must be heard in the DC Circuit, but the FCC moved to dismiss that appeal, on substantially similar grounds as in January.

The next step is for the panel to announce which circuit is selected in the lottery.  That decision is expected by the end of the week.  If the pick is not the DC Circuit, Verizon is expected to move to transfer venue to the DC Circuit. 

Continue Reading...

Federal Register Publication Marks Beginning of Net Neutrality Litigation

One long march is finally over, another one begins.  After OMB approval of the rules was announced earlier this week, today, the FCC published the Net Neutrality Order in the Federal Register.  The 44 page summary is available here.  With this notice today, the next stage in the net neutrality saga finally begins. 

First, and most likely, with the publication today, appeals of the rules may finally begin.  Multiple appeals will be filed, most likely in multiple circuit courts of appeals.  The question will be where the appeals will be heard.  On one side, Verizon Wireless has argued that the appeal must be heard in the DC Circuit because it is a "licensing" decision.  Others have argued that the general appeal provision applies, so venue is proper in any of the circuits.  If this latter view is correct, a lottery will be held among the circuits with appeals filed in the first 10 days to determine which circuit will hear the case. 

Second, the publication triggers the effective date of the new rules.  With publication today, the new rules will take effect on November 20th unless stayed by the court.  It is important to recall that Commissioner McDowell wrote a dissent that essentially argued that the rules will create irreparable harm, which is the primary factor examined in determining whether a stay is proper.

Watch this blog for more updates.  We expect today to mark the beginning of a busy litigation period over the new rules. 

Inside the Burdens of the Net Neutrality Rules

The Office of Management and Budget does not post the comments it receives on Paperwork Reduction Act notices, like the FCC's recent notices regarding the net neutrality rules.  But we have them here.

Continue Reading...

CompTel Asks Court to Compel Action on Special Access

Since 2002, purchasers of special access services from the incumbent local telephone companies have been asking the FCC to revise its pricing rules for the services.   Last month, CompTel (the leading trade association for competitive carriers) and a coalition of others asked the United States Court of Appeals for the DC Circuit to require the FCC to resolve its pending special access proceeding within six months.  The CompTel petition is a petition for mandamus -- a court order compelling action by the agency.  The FCC has not yet responded to the petition. 

This is not the first time competitive carriers have gone to the court for action.  Back in 2003, the old AT&T (pre-acquisition by SBC) asked the same court to compel the FCC to act on AT&T's Petition for Rulemaking filed in 2002 to revise the special access rules.  In reliance on the FCC’s representations that it was diligently working the proceeding, the court required the FCC to file periodic status reports.  The court eventually dismissed the AT&T mandamus petition after the FCC issued the current Notice of Proposed Rulemaking in early 2005.  Six years later, the FCC has not completed that proceeding and CompTel asks the court to require a resolution. 

Continue Reading...

Another VoIP-Related Access Charge Issue Makes its Way to the FCC

The Commission's long-standing refusal to classify VoIP services continues to feed litigation between telecommunications carriers.  Previously, a coalition of carriers asked the courts to decide the issue and it appears likely the FCC will address VoIP at least prospectively, but in the meantime, cases like this will persist.

In the latest case, CLEC Pac-West and IXC Verizon Business sparred in dueling Petitions for Declaratory Ruling stemming from a primary jurisdiction referral by a U.S. District Court in California.  The petitioners offer vastly different approaches to resolving the dispute. 

Continue Reading...

Net Neutrality Order Moves a Step Closer to Publication

Continuing the slow march to Federal Register publication -- and certain court challenge -- of the Net Neutrality rules, the FCC today published notices of the two information collection provisions subject to review by the Office of Management and Budget (OMB).  The notices address the formal complaint rules for violations of the new requirements and the public disclosure rules for network management practices.  Regarding the latter, see also the clarification released by the FCC last week.

Comments on the two information collection notices are due by August 8.  Publication of the rules in the Federal Register is not likely before the comment date.

Net Neutrality Update

After months of waiting for the FCC to publish its Net Neutrality Order in the Federal Register, the FCC has finally . . .  released a clarification of the disclosure rules that will eventually apply.   The action does not indicate when Federal Register publication will occur, but, buried in the clarification is an announcement that the FCC will release results of its own broadband performance measurements before the new rules become effective.  So, we may have at least one more Public Notice before Federal Register publication (or perhaps simply a notice between publication and effectiveness). 

For more on the clarification, see below

Continue Reading...

House Approves Resolution to Disapprove Net Neutrality Order

In a move that has more symbolic than practical effect, on Friday, the U.S. House of Representatives approved a resolution of disapproval of the FCC's December 21, 2010 Net Neutrality Order.  The Resolution was approved largely along party lines, with only two Republicans voting against the measure and only six Democrats voting for the measure.

To become effective, the resolution of disapproval would have to be approved by the Senate and signed by the President.  The Senate is not expected to approve the resolution, and the President stated that he would veto any disapproval measure.

The next major step for the Net Neutrality Order will be Court of Appeals review.  That will commence once the FCC publishes notice of the order in the Federal Register.

FCC Rules VoIP Provider May Not Collect Access Charges

With the continued uncertainty regarding the classification of VoIP service and the application of intercarrier compensation to VoIP, litigation over VoIP charges is extensive.  In the latest case to reach a decision, the FCC ruled that a CLEC serving an affiliated VoIP provider may not collect tariffed access charges for terminating calls to the VoIP customers or for 8YY calls originated by the VoIP customers.

The FCC order was issued in a formal complaint case brought by AT&T against YMax Communications Corp., whose affiliated entity provides the MagicJack VoIP device.  The Commission agreed with AT&T that it did not have to pay YMax's access charges for the traffic in question.

The FCC's decision is a narrow one, however.  It ruled only that the CLEC's tariff language did not apply to the traffic, not that VoIP may not be subject to access charges.  The primary lesson of the case is that a VoIP provider must carefully consider the description of its services, and not necessarily use "cookie cutter" tariffs designed for traditional PSTN traffic. 

Continue Reading...

Court Dismisses Verizon Net Neutrality Appeal -- For Now

Back in January, we posted on Verizon's attempt to appeal the FCC's Net Neutrality order.  Verizon presented a controversial claim that the order was a "licensing" decision which limited review to the U.S. Court of Appeals for the D.C. Circuit.  The FCC opposed that interpretation.

If successful, Verizon's preemptive move would have prevented a lottery from deciding which court of appeals considered the Net Neutrality order.  Yesterday, however, the D.C. Circuit dismissed Verizon's appeal as premature.

Continue Reading...

FCC Releases USF and ICC Reform NPRM

Late yesterday, the FCC released its latest NPRM on high cost USF and ICC reform (see our 2/8 post).  The 289 page item, available here,  sets forth staggered comment dates triggered by federal register publication.  The first -- 30 days after Federal Register publication -- is for comments on intercarrier compensation for VoIP traffic, rules to address phantom traffic and rules to reduce access stimulation.  Reply comments are due 15 days after that.  Comments on the rest of it will be due on the same day (45 days after Federal Register publication).  State members of the Federal-State Joint Board on Universal Service get two extra weeks to file comments.  All reply comments on the remaining sections are due 80 days after federal register publication.

Verizon Net Neutrality Appeal Update

On January 20th, Verizon took the controversial move of appealing the FCC's Net Neutrality Order before notice was published in the Federal Register.  Shortly after Verizon appealed, MetroPCS Communications filed a similar appeal, also in the D.C. Circuit and also relying on section 402(b) to assert that venue lies exclusively within the D.C. Circuit.

The FCC has moved to dismiss both petitions as premature.  Verizon opposed the motion and the FCC filed its reply yesterday.  At this time, the court has not ruled on the motion.  However, the D.C. Circuit issued a brief order denying Verizon's motion to refer the case to the Comcast panel of judges. 

Meanwhile, the FCC's order still has not been published in the Federal Register.  Once it is published, we expect multiple appeals to be filed, most likely in several circuit courts of appeal.  Such appeals would trigger the lottery process to determine where to consolidate the cases.

Links to the pleadings relating to the FCC's motion to dismiss are available below.

Continue Reading...

Verizon Appeals Net Neutrality Order

In a controversial move, yesterday Verizon filed an appeal of the FCC's Net Neutrality Order adopted December 21.  Verizon sought review in the U.S. Court of Appeals for the D.C. Circuit -- and asked the same panel that decided the Comcast case to hear the appeal.

Verizon's appeal is controversial because it was filed before the FCC has published notice of the Net Neutrality Order in the Federal Register.  Appeals taken under the more common review provision -- section 402(a) of the Communications Act -- may not be filed prior to Federal Register publication, and the courts will conduct a lottery among all courts where appeals were filed within the first 10 days to determine which circuit will hear the case.  Verizon's move is an attempt to force review in the D.C. Circuit, where the Comcast decision also was considered.

Verizon's petition for review is available here.  Verizon's appeal relies upon section 402(b) of the Communications Act, asserting that the Net Neutrality Order modified Verizon's wireless licenses and thus that 402(b) applies.  Verizon's motion for consideration of the appeal by the Comcast panel is available here.

Intercarrier Compensation, USF High Cost Fund Reform Top FCC Agenda

As expected, late yesterday, the FCC announced that it would again attempt to tackle its "holy grail" of regulatory action:  reforming carrier-to-carrier compensation mechanisms and the high-cost program of the Universal Service Fund.  The FCC has placed a Notice of Proposed Rulemaking addressing both intercarrier compensation and USF reform on its agenda for February 8.  The combined NPRM furthers the National Broadband Plan's promise to refocus FCC policy to supporting broadband networks.

These two topics are at the core of what we cover in this blog.  The complicated mix of carrier-to-carrier compensation mechanisms, which make how a call is classified critical to determining its cost, has engendered significant litigation involving such issues as VoIP, prepaid calling cards, access charges, reciprocal compensation and many others.  Meanwhile, the funding and administration of the $7 billion per year Universal Service Fund is a constant source of audit issues, enforcement actions and rulemaking proposals.

Continue Reading...

FCC Releases Text of Net Neutrality Order

Late yesterday, the FCC released the text of its Open Internet Report and Order (aka the Net Neutrality decision).  We're on vacation already, so we don't have time for any analysis right now.  Nevertheless, for those interested, the Report and Order is available here. 

Readers should review paragraphs 151-160 for the discussion of enforcement of the new rules.  Also, paragraph 161 states that all of the rules will be effective 60 days after the Federal Register notice of OMB's approval of the new information collection requirements associated with the rules.

FCC Adopts Net Neutrality Rules, Endorses Accelerated Docket Complaints for Violations

Today, a divided FCC adopted enforceable "net neutrality" rules for the first time.  By a 3-2 vote, with all three Democrats voting in favor and both Republicans voting against, the Commission adopted a Report and Order in its Open Internet inquiry.  As Chairman Genachowski announced last month, the new rules rely upon the FCC's "Title I" authority to adopt "basic rules of the road" to preserve the open Internet "as a platform for innovation, investment, competition and free expression."

To win the support of the other Democratic Commissioners, the Chairman agreed to several changes from his proposal last month.  Most notably, the Order applies the transparency rule and a limited blocking prohibition to wireless carriers, and -- although the exact extent is unclear -- appears to bar wireline broadband service providers from engaging in paid prioritization of Internet content.  The Order also adopts a definition of the "broadband Internet access services" to which the rules apply.

Commissioners Copps and Clyburn pronounced this action imperfect but sufficient to enable them to permit adoption of the Chairman's proposal.  On the other hand, both Commissioners McDowell and Baker dissented from the Order.  Both strongly objected to the Commission's claim of exisiting authority over Internet network management.  Commissioner McDowell also asserted that the Order would create "irreparable harm" -- a factor considered by courts in granting a stay of agency orders.

The FCC action is described in more detail below.  UPDATED:  A PUBLIC NOTICE WITH THE RULES WAS RELEASED.  SEE BELOW

Continue Reading...

FCC's Genachowski Proposes Net Neutrality Rules, Creates Firestorm

Since April, the FCC has been struggling with how to react to the Court's reversal of the Comcast P2P blocking order.  Today, Chairman Genachowski announced that he plans to move forward to adopt net neutrality rules at the FCC's December 21 open meeting.  That announcement was met with prompt condemnation from the Republican commissioners and measured support from his fellow Democratic commissioners.

Genachowski's speech abandons his prior proposal for a "third way" to resolve this issue.  His current approach relies upon the same Title I authority that the court of appeals found lacking, although presumably the Chairman intends to provide a better rationale connecting the rules to the Commission's authority.  One issue that should not get lost in the shuffle, however, is that Chairman Genachowski is proposing to adopt enforceable rules that bind broadband providers for the first time.  This would replace the 2005 Policy Statement, which, as we've pointed out, creates enforcement problems of its own.

Follow the jump below to read the statements released today.

Continue Reading...

AT&T Access Charge Lawsuits Against Prepaid Card Providers Moving Forward

Long time readers of the blog will know that we've been following AT&T's attempts to collect access charges for local calls delivered via intermediaries to prepaid card providers.  The background is available here: previous Telecom Law Monitor entry.  The AT&T litigation is proceeding, albeit slowly.

In June, the U.S. District Court overseeing the first of AT&T's lawsuits allowed the IDT case to proceed forward.  IDT counterclaimed against AT&T, and AT&T answered the counterclaims.  The pre-trial discovery period is ongoing, but trial is not scheduled to begin until March of 2012

In addition, AT&T has sued two other small prepaid card providers in the same U.S. District Court in Texas.  The defendants are Next-G Communications  and Touch-Tel Communications.  Next-G has answered the complaint, and it appears it will follow the IDT case's timing. 

Meanwhile, the FCC still has not acted on the Arizona Dialtone petition for reconsideration of the Prepaid Card Order that underlies AT&T's case.  Arizona Dialtone's 2006 request to reconsider an "ambiguous aspect of the Order [that] sends mixed messages to carriers" remains pending.

Stay tuned.

 

Text Messaging Provider Sues T-Mobile for Unlawful Call Blocking

As consumers increasingly rely on mobile phones, marketers naturally are following.  Text messaging, in particular, has proven to be a popular marketing method.  It is not surprising, therefore, that we are seeing in increase in litigation over the obligations of senders and mobile carriers with respect to text messaging campaigns. 

The latest example of this trend is a complaint brought in US District Court by text broadcaster EZ Texting, Inc. against T-Mobile USA.  In the complaint, EZ Texting alleges that T-Mobile unlawfully blocked EZ Texting's "short code" (a six digit number to which consumers may direct text messages) on T-Mobile's network.  The reason, as alleged by EZ Texting, was that T-Mobile "did not approve" of an EZ Texting customer that provided information concerning the location of legal medical marijuana dispensaries in California. 

EZ Texting alleges that text messages are "calls" and that Title II's common carrier obligations apply, most notably, Section 201's prohibition on unjust and unreasonable practices and Section 202(a)'s non-discrimination requirement.  EZ Texting also seeks a temporary restraining order and a preliminary injunction.  The court set a hearing on the request for September 30.

The complaint already has garnered a fair amount of attention from others.  Public Knowledge posted on its blog about the case, arguing that the case illustrates the need for the FCC to act on Public Knowledge's 2007 Petition for Declaratory ruling seeking classification of text messaging as a Title II service.  About 75 parties filed comments or replies in response to that petition.

Mobile Content Providers Settle Unauthorized Billing Class Action

While the FCC has taken an interest in mobile marketing by carriers -- most notably with investigations of carrier early termination fees and proceedings examining wireless consumer "bill shock" -- it also is helpful to remember that the mobile content providers are subject to enforcement for deceptive marketing practices.  Our colleagues at the Ad Law Access blog covered a recent settlement of a class action lawsuit by several mobile marketers.  They remind marketers to clearly and conspicuously disclose costs so that consumers know what they are obligated to pay.  Mobile service providers should ensure that their billing and collection agreements impose such an obligation on the content provider and that the carrier properly polices compliance.

Read the Ad Law Access story here. 

Comcast, Phase II: FCC Opens Inquiry into Broadband Classification Options

The FCC today adopted and released its highly anticipated Notice of Inquiry (“NOI”) regarding the potential regulatory reclassification of facilities-based broadband Internet access services.  This proceeding will explore the "third way" toward regulation that Chairman Genachowski suggested in response to the recent decision issued by the U.S. Court of Appeals for the D.C. Circuit in the Comcast case.  In Comcast, the D.C. Circuit rejected the FCC's attempt to rely upon its "ancillary authority" to enjoin a cable operator from degrading its customers' lawful Internet services.  This sparked a concern that similar decisions could cause the Commission to lose regulatory authority over time in connection with most, if not all, Internet access services.  The heart of the problem is that the FCC made a series of decisions over the past decade that have classified wireline broadband Internet access services as "information services" that are exempt from Title II common carrier regulation, and this classification was upheld by the U.S. Supreme Court in its Brand X decision.   If the Commission cannot exert "ancillary authority" to regulate them, then the FCC could be left with virtually no control over services provided over a broadband platform. 

The NOI seeks comment in three areas.  First, the FCC seeks input on whether the current "information service" classification remains adequate for the Commission to perform its mission.  Second, it seeks comment on the legal and practical consequences of "reclassifying Internet services used to communicate with others that have Internet connections" as "telecommunications service" and then applying all of the regulatory requirements of Title II.   Finally, and most importantly, the Commission seeks comment on the "third way" position by which so-called "Internet connectivity service" that is offered as part of a wired broadband Internet service would be reclassified as a "telecommunications service", but that the Commission would forbear from applying all Title II regulatory authority over it except such as necessary to implement a set of discrete rules applicable to universal service, consumer protection, competition and small business opportunity. 

The Commission has fast-tracked the comment cycle in this case.  Comments will be due by July 15, with replies due August 12. 

 

 

Strange Coalition Petitions Court of Appeals to Bypass FCC on VoIP Access Charges

A diverse group of telecom companies and trade groups have jointly submitted a supporting brief to the U.S. Court of Appeals in the Paetec v. CommPartners appeal.  The Joint Brief includes ILECS like AT&T and Verizon, CLECs like Neutral Tandem, and normally contrary trade associations like USTA and the VON Coalition. Although these parties have wildly divergent views on how the VoIP access charge dispute should be resolved, they all agree that the Court of Appeals should decide the issue now.  The Joint Brief states that the parties submitting  "have differing views about the merits" of the district court ruling, "but all agree that a decision from" the Court of Appeals is desirable to clarify the situation for all concerned.  

No one knows for sure, but the many pending cases and disputes on VoIP access charges collectively probably have hundreds of millions of dollars at stake.   The FCC has exerted much effort to avoid making a decision on the court referrals and various petitions that it has received on the subject since 2005. 

Continue Reading...

Breaking News: Court vacates FCC's Comcast Decision

The US Court of Appeals for the DC Circuit vacated the FCC's decision declaring illegal Comcast's 2007 blocking of P2P internet traffic.  This decision is not surprising, given how poorly the oral argument went for the FCC.  (see our post here). 

Click here to download the Court's decision.  We will post a discussion of the jurisdictional issue later.

UPDATE 4/6/10:  The Court of Appeals vacated the FCC Order because the Commission had not adequately justified its exercise of Title I "ancillary" authority over Comcast's network management practices.  Discussing at length appellate Title I jurisdiction cases over the last 40 years, the Court in essence held that the FCC failed to relate Internet network management to common carrier telephone service (Title II), broadcast service (Title II) or cable TV service (Title VI).  One quote from the decision sums up the conclusion:  "On the record before us, we see 'no relationship whatever' between the Order and services subject to Commission regulation."  In other words, the FCC must connect its assertion of authority to something that it indisputably can regulate.

Since the decision was released, there has been much discussion about whether the FCC will reclassify Internet access services as Title II common carrier services.  While it is premature to predict these issues with any confidence, one alternative not being discussed is to accept the Court's invitation to connect regulation of Internet access service with regulation of pure transmission services.  In the Wireline Broadband Order, the Martin Commission concluded that Internet access did not have a separate transmission component.  The decision today may lead the Commission to reverse that determination -- and find that a separate transmission component is inherent in the offering -- so that it may then regulate bundled Internet access due to its impact on stand alone transmission services. 

Finally, I note that the Court did not address the enforceability of the Policy Statement itself.  As a result, the potential impact on the Universal Service Fund's Form 499-A instructions did not come to pass.  Maybe next time.

Now on Deck: Carrier Asks FCC to Preempt Pennsylvania PUC VoIP Decision

The VoIP jurisdictional saga continues.  Last month, we discussed a decision by the Pennsylvania PUC asserting jurisdiction over intrastate Voice over IP calls and a decision by a US District Court reaching the opposite conclusion.  Tomorrow, parties are asked to comment on a petition seeking, among other things, to preempt the Pennsylvania decision.  We will be watching the comments and will post on anything of interest in the comments.

4/6/10 QUICK UPDATE:  19 entities filed comments in response to the Global NAPs petition.  Most were ILECs or state commissions opposing the specific rulings proposed.

This latest VoIP proceeding has its origins in the Pennsylvania PUC decision. After the decision was issued, the carrier ordered to pay intrastate access charges, Global NAPs, filed a Petition for Declaratory Ruling with the FCC. The Petition seeks four rulings from the FCC:

 

1. The Vonage Order prohibits state commissions from subjecting VoIP traffic to intrastate tariffs;

2. Once a carrier’s service has been determined to be “primarily nomadic” VoIP, the remainder of its traffic also is interstate, absent “clear proof of purely intrastate calls”;

3. The Local Exchange Routing Guide (“LERG”) is not a reliable proxy for the geographic point of origination of VoIP calls; and

4. Connecting carriers that forward VoIP traffic are immune from interstate and intrastate switched access charges.

 

In the alternative, Global NAPs seeks preemption of the Pennsylvania PUC decision and “recent and/or impending” rulings in Maryland and New Hampshire.

 

The FCC released a Public Notice seeking comment on the Global NAPs Petition.  Comments are due April 2; replies April 12. 

Congress Investigates Rural LEC "Traffic Pumping"

The House Committee on Energy and Commerce has sent a February 16, 2010 letter to 24 rural local exchange carriers seeking information about their access charge services.  The 24 carriers receiving the letters were chosen on the basis of responses to earlier letters sent to long distance carriers who complained of "traffic pumping" by some rural LECs.  The Congressional letter expresses concern that "excessive rates for terminating access" will harm rural consumers because interexchange carriers will refuse to send traffic to those locations.  It requests written responses to twelve questions by March 8, including information about the sharing of access revenues with other entities.  In such cases, the letter seeks the identity of each such sharing party, the total percentage of revenues shared and a sample contract for sharing revenue.  The letter also inquires about the amount of universal service support which the rural LECs receive.  The LECs are asked to inform Congressional staff by March 1 if they intend to refuse to provide the information voluntarily, presumably so that it can be subpeonaed. The letter is signed by Committee Chairman Henry Waxman (D. CA) and subcommittee chairs Rick Boucher (D. VA) (Communications, Technology and the Internet) and Bart Stupak (D. Mich) (Oversight and Investigations). 

Federal Court Rules that VoIP Need Not Pay Access Charges

The U.S. District Court in D.C. ruled today that IP-originated calls are "information services" that are subject to the local reciprocal compensation scheme - and not access charges - for intercarrier compensation.  The ruling came in Paetec Communications v. CommPartners, LLC, U.S. Dist Ct for DC, Civ. Action No. 08-0397.   Paetec filed the case against CommPartners seeking to collect access charges for all calls, both TDM and VoIP originated.  CommPartners conceded that it owed access fees on the TDM calls, but argued that VoIP calls are information services exempt from access under the FCC's longstanding access charge exemption for such calls.  The Court agreed.  In reaching its opinion...

Continue Reading...

FCC Petitioned in Access Charge Litigation

Beehive Telephone has Petitioned the FCC for a declaratory ruling in an effort to salvage a lawsuit that Beehive brought against Sprint in federal court for collection of access charges. According to the Petition, Sprint refused to pay Beehive's access invoices because Sprint believes they are the product of unlawful "traffic stimulation" by Beehive and a conference bridge provider.  In March 2008, Beehive filed an informal complaint with the FCC seeking a finding that Sprint's refusal to pay is an unlawful practice under Section 201 of the Communications Act.  Sprint opposed the informal complaint on various grounds.  In May of 2008, Beehive filed a collections lawsuit against Sprint in federal court in Utah.  Thereafter, the FCC stated that it would take no further action on the informal complaint.  However, the court later dismissed Beehive's lawsuit for lack of jurisdiction, finding that the informal complaint with the FCC was an "election of remedies" that prevents Beehive from pursing the collections matter in court. (Section 207 of the Communications Act allows complaints against carriers to be brought at the FCC or in Court, but not in both places.)  Beehive's February 2010 Petition asks the FCC to clarify that its initial Section 201 informal complaint raised a different issue from the collection action and thus did not foreclose the collection lawsuit under the "election of remedies".  In effect, Beehive is taking the unusual step of asking the FCC to rule that Beehive is barred from bringing its collection action at the FCC.  If successful in having itself barred by the FCC, Beehive hopes to use the ruling to persuade the Court to reinstate its collection lawsuit.  Comments are due at the FCC on March 1, Replies March 11.

Prepaid Card Provider Seeks Stay, Dismissal of AT&T Access Charge Suit

A few months ago, AT&T sued IDT Corp. for failing to pay access charges allegedly due on local-dialed prepaid calling cards.  As we expected, IDT has moved the court to stay, or in the alternative, dismiss, AT&T's action.  IDT contends that the FCC, not the court, should decide whether access charges apply to this type of call.  In a strategic move, IDT seeks a stay of the case, rather than referral of AT&T's complaint to the FCC for resolution. 

The case bears watching because AT&T appears to be using the IDT litigation as a test case before proceeding with actions it has threatened against other providers.  If IDT is successful, AT&T likely will have to present its case directly to the FCC, perhaps by filing a petition for declaratory ruling, or maybe by bringing a formal complaint before the Enforcement Bureau.    Alternatively, AT&T may switch approaches and seek to recover access charges from the CLECs to whom it hands off the calls.

In the meantime, AT&T has continued to send monthly demands to prepaid card providers, allegedly calculating the amount of access charges due from the carrier.  We are not aware of any other cases AT&T has filed against prepaid card providers.   Yet.

Follow the jump for a discussion of the pleadings on IDT's motion.

 

Continue Reading...

Federal Court Enjoins AT&T From Enforcing Its Restrictions on Payment of Promotions to Local Resellers

A federal district court in Dallas, Texas has issued a preliminary injunction ordering AT&T to cease reducing amounts it pays to local Resellers when it gives promotions offered to AT&T's own retail customers, Budget Prepay et al v. AT&T Inc. The AT&T ILECs often promote new local services by offering a $50 bill credit to new retail customers. Effective September 1, AT&T initiated a new policy which gave Resellers only about $4 (the actual amount varies by state) for their new sign-ups on the AT&T local networks. The Resellers filed suit against AT&T, seeking an injunction against the new policy. On November 30, the Court granted a Preliminary Injunction and instructed AT&T not to apply the new, reduced promotional policy until it has received approval from each affected state PUC.  The Court reasoned that the FCC's rules require any "restriction on resale" to be approved by a PUC before it is implemented.  Since AT&T admitted in open court that it had never sought nor received permission for the new reduced promotions payments, it is in violation of the FCC's rules.  The court concluded that the FCC requirement that AT&T get prior approval is turned upside down if AT&T is allowed to simply change its policies, thus reversing the obligation and forcing the Resellers to go to the PUCs to seek revocation of the new AT&T policy.  AT&T has appealed the ruling to the U.S. Court of Appeals for the Fifth Circuit and has received an expedited schedule from that court, with oral argument to be held in February.
 

FTC BringsThird Prepaid Card Case This Year

The Federal Trade Commission has sued Diamond Phone Card and two individuals for allegedly(1) misrepresenting the number of minutes provided by the cards and (2) failing to disclose adequately the effect of fees on the number of minutes available.  Federal Trade Commission v. Diamond Phone Card, Inc. (U.S.E.D.N.Y. No. 09-3257).  The Complaint asks for a permanent injunction to prevent future violations, refunds and restitution for consumers, and the agency's costs of investigation. 

This case was announced on August 5, and follows the FTC's June settlement with Clifton Telecard Alliance (paid $1.3 million) and the February settlement with Alternatel and Mystic Prepaid (paid $2.25 million).   All three cases have been brought against card distributors, not telecom carriers, in deference to the "common carrier" exclusion from the FTC's enforcement jurisdiction.  Diamond Phone is based in the New York City area.  The FTC News Release announcing the suit thanked authorities in El Salvador, Colombia, Egypt, Mexico, Panama and Peru for their help in investigating the case.  The news release and a link to the Complaint can be found here

It is noteworthy that the Diamond Phone cards included written disclosures on their posters and on the cards themselves, as described in the FTC Complaint.  Diamond also had voice prompts.  However, the FTC lawsuit alleges the disclosures are inadequate because they are too small (10 point font on posters), are too separated from the larger rate claims (at the bottom of the poster) and were too vague ("connection fee may apply").  The disclosures on the cards themselves were said to be in 5 point font that is "nearly impossible to read" and appear on a portion of the card which is below a perforation and discardable.  The FTC said it tested several cards and the initial prompts stated different numbers of minutes than that stated on the cards and posters, and that even those minutes were not actually delivered. For example, the FTC said that a 50 minute card initially prompted 37 minutes and then delivered only 20 minutes in a single call.   Another card was said to be for 400 minutes to Mexico, but prompted 391 minutes and delivered only 106 minutes in a series of five calls of about 20 minutes each.

 

Local Resellers Sue AT&T Over Promotions Treatment

             Local resellers of AT&T ILEC services have sued AT&T over the treatment of promotions offered by AT&T ILECs to new retail customers. Budget Prepay v. AT&T, Inc., Civ. Action No. 3:09CV1494-P (U.S.N.D. Texas – Dallas). The resellers contend that AT&T must give its wholesale customers, like them, the full value of any promotions that AT&T provides to new AT&T retail customers. For example, if Southwestern Bell offers new retail customers a $100 credit to sign up for new local telephone service in Texas, the resellers argue that Southwestern Bell is required to give wholesale customers the same $100 promotion for each new local customer they put on AT&T’s network. AT&T rejects this claim and contends that it may give its wholesale customers a lesser promotional amount than its retail customers. This argument has festered for over two years and now has escalated into millions of dollars in dispute. Recently, it has bubbled over into federal district court lawsuits in Texas and North Carolina.  CGM, Inc. v. BellSouth, Civ. Action No. 3:09-CV-377 (W.D.N.C) (Full disclosure, the author is counsel to the reseller in the North Carolina case.)

        Wholesale prices for local resellers are set by the State public utility commissions following FCC guidelines. The approach mandated by law is a “costs avoided” analysis that starts with the retail price and then applies discounts for wholesale customers based on costs that the ILEC avoids in serving wholesale customers rather than retail customers. This reduction in price is expressed as a percentage discount from the retail price, and in most states falls in a 15-20 percent range. Thus, in a typical state, if the monthly cost of local telephone service from BellSouth is $40, the wholesale discount might be 20 percent, resulting in a wholesale price of $32. For the past two years, AT&T has taken the position that any promotions given to resellers should first be discounted by an amount equal to the percentage discount applicable to wholesale pricing in general. For example, in a state with a 20 percent wholesale discount, a retail promotion of $50 would result in a discounted promotional payment to resellers of only $40. It is this $10 difference that is in dispute in most cases.

            The disputes have been pending for more than two years, but were recently given impetus by a new AT&T policy. In Accessible Letters published in July and August, AT&T announced a new formula for calculating the promotional amounts to be paid to resellers starting September 1. (“Accessible Letters” are public announcements by which AT&T states new policies it intends to apply to wholesale arrangements.) The new formula itself is extremely complex, but the bottom line is that the typical wholesale promotional amount will stop being approximately 80 percent of the retail amount – and instead drop to about 15 percent.  

Continue Reading...

AT&T Sues Prepaid Card Provider for Access Charges

As we discussed previously, AT&T has been sending threatening letters to prepaid card providers who offer local telephone numbers as an alternative to 1-800 access.  In our last post, we noted that the parties were far apart in their legal positions and we warned you to "stay tuned" for developments.  That warning proved appropriate, for on July 2, 2009, AT&T brought suit against a prepaid provider for failing to pay access charges on calls originated through local telephone numbers.

AT&T brought its lawsuit in federal district court against IDT Telecom, Inc. and Entrix Telecom, Inc., an affiliate of IDT.  The complaint alleges three counts (violations):  1.  Violation of the AT&T LECs' federal tariffs; 2.  Violation of the AT&T LECs' state tariffs; and 3.  Unjust Enrichment. 

It is noteworthy that AT&T chose not to bring claims against the CLEC(s) that provided the local numbers to IDT.  Instead, AT&T is suing IDT, even though IDT did not receive traffic directly from AT&T.  The lack of a direct relationship will make it harder for AT&T to establish that IDT is a customer under either the federal or state tariffs alleged to be violated. 

Presumably, IDT will move to refer the case to the FCC under the doctrine of primary jurisdiction.  If IDT is successful, the FCC will have to decide what, if any, access charges apply when customers dial local numbers to reach a prepaid card provider.  That question has been before the Commission since 2006, but the FCC has not yet made a decision.

The complaint is available here.

AT&T Threatens More Prepaid Providers With Litigation

In the last month, AT&T sent another round of demand letters to prepaid card providers seeking access charges on prepaid card calls. AT&T sent the first round of such letters in the fall of 2008. Now, we are seeing signs that a second group of targets has received similar letters. In all of these letters, AT&T targets prepaid calling card providers who make available local telephone numbers as an alternative to 1-800 access numbers. In this scenario, the prepaid provider typically purchases local DID numbers from a CLEC, and resells this local service along with its prepaid card service. The arrangement is similar to "foreign exchange" service in that it provides a distant entity with a "local" presence, accessible by dialing a local number, instead of requiring customers to dial long distance. AT&T contends that the use is subject to its access tariffs, and has threatened lawsuits against prepaid providers that do not cease and desist from the practice.

AT&T's first round of letters prompted a dust-up in the FCC's pending intercarrier compensation docket.  More recently, Cinco Telecom, which received one of AT&T's second round of letters, asked the FCC for clarification in the face of AT&T's threats. This request was followed by a letter from One Communications, supporting the need for clarification. On June 15, 2009 AT&T filed a response to the Cinco Telecom Corp. letter. The response submitted by AT&T denounces any need for clarification, stating that the request is "unfounded because the Commission’s order is quite clear." But AT&T ignores the pending petition for reconsideration in the docket that asks for the very relief AT&T claims is clear. And AT&T still does not explain how its tariff enables it to bill a prepaid provider for traffic when the prepaid card provider does not subscribe to any AT&T service.

The letter is significant because AT&T opens a new front against prepaid card providers -- the payment of USF. Prepaid calling card providers, like other providers of telecommunications services, must contribute directly to the federal USF based on their interstate and international telecommunications revenues. In the letter, AT&T complains that by using local dialed numbers, prepaid card providers receive an intrastate service instead of an interstate service, thereby reducing the interstate revenues available to the USF. Tellingly, AT&T copies Enforcement Bureau staff, in a clear attempt to bring additional investigations upon prepaid card providers.

Only one thing is clear in this situation: AT&T and the prepaid card providers are far apart on this issue. We have not seen any evidence that AT&T has filed suit against a prepaid card provider, but that may just be a matter of time. Unless the FCC acts, of course. Stay tuned.

 

 

Appeals Court Rejects State Regulation of Nomadic VoIP, Again

The U.S. Court of Appeals for the Eighth Circuit has ruled in favor of Vonage and rejected an attempt by the Nebraska PSC to claim regulatory authority over VoIP.  Vonage v. Nebraska PSC, 564 F. 3d 900 (8th Cir. 2009).  Specifically, Nebraska argued that the FCC's original ruling that VoIP is subject to exclusive federal jurisdiction was effectively modified by the FCC's subsequent creation of a "safe harbor" for payment of federal universal service payments by VoIP providers.  Nebraska argued that when the FCC created a presumption that VoIP calls are 64.5% interstate, and directed VoIP providers to make USF contributions on that basis, the inevitable corollary is that 35.5% of VoIP calls are intrastate.  On that basis, the Nebraska PSC sought to levy state universal service fees on 35.5% of Vonage's Nebraska calling.  The Court of Appeals rejected the Nebraska argument, finding that the FCC's preemption of all state regulation of nomadic VoIP was not modified or inconsistent with the FCC's creation of a 64.5% safe harbor for USF purposes.  It is noteworthy, however, that the court focused expressly on "nomadic" VoIP, leaving open the possibility of a different outcome for fixed VoIP services because the FCC's earlier preemption order is based on the nomadic nature of the service being considered in that instance. Nebraska has now petitioned the FCC to modify its order to allow for state assessment of USF on VoIP providers.

Click here to read the Kelley Drye Client Advisory.
 

FCC Seeks Comments on Blue Casa Petition to Apply Access Charges to VNXX Calls Sent to ISPs

The FCC is seeking comment on Blue Casa Communications’ petition to apply access charges to VNXX calls sent to ISPs.

On December 19, 2008, Blue Casa filed a petition asking the FCC to issue a declaratory ruling that originating interstate switched access charges apply to all calls bound for Internet service providers (ISPs) that are delivered via Virtual NXX (VNXX) arrangements.

Blue Casa contends that ISP-bound VNXX traffic is subject to originating access charges under pre-existing Commission policy and that, accordingly, such traffic is “carved out” pursuant to section 251(g) from the scope of traffic covered by section 251(b)(5) of the Communications Act, as amended. Thus, Blue Casa seeks a ruling that originating interstate switched access charges, not reciprocal compensation charges, should now apply to calls bound for ISPs that are delivered via VNXX-type foreign exchange arrangements.

Blue Casa seeks this relief to resolve actual, on-going controversies with other competitive telecommunications carriers over their respective liability for invoiced originating access charges and reciprocal compensation charges.

Comments are due on March 12, and reply comments are due on March 23, 2009.

Qwest Files Access Charge Lawsuit Against CLECs in Seattle

Qwest has begun following in the footsteps of SBC/AT&T by bringing collection actions against CLECs and their IXC customers for access charges which are allegedly due for terminating traffic to Qwest customers. On November 26, 2008 Qwest sued several companies in federal district court in Seattle, Washington. Defendants included Anovian, Broadvox, Transcom Enhanced Services and Transcom Communications, Maskina and Unipoint. The lawsuit claims that long distance calls were terminated to Qwest local customers without paying access charges due to Qwest.