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Sprint Nextel Joins Iowa Lawsuit Bandwagon; Qwest Complains to FCC
By Jill Morgan
Sprint Nextel announced this week that it had filed lawsuits against 14 Iowa telcos and their partners in what Sprint refers to as “a wide-ranging scheme to abuse the intercarrier compensation system.” Sprint now joins AT&T and Qwest, which are suing Iowa LECs over what they refer to as a traffic pumping scheme.
The lawsuits stem from the popular use of free calling services. These free services include free conference calls, international calling services and adult chat lines. According to the large telcos, these services are available compliments of high access charges that they must pay to the Iowa telcos. The free calling companies obtain local numbers from Iowa and are able to profit from the “free” prices because they share in the access charges obtained by the LEC.
For those not familiar with the practice, long distance companies pay access charges to a LEC for every long distance call their wireless and long-distance customers place to customers in the LEC’s territory.
Over the past year, a number of LECs in Iowa have raised their access charges up to 13 cents per minute. Sprint says that the access fee is about 26 times higher than some of the other access fees in the industry.
According to a statement by Sprint, “Left unchecked, such schemes will grow and force carriers to abandon the unlimited long distance pricing plans.” The statement says that “this illegal scheme abuses a system intended to keep the price of basic telephone service affordable for rural consumers.”
In its court filings, Sprint Nextel contends that “pumped traffic” cannot be legitimately considered “terminating access traffic” as defined by FCC regulations or even by the interstate access tariffs filed by the LECs themselves. If pumped traffic is not legitimate access traffic, then any attempt by the LECs or their partners in this arbitrage to collect money from long-distance providers is illegitimate.
This week, a new coalition called the Coalition for Carrier Neutrality was formed by the Iowa LECs and their partners in an effort to clarify several statements they believe are false and misleading. According to the coalition, the traffic in question is not illegal. The group is citing the fact that the FCC has previously rejected the same types of arguments that Sprint is putting forth.
Other issues that the coalition is trying to clarify include call blocking and quality degradation. AT&T and Qwest were recently accused by the Iowa LECs of blocking calls to the various free-service numbers. The LECs complained to the FCC, and in response FCC Chairman Kevin Martin told the companies that it was illegal to block calls and threatened legal action if the call blocking continued. According to the coalition, the call blocking is not as severe as it was a few weeks ago but it is still continuing, and call degradation is a definite problem as well. “Previously no calls were going through, but now only 50 percent to 80 percent are completed. Coalition members engineer their networks based on a call completion rate of [97 percent or higher], and a 20 percent to 50 percent drop does not occur by accident,” the coalition claims.
Qwest Files Formal Complaint
Also in this week’s news, Qwest has filed a formal complaint to the FCC regarding these access fee payments. Previously, service providers had been challenging the access fees through the court systems.
In the complaint, Qwest did not reveal how much money it believes it is being wrongfully charged, but executives recently stated that $10 million to $15 million in “inappropriate” traffic traversed its network in the fourth quarter of 2006.
Qwest cited Farmers and Merchants Mutual Telephone Co. of Wayland, Iowa, as a company charging unreasonably high call-termination fees. According to the filing, traffic delivered to the Farmers switching center in southeastern Iowa increased from 40,000 minutes in July 2005 to more than 10 million minutes in December 2006.
The Usual Suspects
Much like the lawsuits filed earlier this year by AT&T and Qwest, this week’s Sprint Nextel filing named Superior Telephone Cooperative, the Farmers Telephone Company of Riceville, Reasnor Telephone Co., Farmers and Merchants Mutual Telephone Co., Aventure Communication Technology, Dixon Telephone Co., Great Lakes Communication Corp., Interstate 35 Telephone Co., Mediapolis Telephone Co. and Spencer Municipal Utilities. The complaint also includes Global Conference Partners, operator of FreeConference.com; Keenan Communications Inc., operator of QualityConferenceCall.com; Future Fone Services; and FuturePhone.com LLC, operator of FuturePhone.com.
Amidst all the mudslinging from all the various parties, the issues most on the minds of industry watchers include whether AT&T, Qwest and Sprint Nextel will be required to pay the access charges, and whether Qwest’s complaint to the FCC will spur changes in the interconnection and termination rules.
Comments and feedback welcome, please email Jill Morgan at jmorgan@billingworld.com.
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