Sprint Advises FCC to Build Case for ISP Rate Before Entering Court
Sprint Nextel urged the FCC to strengthen its legal argument for keeping a $0.0007 rate for ISP-bound traffic. In a reconsideration petition filed last week, Sprint said it agreed with the FCC’s November order responding to the remand of the U.S. Court of Appeals for the District of Columbia Circuit. But the order -- now facing an appeal in that court -- could be improved by adding an alternative argument, Sprint said: “Given the complexity of the statutory scheme, the lengthy history of litigation concerning compensation for carrying ISP-bound traffic, and the pending petition for review filed by Core Communications in the D.C. Circuit, the Commission would be well-served by relying on two alternative legal theories.”
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A fight is brewing between big carriers and dial-up ISPs in the D.C. Circuit over the sufficiency of the FCC’s November order (CD Dec 17 p2). Last month, ISP Core filed a petition for review, condemning the order as an incomplete response to the court’s mandamus. This month, Sprint asked to formally intervene. Other carriers followed, with AT&T, Qwest and Verizon filing a joint motion and Level 3 filing a third. The intervening carriers have all sided with the FCC and want to keep the $0.0007 rate for ISP traffic. The FCC’s response is due Wednesday.
In justifying the $0.0007 rate for ISP traffic, the FCC shouldn’t rely only on its section 201 authority, as it did in the agency’s November order, Sprint said in the reconsideration petition. The FCC should add that sections 251(b)(5) and 252(d)(2), governing reciprocal compensation arrangements, also justify the rate, the carrier said. Because the D.C. Circuit said in its 2002 WorldCom v. FCC ruling that the FCC’s ISP-bound traffic rules “are likely permissible under section 251(b)(5), the court is extremely unlikely to overturn a rate cap based on that provision,” Sprint said.
Section 252(d)(2) set a standard requiring reciprocal compensation rates to be based on “a reasonable approximation of the additional costs” of terminating traffic, Sprint said. “Record evidence places these ‘de minimus’ costs between $.00010 and $.00024 per minute for existing modern circuit switches, far below the existing rate cap of $.0007,” Sprint said. “In short, if the Commission adopts the ‘additional costs’ standard … there is no question that $.0007 is a reasonable rate cap.”
The FCC can also justify the $0.0007 rate by retaining TELRIC as the appropriate standard, Sprint said. Under TELRIC, “'carriers of all types and sizes’ have entered into voluntary agreements for the exchange of massive volumes of traffic at termination rates” of $0.0007 or less, Sprint said. “There is no reason why carriers would voluntarily agree to rates that are not fully compensatory,” it said.
Adding Sprint’s suggested “second, independent justification” to the order wouldn’t be hard, and probably wouldn’t take more than “a few pages,” Sprint said. The FCC already provided much of the analysis in two proposals to revamp intercarrier compensation, which were released as appendices to the further notice in the November order, Sprint said. Those plans explained that $0.0007 is a reasonable rate cap for all traffic, it said.
Of the carriers wanting to intervene in the Core appeal, only Sprint has formally urged tweaks to the FCC order. “We support the order,” said a Verizon spokesman. Spokesmen for Qwest, AT&T and Level 3 didn’t comment by our deadline.