Court Rejects California Prepaid Wireless Fees

Northern California ruled the law and resolutions “conflict with federal law and are therefore preempted and unconstitutional.” MetroPCS asked the court to declare unlawful and stop enforcement of three CPUC resolutions implementing the state's Prepaid Mobile Telephony Service Surcharge Collection Act, which required prepaid wireless customers to pay a surcharge supporting state USF and certain CPUC fees. The company argued the CPUC portion of the surcharge impermissibly assesses interstate voice and broadband data revenue, conflicting with federal law including the Communications Act, the 2000 Mobile Telecom Sourcing Act and the U.S. Constitution's dormant Commerce Clause. The agency said there's no conflict with federal law because the commission used an intrastate allocation factor to remove interstate and international charges from the surcharge base. “The Court agrees with MetroPCS that the usage of a mandatory intrastate allocation factor conflicts with federal law because it deprives carriers of the ability to treat as intrastate for universal service purposes the same revenues that they treat as intrastate for federal USF contributions,” wrote Judge Susan Illston. “By using the intrastate allocation factor as the sole method for assessing the CPUC fees, the CPUC has deprived carriers of the ability to rely on alternative allocation methodologies, such as their actual revenue data.” The court disagreed with CPUC argument that MetroPCS was "judicially estopped" from challenging because it proposed that CPUC adopt an intrastate allocation factor. MetroPCS may challenge because it supported a “reasonable” estimate of the intrastate portion and argued that the CPUC didn’t act reasonably, said Illston. The regulator and MetroPCS parent T-Mobile didn’t comment Tuesday.