Appeals judges rule fight over internet service belongs in state court

Posted 10:17PM on Friday 11th January 2002 ( 22 years ago )

ATLANTA - A dispute between BellSouth and other local telephone service providers over fees charged for internet calls must be decided in state court, a federal appeals court ruled. In a 2-1 decision, a panel of the 11th U.S. Circuit Court of Appeals said Georgia's Public Service Commission had no jurisdiction to decide the issue, nor did a U.S. District Court judge have the authority to uphold the PSC decision. The appeals court also said it could not side with Bellsouth on the fees because the dispute boiled down to an interpretation of a contract, which falls under the state court. The disagreement stemmed from the federal Telecommunications Act of 1996, which mandated interconnection agreements between former local-service monopolies, such as BellSouth, and other local providers. BellSouth entered into a contract with WorldCom Technologies in 1996 and with MCImetro the following year. Under the agreements, fees for local calls between BellSouth customers and customers of the other companies would be paid to the company where the call terminated. If a BellSouth customer called a WorldCom customer, then BellSouth would compensate WorldCom, and vice versa. The duration of the call was a major factor in determining the amount of the compensation. The problem arose with Internet calls. People spend more time on calls connected to the Internet than on voice lines, and BellSouth said it was having to pay an inordinate amount to WorldCom and MICmetro to compensate for calls to Internet service providers that were customers of those companies. Atlanta-based BellSouth asked the PSC to rule that Internet calls were long-distance calls not subject to the local-service contracts with the other companies. The PSC disagreed, and BellSouth took the matter to federal court, which also declined to rule in BellSouth's favor. Disagreeing with other federal circuit courts which have ruled in similar disputes, the 11th Circuit panel said Thursday that under the 1996 law, the PSC only had the right to approve or reject the contracts, not to interpret them. ``It would be grossly unwarranted to suggest that a quasi-legislative body, like the GPSC, would be better suited than a court to answer the strictly legal questions of contract interpretation,'' said the opinion by Judges Gerald Bard Tjoflat and Henry A. Politz, a Fifth Circuit judge designated to the case. Judge Rosemary Barkett dissented, saying the law granting state commissions to ``approve or reject'' interconnection agreements ``includes the authority to interpret and enforce those agreements.'' ``I agree with the determinations of the First, Fourth, Fifth, Seventh, Eighth and Tenth Circuits in this regard,'' Barkett said. Since BellSouth first raised the issue with the PSC, federal regulators have weighed in with a decision to reduce the amount phone companies pay their rivals to complete dial-up Internet calls, which could save the regional Bell companies billions of dollars a year. The commission set in place a two-year transition period, capping the amount one company pays another. After that time, the commission plans to restructure the system altogether. The FCC proposed that once the transition is complete, phone companies could recover the costs of starting and ending calls on their own networks, rather than trying to collect fees from competitors.

http://accesswdun.com/article/2002/1/200316