Sprint Faces Second Court Loss Over VoIP Rates

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By Kyle Daly

Sprint Corp. faced its second court loss in two weeks over the company’s attempts years ago to use federal communications law to avoid adequately paying smaller providers to connect voice over internet protocol (VoIP) calls to consumers.

The U.S. Court of Appeals for the Fifth Circuit said June 27 that the U.S. District Court for the Western District of Louisiana was right to order Sprint to pay back $8.7 million, plus $3.2 million in late fees, to CenturyLink Inc. for underpayment in connecting VoIP calls ( CenturyTel of Chatham, LLC v. Sprint Commc’ns Co. , 5th Cir., 16-30634, decision 6/27/17 ).

The Fifth Circuit ruled that Sprint was wrong to pay CenturyLink’s CenturyTel unit for VoIP calls using steeply discounted connection rates rather than paying standard telephone connection rates established by state regulators and the Federal Communications Commission.

Sprint in 2009 stopped paying CenturyTel government-mandated tariffs to deliver VoIP calls to users in states including Missouri and Louisiana. The company instead paid far lower rates that the FCC established years ago for local ISP-bound calls, generally taken to mean dial-up internet connections.

The Fifth Circuit rejected those lower rates, concluding that Sprint should have paid traditional tariff rates for VoIP calls. The court also said Sprint acted unreasonably in trying to recoup millions of dollars it had paid CenturyTel for VoIP connections before 2009.

Neither the Louisiana district court nor the Fifth Circuit sought to settle the question of whether VoIP calls count as information services under Title I of the Communications Act, or as telecommunications services under Title II of the act. The FCC under the Trump administration is weighing a plan to reverse the Obama-era classification of broadband as a Title II service subject to utility-style regulation. It’s unclear if the FCC will include VoIP in the effort. The FCC in the past has declined to definitively classify VoIP under communications law.

The Fifth Circuit ruling follows a similar decision from the U.S. Court of Appeals for the Eighth Circuit. That court June 23 affirmed an Iowa district court’s finding that the Iowa Utilities Board could approve and enforce VoIP connection rates that Windstream Holdings Inc. sought from Sprint.

To contact the reporter on this story: Kyle Daly in Washington at kdaly@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com

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