9th Cir. Rejects FCC Rule Prohibiting RLECs from Recouping Fees for Non-Access, Wireless Traffic Transport & Termination


The 9th Circuit Court of Appeals recently rejected and remanded the FCC’s rule (§ 20.11(d)) that prohibited rural LECs from filing state tariffs to recover their costs for transporting and terminating non-access calls for CMRS (wireless) carriers.  Ronan Tel. Co. v. FCC, No. 05-71995, slip op. (9th Cir., August 21, 2013).

In 2005, the FCC amended its rules in a manner that stripped rural LECs from their ability to file tariffs that governed the transport and termination of intra-MTA (Metropolitan Trading Area) traffic sent by wireless carriers.  The rule prohibits LECs from “imposing compensation obligations for [non-access traffic] upon [CMRS] service providers pursuant to tariffs.”  Rather, such traffic is subject to negotiated and, if necessary, arbitrated interconnection agreements.  The obligation to negotiate interconnection agreements with large national or regional wireless carriers has been a significant burden for many small LECs.

Two rural LECs from Montana sought judicial review of FCC’s new rule.  They argued the FCC failed to consider the effects of eliminating state tariffs on rural LECs.  The 9th Circuit agreed.  The court noted section 251(f)(1)(A) of Telecommunications Act of 1996 (TCA) provided rural LECs with the ability to receive exemptions from the TCA’s obligation to negotiate and arbitrate call termination rates with other carriers, including CMRS operators.  Such exemption authorizes a qualified LEC to rely on state tariffs for its cost recovery. Further, the court concluded the Commission failed to “examine the relevant data and articulate a satisfactory explanation for its action,” and also neglected to “consider an important aspect of the problem.”  The FCC simply failed to justify its order, according to the court.  The rule was remanded to the Commission for further consideration.

We expect the FCC to answer the remand with a public notice seeking a new round of comments and replies that discuss the effect of § 20.11(d) on rural LECs and that such process will likely take between 12 and 18 months or even longer to complete.  In the interim, rural LECs (or otherwise qualified, interconnected VoIP providers with CLEC status) may wish to consider whether to file non-access tariffs for intra-MTA wireless traffic with their state commission.  Such tariffs would avoid the need to negotiate new interconnection agreements with wireless carriers and permit the rural company to take advantage of the filed rate doctrine.

If you have questions about the Ronan case or would like to discuss the potential filing of a non-access tariff, please contact Robert Jackson.

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