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Supreme Court Declines Telecom Rate Case

  Court Watch  -   POSTED: 2007/05/14 12:18

The Supreme Court Monday turned down an appeal from an Iowa telecommunications company that claimed Qwest Communications International Inc. owed it money for wireless phone calls that Qwest connected to its network.

At issue in the case, which was brought by Iowa Network Services Inc., is whether federal regulators have the final say on telecom rates or whether local call rates can be set by state officials.

Lower federal courts ruled in Qwest's favor and gave Iowa's state utilities board a role in resolving the dispute. By declining to take the case, without comment, the Court let stand the lower court rulings in Qwest's favor, which will save Qwest tens of millions of dollars in charges and interest that INS had sought.

James Troup, Iowa Networks' attorney, said the rulings undermined the ability of the Federal Communications Commission to enforce uniform rates across the country and could also affect other federally regulated industries, such as electric and gas utilities and railroads.

The quarrel began in the late 1990s, when INS sought to bill Qwest for wireless telephone calls that Qwest transmitted to INS's networks, which INS then sent to local phone companies. The calls were originated by third-party wireless carriers, not Qwest.

INS argued that Qwest did not provide them with enough information to determine which wireless companies originated the call, making it impossible to bill firms for the use of their network. At that point, INS sought payment from Qwest, based on rates that had been approved by the FCC.

Qwest, though, had sought a ruling in 2000 from the Iowa Utilities Board, which said that since the calls in question are local, rather than long-distance, they would not be subject to the FCC-approved rates.

Iowa Network Services said in its petition to the Supreme Court that the board's ruling overrides federally approved rates that require telecom carriers to charge the same rates to all customers, INS said.

A federal district court and the 8th Circuit Court of Appeals, however, agreed with much of the utility board's analysis. The 8th Circuit said that rather than nullifying the rates, the utilities board's ruling meant they didn't apply to local traffic.

The case is Iowa Network Services Inc. v. Qwest Corp., 06-1217.

Iowa Network Services owns a stake in Newton, Iowa-based Iowa Telecommunications Services Inc., whose shares dropped a penny to $21.88 in early trading. Qwest shares rose 9 cents to $9.86.


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