D.C. Circuit Vacates FCC Order on Telecomm Fees

WASHINGTON (CN) – Throwing out a ruling against AT&T, the D.C. Circuit found that the Federal Communications Commission did not explain why the telecomm giant should be charged more for connecting online phone calls.

On Friday, a three-judge panel of the D.C. Circuit vacated an FCC ruling finding that AT&T, which connects phone calls made using a voice-over-internet-protocol, or VoIP, system, is subject to paying higher fees for making the connection.

VoIP calls are typically connected by a local exchange carrier and AT&T is not considered local, but rather an interexchange connector, Judge Stephen Williams noted in the 18-page ruling.

The apparent confusion about the designation caused Williams to walk back the FCC’s 2015 ruling, since the agency did not correctly determine how AT&T’s services actually function.

“Resolution of the dispute turns on how the disputed services are to be classified,” Williams wrote. “The Federal Communications Commission says that they are end-office switching services. Petitioner AT&T says that they are tandem switching services. The prescribed rates for the latter have generally been lower; AT&T has no objection to paying them.”

In lay terms, an end-office switching service involves any call that is patched through directly from consumer to consumer. Examples of end-office switching include call forwarding or call waiting.

Tandem switching, by contrast, does not connect consumers directly. For example, when a consumer calls an 800 number, the connection must be switched from one telecommunications company to another.

The FCC found last year that interexchange-call services qualify as end-office access, subjecting AT&T to higher fees.

Williams ruled Friday that the FCC did not adequately explain its 2015 decision.

“In the end, we find that the declaratory ruling does not disclose the Commission’s reasoning with the requisite clarity to enable us to sustain its conclusion,” the judge wrote. “We therefore vacate and remand the order to the Commission for further explanation.”

Williams was joined on the three-judge panel by Judges Judith Rogers and A. Raymond Randolph.

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