Supreme Court Declines|Review of FCC Rate Cap

(CN) - The Supreme Court on Monday refused to review the Federal Communications Commission's order capping the fees that local exchange carriers can charge for connecting other carriers' customers to dial-up Internet service.

The high court turned down the appeal of two local exchange carriers, who challenged the agency's power to regulate interstate communications.

When a customer accesses the Internet through a modem, the call goes to a local exchange carrier, which typically hands the call off to another carrier. That carrier then connects the customer to an Internet service provider.

In 2008, the FCC decided to cap the rates that the first carrier paid the second to stop ISPs carriers from charging exorbitant fees for dial-up Internet access.

Before the cap system, carriers used a "reciprocal compensation" system to pay each other for connecting customers' calls. But because the traffic to ISPs flows one way, so did the money, requiring the FCC to impose the rate cap.

The D.C. Circuit upheld the FCC order in January, rejecting challenges by Core Communications, the Public Service Commission of New York and the National Association of Regulatory Utility Commissioners.

The court said it was reasonable for the FCC to apply the rate-cap system to ISP-bound traffic and to keep the reciprocal compensation system for all other traffic.

The Supreme Court on Monday turned down the carriers' appeal without comment.

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