MANHATTAN (CN) – The New York Public Service Commission overstepped its authority by establishing a rate for all wireless traffic between telecom giants and a local carrier, Sprint and Nextel claim in Federal Court. Sprint and Nextel claim the state ignored their complaints that Xchange Telecom was “exploiting the intercarrier compensation system through a traffic pumping scheme.”
Sprint and Nextel claim the commission did not give them a chance to contest Xchange’s petition for “reasonable” compensation.
Sprint Spectrum, Nextel of New York and Nextel Partners of Upstate New York – all Delaware companies – say when their customers place calls, Delaware-based Xchange receives them and directs them to the dialed parties.
Xchange customers also originate calls that are delivered to Sprint for delivery, or “termination,” but Sprint and Nextel claim they direct a much higher volume of traffic to Xchange than they receive.
While renegotiating contracts with Xchange between 2005 and 2007, the telecom giants say they learned that Xchange “was not forthcoming regarding pertinent information about its traffic” and was creating excessive traffic volumes through a “traffic-pumping” scheme.
When negotiations came to a halt, Xchange complained to the New York State Public Service Commission that Sprint did not pay it “reasonable terminating compensation.”
After ignoring Sprint’s motion to dismiss, the commission issued an order in February that set a reciprocal compensation rate of $0.001069 per minute for interconnection mobile traffic, according to the complaint.
Sprint and Nextel say the commission does not have jurisdiction to make such a ruling, which incorrectly assumes all traffic is intrastate.
They also claim the commission did not provide an opportunity for Sprint and Nextel to challenge Xchange’s claim and ignored their complaints of “traffic pumping.”
Sprint and Nextel sued Xchange and the five commissioners of the Public Service Commission, seeking declaratory and injunctive relief. They allege violations of the Supremacy clause of the Constitution and state due process violations.
They are represented by Richard Jarashow with McGuireWoods.