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Click here for the full text of this decision FACTS:The defendants, the Commissioners of the Texas Public Utilities Commission, challenge the district court’s order granting the motion for summary judgment of plaintiffs AT&T Corp. and AT&T Communications of Texas, LP. The district court determined that the Telecommunications Act of 1996 pre-empted the Texas statute, which imposed a regulatory fee on intrastate, interstate and international calls originating in Texas. HOLDING:Affirmed. The court agrees with the district court that the Texas assessment on multijurisdictional carriers burdens those carriers more than purely interstate carriers. The assessment is discriminatory, in conflict with 254(f) of the TA96, and pre-empted. AT&T claims that the Texas universal service assessment is pre-empted through conflict pre-emption. The critical issue in this case is whether the Texas universal service assessment conflicts with 254(f) of the TA96. This court has previously found a similar universal service regulatory funding scheme to be inequitable and discriminatory. In Texas Office of Public Utility Counsel v. FCC, 183 F.3d 393 (5th Cir. 1999), this court determined that the FCC could not collect on both interstate and international calls because such a regulation was inequitable and discriminatory in violation of 254(d). Given the symmetry of 254(d) and (f), TOPUC dictates the result in this case. The assessment of interstate and intrastate telecommunications revenues has the same inequitable and discriminatory effect as the FCC’s assessment of interstate and international revenues in TOPUC. Given the state regulation scheme multijurisdictional carriers will be forced to pay an approximate 11 percent fee on their revenue derived from interstate telecommunications calls, while their pure-interstate-provider competitors pay only the 7.28 percent federal fee on interstate revenues. The result is a regulation that is clearly unfair and discriminates between telecommunication service providers based solely upon their presence in the intrastate market. In TOPUC there was clear evidence that COMSTAT carried so few interstate calls that it was forced to pay more in universal service fees than it realized in interstate revenues, the revenues that triggered the federal fee. The court determines that AT&T has not presented evidence that its universal service fee obligation outweighs its intrastate revenues. Nevertheless, the court states, the absence of such evidence does not defeat its assertion that the state regulation is discriminatory. Regardless of the amount of intrastate revenues a carrier earns, the double assessment of interstate revenue puts multijurisdictional carriers at a distinct competitive disadvantage compared with the pure interstate carriers. The funding mechanism, therefore, burdens multijurisdictional carriers more severely than pure interstate or intrastate carriers. AT&T is damaged more than its non-multijurisdictional competitors thus making the PUC regulation discriminatory and in violation of 254(f). OPINION:Davis, J.; Reavley, Davis and DeMoss, JJ.

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