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WorldCom, Inc. v. Federal Communications Commission

Section 251(g) of Telecommunications Act did not permit FCC to "carve out" calls made to ISPs within local calling area from reciprocal compensation arrangements between LECs.

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Argued February 12, 2002

Section 251(b)(5) of the Telecommunications Act of 1996, 47 U.S.C. �� 151-714 (the “1996 Act” or the “Act”), directs all local exchange carriers (“LECs”) to “establish reciprocal compensation arrangements for the transport and termination of telecommunications.” 47 U.S.C. � 251(b)(5). In the order before us the Federal Communications Commission held that under � 251(g) of the Act it was authorized to “carve out” from � 251(b)(5) calls made to internet service providers (“ISPs”) located within the caller’s local calling area. It relied entirely on � 251(g). Because that section is worded simply as a transitional device, preserving various LEC duties that antedated the 1996 Act until such time as the Commission should adopt new rules pursuant to the Act, we find the Commission’s reliance on � 251(g) precluded. Thus we remand the case. Because there may well be other legal bases for adopting the rules chosen by the Commission for compensation between the originating and the terminating LECs in calls to ISPs, we neither vacate the order nor address petitioners’ attacks on various interim provisions devised by the Commission.

Due in part to the 1996 Act, local telephone service areas are now typically (perhaps universally) served by more than one LEC. The reciprocal compensation requirement of � 251(b)(5), quoted above, is aimed at assuring compensation for the LEC that completes a call originating within the same area. Although its literal language purports to extend reciprocal compensation to all “telecommunications,” the Commission has construed it as limited to “local” traffic only. In the Matter of Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, 11 FCC Rcd 15499, 16012-13, � � 1033-34, 16015-16, � 1040 (1996) (“Local Competition Order”); 47 C.F.R. � 51.701(a). For long distance calls, by contrast, the long-distance carrier collects from the user and pays both LECs-the one originating and the one terminating the call. Local Competition Order, 11 FCC Rcd at 16013, � 1034.

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