ISP-Planet Staff

March 24, 2000 (Reuters) — A U.S. Appeals Court on Friday struck down Federal Communications Commission (FCC) rules that would have reduced reciprocal compensation payments to competitive local exchange carriers (CLECs).

The rules said that calls to Internet service providers were similar to long distance calls and, therefore, were not subject to compensation.  CLECs had been gaining significant reciprocal compensation revenues from incumbents for such calls, but the rules threatened to eliminate that revenue.

Incumbents had said that traffic to ISPs, many of whom use the services of competitors, was a loophole and the FCC moved last year to close it.  The agency ruled that calls by computer users were more like long distance calls than local calls and, therefore, not subject to the reciprocal compensation payments.

In Friday's ruling, the Court of Appeals for the District of Columbia sided with competitors.  It said the FCC had not explained why calls to ISPs were more like long distance that local traffic. And the court pointed to earlier FCC decisions that appeared to favor the opposite conclusion.

With the FCC forced to revise its rules, the court said carriers could appeal to state regulators to sort out disputes over compensation for calls to ISPs.

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