An Internet phone company providing dial-around long-distance services in Colorado must pay access charges to Qwest Communications International Inc. (www.qwest.com), a Denver District Court judge ruled.
Denver-based IP Services Inc. (www.ipserv.net), also known as Mountain Solutions Telecom Group and IP Telephony Inc., provides voice and data services over end-to-end IP networks in Tier III cities across the country in partnership with Cisco Systems Inc. (www.cisco.com).
The young company leases the network of ICG Communications Inc. (www.icgcomm.com) and resells services to about 5,000 customers in Colorado, routing calls across boundaries within the state. Since IP Services hasn't been paying access charges to Qwest – totaling about 4 cents at either end – its customers pay only a local fee for the calls. Qwest found it unfair and took the 18-month-old company to court last year.
IP Services argued that it is not responsible for switched access charges because its calls were routed via the Internet backbone and therefore are an enhanced service that state and federal telecom regulators exempt from access charges.
But the court disagreed, claiming that the company acts as a long-distance carrier in that it uses part of Qwest's network when its calls are delivered to and from Qwest's customers.
“IP is the long-distance carrier for the customer making the long-distance call and is, therefore, ultimately responsible for the switched access charges,” Judge R. Michael Mullins wrote in his summary judgment.
Mullins says it’s illegal for IP telephony companies to use dial-around services without paying access charge fees to Qwest, even when the companies have no direct business relationship with Qwest and provide service to consumers through resale agreements with other providers. The judge says that if IP Services or ICG doesn't pay the charges, the companies are engaged in toll bridging, which is illegal.
It isn’t likely that ICG will pony up the money since it has fallen on hard financial times itself.
Martin F. McDermott III, president and COO of IP Services, claims the judge's ruling “flies in the face” of earlier rulings by state and federal regulators and is so broadly written that it threatens to put Internet telephony companies, including his, out of business in Colorado.
“By requiring us to make these payments, the court has reinstated the monopoly system,” McDermott said.
McDermott fears that the judge's ruling could force his company to pay damages of anywhere between $1 million to $4 million, which effectively “could put us out of business,” he said.
McDermott plans to take his case to the Colorado PUC (www.dora.state.co.us/puc), which exempts IP telephony companies from paying access charges, as does the FCC (www.fcc.gov).
A Qwest spokesman said the judge’s order isn’t out of line since all IXCs are required to pay access charges.
The court will decide how much the company will have to pay Qwest unless the two companies reach their own settlement agreement.
