• On June 21, 2011, the US Court of Appeals for the Ninth Circuit reversed a 2008 California federal district court order affirming a 2006 California Public Utilities Commission (CPUC) decision that AT&T Communications of California, a LEC, must pay tariffed access charges to Pac-West Telecomm for termination of traffic to Internet Service Providers. The court of appeals found instead that the FCC’s $0.0007 rate for interstate ISP traffic preempts the CPUC decision and applies to ISP-bound traffic. It stated that “[a]lthough the [FCC’s] ISP Remand Order could be clearer, we are convinced that the CPUC and the district court erred in holding that it does not apply to ISP-bound traffic exchanged between two CLECs.” It further reasoned that “[t]he defining feature of the problem the FCC sought to remedy is thus the type of traffic being exchanged—ISP-bound traffic.” Finally, the court found support in the FCC’s amicus brief which argued that “the regulatory language, the FCC’s description of the scope of its compensation regime, and the regulatory purpose demonstrate that the new markets rule (until forborne from on October 18, 2004) and the rate caps ... apply to CLEC-to-CLEC ISP-bound traffic.” AT&T Commc’ns of Cal., Inc. v. Pac-West Telecomm, Inc., No. 08-17030 (9th Cir.).
  • Also on June 21, the Bankruptcy Court of the US District Court for the Southern District of New York provisionally accepted DISH Network’s $1.4 billion bid for bankrupt TerreStar Network Inc. ahead of a June 30, 2011 auction. The bankruptcy court noted the lack of objections to the bid, as well as the support DISH’s bid received from the committee of unsecured creditors. DISH’s bid reportedly exceeds TerreStar’s secured debt by $90 million, and will be an all-cash transaction. This would mark DISH’s third significant bankruptcy-related acquisition, having completed acquired a bankrupt Blockbuster and satellite provider DBSD North America earlier this year for $320 million and $1.4 billion, respectively. In re TerreStar Networks Inc., Br. No. 1:10-bk-15446 (S.D.N.Y.).