• On October 31, 2012, the Washington Utilities and Transportation Commission (WUTC) denied the joint motion to dismiss from Pac-West Telecomm, Inc. and Level 3 Communications, LLC in a consolidated proceeding against Qwest. Pac-West and Level 3 had filed complaints against Qwest in 2005 alleging that it was violating the parties’ interconnection agreements (ICAs) and the FCC’s intercarrier compensation rules by refusing to pay reciprocal compensation for terminating “Virtual NXX” (VNXX) ISP-bound traffic originated by Qwest customers. In 2006, the WUTC held that Qwest was required to pay reciprocal compensation for such traffic, without regard to whether such calls were considered local or interexchange. Qwest appealed that decision to the United States District Court for the Western District of Washington, which remanded the case back to the WUTC in 2007 and directed the agency to classify VNXX ISP-bound traffic as either within or without a local calling area under the FCC’s analysis in the ISP Remand Order.

Following the remand, the WUTC found that Pac-West and Level 3 are entitled to neither reciprocal compensation nor the rate established in the ISP Remand Order. It reasoned that the FCC’s rules address only compensation for traffic within a local calling area, and not interexchange traffic. The WUTC found that states retain authority under Section 251(g) of the Telecommunications Act of 1996 to apply access or toll charges to intrastate interexchange traffic. Further, the WUTC determined that the parties’ ICAs do not require Qwest to compensate Pac-West or Level 3 for VNXX traffic under either the FCC’s ISP-bound traffic rate or Section 251(b)(5) of the Act. Rather, the WUTC determined, the parties’ ICAs likely require the carriers to pay Qwest originating access charges for this traffic. In their joint motion to dismiss filed on June 1, 2012, Pac-West and Level 3 argued that the WUTC should dismiss the case due to the WUTC’s previous finding that VNXX ISP-bound traffic does not fall within the scope of the FCC’s ISP Remand Order, which, they asserted, “eliminated any jurisdictional nexus for further Commission action in this matter.” In denying the motion to dismiss, the WUTC stated that it would not reconsider its previous orders and was acting within its jurisdiction to respond to the court’s order on remand. Docket Nos. UT-053036 and UT-053039.