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AT&T and Sprint in battle over interconnecting fees goes to FCC

Discussion in 'Wireless News' started by Fire14, Mar 18, 2008.

  1. Fire14

    Fire14 Easy,Cheap & Sleazy
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    Sep 27, 2002
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    AT&T, Sprint spat over fees goes to FCC

    FCC to Decide AT&T-Sprint Nextel Tangle Over Proposed Contract to Use Each Others' Networks

    Contract battles with phone companies are no fun — just ask anyone who's tried to get out of one.

    But when phone companies tussle over terms of contracts they have with each another, those fights don't just get heated, they get kicked up to federal regulators to referee.

    AT&T and rival Sprint Nextel are in a bitter dispute over fees to use one another's voice networks. The nation's largest phone company doesn't want Sprint expanding a no-fee deal to nearly half the country. So it's taken the fight from the states to the Federal Communications Commission.

    If AT&T doesn't get its way, Sprint can go fee-free into 22 states and potentially cost its rival millions in annual revenue.

    Carriers routinely negotiate so-called interconnection agreements so they can exchange customer calls on each others' networks. The agreements contain rates, called access charges, that phone companies charge competitors to connect calls. Carriers sometimes agree not to bill each other for traffic on their networks — an arrangement known as "bill and keep" that AT&T Inc. and two Sprint Nextel Corp. subsidiaries have had in nine states, including Kentucky, since 2001.

    Last year, Sprint decided it wanted to expand the arrangement to all it subsidiaries where San Antonio, Texas-based AT&T operates.

    Sprint, the nation's third-largest wireless carrier, said it can do this by applying a government condition accepted by AT&T in its 2006 buyout of BellSouth Corp. But AT&T claimed its rival is misinterpreting the clause and filed the complaint with the FCC.

    The issue doesn't directly affect customers, but Sprint said any money saved from these contracts could be reinvested into network and customer service improvements.

    The situation has major monetary implications for AT&T, but is equally important to Sprint, which is in a financially tight situation, said Jessica Zufolo, an independent telecom analyst with Medley Global Advisors.

    Sprint has struggled since its 2005 acquisition of Nextel, beset by technical and marketing problems and difficulty in merging the two companies' work forces. The Overland Park, Kan.-based company recently reported a massive fourth-quarter loss of $29.5 billion, or $10.36 per share.

    "They're strapped and a win for them on this one would be a huge upside, but it's not certain which way it's going to go," Zufolo said.

    An FCC spokesman said he could not comment on pending matters before the agency, which is not under any deadline to rule on AT&T's request.

    Analysts say access charges are a major source of revenue for companies, possibly amounting to hundreds of millions of dollars a year. AT&T and Sprint declined to provide financial details on contracts with one another.

    Last September, Kentucky's public service commission ruled that Sprint could expand that interconnection agreement — including the no-fee arrangement — to its other two subsidiaries within the state, a move that AT&T fought, lost and is now appealing. State regulators set the rates on access rates.

    AT&T also rebuffed Sprint when it wanted to transfer that agreement to other states, where both have made their cases. Sprint said the FCC provision voluntarily accepted by AT&T back in 2006 permits that, but an AT&T spokesman contends Sprint is "wrongly applying" the provision to get "an unwarranted financial windfall."

    That provision says any AT&T competitor can essentially take an interconnection agreement it has in one state and replicate it in the other states. The provision was designed to reduce the costs of negotiating such agreements.

    "Sprint Nextel is twisting the clear language of our merger commitment because it wants an agreement which costs them nothing transferred to other states," said AT&T spokesman Michael Balmoris. The agreements, he said, are "subject to state- specific circumstances, such as pricing plans."

    Sprint maintains that AT&T is reneging on the deal it made with the FCC two years ago.

    "Our worst suspicions about AT&T have come true," said Sprint spokesman John Taylor. "They just said whatever they needed to say in order to win approval of their merger with BellSouth."

    Sprint has picked up some major allies, at least in FCC filings.

    Several companies, including MetroPCS Communications Inc., Comcast Corp. and Charter Communications Inc., said they are concerned about AT&T's actions and some outlined their own problems trying to get agreements duplicated in several AT&T states.

    The No. 2 telecom company weighed in, echoing more of Sprint's argument than that of their bigger rival. In its filing, Verizon Communications Inc. said that AT&T's delay "does create concern that its petition may be part of a broader effort" to avoid complying with the agency's condition.

    Sprint also maintains that AT&T is trying to run out the clock on the provision, which expires June 29, 2010.

    After that date, carriers that applied the provision would have to negotiate new agreements with AT&T.

    AT&T, Sprint Spat over Fees Goes to FCC
  2. Eric47

    Eric47 Bronze Senior Member
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    Dec 25, 2007
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    hmm...so its like free m2m for the company so they can turn a profit off charging their people for it...gotcha...
  3. hf1khal

    hf1khal Who am I to judge
    Senior Member

    Dec 2, 2006
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    iphone 4, 3G S, BB 9700
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    Sprints needs t catch every single break or any sneeky way to enhance its bottom line. What I would like to know, does VZW provide the same terms to other providers!

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