Peevey

These appeals arise out of a dispute between local exchange carriers over the identification of internet-bound traffic, and compensation for delivery of telephone calls to internet service providers and for calls that appear to the customer to be made within a local area code but in fact are not. One of the carriers, Verizon California, Inc., had an exclusive franchise within California before passage of the Telecommunications Act of 1996, 47 U.S.C. § 151 et seq. However, the Act established a competitive system whereby, “incumbent” local exchange carriers such as Verizon must share their networks with “competitive” carriers such as Pac-West Telecomm, Inc. It also provides that disagreements are to be referred for arbitration to the state public utility commission, in this case, the California Public Utilities Commission (CPUC). Verizon and Pac-West entered into an interconnection agreement in 1996, but when they reached an impasse in negotiating a new agreement in 2001 and referred the dispute to the CPUC, the commission ruled in Pac-West’s favor that (1) during the interim period before a new agreement was in place, the parties’ 1996 agreement continued in force such that…