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Verizon Maryland Inc. v. Public Service Commission of Maryland

Telecommunications Act of 1996 permitted telecommunications company to sue state in federal court in dispute over payments owed to another company under reciprocal compensation agreements.

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These cases present the question whether federal district courts have jurisdiction over a telecommunication carrier’s claim that the order of a state utility commission requiring reciprocal compensation for telephone calls to Internet Service Providers violates federal law.

I.

The Telecommunications Act of 1996 (1996 Act or Act), Pub. L. 104-104, 110 Stat. 56, created a new telecommunications regime designed to foster competition in local telephone markets. Toward that end, the Act imposed various obligations on incumbent local-exchange carriers (LECs), including a duty to share their networks with competitors. See 47 U. S. C. �251(c) (1994 ed., Supp. V). When a new entrant seeks access to a market, the incumbent LEC must “provide … interconnection with” the incumbent’s existing network, �251(c)(2), and the carriers must then establish “reciprocal compensation arrangements” for transporting and terminating the calls placed by each others’ customers, �251(b)(5). As we have previously described, see AT&T Corp. v. Iowa Utilities Bd., 525 U. S. 366, 371-373 (1999), an incumbent LEC “may negotiate and enter into a binding agreement” with the new entrant “to fulfill the duties” imposed by ��251(b) and (c), but “without regard to the standards set forth” in those provisions. ��252(a)(1), 251(c)(1). That agreement must be submitted to the state commission for approval, �252(e)(1), which may reject it if it discriminates against a carrier not a party or is not consistent with “the public interest, convenience, and necessity,” �252(e)(2)(A).

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