CORETEL VIRGINIA, LLC v. VERIZON VIRGINIA, LLC., NO. 13-1765

Decided: May 13, 2014

The Court held that Verizon Virginia, LLC (“Verizon”) was required to offer entrance facilities to CoreTel Virginia, LLC (“CoreTel”) at cost-basis for interconnection; CoreTel’s ports and multiplexers did not qualify as entrance facilities; Verizon did not have to pay reciprocal compensation charges for calls even if it did not provide “EMI data” to CoreTel; and CoreTel did not provide “terminations in the end office of end user lines” because it did not utilize its own facilities to connect its customers by converting incoming calls into Internet data streams.

Congress passed the Telecommunications Act (the “Act”) to reduce the competitive advantages enjoyed by telecommunications carriers, known as “incumbent carriers,” over new market entrants, known as “competing carriers.”  Verizon, an incumbent carrier, entered into an agreement (the “ICA”) pursuant to the Act to share network resources with CoreTel, a competing carrier.  A dispute arose between CoreTel and Verizon regarding the ICA, with claims and counterclaims between the two parties.  The district court organized the various claims into four broad categories: (1) Verizon’s facilities claims relating to its bills for the entrance facilities CoreTel leased; (2) CoreTel’s facilities claims relating to its bills for the entrance facilities that CoreTel contends Verizon leased; (3) Verizon’s reciprocal compensation claims; and (4) Verizon’s claims that CoreTel improperly billed it for services under CoreTel’s tariffs.  The district court granted summary judgment in favor of Verizon on all claims; CoreTel appealed.

For the first category of claims, the Fourth Circuit determined that CoreTel was entitled to summary judgment on both parties’ claims for declaratory relief that related to Verizon’s facilities charges.  The Court noted that a provision in the ICA authorized CoreTel to lease entrance facilities from Verizon at “rates[, which were listed at cost basis] and charges, set forth in this Agreement.”  For the second category of claims, the Court reasoned that CoreTel’s trunk ports and multiplexers are not entrance facilities, Verizon was entitled to summary judgment on CoreTel’s facilities claims.  For the third category of claims, the Court reasoned that Verizon did not have to pay reciprocal compensation charges for calls even if Verizon did not provide “EMI data” to CoreTel because Verizon and that data were needed to properly categorize every call.  For the fourth category of claims, the Court reasoned that CoreTel did not deploy its own facilities to connect it to its customers by converting incoming calls into an Internet data stream once they reached CoreTel’s office.  Accordingly, CoreTel did not provide “terminations in the end office of end user lines” as required by its tariffs.  Thus, CoreTel’s general definition of switched-access service that explicitly permitted CoreTel to charge for that service did not override the more specific definition of end-office switched access provided in the Communications Act of 1934.

Full Opinion

Chris Hampton

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