By PETER HUSSMANN
A small Jasper County telephone company is being sued by long distance telephone giant Verizon Business Services over what it calls "an unlawful scheme... to obtain "money that Verizon Business did (and does) not actually owe."
Verizon, a subsidiary of MCI Communications, filed suit in federal court on Monday against the Sully Telephone Association claiming the Jasper County local telephone exchange carrier engaged in a "traffic pumping" scheme that resulted in artificially inflated charges to the long distance carrier.
Local exchange carriers like Sully provide not only services to local users, but also to other telecommunication service providers like Verizon. Among those services is "terminated switched access service" where a company like Sully delivers or "terminates" to its own end users calls that were made by users located outside the local calling area. The long distance carrier that carried the call between the calling areas pays the local exchange carrier a fee for delivering the call.
Verizon contends in its suit that beginning around April 2007, Sully Telephone "devised and engaged in an unlawful scheme of a kind commonly known as 'traffic pumping' or 'access stimulation'" to obtain money from Verizon and others "by purporting to provide inflated quantities of terminating switched access." The suit contends "Sully set its regulated rates for terminated switched access service at relatively high levels calculated according to the low volume of service that, for a period before April 2007, it had provided."
In order to garner additional fees, Verizon alleges that Sully then entered into an arrangement or arrangements with one or more companies that provide free or heavily discounted conference-calling, chat-line or international calling that generated "volumes of call traffic that far exceeded Sully's previous levels of terminating switched access service."
Verizon goes on to allege that Sully then billed Verizon "as though the calls generated by the traffic-pumping scheme were calls to Sully's end users." Verizon contends the companies that received these calls were not Sully's end users and that Verizon did not and does not owe Sully for the billed services.
According to the suit, the amount Sully charged Verizon increased by "many multiples" after the "traffic-pumping" scheme was hatched. Specifically, Verizon claims in the suit, Sully invoiced the long distance carrier $2,976.94 for terminating switched access service in March 2007 with those bills jumping to $16,076.41 in April 2007, $72,060.51 in May and $223,743.64 in August 2007, the highest amount from January 2005 to today.
The suit alleges Sully Telephone "divided the charges" with the companies that had generated the increased telephone traffic.
Verizon is asking that Sully Telephone be required to repay $208,314 that it has paid attributable to the "disputed traffic" and is asking the court to issue a declaratory judgment saying Verizon does not owe Sully another $1,566,833 in invoices that Verizon has refused to pay.
This is not the first time large long-distance carriers have brought suit against small Iowa telephone companies over traffic pumping. A 2007 telecom industry piece outlines some of what has transpired before and how the small carriers are fighting back against the long-distance giants. You can read that story here.
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