Verizon Communications will pay MCI $169 million in cash to settle six years of legal wrangling over inter-connection fees. In addition, the New York and Ashburn, Va., telecom companies agreed to a rate schedule for handling each other’s traffic over the next three years.
“Both sides decided they would be better off resolving their differences and putting an end to unproductive litigation,” Verizon spokesman Bob Varettoni told internetnews.com.
Varettoni said Verizon has similar disputes with other carriers, including AT&T . It will continue to work through the legal sysetm on those cases. MCI represented the largest such case however, he said.
The deal received final approval yesterday from Judge Arthur J. Gonzales, who is overseeing MCI’s reorganization in the U.S. Bankruptcy Court for the Southern District of New York.
“The settlement is fair and reasonable under the circumstances and in no way unjustly enriches any of the parties,” Gonzales wrote.
A spokesperson for MCI did not immediately respond to a request for comment.
Since 1997, MCI, formerly known as WorldCom, argued that Verizon should pay “reciprocal compensation” on calls made by its customers to MCI’s Internet service provider customers. Verizon maintained that no fees were owed.
In addition to avoiding additional litigation costs, another reason for avoiding trial is that case law on the topic remains hazy.
Several disagreements are before state and federal judges, private arbitrators and regulatory boards. And the Federal Communications Commission is looking into the issue.
But according to Judge Gonzales, “results have been mixed and many of the cases remain pending.”
“The settlement agreement is in the best interest of the debtors, their estates and creditors because it… resolves all litigation and provides for a substantial cash payment,” Gonzales concluded.
For MCI, the Verizon pact ties up one more loose end as it prepares to emerge from Chapter 11 bankruptcy protection early next year.
The company has been working to regain its financial and ethical footing after a massive accounting scandal that rocked Wall Street and the telecom industry.
