WASHINGTON, Sept 2 A U.S. appeals court on
Tuesday rejected Sorenson Communications Inc's challenge of a
2013 order by the Federal Communications Commission that cut the
amount the company get paid for a service to help hearing- and
speech-impaired people make phone calls.
But the court did vacate the part of the FCC's 2013 order
that raised the standards for how fast the service operates,
sending it back to the FCC for review.
Sorenson, which filed for bankruptcy earlier
this year, has been the leading provider of so-called video
relay services, or VRS, that allow consumers to connect by video
with a sign language interpreter who can help them make phone
Like other VRS providers, Sorenson receives payments from
the FCC for such calls at a rate set by the agency based on
costs incurred by the company in the process.
The FCC lowered its per-minute compensation rates in 2010
and again in 2013, while raising the standard for how fast VRS
calls are answered.
Sorenson, which generates revenue almost exclusively from
FCC compensation, challenged the 2013 rate-lowering order in
court as "arbitrary and capricious." But the U.S. Court of
Appeals for the District of Columbia Circuit on Tuesday rejected
the company's argument.
The ruling noted that Sorenson had mounted "nearly the same"
challenge against the FCC's 2010 rate decrease and lost in
another appeals court.
The court agreed with Sorenson that the FCC, in setting new
VRS standards in 2013, did not properly address extra labor
costs potentially incurred by complying with the required faster
speeds in answering VRS calls, however.
The FCC was ordered to review whether its enhanced
speed-of-answer requirement increased providers' costs and, if
so, whether faster service was worth an increase in rates.
Sorenson in March filed for Chapter 11 bankruptcy
protection, saying that by lowering rates and increasing minimum
standards the FCC had made it infeasible to provide the video
relay services over the long term.
The case is Sorenson Communications Inc v. FCC, U.S. Court
of Appeals for the District of Columbia Circuit, No. 13-1215.
(Reporting by Alina Selyukh; Editing by Tom Brown)