By Lawrence Hurley
WASHINGTON (Reuters) - The Supreme Court agreed on Monday to intervene in a dispute between a Sprint Nextel Corp subsidiary and the utilities regulator in Iowa.
Sprint Communications Co declined to pay access charges for calls carried by Iowa Telecom - now Windstream Iowa Communications - that were transmitted over the Internet rather than the traditional phone network.
The Iowa Utilities Board, which regulates telecommunications in the state, said Sprint was required to pay.
Windstream had billed Sprint for access charges for the Internet calls, known as "voice over Internet protocol" or VoIP calls.
Sprint maintains that under the federal Telecommunications Act of 1996, VoIP calls are an "information service" not a "telecommunications service" and that therefore the company does not have to pay access charges.
The legal question before the high court is whether the dispute should be handled first in Iowa state courts or in federal court
Sprint challenged the utilities board decision in federal court, saying that the question of whether the calls should be subject to compensation is a federal law issue, but there are also concurrent proceedings in state court.
A federal judge held that the state proceedings should be resolved first.
The St. Louis-based 8th U.S. Circuit Court of Appeals upheld the ruling, saying Sprint's request that the utilities board be prevented from ordering that it pay the fees "interferes with an ongoing state judicial proceeding."
Oral arguments and a decision are expected in the court's next term, which starts in October and ends in June 2014.
The case is Sprint v. Jacobs, U.S. Supreme Court, No. 12-815.
(Reporting by Lawrence Hurley; Editing by Howard Goller and Sofina Mirza-Reid)