Michigan Bell Telephone v. Mci Metro Access Trans.

• Decision Date: 22 January 2001
• Docket Number: No. 00-70636.,00-70636.
• Citation: 128 F.Supp.2d 1043
• Parties: MICHIGAN BELL TELEPHONE COMPANY d/b/a Ameritech Michigan, Plaintiff, v. MCI METRO ACCESS TRANSMISSION SERVICES, INC., and John G. Strand, Robert B. Nelson and David A. Svanda, Commissioners of the Michigan Public Service Commission (In Their Official Capacities and not as Individuals), Defendants.
• Court: U.S. District Court — Eastern District of Michigan

128 F.Supp.2d 1043

MICHIGAN BELL TELEPHONE COMPANY d/b/a Ameritech Michigan, Plaintiff, v. MCI METRO ACCESS TRANSMISSION SERVICES, INC., and John G. Strand, Robert B. Nelson and David A. Svanda, Commissioners of the Michigan Public Service Commission (In Their Official Capacities and not as Individuals), Defendants.

No. 00-70636.

United States District Court, E.D. Michigan, Southern Division.

January 22, 2001.

Michael G. Vartanian, John A. Dempsey, Dickinson, Wright, Lansing, MI, Michael A. Holmes, Ameritech, Detroit, MI, for Michigan Bell Telephone Company dba Ameritech Michigan, plaintiff.

Albert Ernst, Dykema Gossett, Lansing, MI, for MCIMetro Access Transmission Services, Incorporated, defendant.

David A. Voges, David M. Gadaleto, Michigan Department of Attorney General, Public Service Division, Lansing, MI, for John G. Strand, Robert B. Nelson, defendants.

ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

ROBERTS, District Judge.

I. Introduction

This action arises out of an alleged violation of the Telecommunications Act of 1996, 47 U.S.C. § 251 et. seq. (the "Act"). The Act was designed to open local telephone markets, which had previously been controlled by monopolies, to full, fair and effective competition on a nationwide basis. In construing the Act, the Supreme Court held in AT & T Corp. v. Iowa Utilities Bd., 525 U.S. 366, 371, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999), that:

States may no longer enforce laws that impede competition, and incumbent LECs [local exchange carriers] are subject to a host of duties intended to facilitate market entry. Foremost among these duties is the LEC's obligation under 47 U.S.C. § 251(c) (1994 ed., Supp. II) to share its network with competitors.

Plaintiff in this case, Michigan Bell Telephone Company d/b/a Ameritech Michigan ("Ameritech") is an incumbent LEC ("ILEC") under the Act and is obligated to allow would be competitors such as Defendant MCImetro Access Transmission Services, Inc., ("MCI") to gain access to its networks, facilities and services so that MCI can provide competitive services. In particular, § 251 of the Act requires an ILEC to allow competing LECs ("CLECs") to purchase for resale "any telecommunications service that the carrier provides at retail to subscribers." Section 251(c)(4).

ILECs meet their § 251 obligations by means of interconnection agreements, negotiated and/or arbitrated pursuant to § 252 of the Act. Section 252(a) provides that interconnection agreements are "binding." Section 252(a). The substantive rules governing interconnection are set by federal law, while Congress entrusted the process of establishing and enforcing interconnection agreements to State commissions. Section 252.

Under the mandate of the Act then, Ameritech negotiated an Interconnection Agreement ("Agreement") with MCI. The Agreement was filed, as required, with the Defendant, Michigan Public Service Commission (the "MPSC"), and approved by the MPSC on July 31, 1997. When a dispute arose as to the enforceability of the provision of the Agreement which required MCI to electronically place orders relating to resale services, MCI filed a challenge with the MPSC.

The MPSC, through its members, Defendants John G. Strand, Robert B. Nelson and David Svanda, entered an Order on January 3, 2000, allowing MCI to fax certain change orders concerning resale service orders, rather than requiring MCI to submit the change orders electronically as required by the Agreement. Although the MPSC recognized the clear language of the Agreement, it nonetheless ruled that since competitors without interconnection agreements could fax change orders under Ameritech's general tariff provisions, MCI should have the same right, despite its agreement to the contrary.

Ameritech now challenges the MPSC decision to allow MCI to proceed under the general tariff provisions applicable to Ameritech rather than pursuant to the negotiated Agreement between the parties.

For the reasons stated below, this Court finds the MPSC acted arbitrarily and capriciously in allowing MCI to circumvent the Agreement. Accordingly, the Court grants Ameritech's Motion for Summary Judgment.

II. The Contentions of The Parties

A. Ameritech's Motion

Ameritech presents this case as a straightforward one involving only the interpretation of the Agreement under general contract principles.

Section 10.13.2(a) of the Agreement required Ameritech to provide an electronic interface for change orders and to update the interface as necessary to comply with industry standards.

Electronic Interface for Pre-Ordering, Ordering and Provisioning.

Ameritech will provide an electronic interface for the transfer and receipt of data necessary to perform the pre-ordering, ordering, and provisioning functions (e.g., order entry, telephone number selection, and due date selection) associated with Resale Services.... [A]s an industry standard interface is developed by the appropriate industry forum, and generally accepted for implementation by the industry, Ameritech shall implement such interface....

(Ameritech Br., Ex. 1 at 41-42).

Section 10.13.2(b) required that change orders be made via the electronic interface described in § 10.13.2(a). "Service orders will be placed by MCImetro and provisioned by Ameritech in accordance with the procedures described in this Section 10.13 and the Implementation Plan." (Ameritech Br. Ex. 1 at 42). The Implementation Plan to which Section 10.13.2(b) refers provides that, "[t]he Manual Ordering Process [i.e. ordering by fax] is intended as an interim and back-up mode only."

The Agreement contained an integration clause, which incorporated only those terms of the Agreement and other documents specifically referenced there:

30.18 Entire Agreement. The terms contained in this Agreement and any Schedules, Exhibits, tariff provisions referenced herein and other documents or instruments referred to herein, which are incorporated into this Agreement by reference, constitute the entire agreement between the Parties with respect to the subject matter hereof, superseding all prior understandings, proposals and other communications, oral or written. Neither party shall be bound by any terms additional to or different from those in this Agreement that may appear subsequently in other Party's form documents, purchase orders, quotations, acknowledgments, invoices or other communications. This Agreement may only be modified by a writing signed by an officer of each Party.

(Ameritech's Br., Ex. 1, last page). Additionally, § 30.16 of the Agreement stresses, "This Agreement does not obligate either Party to provide arrangements not specifically provided herein." (Ameritech's Br., Ex. 1 at 103).

As recognized by the MPSC, the provisions of the Agreement requiring electronic submission of change orders resulted from MCI's own opposition to manual ordering:

Throughout the arbitration of their interconnection agreement, MCI stressed the importance of being able to submit orders electronically and argued that the inability to do so would place MCI at a competitive disadvantage. Repeatedly, MCI argued that manual access arrangements were simply not compatible with its needs as a new entrant seeking to compete against an entrenched incumbent. MCI opposed being limited to manual ordering because of delay in processing manual orders, the significant risk of error, and increased administrative costs.

(Ameritech's Br., Ex. 2 at 17).

Indeed, Ms. Ali Miller, MCI's market manager for local services in the Ameritech region, submitted the following testimony to the Commission during that process:

Every manual intervention causes delay, sometimes substantial, and creates significant risk of error. By relying upon manual interventions, Ameritech can hold its competitors hostage to its own response time, hours of operation, and ability (or incentive) to provide accurate information. Also, manual arrangements increase CLECs' costs in two ways: CLECs must employ more people to handle the process and to audit Ameritech's performance; and Ameritech will try to pass its own inflated costs through the CLECs. Accordingly, solutions that require manual intervention on Ameritech's side cannot be acceptable in either the short or long term.

* * * * * *

Customers demand prompt and accurate information regarding the timely provision of telecommunication services. Consequently, CLECs like MCI require a mechanized interface for both resold and unbundled services in order to provide timely and up-to-date information regarding the status, potential delay, and final completion of the provisions of these services.

Hence, the parties agreed that electronic ordering would be the exclusive means that they would use for ordering services for resale.

The Defendants dispute none of the above.

In March 1999, Ameritech informed MCI that it was going to upgrade its electronic interface to become Y2K ready. In order to maintain compatibility, MCI was requested to complete the same upgrade by June 30, 1999 (MCI Br., Ex. H). In response, a representative of MCI sent an email informing Ameritech that it (MCI) decided not to upgrade its electronic interface and that it would instead fax change orders (Ameritech Br., Ex. 5). According to MCI, its change of position resulted from a plummeting of the number of resale service orders MCI was placing with Ameritech, down to 3 to 5 per day (MCI Br. at 7). Under those circumstances, MCI viewed the funding of an electronic interface upgrade is "`throwing money down a rat hole.'" (Quote of former MCI President and COO, Timothy F. Price, Ameritech Br., Ex. 2 at 17).

Ameritech responded by letter on May 26, 1999, lambasting MCI's "unilateral funding decision" to fax orders to Ameritech. MCI did not heed Ameritech's objections and, instead, proceeded to fax change orders to Ameritech. After Ameritech refused to process those faxed orders, MCI filed a complaint with the MPSC.

Ameritech...