479 F.3d 1184 (10th Cir. 2007), 06-1132, Qwest Corp. v. Public Utilities Com'n of Colorado

Docket Nº:06-1132, 06-4021.
Citation:479 F.3d 1184
Party Name:QWEST CORPORATION, a Colorado corporation, Plaintiff-Appellant, v. The PUBLIC UTILITIES COMMISSION OF the State of COLORADO, a regulatory agency of the State of Colorado; Gregory E. Sopkin, Polly Page, and Carl Miller, in their official capacities as Commissioners of the Public Utilities Commission of Colorado, Defendants-Appellees. Verizon, Amicus
Case Date:March 05, 2007
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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479 F.3d 1184 (10th Cir. 2007)

QWEST CORPORATION, a Colorado corporation, Plaintiff-Appellant,

v.

The PUBLIC UTILITIES COMMISSION OF the State of COLORADO, a regulatory agency of the State of Colorado; Gregory E. Sopkin, Polly Page, and Carl Miller, in their official capacities as Commissioners of the Public Utilities Commission of Colorado, Defendants-Appellees.

Verizon, Amicus Curiae.

Qwest Corporation, a Colorado corporation, Plaintiff-Appellant,

v.

Public Service Commission of Utah, a regulatory agency of the State of Utah; Richard M. Campbell; Constance B. White; Ted Boyer, in their official capacities as Commissioners of the Public Service Commission of Utah, Defendants-Appellees.

Nos. 06-1132, 06-4021.

United States Court of Appeals, Tenth Circuit.

March 5, 2007

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John M. Devaney, Perkins, Coie, L.L.P., Washington, D.C., for Plaintiff-Appellant.

Mark T. Valentine, (John Suthers, Colorado Attorney General and Paul C. Gomez, First Assistant Attorney General, State Services Section, on the brief), Denver, CO, for Defendants-Appellees Public Utilities Commission of Colorado.

Scott H. Angstreich, Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C.,

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Washington, D.C. (and Gregory M. Romano, General Counsel--Northwest Region, Everett, WA, on the brief), for Amicus Curiae Verizon.

Sandy J. Mooy, Attorney for Public Service Commission and Individual Commissioners, Salt Lake City, UT, for Defendants-Appellees Public Service Commission of Utah.

Before KELLY, ALARCÓN, [*] and LUCERO, Circuit Judges.

PAUL KELLY, JR., Circuit Judge.

In these consolidated appeals, Plaintiff-Appellant Qwest Corporation asks us to determine whether it was obligated to seek state utility commission approval of a contract in which it agreed to provide MCImetro Access Transmission Services, LLC ("MCImetro"), with access to a service known as Qwest Platform Plus. The Public Utility Commission of Colorado and the Public Service Commission of Utah both independently determined that the Telecommunications Act of 1996 ("the Act")--specifically, 47 U.S.C. § 252(a)(1)--required Qwest and MCImetro to submit their agreement for approval, and the district courts in Colorado and Utah agreed. Qwest challenges this conclusion, asserting that the filing obligation in § 252 arises only if an agreement contains network elements that Qwest must make available to other carriers pursuant to 47 U.S.C. § 251. Our jurisdiction to review the district courts' final orders arises under 28 U.S.C. § 1291, and we affirm.

Background

Through a merger, Qwest obtained U.S. West, a former subsidiary of AT & T which was divested pursuant to a consent decree between AT & T and the United States government. Under current parlance, Qwest is known as a Bell operating company ("BOC," meaning a former AT & T subsidiary) and an incumbent local exchange carrier ("ILEC," meaning a local telephone service provider that used to have a monopoly in a certain area) in both Colorado and Utah. As such, the Telecommunications Act of 1996 requires Qwest to share its network resources with other telecommunications carriers ("competitive local exchange carriers" or "CLECs"), that wish to enter Qwest's local markets. MCImetro is a CLEC in Utah and Colorado.

I. Statutory Framework: The Telecommunications Act of 1996

For most of its history, "local phone service was thought to be a natural monopoly." AT & T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 371, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999). Accordingly, states alone regulated the industry, seeking to ensure that each local monopolist provided adequate service at reasonable prices. 1 This regime began to change in 1982, when AT & T agreed to divest itself of the local exchange carriers that it owned. See United States v. AT & T, 552 F.Supp. 131 (D.D.C.1982), aff'd sub nom. Maryland v. United States, 460 U.S. 1001, 103 S.Ct. 1240, 75 L.Ed.2d 472 (1983). Fourteen years later, "Congress enacted the Telecommunications Act of 1996, which fundamentally changed telecommunications regulation by introducing competition in the

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local service market." Sw. Bell Tel. Co. v. Apple, 309 F.3d 713, 715 (10th Cir.2002) (internal quotation marks omitted). In passing the legislation, Congress hoped to obtain the benefits of competition for the American consumer while avoiding, as much as possible, the potential that established entities would use their existing market power to prey on would-be market entrants. See Thomas G. Krattenmaker, The Telecommunications Act of 1996, 29 Conn. L.Rev. 123, 129-31 (1996).

Therefore, "incumbent LECs are subject to a host of duties intended to facilitate market entry." Iowa Utils. Bd., 525 U.S. at 371, 119 S.Ct. 721. These duties "essentially require the incumbents to interconnect with and to rent parts of their networks to new entrants--especially those parts of a local network that it is least economic for a new entrant to duplicate." James B. Speta, Antitrust and Local Competition Under the Telecommunications Act, 71 Antitrust L.J. 99, 102-03 (2003). At the same time, the Act provides for targeted monitoring of these interconnections by state and federal regulators. See 47 U.S.C. § 252(e).

In this case, three provisions of the Act are at issue. The first is § 251, which--among other things--imposes a duty on ILECs to "interconnect" with would-be competitors. See 47 U.S.C. § 251(a)(1). The second is § 252, which provides that an ILEC faced with a request for interconnection may either negotiate an agreement with the requesting party or submit to arbitration by a state regulatory agency; in either case, the resulting "interconnection agreement" must be submitted to the state regulatory agency for approval. Id. § 252(a)-(b), (e). The third provision at issue is § 271, which allows BOCs to provide long-distance telephone service to their customers as long as they comply with certain conditions enumerated in the statute. Id. § 271(a). The dispute in this case is whether the agreements between Qwest and MCImetro are "interconnection agreements" that must be approved by state regulatory bodies pursuant to § 252, whether they are simply agreements wherein Qwest agrees to provide the services enumerated in § 271, or whether they are both.

A. Section 251: The Duties Imposed on Telecommunications Carriers

"Section 251 of the Act establishes a three-tier system of obligations imposed on separate, statutorily defined telecommunications entities." Atlas Tel. Co. v. Okla. Corp. Comm'n, 400 F.3d 1256, 1262 (10th Cir.2005). Under the first tier, all carriers have the duty "to interconnect directly or indirectly with the facilities and equipment of other telecommunications carriers." 47 U.S.C. § 251(a)(1). In the second tier, all local exchange carriers (both ILECs and CLECs) have the duty to resell telecommunications services without "unreasonable or discriminatory conditions or limitations...." Id. § 251(b)(1). They are also obligated to provide number portability, dialing parity, access to rights of way, and reciprocal compensation. Id. § 251(b)(2)-(5). Finally, the third tier contains the "[f]oremost among these duties[:] ... the [ILEC's] obligation ... to share its network with competitors." Iowa Utils. Bd., 525 U.S. at 371, 119 S.Ct. 721; see 47 U.S.C. § 251(c).

The statute establishes three methods of providing access to an ILEC's local network. See MCI Telecomm. Corp. v. Bell Atl.-Pa., 271 F.3d 491, 498 (3d Cir.2001). First, a CLEC "may build its own network and interconnect with the [ILEC's] network." Id. (internal quotation marks omitted). 2 Second, a CLEC "may lease

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individual elements of the existing network on an 'unbundled basis' at 'any technically feasible point' on 'rates, terms, and conditions that are just, reasonable, and nondiscriminatory.' " Id. at 499 (quoting 47 U.S.C. § 251(c)(3)). Finally, a CLEC may purchase at wholesale prices the entire package of services provided by the ILEC and simply resell them to customers. Id.; see also 47 U.S.C. § 251(c)(4)(A).

Each of these options benefits the CLEC because "[t]he firm need not build that which the incumbent LEC has already built; the entrant may just plug into it, at prices deemed fair by the FCC." Krattenmaker, supra, at 139. The requirement that ILECs share their networks is an integral part of the new regulatory scheme because "[w]ithout [it], a new carrier's entry barriers would be insurmountable." Speta, supra, at 118.

B. Section 252: The Filing Obligation

"Section 252 ... specifically describes how § 251's obligations are to be implemented...." Iowa Utils. Bd., 525 U.S. at 419, 119 S.Ct. 721 (Breyer, J., concurring in part and dissenting in part). First, it permits carriers to negotiate interconnection agreements on their own initiative:

Upon receiving a request for interconnection ... services, or network elements pursuant to section 251 of this title, an incumbent local exchange carrier may negotiate and enter into a binding agreement with the requesting telecommunications carrier or carriers without regard to the standards set forth in subsections (b) and (c) of section 251 of this title.... The agreement ... shall be submitted to the State commission under subsection (e) of this section.

47 U.S.C. § 252(a)(1). This subsection allows the ILEC "to negotiate and enter into a binding agreement with the new entrant to fulfill the duties imposed by §§ 251(b) and (c)...." Verizon Md., Inc. v. Pub. Serv. Comm'n of Md., 535 U.S. 635, 638-39, 122 S.Ct. 1753, 152 L.Ed.2d 871 (2002) (internal quotation marks omitted). However, the "without regard" clause indicates that "the parties may make agreements that go beyond or contradict the specific statutory requirements that an incumbent must...

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