718 F.3d 53 (2nd Cir. 2013), 11-2332-cv, Southern New England Telephone Co. v. Comcast Phone of Connecticut, Inc.
|Citation:||718 F.3d 53|
|Opinion Judge:||BARRINGTON D. PARKER, Circuit Judge:|
|Party Name:||SOUTHERN NEW ENGLAND TELEPHONE COMPANY d/b/a AT & T, Connecticut, Plaintiff-Appellant, v. COMCAST PHONE OF CONNECTICUT, INC., Cablevision Lightpath-Connecticut, Inc., Cox Connecticut Telecom, LLC, Intervenors-Defendants-Appellees, MetroPCS New York, LLC, Sprint Communications, L.P., Sprint Spectrum, L.P., Nextel Communications of the Mid-Atlantic,|
|Attorney:||Timothy P. Jensen, Hinckley, Allen & Snyder LLP, Hartford, CT; Theodore A. Livingston, Dennis G. Friedman, J. Tyson Covey, Mayer Brown LLP, Chicago, IL, for Petitioner-Appellant. Clare Kindall, Assistant Attorney General, New Britain, CT, for Defendants-Appellees.|
|Judge Panel:||Before: POOLER, B.D. PARKER and WESLEY, Circuit Judges.|
|Case Date:||May 01, 2013|
|Court:||United States Courts of Appeals, Court of Appeals for the Second Circuit|
Argued: Sept. 12, 2012.
[Copyrighted Material Omitted]
This appeal requires us to determine whether the Telecommunications Act of 1996 (" TCA" ), Pub. L. No. 104-104, 110 Stat. 56 (codified in part at 47 U.S.C. §§ 251-261), obligates former telecommunications monopolists, known as Incumbent Local Exchange Carriers (" ILECs" ), to provide a connection service known as transit traffic service (" transit service" ) at negotiated rates or at lower regulated rates to new entrants seeking to exchange traffic with each other through the ILEC's facilities. We agree with the United States District Court for the District of Connecticut (Eginton, J. ) that the regulated rates apply.
The TCA transformed the " longstanding regime of state-sanctioned monopolies" into a competitive market. AT & T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 371, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999). Prior to its passage, ILECs held state-granted franchises to act as exclusive telephone service providers and, after its passage, they continue to control the physical network infrastructure in most states. See id. ; 47 U.S.C. § 251(h)(1). Plaintiff-Appellant Southern New England Telephone Company, d/b/a AT & T Connecticut (" AT & T" ), is an ILEC in Connecticut.
New entrants, known as Competitive Local Exchange Carriers (" CLECs" ), entered the market after deregulation. They now compete with ILECs to provide services, but they lack some of the advantages that the ILECs enjoy due to the ILECs' historical ownership of network infrastructure. Intervenors-Defendants-Appellees Comcast Phone of Connecticut, Inc., Cablevision
Lightpath-Connecticut, Inc., and Cox Connecticut Telecom, LLC are CLECs. Commercial mobile radio services (" CMRSs" ) are new entrants who offer wireless communication and compete with both ILECs and CLECs to provide telephone service. Intervenors-Defendants-Appellees MetroPCS New York, LLC, Sprint Communications, L.P., Sprint Spectrum, L.P., Nextel Communications of the Mid-Atlantic, Inc., and Youghiogheny Communications Northeast, LLC d/b/a Pocket Communications (" Pocket Communications" ) are CMRSs.
To advance Congress' goals of promoting competition and widespread user access to telecommunications services, section 251(a) of Title 47 of the United States Code requires all telecommunications carriers to " interconnect," that is physically link their facilities for the mutual exchange of traffic. 47 U.S.C. § 251(a); 47 C.F.R. § 51.5. In requiring universal interconnection, the TCA aims to ensure that the customers of all carriers will be able to exchange telecommunications traffic with each other. In addition, §§ 251(c)(2) and 252(d)(1) require ILECs, like AT & T, to physically connect all other carriers to their network facilities at regulated or Total Element Long-Run Incremental Cost (" TELRIC" ) rates.147 U.S.C. §§ 251(c)(2), 252(d)(1). In requiring ILECs to provide interconnection to the facilities of new entrants, the TCA seeks to ensure that ILECs do not exploit their former monopoly status and their continuing control of network infrastructure to the disadvantage of CLECs.
Interconnection may be direct, where a carrier attaches his equipment to the physical network infrastructure of another carrier, or indirect, where " the attachment occurs through the facilities or equipment of an additional carrier." In the Matters of Deployment of Wireline Servs. Offering Advanced Telecomms. Capability and Implementation of the Local Competition Provisions of the Telecomms. Act of 1996, 15 F.C.C.R. 17806, 17845 n. 198 (2000). Typically, two new entrants use an ILEC's network to interconnect indirectly. In the Matter of Dev'g a Unified Intercarrier Comp. Regime, Further Notice of Proposed Rulemaking, 20 F.C.C.R. 4685, 4737 (2005) (" Notice 2005" ). When carriers are directly interconnected, they are able to exchange traffic. However, when they are indirectly interconnected, they must rely on and pay the interconnecting carrier to route the traffic between them.
The principal question in this appeal is whether AT & T, an interconnecting carrier, is obligated under § 251(c)(2) to provide this routing of traffic, or transit service, at lower TELRIC rates or whether AT & T is permitted to charge higher negotiated rates. Most new entrants interconnect indirectly and transit service is essential to ensuring that indirectly interconnected entrants can exchange traffic. It would be inconsistent with the stated purpose of the TCA to allow AT & T to charge higher negotiated rates for this service because this would impose additional costs and competitive disadvantages upon new entrants. Such an imposition would allow AT & T to further exploit its status as a former monopolist. Thus, we conclude that the provision of transit service falls under AT & T's obligation as an ILEC and that the service must be delivered at regulated rates.
In December 2008, Pocket Communications petitioned the Connecticut Department
of Public Utility Control (" DPUC" ) to review a commercial agreement it was negotiating with AT & T. The main disagreement in that proceeding (" Pocket Proceeding" ) was over the rates that AT & T could charge Pocket for transit service. Pocket alleged that AT & T violated Connecticut statutory law and the DPUC's 2003 decision in a proceeding under the TCA involving Cox Communication, both of which required AT & T to charge regulated rates for transit service. Pocket Petition, at 12; see also Decision, Conn. Dep't of Pub. Util. Control, Petition of Cox Connecticut Telecom, LLC for Investigation of SNET's Transit Service Cost Study and Rates, No. 02-01-23 (Jan. 15, 2003) (" Cox Decision" ). Pocket argued that the rates AT & T charged for transit service in Connecticut were significantly higher than those it charged in other states and requested that the Commission order them to be lowered. AT & T argued that because transit service did not constitute interconnection under § 251, it was subject to higher negotiated rates. The DPUC concluded that AT & T was required to offer transit service at regulated rates and ordered that those rates be afforded not only to Pocket but to other AT & T transit service customers as well. Decision, Conn. Dep't of Pub. Util. Control, Petition of Youghiogheny Communications Northeast, LLC, No. 08-12-04, at 42 (Oct. 7, 2009) (" Pocket Decision" ).
AT & T appealed to the district court on a number of grounds. It first argued preemption: the DPUC was not authorized to regulate transit service...
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