Asap Paging Inc. v. Public Utility Commission of Texas

• Decision Date: 05 May 2006
• Docket Number: No. 03-05-00172-CV.,03-05-00172-CV.
• Citation: 213 S.W.3d 380
• Parties: ASAP PAGING INC., Appellant, v. PUBLIC UTILITY COMMISSION OF TEXAS and CenturyTel of San Marcos, Inc., Appellees.
• Court: Texas Court of Appeals

213 S.W.3d 380

ASAP PAGING INC., Appellant, v. PUBLIC UTILITY COMMISSION OF TEXAS and CenturyTel of San Marcos, Inc., Appellees.

No. 03-05-00172-CV.

Court of Appeals of Texas, Austin.

May 5, 2006.

Rehearing Overruled September 5, 2006.

W. Scott McCollough, Austin, for appellant.

Brook Bennett Brown, McGinnis, Lochridge & Kilgore, LLP, Austin, for CenturyTel.

John R. Hulme, Asst. Atty. Gen., Austin, for Public Utility Commission.

Before Chief Justice LAW, Justices PEMBERTON and WALDROP.

OPINION

BOB PEMBERTON, Justice.

ASAP Paging, Inc. (ASAP) is a Commercial Mobile Radio Service (CMRS) provider that also provides wireline connections for Internet Service Providers (ISPs). ASAP alleges that CenturyTel of San Marcos, Inc. (CenturyTel) charged CenturyTel's customers a long-distance toll for calls to ASAP's paging and ISP customers in violation of federal and state telecommunications law. According to ASAP, these calls should be rated as toll-free local calls under Extended Local Calling Service (ELCS), and, if they are not so rated, the toll charge will deter CenturyTel's customers from calling ASAP's customers. In response, CenturyTel contends that it is entitled to charge a toll because the calls do not qualify for ELCS and are properly rated as long-distance. The Public Utilities Commission (PUC) found that calls from CenturyTel's customers in San Marcos to ASAP's paging and ISP customers were properly charged long-distance toll. The district court rendered judgment affirming the PUC's order. We will affirm the judgment of the district court.

BACKGROUND

The regulatory framework

To understand the context of the present dispute, we begin by surveying the framework of federal and state telecommunications regulation within which this dispute arose.

Federal authority

The Telecommunications Act of 1996 (the "Telecommunications Act") amended the Federal Communications Act of 1934 and, in doing so, fundamentally altered the nature of telecommunications. See Pub.L. No. 104-104, 110 Stat. 56 (codified in scattered sections of 15 and 47 U.S.C.). Historically, regulation of this industry was premised on the belief that service could be provided at the lowest cost to the maximum number of consumers through a regulated monopoly network. Over many decades, state and federal agencies regulated the prices and practices of these monopolies and protected them against competitive entry. The Telecommunications Act adopts precisely the opposite approach. Rather than shielding telephone companies from competition, this Act requires telephone companies to open their networks to competition.¹ The legislation was enacted in an effort to "promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunication consumers and encourage the rapid deployment of new telecommunications technologies." Telecommunications Act pmbl, 110 Stat. at 56. The Telecommunications Act grants the Federal Communications Commission (FCC) plenary jurisdiction over telephone numbering issues and gives the FCC the authority to delegate to state commissions or certain other entities all or any portion of its jurisdiction. See 47 U.S.C.A. § 251(e) (West 2001).²

Rate centers

Telephone numbers are assigned on a nondiscriminatory basis under the FCC by the North American Numbering Plan Administrator (NANPA). 47 C.F.R. § 52.13(a), (d) (2005).³ NANPA issues telephone numbers in blocks of 10,000, and each telephone number has ten digits, appearing generically as: NPA-NXX-XXXX. The first three digits (NPA) represent the area code; the second three digits (NXX) identify the particular carrier and switch to which the call is routed; and the last four digits (XXXX) identify the customer served by the switch. See id. §§ 52.7(a), (c).

The switch is a device that channels incoming data from any of multiple input ports to the specific output port that will take the data toward its intended destination. In the traditional circuit-switched telephone network, one or more switches are used to set up a temporary connection or circuit for an exchange between two or more parties.

The NXX digits carry special importance to this case because they signify the applicable "rate center" for each telephone number. Rate centers are associated with the switches serving the calling and called parties to determine whether a call is local or toll and to compute the air mile distance for rating the toll call. Calls placed from one rate center to another center not on the local list for the caller's rate center generally are considered toll calls. Thus, most carrier billing systems rely on NPA-NXX code information for rating calls. In re Numbering Resource Optimization, 14 FCC Rcd 10322, 10370 (1999) (FCC NRO) (internal citations omitted).

To provide sufficient telephone numbers for their customers, telephone companies need to acquire a rate center, depending on whether they are wireless⁴ or wireline providers. Wireline services are fixed to a specific location, and a subscriber's telephone number is limited to use within the rate center within which it is assigned. Wireless services, on the other hand, are not fixed to a specific location because they are mobile. Thus, while the wireless subscriber's number is associated with a specific geographic rate center, the wireless service is not limited to use within that rate center. For wireline services, "[NXXs] allocated to a wireline Service Provider are to be utilized to provide service to a customer's premise physically located in the same rate center that the [NXXs] are assigned." But wireless service providers "offer larger calling areas and thus require fewer NXX codes for the wireless service, [so] they often must request as many NXX codes as are required to permit wireless customers to be called by wireline customers on a local basis." Id.

Interconnection

After the implementation of the Telecommunications Act, incumbent local exchange carriers (ILECs) struggled with the onset of competitive local exchange carriers (CLECs) and commercial mobile radio service (CMRS) providers.⁵ To make it easier for new companies to enter the telecommunications market, the Telecommunications Act requires ILECs to provide interconnection⁶ at their pre-existing networks to any requesting telecommunications carrier at any technically feasible point.⁷ See 47 U.S.C.A. § 251(c)(2) (West 2001). This interconnection must be at least equal in quality to that provided by the ILEC to itself or its affiliates, and must be provided on rates, terms, and conditions that are just, reasonable, and nondiscriminatory. Id.

Two basic types of interconnection exist. Type 1 service involves interconnection to a telephone company end office similar to that provided to a private branch exchange (PBX). Under Type 1 interconnection, the telephone company owns the switch serving the CMRS network and, therefore, performs the origination and termination of both incoming and outgoing calls. Under Type 2, the CMRS provider owns the switch, enabling it to originate outgoing calls and to terminate incoming calls. See generally Cellular Interconnection Proceeding, 4 FCC Rcd 2369, 2372 & n. 16 (1989). ASAP uses only Type 2 interconnections.⁸

In addition to providing interconnection, an ILEC must also provide dialing parity. See 47 U.S.C.A § 153(15) (West 2001). Dialing parity enables a customer of a new LEC to dial others with the convenience an incumbent provides, regardless of which carrier the customer has chosen as the local service provider. See 47 C.F.R § 51.207. Under this requirement, an ILEC will allow customers within a local calling area to dial the same number of digits (seven or ten) to make a local phone call, regardless of the customer's service provider. Id. The FCC has concluded that this requirement must apply to intrastate, local and toll services. See In re Implementation of the Local Competition Provisions of the Telecomms. Act of 1996, 11 FCC Rcd 19392, 19400, 19406 (1996) (Second Report & Order).

For CMRS providers, in order for the provider's customers to be paged or called, these calls would travel over — and eventually terminate⁹ at — ILEC networks. Due to the dependency on these pre-existing networks, the FCC has established special guidelines. ILECs are obligated, pursuant to section 251(b)(5) of the Telecommunications Act and the corresponding pricing standards of section 252(d)(2), to enter into reciprocal compensation arrangements with CMRS providers, including paging providers, for the transport and termination of traffic on each other's networks. See TSR Wireless, 15 FCC Rcd at 11168-69, 11183. Because many CMRS providers offer telephone exchange service and exchange access, the ILECs therefore must make interconnection available to these CMRS providers in conformity with sections 251(c) and 252. See id. at 11183.

Reciprocal compensation

The Telecommunications Act requires interconnecting LECs to establish reciprocal compensation arrangements for the transport and termination of telecommunications. 47 U.S.C.A. § 251(b)(5) (West 2001). A reciprocal compensation arrangement is one in which a carrier receives compensation from another carrier for the transport and termination of telecommunications traffic on the first carrier's network facilities. See 47 C.F.R. § 51.701(e). This is also referred to as "transiting traffic": traffic that originates from a carrier other than the interconnecting LEC but nonetheless is carried over the LEC network to the paging carrier's network. TSR Wireless, 15 FCC Rcd at 11177 n. 70; see Local Competition Order, 11 FCC Rcd at 16016-17. In addition, the paging carrier would be responsible for paying charges for facilities ordered from the LEC to connect points on the paging carrier's side of the point of interconnection,¹⁰ such as facilities ordered to connect the paging terminal with its antennas. TSR Wireless, 15 FCC Rcd at 11177 n. 70.

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