At & T Communications v. Gte Florida, Inc.
| Decision Date | 12 December 2000 |
| Docket Number | No. 4:97CV300-RH.,4:97CV300-RH. |
| Citation | 123 F.Supp.2d 1318 |
| Parties | AT & T COMMUNICATIONS OF the SOUTHERN STATES, INC., Plaintiff, v. GTE FLORIDA, INC., et al., Defendants. |
| Court | U.S. District Court — Northern District of Florida |
David Lawson, Sidley & Austin, Washington, DC, Mark K. Logan, Smith Ballard Logan PA, Tallahassee, FL, Paul Race Bradshaw, Paul R. Bradshaw PA, Tallahassee, FL, for Plaintiff.
Harry R. Detwiler, Holland & Knight, Tallahassee, FL, Patrick F. Philbin, Kirkland & Ellis, Washington, DC, for GTE Florida Inc.
Diana Weaks Caldwell, David E. Smith, Florida Public Service Com'n State of Florida, Tallahassee, FL, for Florida Public Service Com'n.
David E Smith, Public Service Commission, State of Florida, Tallahassee, FL, Mark K Logan, Smith Ballard Logan, PA, Tallahassee, FL, Paul Race Bradshaw, Paul R. Bradshaw PA, Tallahassee, FL for The Commission of Florida Public Service Com'n.
ORDER ON MERITS
This is another in a series of challenges under the Telecommunications Act of 1996, 47 U.S.C. §§ 251-52, to decisions of the Florida Public Service Commission with respect to the terms and conditions under which an incumbent local exchange carrier must provide services and make facilities and network elements available to a competitor. The new issues presented by this case include the respective rights of the incumbent and competitor to access charges paid by long distance carriers for terminating calls over local facilities; whether the incumbent's obligation to provide network elements to any competitor on the same terms available to any other competitor obligates the incumbent to make available to the competitor only the same overall agreement entered with the other competitor or instead allows the competitor to pick and choose specific terms of the agreement with the other competitor; the proper methodology for setting the incumbent's charges for operator and directory assistance services; and whether the incumbent must provide "number portability," that is, allow customers to change carriers without changing telephone numbers, by specified means. The case also presents additional issues that have been addressed in prior cases.
Historically, local telephone service was provided in the United States on a monopoly basis by carriers regulated under state law by state public service commissions. Congress fundamentally changed that approach by enacting the Telecommunications Act of 1996. The Act imposes on local carriers, as a matter of federal law, various duties designed to foster competition. The Act allows state commissions the option of taking a major role in implementing the Act's requirements.
The federal duties imposed on each "incumbent local exchange carrier" — that is, on each carrier who previously provided local service on a monopoly basis — include the obligation to sell local services at wholesale to any competing carrier for resale by the competing carrier to customers, the obligation to allow competitors to interconnect with the incumbent's facilities for the purpose of providing services to the competitor's own customers, and the obligation to make certain "network elements" — parts of its telecommunications system—available to competing carriers for their use in providing service to their own customers. These duties are described in greater detail in MCI Telecomms., Corp. v. BellSouth Telecomms., Inc., 112 F.Supp.2d 1286 (N.D.Fla.2000).
The Act also imposes on each incumbent the duty to negotiate in good faith with any requesting carrier on the terms and conditions of an agreement under which these various duties will be fulfilled. See 47 U.S.C. § 251(c)(1). The Act likewise imposes on requesting carriers the duty to negotiate in good faith. Id.
If the parties reach a negotiated agreement, it must be submitted to the state commission for approval. See 47 U.S.C. § 252(e)(1). If the parties fail to agree on all terms and conditions, any party to the negotiation may request binding arbitration before the state commission of "any open issues." 47 U.S.C. § 252(b)(1).1
The Act provides for judicial review of the commission's decisions in federal district court. See 47 U.S.C. § 252(e)(6). The case at bar is an action for judicial review under this provision.
Defendant GTE Florida, Incorporated ("GTE") is the incumbent local exchange carrier in parts of the State of Florida. Plaintiff AT & T Communications of the Southern States, Inc. ("AT & T") is a competitor. In accordance with the Telecommunications Act of 1996, GTE and AT & T entered negotiations for an agreement under which AT & T would purchase certain services for resale, would interconnect with GTE's facilities, and would have access to GTE's network elements. They were unable to agree on all terms and conditions of an agreement and thus sought and obtained arbitration before the Florida Public Service Commission. Following an evidentiary hearing, the Florida Commission issued a final arbitration order and, in due course, orders approving the agreement entered between AT & T and GTE as directed by the arbitration order. AT & T now brings this action challenging the Florida Commission's decision in four respects, and GTE counterclaims challenging the decision in one of the same respects and in five additional respects. AT & T has named as defendants GTE, the Florida Commission, and each of its Commissioners in his or her official capacity.2
The parties have agreed that this court's review should be conducted based solely on the record as compiled in the Florida Commission. The parties have submitted briefs and presented oral argument, and more recently have submitted supplemental briefs addressing the decision of the United States Supreme Court in AT & T Corp. v. Iowa Utilities Bd., 525 U.S. 366, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999). This order constitutes the court's ruling on the merits.
Five of the nine issues raised by AT & T and GTE already have been addressed by this court in cases arising from other inter-connection agreements; they are resolved in this order primarily by cross-reference to those decisions. The four remaining issues — terminating access charges, the competitor's right to "pick and choose" terms from the incumbent's agreement with any other competitor, charges for operator and directory assistance services, and "number portability" — are addressed for the first time in this order. This order thus resolves each of the nine issues.
The Telecommunications Act provides for actions such as the case at bar in a single sentence:
In any case in which a State commission makes a determination under [the Act], any party aggrieved by such determination may bring an action in an appropriate Federal district court to determine whether the agreement or statement meets the requirements of [the Act].
47 U.S.C. § 252(e)(6).3 The Act does not further specify the standard of review to be applied in determining "whether the agreement ... meets the requirements of" the Act.
For the reasons set forth at length in MCI Telecomms. Corp. v. BellSouth Telecomms., Inc., 112 F.Supp.2d 1286 (N.D.Fla.2000), I will review de novo issues regarding the meaning and import of the Telecommunications Act, and I will review state commission determinations of how to implement the Act as so construed only under the arbitrary and capricious standard. This apparently is the standard of review advocated by all parties to this proceeding.
The Telecommunications Act directs state commissions to set "just and reasonable" prices for interconnection and network elements "based on the cost (determined without reference to a rate-of-return or other rate-based proceeding) of providing the interconnection or network element." 47 U.S.C. § 252(d)(1). Both AT & T and GTE challenge the Florida Commission's selection of a pricing methodology, and GTE also challenges the Florida Commission's implementation of its chosen methodology.
The Florida Commission adopted a methodology known as Total Service Long-Run Incremental Cost ("TSLRIC"), which uses the incumbent's current network architecture and future replacement technology as the basis for determining long-run incremental cost. For the reasons set forth in AT & T Comms. of Southern States, Inc. v. Bellsouth Telecomms., Inc., 122 F.Supp.2d 1305 (N.D.Fla.2000), I reject the parties' challenge to the Florida Commission's adoption of this methodology.4
GTE also asserts that, even if TSLRIC is an appropriate pricing methodology, the Florida Commission's implementation of this methodology was flawed in four respects. I reject GTE's first, second and fourth assertions because GTE has made no showing that the Florida Commission's actions were arbitrary and capricious or contrary to the Telecommunications Act of 1996. With respect to GTE's third assertion, I direct the defendant Commissioners to provide a further explanation of their decision.
GTE's first contention is that in setting network element prices, the Florida Commission erred by failing to consider costs GTE incurs to provide "universal service." GTE is wrong.
State commissions historically have pursued a goal of making telephone service available to as many potential users as possible. Thus basic rates have been held low, sometimes below cost, in an effort to make basic telephone service widely affordable. And rates have been held uniform, even to remote locations, so that the high cost of providing lines to remote locations would not mean service would be unavailable there. Local monopoly carriers historically took the loss for providing such service but made it up through rates to other customers or for other types of service.
Competition of course will require changes in this approach to universal service. If...
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