Bellsouth Telecom. v. Mcimetro Access Trans.

• Decision Date: 03 May 2000
• Docket Number: Civ. A. No. 1:99-CV-0249-JOF.,Civ. A. No. 1:99-CV-0518-JOF.,Civ. A. No. 1:99-CV-0248-JOF.,Civ. A. No. 1:99-CV-0781-JOF.
• Citation: 97 F.Supp.2d 1363
• Parties: BELLSOUTH TELECOMMUNICATIONS, INC., Plaintiff, v. MCIMETRO ACCESS TRANSMISSION SERVICES, INC., et al., Defendants. BellSouth Telecommunications, Inc., Plaintiff, WorldCom Technologies, Inc., et al., Defendants. BellSouth Telecommunications, Inc., Plaintiff, v. Intermedia Communications, Inc., et al., Defendants. BellSouth Telecommunications, Inc., Plaintiff, v. e.spire Communications, Inc., et al., Defendants.
• Court: U.S. District Court — Northern District of Georgia

97 F.Supp.2d 1363

BELLSOUTH TELECOMMUNICATIONS, INC., Plaintiff, v. MCIMETRO ACCESS TRANSMISSION SERVICES, INC., et al., Defendants.

BellSouth Telecommunications, Inc., Plaintiff,

WorldCom Technologies, Inc., et al., Defendants.

BellSouth Telecommunications, Inc., Plaintiff, v. Intermedia Communications, Inc., et al., Defendants.

BellSouth Telecommunications, Inc., Plaintiff, v. e.spire Communications, Inc., et al., Defendants.

Civ. A. No. 1:99-CV-0248-JOF.

Civ. A. No. 1:99-CV-0249-JOF.

Civ. A. No. 1:99-CV-0518-JOF.

Civ. A. No. 1:99-CV-0781-JOF.

United States District Court, N.D. Georgia, Atlanta Division.

May 3, 2000.

Matthew Henry Patton, Robert Peter Marcovitch, John Franklin Beasley, Kilpatrick Stockton, William J. Ellenberg, II, Bellsouth Telecommunications, Inc., Fred McCallum, Jr., Bellsouth Telecommunications, Inc., Atlanta, GA, Michael K. Kellogg, Sean A. Lev, Kellogg, Huber, Hansen, Todd & Evans, Washington, DC, for Plaintiff.

Teresa Wynn Roseborough, David Isaac Adelman, Sutherland, Asbill & Brennan, Atlanta, Darryl M. Bradford, John J. Hamill, Jenner & Block, Chicago, IL, Patrick K. Wiggins, Wiggins & Villacorta, Tallahassee, FL, Frank B. Strickland, Mary M. Brockington, Sara Lynn Doyle, Wilson, Strickland & Benson, Suzanne W. Ockleberry, AT & T Communications of the Southern States, Inc., Atlanta, GA, Newton M. Galloway, Dean Richard Fuchs, Newton M. Galloway & Associates, Griffin, Robert S. Bomar, Thurbert E. Baker, William Wright Calhoun, Thomas K. Bond, Harold David Melton, Office of State Attorney General, Atlanta, GA, for Defendants.

Robert David Powell, Assistant United States Attorney, Atlanta, GA, Rachel J. Hines, U.S. Department of Justice, Federal Programs Branch, Civil Division, Washington, DC, for Intervenor.

ORDER

FORRESTER, District Judge.

This matter is before the court on Plaintiff's petitions for judicial review of four orders of the Georgia Public Service Commission ("PSC").

I. STATEMENT OF THE CASE

A. Procedural History

Plaintiff, BellSouth Telecommunications, Inc. ("BellSouth"), filed the instant actions seeking judicial review, pursuant to 47 U.S.C. § 252(e)(6), of four PSC orders holding that BellSouth must pay reciprocal compensation to its competitors for calls made to Internet service providers ("ISP").¹ BellSouth subsequently filed emergency motions to pay into court the amounts owed under the PSC orders. After a hearing, the court granted these motions. BellSouth then filed motions to stay the PSC orders or, alternatively, to continue filing the amounts owed under those orders into the court's registry. The court denied BellSouth's motions to stay but granted its motions to continue paying sums into the registry of the court, in accordance with the terms of the court's earlier ruling on the emergency motions. On July 29, 1999, the court issued a scheduling order in which it ordered the PSC to file a complete record of the administrative proceedings in the four cases at issue and imposed a briefing schedule on the parties to this dispute. After the scheduling order had been issued, both the United States and MediaOne Telecommunications of Georgia, LLC ("MediaOne") moved to intervene. The court verbally granted the motion of the United States and verbally denied the motion of MediaOne. Finally, on April 4, 2000, the court heard arguments on the issues presented in this case.

B. Background

The Telecommunications Act of 1996 ("the Act" or "the 1996 Act") requires all telecommunications carriers "to interconnect directly or indirectly with the facilities and equipment of other telecommunications carriers" so that customers of one carrier can call customers of a different carrier. 47 U.S.C. § 251(a)(1). Important provisions in the Act apply specifically to local exchange carriers ("LECs"). Prior to the Act's passage, local telephone service was thought to be a natural monopoly, and states typically granted exclusive franchises in each local service area to a LEC, which owned the equipment that constitutes a local exchange network. AT & T Corp. v. Iowa Util. Bd., 525 U.S. 366, 119 S.Ct. 721, 726, 142 L.Ed.2d 835 (1999). After the Act, however, states "may no longer enforce laws that impede competition, and the incumbent LECs are subject to a host of duties intended to facilitate market entry." Id. Among the duties imposed on incumbent LECs ("ILECs") are the obligations "to establish reciprocal compensation arrangements for the transportation of telecommunications," 47 U.S.C. § 251(b)(5), and to execute interconnection agreements with competitor LECs ("CLECs") setting forth the terms by which they will compensate each other for the use of the other's network. Id. at § 251(c).

The Act provides that ILECs may voluntarily negotiate the interconnection agreements with CLECs, and any party to the negotiation may request that the state commission charged with such duties may mediate any differences arising in the course of the negotiation. 47 U.S.C. § 252(a). If, within a given time, an agreement is not reached by negotiation or mediation, the Act provides for compulsory arbitration by the state commission. Id. at § 252(b). Once an agreement is reached, whether through negotiation or arbitration, it must be submitted to the state commission for approval. Id. at § 252(e). If the state commission fails or refuses to act on an agreement, the Federal Communications Commission ("FCC") will then issue an order preempting the state commission and shall assume the state commission's responsibilities under the Act. Id. at § 252(e)(5).

Pursuant to the aforementioned obligations, BellSouth entered into four separate interconnection agreements with the CLEC Defendants in late 1996 and early 1997, and each of the agreements was approved by the PSC. Each agreement provided for reciprocal compensation obligations only with regard to "Local Traffic." (Def. Ex. 2, § 5.8.1; Def. Ex. 3, § 2.2.1; Def. Ex. 4, § IV.A-B; Def. Ex. 5, § VI.B). Three of the agreements define "Local Traffic" as "[any] telephone call[s] that originate[s] in one exchange and terminate[s] in either the same exchange, or a corresponding Extended Area Service ... exchange." (Def. Ex. 3, § 2.2.1; Def. Ex. 4, § I.D; Def. Ex. 5, Att. B, ¶ 48). The fourth agreement defined "Local Traffic" as "calls between two or more Telephone Exchange service users where both Telephone Exchange Services bear NPA-NXX designations associated with the same local calling area ...."² (Def.Ex. 2, § 1.40). After these agreements were executed, a dispute arose between BellSouth and the CLEC Defendants as to whether the agreements required the payment of reciprocal compensation for calls made to ISPs for the purposes of connecting with the Internet. At the heart of this dispute was whether ISP-bound traffic constitutes "Local Traffic" for purposes of the agreements. Answering this question negatively, BellSouth sent a letter to the CLEC Defendants on August 12, 1997, informing them that BellSouth would not pay reciprocal compensation for calls made to ISPs. (Def.Ex. 19).

Defendants WorldCom,³ MCI, e.spire, and Intermedia thereafter filed complaints with the PSC alleging that BellSouth had breached the agreements and seeking enforcement of the interconnection agreements so as to require reciprocal compensation for ISP-bound traffic. The PSC sided with the CLEC Defendants and issued four orders ruling that calls made to ISPs are local in nature and fit within the definitions of "Local Traffic" contained in the interconnection agreements. Important to the PSC decisions was the notion that such calls terminate locally at the ISPs, and the PSC found that information services provided by the ISPs were distinct from and irrelevant to the telecommunications service provided by the LEC. See WorldCom Order, at 7; In re Petition of MCImetro for Arbitration of Certain Terms and Conditions of Proposed Agreement with BellSouth Telecommunications, Inc. Concerning Interconnection and Resale Under the Telecommunications Act of 1996, Order Deciding Complaint, PSC Dkt. No. 6865-U, at 30-31 ("MCI Order"); In re Complaint of Intermedia Communications, Inc. against BellSouth Telecommunications, Inc. for Breach of Terms of Georgia Partial Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996, and Request for Relief, Order Deciding Complaint, PSC Dkt. No. 9920-U, at 3 ("Intermedia Order"); In re Complaint of e.spire Communications, Inc. Against BellSouth Telecommunications, Inc., Order Affirming and Modifying the Hearing Officer's Decision, at 7 ("e.spire Order"). BellSouth then sought relief in this court.

After the initiation of the instant actions, the FCC handed down a ruling relevant to reciprocal compensation for ISP-bound traffic. See In the Matter of Implementation of the Local Competition Provisions of the Telecommunications Act of 1996; Inter-Carrier Compensation for ISP-Bound Traffic, 14 F.C.C.R. 3689, 1999 WL 98037 (1999) ("ISP Ruling"). The FCC concluded that "ISP-bound traffic is jurisdictionally mixed and appears to be largely interstate in nature," id. at ¶ 1, and decided to "analyze ISP traffic for jurisdictional purposes as a continuous transmission from the end user to a distant Internet site." Id. at ¶ 13. In so holding, the FCC rejected the idea that "ISP-bound traffic must be separated into two components: an intrastate telecommunications service ... and an interstate information service ...." Id. Because reciprocal compensation is mandated under 47 U.S.C. § 251(b)(5) only for local traffic, id. at ¶ 26, the FCC's ruling that ISP-bound traffic is jurisdictionally interstate removed such traffic from the reciprocal compensation requirement. Nonetheless, the FCC noted that "parties may voluntarily include this traffic within the scope of their interconnection agreements" as those agreements are "interpreted and enforced by the state commissions." Id. at ¶ 22.

On March 24, 2000, the United States Court of...