Mci Telecommunications v. Southern New England Tele
| Decision Date | 29 September 1998 |
| Docket Number | Civil Action No. 3:97CV1601AWT.,Civil Action No. 3:97CV1596AWT. |
| Citation | 27 F.Supp.2d 326 |
| Court | U.S. District Court — District of Connecticut |
| Parties | MCI TELECOMMUNICATIONS CORPORATION, et al., Plaintiffs, v. THE SOUTHERN NEW ENGLAND TELEPHONE COMPANY, et al., Defendants. AT & T Communications of New England, Inc., Plaintiff, v. The Commissioners of the Connecticut Department of Public Utility Control, Defendants. |
Paul E. Knag, Joshua van Hulst, Cummings & Lockwood, Stamford, CT, Maureen F. Del Duca, Jenner & Block, Washington, DC, Alan D. Mandl, Ottenberg Dunkless, Mandl & Mandl, Boston, MA, for MCI Telecommunications Corp, MCImetro Access Transmission Svcs, Inc.
Joseph Guerra, Sidley & Austin, Washington, DC, Donald E. Frechette, Edwards & Angell, Hartford, CT, for AT&T Communications of New England, Inc..
Ralph G. Elliot, Glory Martyn Lena, Kevin S. Murphy, Tyler Cooper & Alcorn, Hartford, CT, Kathleen Ann Carrigan, Southern New England Telephone Co., Madelyn M. DeMatteo, New Haven, CT, for Southern New England Telephone Co., Southern New England Telecommunications Corp., SNET America, Inc.
Mark F. Kohler, Robert S. Golden, Jr., Attorney General's Office, Public Utility Control, New Britain, CT, for Donald W. Downes, John W. Betkoski, III, Jack R. Goldberg, Glenn Arthur, Dept. of Public Utility Control.
William L. Vallee, Jr., Connecticut Office of Consumer Counsel, New Britain, CT, for Office of Consumer Counsel.
RULING ON MOTIONS FOR SUMMARY JUDGMENT
This matter is before the court on the plaintiffs' motions for summary judgment and the defendants' cross-motions for summary judgment. For the reasons set forth below, the plaintiffs' motions are being denied and the defendants' motions are being granted.
In these consolidated actions seeking declaratory and injunctive relief, the plaintiffs, each of whom is a telecommunications carrier, challenge a decision by the Commissioners of the Connecticut Department of Public Utility Control approving the restructuring of certain operations of the Southern New England Telecommunications Corporation. The plaintiffs argue that this decision violates provisions of the Telecommunications Act of 1996 which impose special obligations on incumbent local exchange carriers.
The Telecommunications Act of 1996 (the "1996 Act"), which is codified in Title 47 of the United States Code, is a comprehensive rewriting of the Communications Act of 1934 that "fundamentally changes telecommunications regulation." First Report and Order, No. 96-325, In the Matter of Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, CC Docket No. 96-98 (FCC Aug. 8, 1996), 11 FCC Rcd. 15499 (1996), 1996 WL 452885 ("Local Competition Order") at ¶ 1. The broad purpose of the 1996 Act was "to promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies". 1996 Act, Pub.L. No. 104-104, purpose statement, 110 Stat. 56, 56 (1996).
Subtitle A of Title I of the 1996 Act is aimed at opening competition in local telephone service markets, by seeking to remove "not only statutory and regulatory impediments to competition, but economic and operational impediments as well." Local Competition Order at ¶ 3. To help achieve this goal, 47 U.S.C. § 251 imposes certain duties on local exchange carriers ("LECs") and incumbent local exchange carriers ("ILECs").1 The latter group is required to, inter alia:
(1) negotiate in good faith binding interconnection agreements to fulfill the duties imposed on them under §§ 251(b) and 251(c), 47 U.S.C. § 251(c)(1);
(2) provide, for the facilities and equipment of any requesting telecommunications carrier, interconnection at any technically feasible point of the same type and quality it provides to itself or any other party, on just, reasonable, and nondiscriminatory terms and conditions, 47 U.S.C. § 251(c)(2);
(3) provide access to "network elements" on an unbundled basis, 47 U.S.C. § 251(c)(3); and
(4) "offer for resale at wholesale rates any telecommunications service that the carrier provides at retail to subscribers who are not telecommunications carriers", 47 U.S.C. § 251(c)(4).
With respect to the resale obligation noted above, 47 U.S.C. § 252(d)(3) specifies that, when arbitrating an interconnection agreement, "a State commission shall determine wholesale rates on the basis of retail rates" charged to subscribers minus "any marketing, billing, collection, and other costs that will be avoided by the local exchange carrier" (the "avoided cost" wholesale discount). 47 U.S.C. § 252(d)(3).
Section 252 outlines the procedures for negotiation, arbitration, and approval of interconnection agreements between ILECs and requesting telecommunications carriers. 47 U.S.C. § 252. Primary responsibility for approval and oversight of such agreements is vested in State commissions. See 47 U.S.C. § 252(e)(1). Any party aggrieved by a State commission's approval or rejection of an interconnection agreement "may bring an action in an appropriate Federal district court to determine whether the agreement ... meets the requirements of section 251 ... [and section 252]." 47 U.S.C. § 252(e)(6).
The plaintiffs in the first of two consolidated cases before this court are MCI Telecommunications Corporation and MCImetro Access Transmission Services, Inc. (collectively "MCI"). The plaintiff in the second case is AT & T Communications of New England, Inc. ("AT & T"). The plaintiffs are corporations providing long-distance and other telephone services throughout Connecticut and other parts of the United States. Statement of Material Facts Not In Dispute [docs. # 17, 22, 25 and 28].2 MCI and AT & T hold a certificate of public convenience and necessity to offer local telephone service in Connecticut, and both intend to offer local telephone service in Connecticut in competition with defendant Southern New England Telephone Company ("SNET"). Id.
Defendant SNET is an ILEC under the 1996 Act and a telephone company that provides telephone services, including local exchange services, at wholesale and retail, in almost all areas of Connecticut. Id. Both defendant SNET and defendant SNET America, Inc. ("SAI") are wholly-owned subsidiaries of defendant Southern New England Telecommunications Corporation ("SNET Holding"). Id. The defendant Commissioners of the Connecticut Department of Public Utility Control (the "DPUC") are the members of the State commission responsible for approval and oversight of interconnection agreements between ILECs and new entrants to the Connecticut market under 47 U.S.C. § 252.
The DPUC has arbitrated separate interconnection agreements between MCI and SNET and between AT & T and SNET. SNET Defendants' Memorandum of Law Re All Motions for Summary Judgment [doc. #29] ("SNET Opposition Memo") at 7; Memorandum of Law in Support of Plaintiffs' Motion for Summary Judgment [doc. # 16] ("MCI Memo") at 8 n.5. These agreements require SNET, in accordance with § 252(d)(3), to offer its services for resale at a discounts off retail rates. Affidavit of Anne U. MacClintock [doc. # 30] at Exh. A, pp. 12-19; id. at Exh. B, pp. 40-46.
At the same time that these interconnection agreements were being negotiated and arbitrated, defendants SNET Holding and SNET filed a proposal with the DPUC for approval of a restructuring of certain operations. The principal component of the proposal was the separation of SNET Holding's retail and wholesale business units, the withdrawal of SNET from the retail telecommunications market, and the transfer of all retail operations and customers of SNET to defendant SAI. State Defendants' Memorandum of Law in Support of Their Cross-Motion for Summary Judgment and in Opposition to Plaintiffs' Motions for Summary Judgment [doc. # 26] (the "DPUC Opposition Memo") at 5.
By a decision dated June 25, 1997, the DPUC approved the restructuring proposal, subject to certain conditions and modifications. See Decision, DPUC Investigation of the Southern New England Telephone Company Affiliate Matters Associated with the Implementation of Public Act 94-83, Docket No. 94-10-05 (June 25, 1997) ("DPUC Decision"). For example, the DPUC refused to permit the direct transfer of SNET's retail customers to SAI, but, rather, imposed a "balloting process" whereby customers would be permitted to select a retail provider from among all those carriers (including MCI and AT & T) certified to provide local telephone service in Connecticut. DPUC Decision at 54-56. At the completion of the balloting process, SNET will cease its retail operations, and the assets relating to its retail business will be transferred to SAI. DPUC Opposition Memo at 7.
In addition, the DPUC limited the type and scope of customer service information that could be provided by SNET to SAI to information relating to those customers that become SAI retail customers and only to the extent that (i) such information is critical to the ongoing management of the retail subscriber function and (ii) corresponding information for non-SAI retail customers is provided to the respective retail provider chosen by those customers on the same terms and conditions as it is provided to SAI. Id. at 53-54.
In approving SNET's restructuring proposal, as modified, the DPUC specifically found that:
(1) the restructuring did not violate the 1996 Act, as an ILEC such as SNET is not subject to the resale obligations of §§ 251(c)(4) and 252(d)(3) if it does not offer any services on a retail basis, DPUC Decision at 50-51; and
(2) SAI was not a "successor or assign" of SNET under § 251(h) so as to subject it to the resale obligations of §§ 251 and 252, id. at 47-49.
The plaintiffs commenced this suit because...
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