Mcleodusa Telecomm. v. Iowa Utilities Bd.

• Decision Date: 06 May 2008
• Docket Number: No. 4:07-cv-214.,4:07-cv-214.
• Citation: 550 F.Supp.2d 1006
• Parties: McLEODUSA TELECOMMUNICATIONS SERVICES, INC., Plaintiff, Office of Consumer Advocate, Intervenor Plaintiff, v. IOWA UTILITIES BOARD, Utilities Division, Department of Commerce; John Norris and Curtis Stamp, in their Official Capacities as Members of the Iowa Utilities Board and not as Individuals; and Qwest Corporation, Defendants.
• Court: U.S. District Court — Southern District of Iowa

Page 1006

550 F.Supp.2d 1006

McLEODUSA TELECOMMUNICATIONS SERVICES, INC., Plaintiff Office of Consumer Advocate, Intervenor Plaintiff, v. IOWA UTILITIES BOARD, Utilities Division, Department of Commerce; John Norris and Curtis Stamp, in their Official Capacities as Members of the Iowa Utilities Board and not as Individuals; and Qwest Corporation, Defendants.

No. 4:07-cv-214.

United States District Court, S.D. Iowa, Central Division.

May 6, 2008.

David Jay Lynch, Iowa Utilities Board Dept of Commerce, Des Moines, IA, Lisa A. Anderl, Qwest Corporation, Seattle, WA, Timothy Goodwin, Qwest Corporation, Denver, CO, David S. Sather, Littleton, CO, for Defendant/Intervenor Defendant.

Bret Alan Dublinske, Dickinson Mackaman Tyler & Hagen PC, Des Moines, IA, for Plaintiff.

Gary D. Stewart, IA Dept of Justice Special Litigation Division, Des Moines, IA, for Intervenor Plaintiff.

MEMORANDUM OPINION AND ORDER

ROBERT W. PRATT, Chief Judge.

I. PROCEDURAL BACKGROUND

On May 16, 2007, Plaintiff, McLeodUSA Telecommunications Services, Inc. ("McLeod") filed a Complaint for Declaratory and Injunctive Relief (Clerk's No. 1) against Defendants, the Iowa Utilities Board, Utilities Division, Department of Commerce ("IUB"), John Norris and Curtis Stamp, in their official capacities as members of the IUB ("Norris" and "Stamp"), and Qwest Corporation ("Qwest") (collectively "Defendants"). In the Complaint, McLeod alleges that Qwest provided it access to electrical power on terms and conditions that are discriminatory, in violation of the Telecommunications Act of 1934, 47 U.S.C. § 151 et seq. ("the 1934 Act"), as amended by the Telecommunications Act of 1996 ("the 1996 Act"), 47 U.S.C. § 251 et seq. McLeod claims that it complained of Qwest's discrimination to the IUB and that the IUB, in issuing an administrative order on the issue, failed to enforce Federal and State laws plainly prohibiting such discrimination.

The IUB, Norris, and Stamp filed an Answer to the Complaint on July 13, 2007. Clerk's No. 7. Qwest filed an Answer to the Complaint on July 23, 2007. Clerk's No. 8. On July 26, 2007, the Iowa Office of Consumer Advocate ("OCA") moved for permissive intervention, pursuant to Federal Rule of Civil Procedure 24. Clerk's No. 9. The Court granted the OCA's intervention request (Clerk's No. 10), and the OCA's Intervenor Complaint, asserting claims substantially parallel to those of McLeod, was filed on July 31, 2007. Clerk's No. 11. The IUB, Norris, and Stamp filed an Answer to the Intervenor Complaint on August 15, 2007. Clerk's No. 12. Qwest filed an Answer to the Intervenor Complaint on August 17, 2007. Clerk's No. 13. The parties stipulated to having the case resolved by the Court on the basis of the existing administrative record. See Clerk's No. 14. Accordingly, the Court entered an order setting a briefing schedule on September 11, 2007. Clerk's No. 15. The OCA and McLeod filed trial briefs on October 23, 2007. Clerk's Nos. 16, 18. The IUB and Qwest filed trial briefs on November 20, 2007. Clerk's Nos. 19, 20. The OCA and McLeod filed reply briefs on December 11, 2007. Clerk's Nos. 22, 23. A hearing was held on January 11, 2008. Clerks's No. 29. The matter is fully submitted.

II. FACTUAL BACKGROUND

Congress enacted the Telecommunications Act of 1996 in an effort to enhance competition in the local telephone service market. See AT & T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 371, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999). The purpose and effect of the 1996 Act was summarized well by the Eighth Circuit Court of Appeals in 2004:

Even after the 1980s breakup of the AT & T telecommunications monopoly, which, inter alia, divested AT & T of its local exchange carriers, local telephone service continued to be viewed and operated as a natural monopoly, with state utility boards, or commissions, giving one local telephone service provider exclusive coverage of a given geographic area. The Telecommunications Act of 1996 (1996 Act), 47 U.S.C. §§ 151-615b, fundamentally restructured local telephone markets and the regulatory scheme that governed them. No longer could states enforce laws that impeded competition in the local markets. No longer was the local market to be viewed as a natural monopoly with only one authorized provider of local telephone service. To the contrary, the 1996 Act required local exchange carriers to facilitate local competition by sharing their networks with their new competitors. The 1996 Act also thrust the federal government into the local telephone market regulatory arena, which had previously been the exclusive domain of the states. MCI Telecomm. Corp. v. Bell Atl. Pa., 271 F.3d 491, 497 (3d Cir.2001) ("The Act requires that local service, which was previously operated as a monopoly overseen by the several states, be opened to competition according to standards established by federal law."), cert. denied, 537 U.S. 941, 123 S.Ct. 340, 154 L.Ed.2d 247 [(2002)].

Iowa Network Servs., Inc. v. Qwest Corp., 363 F.3d 683, 685-86 (8th Cir.2004).

To facilitate competition, the 1996 Act imposed several duties on incumbent local exchange carriers ("ILECs")¹ with regard to new competitors in the telecommunications market, or competitive local exchange carriers ("CLECs").² First, ILECs must permit any requesting CLEC to interconnect with the ILEC's existing network. 47 U.S.C. § 251(c)(2). Second, ILECs must provide CLECs with access to unbundled network elements ("UNEs"), that is, "access to network elements on an unbundled basis at any technically feasible point"³ on "just, reasonable, and nondiscriminatory" terms. Id. § 251(c)(3). Finally, ILECs must offer any telecommunications services it provides to CLECs at wholesale rates, so that CLECs may offer such services for resale to end-users. Id. § 251(c)(4).

According to McLeod, CLECs that deploy at least a portion of their own network facilities used in combination with UNEs are known as "facilities-based" CLECs:

When facilities-based CLECs like McLeodUSA entered the picture, the networks of these new competitors had to be interconnected to the existing networks of the ILECs. Interconnection allows, among other things, access to the UNEs that would permit the CLEC to reach end users over the ILEC's existing aerial or buried wires, which, when leased by a CLEC, are called "UNE loops." This interconnection of networks, provided for under federal and state law, is typically accomplished by McLeodUSA locating its equipment in a Qwest central office ("CO") through a process called "collocation."

Qwest charges McLeod a variety of fees for collating McLeodUSA's equipment in Qwest COs. For example, if a CLEC requests a "caged" area to house its network equipment, then Qwest will erect a fenced off area in its CO to create the "caged collocation" space that is then leased by the competitive provider. The competitive LEC also requires power to run its "collocated equipment." A CLEC orders power feeder cables that run from the CO power plant to the CLECs collocation site, for which the CLEC pays the ILEC a non-recurring charge to purchase and install these cables. ... Each Qwest central office has a power plant that serves both Qwest and all collocated entities.

Compl. at 2-3.

"Upon receiving a request for interconnection, services, or network elements" from a CLEC, an ILEC "may negotiate and enter into a binding agreement with the requesting telecommunications carrier or carriers...." 47 U.S.C. § 252(a). Any such voluntarily negotiated interconnection agreement ("ICA") must "include a detailed schedule of itemized charges for interconnection and each service or network element included in the agreement." Id. The ICA must then be submitted to the relevant State commission (in Iowa, the IUB) for approval. Id. § 252(a), (e). If a voluntary ICA cannot be reached, the parties may petition the State commission for arbitration of the matter. Id. § 252(b). A third alternative for an ILEC and a CLEC to enter into an ICA is for the CLEC to essentially "opt-in" to an ICA that the ILEC has with another CLEC. See id. § 252(i) ("A local exchange carrier shall make available any interconnection, service, or network element provided under an agreement approved under this section to which it is a party to any other requesting telecommunications carrier upon the same terms and conditions as those provided in the agreement.")

McLeod elected this third alternative in entering into an ICA with Qwest. The IUB approved the ICA between McLeod and Qwest on December 15, 1997. McLeod and Qwest's ICA provided that the interconnections services provided to McLeod by Qwest would be at rates in accordance with the Statement of Generally Available Terms ("SGAT") on file with the IUB.⁴ In June 2001, Qwest filed proposed changes to its SGAT with the IUB, including new rates and a new rate structure for providing DC power for collocation. See IUB Docket No. RPU-01-6, Proposed Decision and Order (Mar. 25, 2002), available at www.state.ia.us/ government/com/util/docs/.0orders/2002/ 0325_rpu016.pdf (Qwest "filed proposed wholesale prices for services and new unbundled network elements"). While some of Qwest's proposed rates were contested, others, including the new rates and rate structure for DC power for collocation were not contested and were, therefore, ultimately approved by the IUB in 2002. See Proposed Decision and Order at 38 ("Qwest has proposed prices for many other UNEs and services in this docket that were not set in Docket No. RPU-96-9. The proposed prices are uncontested, are supported by Qwest studies, and will be approved subject to complaint or investigation.").

On August 18, 2004, McLeod and Qwest entered into a "DC Power Measuring Amendment" (the "Amendment") to the ICA, which altered some terms of the original ICA between the parties. At some point after entering into the Amendment, a dispute developed between McLeod and Qwest over the manner in which Qwest was charging McLeod...