New Cingular Wireless PCS, LLC v. Finley

• Decision Date: 15 March 2012
• Docket Number: 10–2243.,Nos. 10–2221,s. 10–2221
• Citation: 55 Communications Reg. (P&F) 723,674 F.3d 225
• Parties: NEW CINGULAR WIRELESS PCS, LLC, d/b/a AT & T Mobility, on behalf of itself and its wireless operating affiliates, Plaintiff–Appellant,andAlltel Communications, LLC, d/b/a Verizon Wireless, Plaintiff, v. Edward S. FINLEY, Jr., Chairman (in his official capacity as Commissioner of the North Carolina Utilities Commission); William T. Culpepper, III, Commissioner (in his official capacity as Commissioner of the North Carolina Utilities Commission); Bryan E. Beatty, Commissioner (in his official capacity as Commissioner of the North Carolina Utilities Commission); Susan Warren Rabon, Commissioner (in her official capacity as Commissioner of the North Carolina Utilities Commission); Lorinzo L. Joyner, Commissioner (in his official capacity as Commissioner of the North Carolina Utilities Commission); Ellerbe Telephone Company; Randolph Telephone Company; MebTel, Incorporated; Tonola D. Brown–Bland, Commissioner; Lucy T. Allen, Commissioner, Defendants–Appellees.Federal Communications Commission, Amicus Curiae.Alltel Communications, LLC, d/b/a Verizon Wireless, Plaintiff–Appellant,andNew Cingular Wireless PCS, LLC, d/b/a AT & T Mobility, on behalf of itself and its wireless operating Affiliates, Plaintiff, v. Edward S. Finley, Jr., Chairman (in his official capacity as Commissioner of the North Carolina Utilities Commission); William T. Culpepper, III, Commissioner (in his official capacity as Commissioner of the North Carolina Utilities Commission); Bryan E. Beatty, Commissioner (in his official capacity as Commissioner of the North Carolina Utilities Commission); Susan Warren Rabon, Commissioner (in her official capacity as Commissioner of the North Carolina Utilities Commission); Lorinzo L. Joyner, Commissioner (in his official capacity as Commissioner of the North Carolina Utilities Commission); Ellerbe Telephone Company; Randolph Telephone Company; MebTel, Incorporated; Tonola D. Brown–Bland, Commissioner; Lucy T. Allen, Commissioner, Defendants–Appellees.Federal Communications Commission, Amicus Curiae.
• Court: U.S. Court of Appeals — Fourth Circuit

55 Communications Reg. (P&F) 723

674 F.3d 225

NEW CINGULAR WIRELESS PCS, LLC, d/b/a AT & T Mobility, on behalf of itself and its wireless operating affiliates, Plaintiff–Appellant,andAlltel Communications, LLC, d/b/a Verizon Wireless, Plaintiff,

v.Edward S. FINLEY, Jr., Chairman (in his official capacity as Commissioner of the North Carolina Utilities Commission); William T. Culpepper, III, Commissioner (in his official capacity as Commissioner of the North Carolina Utilities Commission); Bryan E. Beatty, Commissioner (in his official capacity as Commissioner of the North Carolina Utilities Commission); Susan Warren Rabon, Commissioner (in her official capacity as Commissioner of the North Carolina Utilities Commission); Lorinzo L. Joyner, Commissioner (in his official capacity as Commissioner of the North Carolina Utilities Commission); Ellerbe Telephone Company; Randolph Telephone Company; MebTel, Incorporated; Tonola D. Brown–Bland, Commissioner; Lucy T. Allen, Commissioner, Defendants–Appellees.Federal Communications Commission, Amicus Curiae.Alltel Communications, LLC, d/b/a Verizon Wireless, Plaintiff–Appellant,andNew Cingular Wireless PCS, LLC, d/b/a AT & T Mobility, on behalf of itself and its wireless operating Affiliates, Plaintiff,

v.Edward S. Finley, Jr., Chairman (in his official capacity as Commissioner of the North Carolina Utilities Commission); William T. Culpepper, III, Commissioner (in his official capacity as Commissioner of the North Carolina Utilities Commission); Bryan E. Beatty, Commissioner (in his official capacity as Commissioner of the North Carolina Utilities Commission); Susan Warren Rabon, Commissioner (in her official capacity as Commissioner of the North Carolina Utilities Commission); Lorinzo L. Joyner, Commissioner (in his official capacity as Commissioner of the North Carolina Utilities Commission); Ellerbe Telephone Company; Randolph Telephone Company; MebTel, Incorporated; Tonola D. Brown–Bland, Commissioner; Lucy T. Allen, Commissioner, Defendants–Appellees.Federal Communications Commission, Amicus Curiae.

Nos. 10–2221

10–2243.

United States Court of Appeals, Fourth Circuit.

Argued: Oct. 26, 2011.Decided: March 15, 2012.

ARGUED: Helgi C. Walker, Wiley Rein, LLP, Washington, D.C., for Appellants. Margaret Ann Force, North Carolina Department of Justice, Raleigh, North Carolina; Daniel C. Higgins, Burns, Day & Presnell, PA, Raleigh, North Carolina, for Appellees. ON BRIEF: Dennis Friedman, Jeffrey M. Strauss, Mayer Brown LLP, Chicago, Illinois, for Appellant New Cingular Wireless PCS, LLC; Brett A. Shumate, Wiley Rein, LLP, Washington, D.C., for Appellant Alltel Communications, LLC. Roy Cooper, North Carolina Attorney General, Raleigh, North Carolina, for Appellees Commissioners of the North Carolina Utilities Commission. James M. Mills, Burns, Day & Presnell, P.A., Raleigh, North Carolina, for Appellees Ellerbe Telephone Company, Mebtel, Inc., and Randolph Telephone Company. Austin C. Schlick, General Counsel, Peter Karanjia, Deputy General Counsel, Richard K. Welch, Acting Associate General Counsel, James M. Carr, Federal Communications Commission, Washington, D.C., for Amicus Curiae.

Before AGEE, DAVIS, and KEENAN, Circuit Judges.

Affirmed by published opinion. Judge DAVIS wrote the opinion, in which Judge AGEE and Judge KEENAN joined.

OPINION

DAVIS, Circuit Judge:

This appeal arises from a dispute between Appellees Ellerbe Telephone Company, Randolph Telephone Company, and MebTel, Inc., incumbent local exchange carriers that provide telephone service in rural areas of North Carolina (collectively, “RLECs”) and Appellants New Cingular Wireless PCS, LLC, d/b/a AT & T Mobility (“AT & T Mobility”) and Alltel Communications, LLC, d/b/a Verizon Wireless (“Verizon”),¹ which provide commercial mobile radio service (collectively, “CMRS Providers”) in North Carolina. In 2005, the RLECs formally requested interconnection with the CMRS Providers. When the parties were unable to reach agreement on certain issues, the RLECs filed petitions for arbitration with the North Carolina Utilities Commission (“NCUC”). The NCUC consolidated the petitions, held an evidentiary hearing, and issued a Recommended Arbitration Order (“RAO”) on December 20, 2007. After the parties filed objections, the NCUC issued a final Order Ruling on Objections and Requiring the Filing of Composite Agreements (“FAO”) on December 31, 2008. The parties filed conforming interconnection agreements (“ICAs”) on February 20, 2009. The NCUC approved the ICAs by order on February 24, 2009 (“approval order”).

On March 26, 2009, the CMRS Providers filed a complaint in the U.S. District Court for the Eastern District of North Carolina against the RLECs and the Commissioners of the NCUC in their official capacities (referred to as “NCUC” or “Commissioners”), seeking review of several determinations made by the NCUC and, ultimately, the NCUC's approval of portions of the ICAs. They sought declaratory and injunctive relief and compensation.

On November 16, 2009, the CMRS Providers, the RLECs, and the NCUC filed cross motions for summary judgment. The district court denied the CMRS Providers' motion for summary judgment and granted the RLECs' and the NCUC's motions for summary judgment. See New Cingular Wireless PCS, LLC v. Finley, No. 5:09–CV–123–BR, 2010 WL 3860384 (E.D.N.C. Sept. 30, 2010). The district court also affirmed the NCUC's December 31, 2008 FAO and February 24, 2009 approval order. Id. The CMRS Providers timely appealed. We affirm.

I.

A.

We begin with a description of the statutory and regulatory framework in which the present dispute arises. In so doing, we briefly describe recent revisions to the regulatory regime administered by the FCC, but we further point out, see infra n. 5, that the effective date of some of those revisions, July 1, 2012, renders it unnecessary for us to accommodate those changes.

The Telecommunications Act of 1996 aims “to transition the [telecommunications] industry from regulated monopoly to unregulated competition.” 1 Peter W. Huber et al., Federal Telecommunications Law § 1.9 (2d ed. Supp.2011) (hereinafter “Huber”). To achieve this goal, the Act seeks to “clear[ ] away the obstacles to new entry” for new competitors and requires incumbent Local Exchange Carriers (“ILECs”), specifically, “to assist” new competitors entering the market. Id. Congress recognized “that the provision of local service required significant infrastructure and that the prohibitive cost of duplicating an incumbent LEC's infrastructure would be an insuperable barrier to entry,” and thus “imposed on incumbents a number of affirmative duties intended to facilitate market entry by potential competitors.” MCImetro Access Transmission Servs., Inc. v. BellSouth Telecomms., Inc., 352 F.3d 872, 874 (4th Cir.2003).

One way ILECs assist new entrants, which is relevant here, is through “interconnection.” See 47 U.S.C. § 251(c)(2). While the Act requires all “telecommunications carrier[s]” ² “to interconnect directly or indirectly,” id. § 251(a)(1), the Act requires ILECs, specifically, upon request, to interconnect “at any technically feasible point within the [ILEC's] network,” id. § 251(c)(2)(B); see also MCImetro, 352 F.3d at 875; Atlas, 400 F.3d at 1265 (“[T]he obligation under § 251(c)(2) applies only to the far more limited class of ILECs, as opposed to the obligation imposed on all telecommunications carriers under § 251(a).”). Interconnection, as used in § 251(c)(2), is defined as the “ physical linking of two networks for the mutual exchange of traffic.” Local Competition Order, 11 FCC Rcd. at 15590 ¶ 176 (emphasis added); see also 47 C.F.R. § 51.5. “[T]ransport and termination” of one carrier's traffic by another carrier is not considered “providing interconnection under the Act.” Huber § 5.6.4.1; see also 47 C.F.R. § 51.5 (expressly excluding “transport and termination of traffic” from the definition of interconnection). In 2005, the FCC amended its rules to clarify that “[ILECs] may request interconnection from a CMRS provider and invoke the negotiation and arbitration procedures set forth in section 252 of the Act.” See Developing a Unified Intercarrier Compensation Regime, 20 FCC Rcd. 4855, 4864–65 ¶¶ 15–16, 2005 WL 433200 (2005); see also 47 C.F.R. § 20.11(e).

Without interconnection, “customers of different LECs in the same local calling area would not be able to call each other.” ³ MCImetro, 352 F.3d at 875. When a customer of Carrier A places a phone call to a customer of Carrier B, the call goes through the network of Carrier A (the “originating” carrier) and is completed on the network of Carrier B (the “terminating” carrier). In some instances, the originating carrier and the terminating carrier are “directly” interconnected. In other instances, such as the circumstances in this case,⁴ the originating and terminating carriers are “indirectly” interconnected. When a customer of Carrier A calls a customer of Carrier B, the call originates on Carrier A's equipment but is delivered to a third-party transit provider (here, typically AT & T Mobility's affiliate, BellSouth Telecommunications, Inc., d/b/a AT & T North Carolina (“AT & T North Carolina”)). The third-party transit provider delivers the call to Carrier B. Carrier B then delivers the call to its customer.

The Act also requires all LECs “to establish reciprocal compensation arrangements for the transport and termination of telecommunications.” ⁵ 47 U.S.C. § 251(b)(5). “Under a typical reciprocal compensation agreement between two carriers, the carrier on whose network the call originates bears the cost of transporting the telecommunications traffic to the point of interconnection with the carrier on whose network the call terminates.” Atlas, 400 F.3d at 1260. “Having been compensated by its customer, the originating network in turn compensates the terminating carrier for completing the call.” Id.; see also Local Competition Order,...