P.R. Tel. Co. v. T–Mobile P.R. LLC

• Decision Date: 02 May 2012
• Docket Number: No. 11–1504.,11–1504.
• Citation: 55 Communications Reg. (P&F) 1247,678 F.3d 49
• Parties: PUERTO RICO TELEPHONE COMPANY, INC., Plaintiff, Appellee, v. T–MOBILE PUERTO RICO LLC, Defendant, Appellant, Telecommunications Regulatory Board Of Puerto Rico; Nixyvette Santini–Hernandez, in her official capacity as member of the Telecommunications Regulatory Board of Puerto Rico; Vicente Aguirre–Iturrino, in his official capacity as member of the Telecommunications Regulatory Board of Puerto Rico; Sandra Torres–Lopez, in her official capacity as President of the Telecommunications Regulatory Board of Puerto Rico, Defendants.
• Court: U.S. Court of Appeals — First Circuit

678 F.3d 49

55 Communications Reg. (P&F) 1247

PUERTO RICO TELEPHONE COMPANY, INC., Plaintiff, Appellee,

v.T–MOBILE PUERTO RICO LLC, Defendant, Appellant,Telecommunications Regulatory Board Of Puerto Rico; Nixyvette Santini–Hernandez, in her official capacity as member of the Telecommunications Regulatory Board of Puerto Rico; Vicente Aguirre–Iturrino, in his official capacity as member of the Telecommunications Regulatory Board of Puerto Rico; Sandra Torres–Lopez, in her official capacity as President of the Telecommunications Regulatory Board of Puerto Rico, Defendants.

No. 11–1504.

United States Court of Appeals,First Circuit.

Heard March 6, 2012.

Decided May 2, 2012.

Jaime E. Toro–Monserrate, with whom Toro, Colón, Mullet, Rivera & Sifre, P.S.C., Christopher W. Savage, and Davis Wright Tremaine, LLP were on brief, for appellant.

Eduardo R. Guzmán, with whom Drinker Biddle & Reath LLP was on brief, for appellee.

Before LYNCH, Chief Judge, TORRUELLA and LIPEZ, Circuit Judges.

LYNCH, Chief Judge.

This case arises out of a dispute regarding the applicable billing rate for T–Mobile Puerto Rico LLC's use of certain services provided by Puerto Rico Telephone Company,Inc. (PRTC), an incumbent local exchange carrier (ILEC). It requires us to address several issues under the Telecommunications Act of 1996 (TCA), including what is meant by the term “discrimination.”

PRTC and T–Mobile entered into an interconnection agreement (ICA), pursuant to the TCA, in 1999, and into a second agreement in 2001. These agreements provided that certain “intrastate access” services would be billed at a rate contained in PRTC's federal tariff filed with the Federal Communications Commission (FCC). T–Mobile was billed at this rate until 2002, when PRTC announced its view that this billing rate was in error, the disputed services were not covered under the ICA, and the applicable billing rate was a higher rate found in PRTC's local tariff. T–Mobile disagreed. Roughly $2 million is at issue.

T–Mobile filed suit with the Telecommunications Regulatory Board of Puerto Rico (the Board), which ruled in favor of T–Mobile as a matter of Puerto Rico contract law, holding that the FCC tariff rate applied. In response, PRTC filed suit in federal court against T–Mobile and the Board, raising a variety of claims as to why the Board's decision was unlawful.

The district court granted summary judgment for PRTC and entered judgment vacating the Board's order, holding that the Board's decision resulted in the ICA discriminating against third-party carriers, in violation of federal law. P.R. Tel. Co. v. Telecomms. Regulatory Bd. of P.R., No. 08–1885, 2011 WL 1097741, at *9 (D.P.R. Mar. 18, 2011).

We reverse the judgment of the district court, hold that the agreement was neither discriminatory nor violative of any other provision of federal law, and remand with instructions for the district court to reinstate the Board's order and enter judgment in favor of T–Mobile.

I.

Before the enactment of the Telecommunications Act of 1996, Pub.L. 104–104, 110 Stat. 56, local telephone service was provided largely by local exchange carriers (LECs), which were typically local monopolies. Global NAPs, Inc. v. Verizon New England, Inc., 396 F.3d 16, 18 (1st Cir.2005). Before the TCA, LECs owned the physical infrastructure necessary to receive and deliver phone calls among customers and new local carriers could not compete with the incumbent without developing their own separate physical network. Talk Am., Inc. v. Mich. Bell Tel. Co., ––– U.S. ––––, 131 S.Ct. 2254, 2257–58, 180 L.Ed.2d 96 (2011).

This changed with the enactment of the TCA, which “imposed a number of duties on incumbent providers of local telephone service in order to facilitate market entry by competitors.” Id. at 2257. These duties include (1) a requirement that ILECs provide “interconnection” with the ILEC's network for “the transmission and routing of telephone exchange service,” 47 U.S.C. § 251(c)(2), (2) the duty “to offer for resale at wholesale rates any services that the carrier provides at retail to subscribers that are not telecommunications carriers,” id. § 251(c)(4)(A), and (3) most relevant to this case, an “unbundled access” requirement that ILECs provide “nondiscriminatory access to network elements on an unbundled basis at any technically feasible point on rates, terms, and conditions that are just, reasonable, and nondiscriminatory,” id. § 251(c)(3). Such “unbundled network elements” are typically referred to as “UNEs.”

The ICAs under which such services are provided may result from either voluntary negotiations or arbitration. AT & T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 373–74, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999). If voluntarily negotiated, the agreement may be made “without regard to the standards set forth in subsections (b) and (c) of section 251.” 47 U.S.C. § 252(a)(1). Such voluntarily negotiated agreements must be submitted to the relevant state commission for approval or rejection; the state commission may only reject such voluntarily negotiated agreements if it finds that (1) “the agreement (or portion thereof) discriminates against a telecommunications carrier not a party to the agreement,” or (2) “the implementation of such agreement or portion is not consistent with the public interest, convenience, and necessity.” Id. § 252(e)(2)(A).

The TCA also contains a provision requiring LECs to “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.” Id. § 252(i).

The TCA does not displace the ability of telecommunications carriers to agree to purchase services from ILECs on a tariffed basis, under provisions of the communications law that pre-date the TCA. See id.§ 251(g) (providing that LECs must provide certain services that they provided under any “regulation, order, or policy of the Commission,” before the TCA became effective until such obligations are “explicitly superseded” by FCC regulations); see also In re Unbundled Access to Network Elements, 20 FCC Rcd. 2533, 2557–58 (2005) (“[W]e note that incumbent LECs remain subject to the nondiscrimination provisions of the Act, such as that found in section 202. Thus, where wireless and long distance carriers seek to use incumbent LEC facilities on a tariffed basis, they will be entitled to access on similar terms as other, similarly situated carriers.”); In re Implementation of the Local Competition Provisions in the Telecommunications Act of 1996 ( Local Competition Order ), 11 FCC Rcd. 15499, 16013 (1996) (“Pursuant to section 251(g), LECs must continue to offer tariffed interstate access services just as they did prior to enactment of the 1996 Act.”).

II.

The parties agree that PRTC's challenge to the Board's decision is in the nature of an appeal from an administrative agency, so we recount the facts as they were presented in the administrative record before the Board. The same record was before the district court.

A. Factual Background

In June 1999, PRTC and T–Mobile ¹ entered into a one-year voluntary ICA, pursuant to 47 U.S.C. §§ 251– 252. This agreement contained provisions governing the “local interconnection” of the two entities and provided that the parties would designate points of interconnection to each other's networks. The 1999 ICA included an attachment summarizing the rates. At issue in this case is the “intrastate access services” rate, which provided that the rate would be “[a]s per applicable portions of P.R.T.A. Intra-island Switched Access Tariff K–2, Sec. VII.” That tariff, in turn, specified that certain rates would be those provided in “Section 17 of PRTC FCC Tariff No. 1.”

In 2001, the parties voluntarily agreed on a new ICA, which had an initial term of two years and contained similar provisions regarding local interconnection. The 2001 ICA, like the 1999 ICA, provided that the “Intrastate Access” price would be “[p]er applicable portions of P.R.T.A. Tariff K–2 Section VII.” The 2001 agreement was effectively in place until 2008.

A new agreement was entered into effective January 1, 2008. The parties agree that the provisions of the 1999 and 2001 agreements govern for the purposes of the disputed billing at issue here, which took place from 1999 to 2007.

PRTC provided T–Mobile with two services whose pricing is at issue here: (1) high capacity DS–1 and DS–3 circuits that connect T–Mobile's cell sites to T–Mobile's mobile telephone switching office (MTSO) and (2) circuits that connect T–Mobile's MTSO to points of interconnection (POIs) with PRTC.

PRTC's position is that the lower rates under its FCC tariff do not govern. ² PRTC argues that the governing rate is the intrastate private line rate, as provided in PRTC's local tariff F–7. The rates are substantially higher under the local tariff F–7. As said, the Board rejected the application of the higher local tariff.

PRTC billed T–Mobile for the disputed services at the lower rates contained in the FCC tariff from 1999 to 2002. However, in December 2002, PRTC informed T–Mobile that these facilities should have been billed in accordance with the local tariff F–7 but, “owing to an omission,” had been billed at the FCC Tariff No. 1 rate. Its position was that while T–Mobile could in theory have “purchase[d] interstate offerings for interstate use” and paid the interstate FCC tariff rate, it could have done so only if it complied with the terms and conditions of the FCC tariff, or, alternatively T–Mobile could instead have purchased “intraisland offering for intraisland use,” and paid the local tariff rate. PRTC's view was that the FCC tariff would not apply, because T–Mobile had not certified that more than ten percent of the traffic is interstate, as is required under the tariff. As a result, PRTC contended that T–Mobile could only...