Rural Iowa Ind. Telephone v. Iowa Utilities Bd.

• Decision Date: 08 January 2007
• Docket Number: No. 05-3579.,05-3579.
• Citation: 476 F.3d 572
• Parties: RURAL IOWA INDEPENDENT TELEPHONE ASSOCIATION, Plaintiff-Appellant, v. IOWA UTILITIES BOARD, Utilities Division, Department of Commerce, sued as: Iowa Utilities Board; Diane Munns, individually and in her official capacity as a member of the Iowa Utilities Board; Mark O. Lambert, individually and in his official capacity as a member of the Iowa Utilities Board; Elliot Smith, individually and an his official capacity as a member of the Iowa Utilities Board, Defendants-Appellees, Qwest Corporation, Intervenor Defendant-Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

476 F.3d 572

RURAL IOWA INDEPENDENT TELEPHONE ASSOCIATION, Plaintiff-Appellant, v. IOWA UTILITIES BOARD, Utilities Division, Department of Commerce, sued as: Iowa Utilities Board; Diane Munns, individually and in her official capacity as a member of the Iowa Utilities Board; Mark O. Lambert, individually and in his official capacity as a member of the Iowa Utilities Board; Elliot Smith, individually and an his official capacity as a member of the Iowa Utilities Board, Defendants-Appellees Qwest Corporation, Intervenor Defendant-Appellee.

No. 05-3579.

United States Court of Appeals, Eighth Circuit.

Submitted: May 15, 2006.

Filed: January 8, 2007.

Thomas George Fisher, Jr., Des Moines, IA, for Plaintiff-Appellant.

David Jay Lynch, Iowa Utilities Board Department of Commerce, Des Moines, IA, for Defendant-Appellee.

Amy Marie Bjork, Dorsey & Whitney, Des Moines, IA, Roy E. Hoffinger, Bobbee J. Musgrave, Steven J. Perfrement, Paul J. Lopach, Musgrave & Theis, Denver, CO, for Intervenor Defendant-Appellee.

Before BYE, HANSEN, and SMITH, Circuit Judges.

BYE, Circuit Judge.

The Rural Iowa Independent Telephone Association (RIITA), an industry association comprised of rural telephone carriers, challenges a decision of the Iowa Utilities Board (IUB) regarding wireless phone calls which originate and terminate within the same major trading area (MTA), or intraMTA wireless calls. The IUB determined the rural carriers could not charge Qwest Corporation long-distance access charges when Qwest bundled inbound intraMTA wireless traffic with long-distance traffic before delivering it to the rural carriers. The IUB further determined the rural carriers could not force their customers to use Qwest as an interexchange carrier (IXC) (commonly understood as a long-distance carrier) for outbound intraMTA wireless calls. The district court¹ granted summary judgment upholding the IUB's decision. We affirm.

I

This case exemplifies the tension which can result when the regulatory scheme created by the Telecommunications Act of 1996, Pub.L. No. 104-104, 110 Stat. 56 (codified in scattered sections of 47 U.S.C.) (the Act), is applied to wireless phone service. The "two types of charges which one carrier can extract from another for the provision of telecommunication services" are reciprocal compensation, which governs local service, and "access fee[s] charged by common carriers for use in carrying long-distance telecommunications via their infrastructure, or toll services." Iowa Network Servs., Inc. v. Qwest Corp., 363 F.3d 683, 686 (8th Cir.2004). Under the Act, phone companies are supposed to reach interconnection agreements to determine the charges and amounts paid amongst themselves for local phone calls. See 47 U.S.C. §§ 251(a) & (b) (setting forth the duties to interconnect and to establish reciprocal compensation arrangements), and 252 (outlining the procedures for reaching interconnection agreements). Access charges, on the other hand, are determined by tariffs which carriers file either with the Federal Communications Commission (FCC) (when the charges pertain to purely interstate communications) or the applicable state utility commissions (when the charges pertain to intrastate communications). See Iowa Network, 363 F.3d at 686.

Wireless phone service, and the manner in which wireless calls are transported over existing telephonic infrastructure, does not always "fit neatly," id. at 687, into these two categories of charges. For example, the geographical boundaries of the MTAs associated with wireless calls are not always the same as the boundaries for the local exchange areas associated with traditional local phone service. Consequently, intra MTA wireless calls can pass through or over more than one local exchange area and thus be considered inter exchange traffic and be delivered with long-distance calls.

Until 1999, Qwest not only delivered intraMTA wireless calls together with long-distance traffic to the rural carriers in Iowa, but also paid access charges to the rural carriers on the intraMTA wireless calls. Three years earlier, however, the FCC had determined intraMTA wireless calls should be considered local in nature rather than long-distance, and therefore be subject to reciprocal compensation rather than access charges. See Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, Interconnection between Local Carriers and Commercial Mobile Radio Service Providers, First Report and Order, 11 F.C.C.R. 15499, ¶¶ 1036, 1043 (1996) (hereinafter Local Competition Order). In April 1999, although Qwest continued to deliver intraMTA wireless calls to the rural carriers bundled together with long-distance traffic, it advised the rural carriers that it planned to stop paying access charges on such calls pursuant to the FCC's Local Competition Order.

When the rural carriers disagreed with Qwest's position on the continued payment of access charges for intraMTA wireless traffic, Qwest filed a petition with the IUB for a declaratory order regarding its obligations, as a transiting carrier, with respect to wireless traffic exchanged between cellular phone companies and the rural carriers using Qwest's network. The IUB opened a docket on Qwest's petition, allowed a number of intervenors to join the action, and held extensive proceedings including a nine-day evidentiary hearing. Following these proceedings, the IUB issued a "Proposed Decision and Order"² concluding the intraMTA wireless traffic at issue was local in nature, and Qwest was not required to pay access charges to the rural carriers. The IUB indicated cellular phone companies and rural carriers should negotiate interconnection agreements amongst themselves for reciprocal compensation.

RIITA filed an administrative appeal of the proposed decision challenging the conclusion that Qwest was not required to pay access charges for intraMTA wireless traffic. Another issue raised on appeal was whether the proposed decision failed to recognize the "right" of the rural carriers' customers to dial "0" or "1" prior to dialing an intraMTA wireless number, thereby routing the outbound call through an IXC (long-distance carrier) in order to complete the call, and triggering access charges. The final decision issued by the IUB reaffirmed that Qwest was not responsible for access charges for intraMTA wireless traffic. With respect to a customer's "right" to dial an outbound local wireless call as a long-distance call, the IUB said:

[This] argument assumes that customers should pay [access] charges in order to make local calls to wireless customers. However, it is obvious that if the customers were given the choice between making a local call to a wireless customer or making a toll call to the same wireless customer, most customers would likely waive their "right" to make a toll call using their preferred interexchange carrier in favor of making the same call as a local one, with no additional charges. The Board will affirm the Proposed Decision and Order on this issue and direct the [rural carriers] to allow their customers to dial these local calls as local calls.

Appellant App. at 87.

RIITA filed an action against the IUB in federal district court challenging this final administrative decision. After the district court allowed Qwest to intervene, Qwest argued the case should be dismissed because RIITA was directly challenging an FCC ruling, and therefore its suit should be brought in the first instance in a court of appeals pursuant to the Hobbs Act, 28 U.S.C. § 2342. The district court agreed and dismissed the suit. The case then took a detour through our court to determine whether the Hobbs Act deprived the district court of jurisdiction to review the IUB's decision. See Rural Iowa Indep. Tel. Ass'n v. Iowa Utils. Bd., 362 F.3d 1027 (8th Cir.2004). We disagreed with the conclusion that RIITA's suit directly challenged an FCC ruling, and remanded to the district court to determine whether the IUB's decision was consistent with the FCC's rulings and other federal law. Id. at 1030.

On remand, the district court determined the IUB's decision did not violate federal law. Specifically, the district court determined the IUB was within its authority to require the rural carriers to engage in the negotiation/arbitration process set forth in sections 251 and 252 of the Act. Further, the district court held the IUB was within its authority to determine a transit carrier, like Qwest, should not have to pay access charges for intraMTA wireless traffic.

RIITA filed a timely appeal. On appeal, RIITA contends the district court erred in affirming the IUB's decision regarding inbound wireless traffic claiming the "core issue is not whether the [carriers] can charge wireless carriers for local calls, but whether they can charge Qwest for forcing the traffic on them." RIITA's Br. at 18. RIITA further contends the district court failed to address the IUB's error in holding rural carriers cannot use IXCs for outbound wireless traffic.

II

We review de novo whether the IUB's decision complied with federal law. Connect Commc'ns Corp. v. Sw. Bell Tel., L.P., 467 F.3d 703, 708 (8th Cir.2006).

RIITA first argues rural carriers should be allowed to collect access charges from Qwest for inbound intraMTA wireless calls, and the IUB could not require the rural carriers to negotiate reciprocal compensation with wireless carriers. We disagree, noting we have already upheld the sum and substance of the IUB's decision in the related case of Iowa Network Services, Inc. v. Qwest Corp., 466 F.3d 1091 (8th Cir.2006) (Iowa...