Southwestern Bell Telephone v. Mo. Public Service
| Decision Date | 20 June 2008 |
| Docket Number | No. 06-3727.,No. 06-3726.,No. 06-3701.,06-3701.,06-3726.,06-3727. |
| Citation | 530 F.3d 676 |
| Parties | SOUTHWESTERN BELL TELEPHONE, L.P., doing business as SBC Missouri, Plaintiff-Appellee, v. MISSOURI PUBLIC SERVICE COMMISSION; Jeff Davis; Connie Murray; Steve Gaw; Robert M. Clayton III; Linward Appling, in their official capacities as commissioners of the Missouri Public Service Commission and not as individuals, Defendants, Big River Telephone Company, LLC, Defendant-Appellant, Birch Telecom of Missouri, Inc.; Ionex Communications, Inc., Defendants, NuVox Communications of Missouri, Inc.; Socket Telecom, LLC; XO Communications Services, Inc.; XO Missouri, Inc.; Xspedius Management Co. of Kansas City, LLC; Xspedius Management Co. Switched Services, LLC, Defendants-Appellants, Charter Fiberlink-Missouri, LLC; Navigator Telecommunications, LLC; WilTel Local Network, LLC; MCI Communications Services, Inc.; MCImetro, LLC, Defendants, Sprint Communications Company, L.P., Defendant-Appellee. Verizon New England, Incorporated; Verizon New York, Incorporated; Verizon Pennsylvania, Incorporated; Verizon Maryland, Incorporated; Verizon Washington, Incorporated; Verizon Virginia, Incorporated; Amici on Behalf of Appellee Southwestern Bell Telephone, L.P. doing business as SBC Missouri. Southwestern Bell Telephone, L.P., doing business as SBC Missouri, Plaintiff-Appellee, v. Missouri Public Service Commission; Jeff Davis; Connie Murray; Steve Gaw; Robert M. Clayton III; Linward Appling, in their official capacities as commissioners of the Missouri Public Service Commission and not as individuals, Defendants-Appellants, Big River Telephone Company, LLC; Birch Telecom of Missouri, Inc.; Ionex Communications, Inc.; NuVox Communications of Missouri, Inc.; Socket Telecom, LLC; XO Communications Services, Inc.; XO Missouri, Inc.; Xspedius Management Co. of Kansas City, LLC; Xspedius Management Co. Switched Services, LLC; Charter Fiberlink-Missouri, LLC; Navigator Telecommunications, LLC; Sprint Communications Company, L.P.; WilTel Local Network, LLC; MCI Communications Services, Inc.; MCImetro, LLC, Defendants. Southwestern Bell Telephone, L.P., doing business as SBC Missouri, Plaintiff-Appellant, v. Missouri Public Service Commission Jeff Davis; Connie Murray; Steve Gaw; Robert M. Clayton III; Linward Appling, in their official capacities a commissioners of the Missouri Public Service Commission and not a individuals; Big River Telephone Company, LLC, Defendants-Appellees, NuVox Communications of Missouri Inc.; Socket Telecom, LLC; XO Communications Services, Inc.; XO Missouri, Inc.; Xspedius Management Co. of Kansas City, LLC; Xspedius Management Co. Switched Services LLC, Defendants-Appellees, Sprint Communications Company, L.P., Defendant-Appellee, Birch Telecom of Missouri, Inc; Ionex Communications, Inc., Defendants, Charter Fiberlink-Missouri, LLC; Navigator Telecommunications, LLC, Defendants, WilTel Local Network, LLC; MCI Communications Services, Inc.; MCImetro, LLC, Defendants. |
| Court | U.S. Court of Appeals — Eighth Circuit |
William L. Magness, argued, Austin, TX, Carl J. Lumley, St. Louis, MO, and Susan C. Gents, Austin, TX, on the brief, for Coalition Appellants.
William K. Haas, argued, Jefferson City, MO, for appellant.
David Murray, argued, Washington, D.C., for Sprint Communications Company, L.P.
Before BYE, RILEY, and BENTON,1 Circuit Judges.
Southwestern Bell Telephone, L.P., d/b/a SBC Missouri (SBC), attempted to negotiate interconnection agreements with several competitors (Competing Local Exchange Carriers (CLEC)) as required by the Telecommunications Act of 1996, Pub.L. No. 104-104, 110 Stat. 56 (). When those negotiations failed, the dispute was submitted to arbitration as provided for under the Act and the resulting arbitrator's decision was adopted by the Missouri Public Service Commission (MPSC). SBC petitioned the district court2 for review, arguing the MPSC exceeded its authority by ordering SBC to allow CLECs broader access to its facilities network than mandated by the Act. SBC also argued the MPSC erred in ordering it to provide CLECs access to entrance facilities at cost. The district court found the MPSC exceeded its authority when it decided issues relating to which network facilities SBC was required to make available to CLECs. The district court affirmed the MPSC's decision setting the rate SBC could charge CLECs for entrance facilities needed for interconnection. On appeal, the MPSC and various CLECs argue the district court erred in concluding the MPSC exceeded its authority. In its cross-appeal, SBC argues the district court erred in setting the rate it could charge for access to entrance facilities. We affirm.
For years, local telephone service was provided by companies holding monopolies which were subject to regulation by local governments. In passing the Telecommunications Act of 1996, Congress chose to encourage competition among telephone service providers and to impose greater federal regulation. The Act requires existing telephone companies, which previously held monopolies (Incumbent Local Exchange Carriers (ILEC)), to make their local facilities or networks available to newcomers — CLECs — for a fee, if the CLEC's ability to provide service was "impaired" without access. This appeal focuses on two sections of the Act which implemented these requirements — 47 U.S.C. §§ 251 and 271.
Under § 251, all ILECs are required to negotiate interconnection agreements with impaired CLECs and to lease certain of their network facilities at cost-based rates known as "total element long-run incremental cost" (TELRIC). If an agreement cannot be negotiated, the Act requires unresolved § 251 disputes be submitted to arbitration. Section 251 compliance, including the arbitration process, is subject to oversight by state public service commissions.
Prior to 2005, the Federal Communications Commission (FCC) took the position ILECs were required under § 251 to make all basic elements of their local networks (Unbundled Network Elements-Platform (UNE or UNE-Platform)) available to CLECs at TELRIC rates. Courts reviewing the FCC's orders, however, disagreed when the practice caused the competition pendulum to swing too far in favor of CLECs. See, e.g., AT & T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 390, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999) ( ); U.S. Telecom Ass'n v. FCC, 290 F.3d 415, 424 (D.C.Cir.2002) (); Verizon New England, Inc. v. Maine Pub. Utils. Comm'n, 509 F.3d 1, 9 (1st Cir.2007) (). In 2005, the FCC issued its Triennial Review Remand Order (TRRO), which no longer required ILECs to make all elements of their local networks available under § 251 at TELRIC rates. See Order on Remand, In the Matter of Unbundled Access to Network Elements, Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers, 20 F.C.C.R. 2533 (2005).
The TRRO also concluded CLECs were no longer impaired with respect to "entrance facilities" and ILECs were not required to provide such facilities as UNEs at TELRIC rates. An entrance facility is a connection between a switch maintained by an ILEC and a switch maintained by a CLEC. It is a means of transferring traffic from one carrier's network to another's, and facilitates an ILEC's obligation under the Act to interchange traffic among networks. CLECs also use entrance facilities to route customer traffic between a CLEC's customer and the CLEC's switch — a practice known as "backhauling." When used to transfer traffic from one network to another, entrance facilities are used for interconnection purposes. When used for backhauling, they are not used for interconnection. The TRRO found CLECs did not need entrance facilities for backhauling CLEC to CLEC traffic. Conversely, the TRRO reiterated that ILECs are required to provide entrance facilities at TELRIC rates under § 251(c)(2) if necessary for interconnection purposes.
In addition to § 251, which applies to all ILECs, § 271 imposes additional requirements on ILECs previously part of the Bell network (Bell Operating Companies (BOC)). Under § 271, BOCs wishing to enter the long-distance market must demonstrate they have, in addition to complying with § 251, made additional network facilities listed in a "competitive checklist" available to CLECs. Unlike § 251, the language of § 271 expressly states § 271 compliance is determined by the FCC.
Prior to 2005, § 271 compliance was not a contentious issue because the FCC's interpretation of § 251 required ILECs to provide § 271 network facilities as part of the § 251 agreements. It did not matter whether states had authority to force ILECs to comply with § 271, because they could order the same level of compliance by enforcing § 251. After the FCC issued its 2005 TRRO reducing the number of network facilities ILECs were required to make available, states and CLECs began exploring whether ILECs could be required to provide the same network facilities, i.e., the UNE-Platform, by enforcing the competitive checklist requirements of § 271. That brings us to the primary issue in this case — the authority of states to enforce § 271.
After the Act was passed, SBC negotiated § 251 agreements with various...
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