E. Spire Communications Inc. v. Baca

• Citation: 269 F.Supp.2d 1310
• Decision Date: 12 June 2003
• Docket Number: No. CIV. 02-0495 LCS/RHS.,CIV. 02-0495 LCS/RHS.
• Parties: E. SPIRE COMMUNICATIONS, INC. and Acsi Local Switched Services, Inc. D/B/A E. Spire Communications, Plaintiffs, v. E. Shirley BACA, Jerome Block, Herb Hughes, Lynda Lovejoy, David W. King, Commissioners of the New Mexico Public Regulation Commission; the New Mexico Public Regulation Commission; and Qwest Corporation, Defendants.
• Court: U.S. District Court — District of New Mexico

Page 1310

269 F.Supp.2d 1310

E. SPIRE COMMUNICATIONS, INC. and Acsi Local Switched Services, Inc. D/B/A E. Spire Communications, Plaintiffs, v. E. Shirley BACA, Jerome Block, Herb Hughes, Lynda Lovejoy, David W. King, Commissioners of the New Mexico Public Regulation Commission; the New Mexico Public Regulation Commission; and Qwest Corporation, Defendants.

No. CIV. 02-0495 LCS/RHS.

United States District Court, D. New Mexico.

June 12, 2003.

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David M. Kaufman, David M. Kaufman, P.C., Santa Fe, NM, for plaintiffs.

Margaret K. Caffey-Moquin and James C. Martin, Office of General Counsel, NM Public Regulation Commission, Santa Fe, NM, for NMPRC.

Stephen S. Hamilton, Montgomery & Andrews, Santa Fe, NM, Kelly A. Cameron and Mary Rose Hughes, Perkins Coie LLP, Washington, DC, Todd Lundy, Qwest Corp., Denver CO, for Qwest Corp.

MEMORANDUM OPINION AND ORDER

SMITH, United States Magistrate Judge.

THIS MATTER came before the Court on Defendant Qwest's Motion for Partial Summary Judgment (Doc. 8), filed on August 12, 2002, Defendants Baca, Block, Hughes, Lovejoy, King, and the New Mexico Public Regulation Commission's (collectively "NMPRC") Motion to Dismiss (Doc. 22), filed on October 15, 2002, Defendant NMPRC's Motion for Partial Summary Judgment (Doc. 23), filed on October 15, 2002, and Plaintiff e.spire Communication, Inc. and ACSI Local Switched Services, Inc. d/b/a e.spire Communications' (collectively "e.spire") Brief-In-Chief (Doc. 39), filed on January 27, 2003. The undersigned United States Magistrate Judge, acting upon consent and designation pursuant 28 U.S.C. § 636, and having considered the record, arguments of counsel, relevant law, and being otherwise fully advised, finds that Defendant NMPRC's Motion to Dismiss should be DENIED, that Defendant Qwest's Motion for Partial Summary Judgment and Defendant PRC's Motion for Partial Summary Judgment should be GRANTED, and that Defendant NMPRC's Final Order on Recommended Decision should be AFFIRMED.

I. Introduction

e.spire alleges claims under the Telecommunications Act of 1996, specifically 47 U.S.C. § 252(e)(6), as well as claims for deprivation of due process, equal protection and an unlawful taking under the United States and New Mexico Constitutions, e.spire seeks declaratory and injunctive relief, with respect to Qwest and NMPRC, as well as damages from NMPRC under 42 U.S.C. § 1983.

A brief review of developments in the local telephone service industry over the past two decades is necessary to place this case in proper perspective. Before the 1990s, local telephone service was provided through state-sanctioned monopolies. U.S. West Communications, Inc. v. Sprint Communications Co., 275 F.3d 1241, 1243 (10th Cir.2002) (citing AT&T Corp. v. Iowa Utilities Bd., 525 U.S. 366, 371-73, 119 S.Ct. 721,142 L.Ed.2d 835 (1999)). By the early 1990s, technological innovations rendered the monopolistic system obsolete by permitting competition among multiple local service providers. Sprint, 275 F.3d at 1243. Congress responded to these changes by enacting the Telecommunications Act of 1996 ("the Act"), 47 U.S.C. § 251, et seq., with an intent to "promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies." Pub.L. No. 104-104, 110 Stat. 56 (1996). Consistent with this purpose, the Act contains mechanisms designed to open the formerly monopolistic local telephone service markets to competition. Southwestern Bell Telephone Co. v. Brooks Fiber Communications, Inc., 235 F.3d 493, 495 (10th Cir.2000).

In order to facilitate market entry by competing local exchange carriers ("CLECs") such as e.spire, the Act imposes a multitude of duties on incumbent local exchange carriers ("ILECs"), such as Qwest. See 47 U.S.C. § 251. Foremost among these duties is the duty to interconnect ILEC networks with CLEC networks. 47 U.S.C. § 251(c)(2). Interconnection ensures that consumers who subscribe to one local telephone service can receive calls from, and place calls to, those who subscribe to a different local service. 47 U.S.C. § 251(c)(2)(A). The Act directs ILECs to "establish reciprocal compensation arrangements for the transport and termination of telecommunications." 47 U.S.C. § 251(b)(5). Reciprocal compensation is designed to compensate one LEC for terminating calls that originated on another LEC's network. Brooks Fiber, 235 F.3d at 495.

Both ILECs and CLECs must attempt to negotiate the terms and conditions of interconnection agreements in good faith. 47 U.S.C. §§ 251(c)(1); 252(a)(1). At any point in the negotiations, a negotiating party may request the governing state commission to mediate any differences arising in the course of the negotiations. 47 U.S.C. § 252(a)(2). Within a specific time frame, a negotiating party may petition the state commission to arbitrate any open issues left in the interconnection agreement. 47 U.S.C. § 252(b). Thus, any given interconnection agreement may contain negotiated, mediated and arbitrated terms.

Regardless of the manner in which the terms of an interconnection agreement were reached, an interconnection agreement is not final until approved by the governing state commission. 47 U.S.C. § 252(e). A party aggrieved by the state commission's decision regarding an interconnection agreement may bring an action in federal district court. 47 U.S.C. § 252(e)(6). Federal court review under the Act is limited to the determination of whether an interconnection agreement meets the requirements of Sections 251 and 252. Id.

II. The Interconnection Agreement Between e.spire and Qwest

After the Telecommunications Act took effect in February 1996, e.spire's predecessor, American Communications Services, Inc. (hereinafter "ACSI") requested interconnection, service and unbundled network elements from U.S. West, the predecessor of Qwest. (Qwest Ex. 8, Pet. for Arbitration of ACSI at 1.) When the parties were unable to negotiate all of the terms of the Interconnection Agreement, ACSI petitioned the New Mexico State Corporation Commission (hereinafter "NMSCC"), the predecessor of NMPRC, to arbitrate unresolved issues in the interconnection negotiations between ACSI and U.S. West. (NMPRC Ex. Al, Recommended Decision, NMPRC Utility Case No. 3043 at 10.) ACSI sought, inter alia, "arbitration of issues concerning compensation for the transport and termination of traffic exchanged between the parties." (Qwest Ex. 8 at 1-2.) ACSI advocated a "bill and keep" mechanism waiving compensation for the costs of terminating and transport of local traffic exchanged between its network and that of U.S. West. (Qwest Ex. 8 at 5.) ACSI anticipated that reciprocal compensation would be unnecessary because the volumes of traffic exchanged between the networks would be approximately equal. (Qwest Ex. 8 at 8.)

In the event that the NMSCC determined that the parties should compensate each other for any net differential in traffic, ACSI requested that the compensation rate be based on the total element long run incremental costs ("TELRIC") of U.S. West to transport and terminate traffic. (Qwest Ex. 8 at 8.) At that time the TERIC information had not been developed, and ASCI requested that the NMSCC order U.S. West to develop TELRIC-based rates within six months. (Id.) ACSI took the position that the NMSCC should set interim rates in accordance with defaults established in the FCC's Interconnection Order until TELRIC-based rates were developed. (Qwest Ex. 8 at 15.) ASCI specifically proposed that the parties should charge rates between $0,002 and $0,004 per minute of use (hereinafter "MOU") for end office termination. (Id.) In a post hearing brief, ACSI stated that a rate should not be set at that time so that an approximate, negotiated rate could be "selected to reflect the circumstances at the time that traffic is out of balance." (Qwest Ex. 9, Portion of Brief Submitted at May 12, 2003 Oral Argument.)

On December 6, 1996, the NMSCC issued its Findings of Fact and Conclusions of Law on the ACSI/U.S. West arbitration. (Qwest, Ex. 1, Findings of Fact and Conclusions of Law, NMSCC Docket No. 96-307 TC, Dec. 6, 1996.) At paragraph 80, the NMSCC stated that "[t]he prices established in this arbitration are interim prices and will be in effect pending completion of the Commission's costing docket." (Id.) The NMSCC further noted that U.S. West opposed the bill and keep system because such a system would encourage carriers to avoid costs artificially and provide a strong incentive to overuse the service. (Id.) U.S. West suggested a reciprocal compensation mechanism whereby each party would bill the other for terminating calls and the billing rate would be equal to the estimated TELRIC. (Qwest, Ex. 1, ¶ 82.) U.S. West proposed that the traffic be handled on a bill and keep basis so long as the difference in traffic volume was less than five percent, but that a reciprocal compensation system should apply if the five percent threshold were exceeded. (Qwest, Ex. 1, ¶ 85.) The NMSCC adopted U.S. West's proposal, but ordered that the billing be done on a quarterly basis in response to ACSI's concerns regarding billing costs. (Qwest, Ex. 1, ¶ 87.)

ACSI and U.S. West filed a Motion for Clarification on January 23, 1997. (NMPRC Ex. Al at 11.) The NMSCC issued an Order resolving the Motion for Clarification on March 3, 1997, and directed ACSI and U.S. West to prepare and file an Interconnection Agreement consistent with its arbitration Findings of Fact and Conclusions of Law within three days. (Id. at 11-12.) ASCI and U.S. West filed the Interconnection Agreement on March 10, 1997. (Id, at 12.) The NMSCC approved the Interconnection Agreement on April 9,1997. (Id.)

III. Administrative Complaint

On March 17, 1998, ACSI filed a complaint with NMPRC, f/k/a NMSCC, alleging...