Time Warner Cable Information Services v. Duncan, 5:08-CV-202-D.

• Decision Date: 23 September 2009
• Docket Number: No. 5:08-CV-202-D.,5:08-CV-202-D.
• Citation: 656 F.Supp.2d 565
• Parties: TIME WARNER CABLE INFORMATION SERVICES (NORTH CAROLINA), LLC, Plaintiff, v. L. Calvin DUNCAN, in his official capacity as Chairman and Member of the North Carolina Rural Electrification Authority, et al., Defendants.
• Court: U.S. District Court — Eastern District of North Carolina

Page 565

656 F.Supp.2d 565

TIME WARNER CABLE INFORMATION SERVICES (NORTH CAROLINA), LLC, Plaintiff, v. L. Calvin DUNCAN, in his official capacity as Chairman and Member of the North Carolina Rural Electrification Authority, et al., Defendants.

No. 5:08-CV-202-D.

United States District Court, E.D. North Carolina, Western Division.

September 23, 2009.

D.J. O'Brien, III, Brooks, Pierce, McLendon, Humphrey & Leonard, Greensboro, NC, Marcus William Trathen, Elizabeth Spainhour, Brooks Pierce McLendon Humphrey & Leonard, LLP, Raleigh, NC, for Plaintiff.

Melissa H. Taylor, N.C. Dept. of Justice, Raleigh, NC, for Defendants.

ORDER

JAMES C. DEVER III, District Judge.

Time Warner Cable Information Services (North Carolina), LLC ("TWCIS") filed suit against the Commissioners of the North Carolina Rural Electrification Authority ("NCREA"). TWCIS seeks declaratory relief and injunctive relief from the Commissioners solely in their official capacity. The court permitted Atlantic Telephone Membership Corporation, Randolph Telephone Membership Corporation, and Star Telephone Membership Corporation (collectively "TMCs") to intervene as defendants [D.E. 89]. The dispute involves TWCIS' claim that the NCREA's July 19, 2006 order and March 28, 2008 order violate the Telecommunications Act of 1996 and prevent TWCIS from exercising its federal interconnection rights so that it and Time Warner Cable may provide the proposed facilities-based local voice telecommunications in competition with TMCs.

On September 11, 2009, the court heard oral argument concerning the pending motions [D.E. 68, 69, 71, 87, 88], including each party's motion for summary judgment. As explained below, the court denies Commissioners' and TMCs' motions for summary judgment. The court grants in part and denies in part (without prejudice) TWCIS' motion for summary judgment. The court vacates the NCREA's July 19, 2006 and March 28, 2008 orders and remands the action to the NCREA. Additionally, the court denies TWCIS' motion for leave to explain subsequently decided authority, and the court denies Commissioners' motion to strike TWCIS' suggestion of subsequently decided authority.

I.

The Telecommunications Act of 1996 ("1996 Act" or "Act") regulates local telephone markets and imposes various obligations on incumbent local exchange carriers ("ILECs") to foster competition including requirements for ILECs to share their networks with new entrants known as competitive local exchange companies ("CLECs"). See 47 U.S.C. §§ 251 et seq.; Verizon Md., Inc. v. Public Serv. Comm'n, 535 U.S. 635, 638, 122 S.Ct. 1753, 152 L.Ed.2d 871 (2002); MCImetro Access Transmission Servs., Inc. v. BellSouth Telecomms., Inc., 352 F.3d 872, 874-76 (4th Cir.2003); MCI Telecomm. Corp. v. Bell Atl.-Pa., 271 F.3d 491, 500-01 (3d Cir.2001).

Section 251 of the 1996 Act mandates that ILECs share their networks with CLECs. See 47 U.S.C. § 251. Specifically, an ILEC must provide a CLEC an interconnection with the ILECs existing network. Id. § 251(c)(2). The ILEC and CLEC then must establish a "reciprocal compensation arrangement[]" for transporting and terminating the calls placed by each others' customers. Id. § 251(b)(5). Section 251 also provides guidance on how a CLEC may compete with an ILEC for its existing customers in the local telephone markets by using ILEC's existing networks. See id. § 251(c)(2)-(4).

Section 252 establishes the process for developing interconnection agreements between ILECs and CLECs. Id. § 252. First, the parties may "negotiate and enter into a binding agreement." Id. § 252(a)(1). Normally, the CLEC will initiate the process by requesting interconnection with the ILEC. Id. § 252(a)(1). During negotiations, either party may ask the state commission to participate in negotiations and mediate disputes. Id. § 252(a)(2). Section 252 encourages the parties to voluntarily enter into an interconnection agreement by reducing the requirements of section 251. To meet the requirements, a negotiated agreement only need be nondiscriminatory to nonparty carriers and in the public interest. See id. § 252(e)(2)(A).

If the parties are unable to negotiate an interconnection agreement, either party, during the period from 135 to 160 days after the initial interconnection request, may petition the state commission to arbitrate remaining issues with the agreement. Id. § 252(b)(1). The state commission then must resolve these issues and may order appropriate conditions on the parties to forge an agreement. Id. § 252(b)(4)(C). The state commission must ensure that the arbitration process meets the specific requirements of section 251 and the corresponding Federal Communications Commission ("FCC") regulations. Id. § 252(c). Additionally, the state commission must establish the necessary rates and create an implementation schedule for the interconnection agreement. Id. The arbitrated terms become a part of the agreement. See id.

Regardless of how an interconnection agreement is reached, the parties must submit the agreement to the state commission so that the commission may "approve or reject the agreement, with written findings as to any deficiencies." Id. § 252(e)(1). The state commission may reject a negotiated agreement only if it "discriminates against a telecommunications carrier not a party to the agreement" or the implementation of the agreement "is not consistent with the public interest, convenience, and necessity." Id. § 252(e)(2)(A). For an arbitrated agreement, however, the state commission may reject the interconnection agreement if it does not meet the requirements of section 251, the pricing standards of section 252(d), or the associated FCC regulations. Id. § 252(e)(2)(B). If the state commission does not approve or reject a negotiated agreement within ninety days of its submission or an arbitrated agreement within thirty days of submission, the agreement "shall be deemed approved." Id. § 252(e)(4); see 47 C.F.R. § 51.801(c).

If the state commission "fails to act" under section 252, the FCC fulfills the duties of the state commission. See 47 U.S.C. § 252(e)(5); 47 C.F.R. §§ 51.803.807. According to the FCC, a state commission "fails to act" if it does not respond within a reasonable amount of time to a mediation or arbitration request. 47 C.F.R. § 51.801(b). Read together, sections 252(e)(1), (e)(4), and (e)(5) "create a scheme that provides regulatory oversight of interconnection agreements, either by a state commission or by the FCC in the state commission's place." MCI Telecomm. Corp. v. Ill. Bell Tel. Co., 222 F.3d 323, 329 (7th Cir.2000).

Finally, section 252 permits any party aggrieved by a state commission's approval or rejection under section 252(e)(1) to "bring an action in an appropriate Federal district court to determine whether the agreement or statement meets the requirements" of sections 251 and 252. 47 U.S.C. § 252(e)(6). Section 252 strips state courts of jurisdiction to review the actions of a state commission in approving or rejecting an interconnection agreement. Id. § 252(e)(4).

TWCIS is a public utility with its principal place of business in Stamford, Connecticut. Compl. ¶ 8. TWCIS claims that the FCC authorized it to provide long distance telecommunications services, and that the North Carolina Utilities Commission ("NCUC") authorized it to provide competitive local exchange services and interexchange telecommunication services in North Carolina. Id. TWCIS seeks to provide wholesale telecommunications services to the public. Id.

Under North Carolina law, the NCREA is the state commission tasked with regulating intrastate telecommunication services that TMCs in North Carolina provide. Id. ¶ 9; see 47 U.S.C. §§ 153(41), 251, 252. During the relevant periods, defendants were commissioners of the NCREA. The commissioners named in the complaint are: Chairman L. Calvin Duncan, Vice-Chairman Joseph G. Justice, J. Ronnie Alderman, Buddy G. Creed, and Edith C. Cox (collectively "Commissioners"). Compl. ¶¶ 9-12. TWCIS sues the Commissioners in their official capacities only. Id. ¶¶ 10-12.

The TMCs in this case are under the jurisdiction of the NCREA and include Atlantic Telephone Membership Corporation ("Atlantic"), Randolph Telephone Membership Corporation ("Randolph"), and Star Telephone Membership Corporation ("Star"). Id. ¶ 15. The TMCs are rural telephone companies (otherwise known as rural local exchange carriers or "RLECs" under the 1996 Act). Id. ¶ 19; see 47 U.S.C. § 153(37).

Time Warner Cable ("TWC") provides digital phone service using Voice over Internet Protocol ("VoIP") technology in North Carolina and elsewhere. Compl. ¶ 29. The service uses TWC's cable television infrastructure to enable subscribers to make and receive telephone calls and enjoy related functionality. Id. The service makes use of internet protocol through dedicated private facilities, not the public internet. Id. TWC and other VoIP providers like it must purchase telecommunication services from regulated telecommunications carriers in order to originate and terminate calls on the public switched network, access 911 services, and obtain numbering resources. Id.

TWCIS seeks to provide TWC with such telecommunications services. Id. ¶ 30. TWCIS proposes that TWC market telephone services in TWC's name and supply a connection to each subscriber's premises. Id. Subscribers could then make voice calls over TWC's network, which TWCIS would convert from internet protocol format into traditional circuit switched telecommunications format. Id. With that conversion done, TWCIS would then route the telecommunications traffic to the public switched telephone network ("PSTN"). Id. TWCIS would also perform other CLEC functions, including number acquisition and administration, submission of local number portability orders, payment of intercarrier compensation for local and toll telecommunications traffic, connectivity to E911 routers, operator services, directory...