U S West Communications, Inc. v. Tcg Oregon
| Decision Date | 30 January 1998 |
| Docket Number | Civil No. 97-858-JE. |
| Citation | 35 F.Supp.2d 1237 |
| Parties | U S WEST COMMUNICATIONS, INC. Plaintiff, v. TCG OREGON, a limited Partnership; Roger Hamilton, Ron Eachus, Commissioner, and Joan H. Smith, Commissioner, in their official capacities as Commissioners of the Oregon Public Utility Commissioner; and Oregon Public Utility Commission, Defendants. |
| Court | U.S. District Court — District of Oregon |
Lawrence H. Reichman, Perkins Coie, Portland, OR, for Plaintiff.
Keith L. Kutler, Davis Wright Tremaine, Portland, Paul M. Gordon, Wendell H. Goddard, Gordon & Goddard, Oakland, CA, for Defendant TCG Oregon.
W. Benny Won, Timothy M. Wood, Hardy Myers, Assistant Attorneys General, Department of Justice, Salem, OR, for Defendants Oregon Public Utility Commission and Commissioners Hamilton, Eachus & Smith.
Plaintiff U S West Communications, Inc. (U.S. WEST) brings this action against defendants TCG Oregon (TCG), the Oregon Public Utility Commission (PUC), and PUC Commissioners Roger Hamilton, Ron Eachus, and Joan Smith (the Commissioners). The Commission defendants move to dismiss based upon lack of subject matter jurisdiction, and TCG moves to dismiss for lack of jurisdiction and failure to state claims upon which relief may be granted. The United States of America and the Federal Communications Commission (FCC) move to intervene. I grant the FCC's motion to intervene, deny the Commissioners' motion to dismiss, and grant in part and deny in part TCG's motion to dismiss.
U S West has provided local telephone and exchange access service to Oregon customers for more than one hundred years. Through most of this time, U S West has had no competition in its service territories.
In February 1996, Congress enacted the Telecommunications Act of 1996 (1996 Act), Pub.L. No. 104-104, 110 Stat. 56; 47 U.S.C. § 153 et seq. The Act, which amends the Telecommunications Act of 1934, is designed to promote competition in local and long distance telephone markets. The Act sets out a comprehensive scheme for removing barriers to entry into these markets, and reflects a Congressional intent to promote the rapid development of competition by encouraging new entrants to build their own local telephone networks. See 47 U.S.C. §§ 251-253.
The Act provides for the entry of competitors through two distinct mechanisms. Under the first of these, competitors can purchase individual, "unbundled" network elements that can be combined with their own network facilities to provide services. "Loops" are an example of such unbundled elements. These are the wires and other equipment needed to connect individual telephone customers to a provider's central offices, its trunk lines, communications databases, and support systems. The second mechanism allows new competitors to purchase, at wholesale prices, an incumbent local exchange carrier's (LEC's) assembled finished services, such as residential or business telephone service, for resale. These two mechanisms allow new competitors to begin competing with existing LECs before their new completed, competing networks are in place.
The Act sets out obligations for various kinds of telecommunications service providers. Under Section 25 of the Act, incumbent LECs such as U S West are required to:
(1) negotiate in good faith to reach Agreements with new competitors under the Act;
(2) offer interconnection to competing providers at "any technically feasible point" within their network. This interconnection must be at least equal in quality to that provided by the LEC to itself, and must be provided on rates and terms that are "just, reasonable, and nondiscriminatory;"
(3) provide access to unbundled network elements at "any technically feasible point" on rates and terms that are "just, reasonable, and nondiscriminatory." "Network elements" are facilities or equipment used to provide telecommunications services. "Unbundling" refers to selling individual network elements, as opposed to aggregations of network elements (4) offer at wholesale rates any telecommunications service that the LEC provides at retail prices to customers who are not telecommunications carriers;
(5) provide notice of changes in the information necessary for the transmission and routing of services on the LEC's network; and
(6) provide for "collocation" of the equipment necessary for interconnection or access to unbundled elements on rates and terms that are "just reasonable, and nondiscriminatory." "Physical collocation" requires an incumbent LEC to provide the office space that its competitors need to install and operate their own equipment. "Virtual collocation" requires an incumbent LEC to dedicate to its competitors the equipment they request and to permit the competitors to interconnect with the equipment in the LEC's offices.
Under the Act, incumbent LECs are entitled to recover the costs of providing interconnection, unbundled network elements, transportation and termination of traffic, resale and collocation, and may also recover a reasonable profit. 47 U.S.C. § 252(d)(1).
Section 252 of the Act sets out a comprehensive framework for reaching Agreements between LECs and competitors. If these parties are unable to reach an Agreement resolving all of the issues covered by the Act, a party can seek mediation under § 252(a)(2). If that mediation does not produce an Agreement, a party may seek compulsory arbitration under § 252(b). State Commissions like defendant PUC are responsible for conducting arbitration, subject to certain limitations. A Commission may reject an Agreement, or a portion of an Agreement, that has been reached through arbitration if it finds that the agreement does not comply with the requirements of § 251 and any FCC regulations in effect under that section, or with the standards set out in § 252(d).
The Act provides for federal district court review of interconnection agreements concluded pursuant to § 252. Section 252(e)(6) provides that, if a state commission "makes a determination under this section, any party aggrieved by such determination may bring an action in an appropriate federal district court to determine whether the Agreement ... meets the requirements of the Act."
TCG requested interconnection and related network elements from U S West in February 1996. U S West and TCG were unable to resolve all of the issues related to that request, and TCG filed a petition with the PUC for arbitration pursuant to § 252(b). Arbitration was conducted in October 1996.
In a decision issued on November 8, 1996, the arbitrator resolved certain issues, and required the parties to submit a contract in accordance with the decision. U S West filed its Exceptions to the arbitrator's decision, objecting to the provisions complained of in the present action, on November 18, 1996. TCG also filed its comments on the Arbitrator's decision and requested the Commissioners' approval of the arbitration order. The Commissioners and the PUC approved and adopted the arbitration order on December 9, 1996.
U S West petitioned for reconsideration of the Commission decision approving the arbitration decision on February 7, 1997. The Commissioners and the PUC denied that petition in an Order dated April 7, 1997.
The parties filed a copy of the interconnection agreement executed pursuant to the arbitration on May 1, 1997. The Commissioners and the PUC issued an Order on May 19, 1997, approving the executed interconnection agreement.
U S West alleges that it will suffer irreparable harm, and lose millions of dollars, if it is required to provide services at the prices set out in the Agreement ordered by the PUC. U S West's first claim for relief alleges that the Agreement imposes below-cost pricing in violation of 47 U.S.C. §§ 251(c) and 252(d). In this claim, U S West challenges the price assigned for unbundled network elements, the price allotted for physical collocation, and the wholesale discount rates and application of that discount to already discounted, volume, wholesale rates. It also challenges provisions of the Agreement requiring it to offer residential service for resale at a wholesale discount, provisions requiring application of a wholesale discount to the nonrecurring charge assessed to retail customers when TCG purchases services for resale to retail customers, and provisions requiring it to provide transport and termination services on a "bill-and-keep" basis. Finally, this count alleges that the Agreement unlawfully requires U S West to provide network interconnection without ...
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