Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-05-01725/USCOURTS-ca8-05-01725-0/pdf.json

Nature of Suit Code: 990
Nature of Suit: 
Cause of Action: 

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United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 05-1725

___________

WWC License, L.L.C., *

*

Plaintiff - Appellee, *

* Appeal from the United States

v. * District Court for the District of

* Nebraska.

Anne C. Boyle, Chairman, in their *

official capacities as Commissioners of *

the Nebraska Public Service *

Commission; Frank E. Landis, Jr., *

Commissioner, in their official *

capacities as Commissioners of the *

Nebraska Public Service Commission; *

Lowell C. Johnson, Commissioner, in *

their official capacities as *

Commissioners of the Nebraska Public *

Service Commission; Rod Johnson, Jr., *

Commissioner, in their official *

capacities as Commissioners of the *

Nebraska Public Service Commission; *

Gerald L. Vap, Commissioner, in their *

official capacities as Commissioners of *

the Nebraska Public Service *

Commission; *

*

Defendants, *

*

Great Plains Communications, Inc., *

*

Defendant - Appellant. *

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___________

No. 05-1726

___________

WWC License, L.L.C., *

*

Plaintiff - Appellant, *

* Appeal from the United States

v. * District Court for the District of

* Nebraska.

Anne C. Boyle, Chairman, in their *

official capacities as Commissioners of *

the Nebraska Public Service *

Commission; Frank E. Landis, Jr., *

Commissioner, in their official *

capacities as Commissioners of the *

Nebraska Public Service Commission; *

Lowell C. Johnson, Commissioner, in *

their official capacities as *

Commissioners of the Nebraska Public *

Service Commission; Rod Johnson, Jr., *

Commissioner, in their official *

capacities as Commissioners of the *

Nebraska Public Service Commission; *

Gerald L. Vap, Commissioner, in their *

official capacities as Commissioners of *

the Nebraska Public Service *

Commission; *

*

Defendants - Appellees. *

___________

Submitted: December 12, 2005

 Filed: August 23, 2006 

___________

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1

The Honorable Lyle E. Strom, United States District Judge for the District of

Nebraska.

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Before MELLOY, COLLOTON and BENTON, Circuit Judges.

___________

MELLOY, Circuit Judge.

Both sides appeal a district court1

 judgment affirming in part and reversing in

part two rulings from the Nebraska Public Service Commission (“Commission”)

under 47 U.S.C. § 252(e)(6), a section of the Telecommunications Act of 1996

(“Act”). In the first ruling, the Commission ordered amendments to an

interconnection agreement between Great Plains Communications, Inc. (“Great

Plains”), an incumbent local exchange carrier, and WWC License, L.L.C. (“Western

Wireless” or “Western”), a competitive wireless carrier. In the second ruling, the

Commission approved the amended agreement. The rulings dealt with various issues

including: the duty to interconnect the two parties’ telephone networks under 47

U.S.C. § 251(a); the scope of the incumbent’s statutory duty to provide dialing parity

under § 251(b)(3); the reciprocal compensation rate to be paid between the two parties

under § 251(b)(5); and the payment of interim compensation under 47 C.F.R. § 51.715

for a period of time predating the effective date of the interconnection agreement. We

affirm the judgment of the district court.

I. General Background

Historically, incumbent local exchange carriers served as the exclusive

providers of local telephone service and operated as state-sanctioned monopolies.

With the Act, Congress moved to abolish the system of monopolies in favor of a

competitive system with multiple potential carriers. Under the Act, competitive

carriers—land-based or wireless—may compete with incumbent carriers for the

provision of local service. To facilitate the market entry of competitors and ensure the

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2

The Act provides exemptions for certain incumbent rural carriers who may

avoid or limit their obligations under § 251(b) or (c) if the obligations would be

“unduly economically burdensome” or not “technically feasible.” 47 U.S.C. §

251(f)(1) and (2). Regarding exemptions from subsection (b) duties, the incumbent

must petition its state commission for suspension or modification of the duties. Id. at

§ 251(f)(2). Great Plains does not argue that it petitioned for relief from its subsection

(b) duties under the exemption provisions of § 251(f)(2). Rather Great Plains presents

arguments directed towards the interpretation of § 251(b) itself.

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integration of competitors’ networks with incumbents’ networks, the Act imposes

certain specific duties and costs upon incumbent carriers. See 47 U.S.C. § 251(c)(1)-

(6) (enumerating incumbent-specific duties). The Act imposes other duties on

incumbent and competitive carriers alike, such as the duty to interconnect directly or

indirectly and to provide number portability, dialing parity, access to rights-of-way,

and reciprocal compensation for the transport and termination of telecommunications.

47 U.S.C. § 251(a) and (b).2

The specific statutory duties in dispute in this case are subsection (a) and (b)

duties. One of these duties is the duty of both carriers to directly or indirectly

interconnect their networks under § 251(a)(1). As the labels suggest, direct

connections between carriers involve actual physical points of interconnection

between networks; indirect connections involve connections via third parties’

networks. 

Another duty at issue is the duty of carriers to provide local dialing parity.

Local dialing parity includes the recognition of local numbers for competitors’

customers and the treatment of certain calls between carriers’ customers as local calls,

with seven-digit dialing. The obligation to provide dialing parity is found in §

251(b)(3) and 47 C.F.R. § 51.207. This obligation reflects a congressional

determination that local dialing is important to provide a level playing field, promote

competition, and eliminate artificial barriers that might prevent customers from

switching carriers. See Implementation of the Local Competition Provisions of the

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3

See Iowa Network Servs., Inc. v. Qwest Corp., 363 F.3d 683, 687 (8th Cir.

2004) (“Traditional notions of ‘local exchange areas’ do not fit neatly into this new

world of wireless communications. For wireless communications, the country is

divided into Major Trading Areas (MTAs) rather than local exchange areas. Thus, the

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Telecommunications Act of 1996, 11 F.C.C.R. 19392, 19398-400 at ¶¶ 1, 3-4, 1996

WL 819798 (August 8, 1998) (“Second Report and Order”) (discussing the Act and

its history, including S. Conf. Rep. No. 104-230).

The final duty at issue is the duty of the parties to pay one another reciprocal

compensation. Reciprocal compensation is payment from the carrier who originates

a call to the carrier who terminates or receives a call. Reciprocal compensation is

intended to permit the carrier for the customer who receives a call to recoup from the

caller’s carrier those expenses incurred for terminating the call or sending it to its final

destination. See Ace Tel. Ass’n v. Koppendrayer, 432 F.3d 876, 878 (8th Cir. 2005);

47 U.S.C. § 252(d)(2)(A)(i) (stating that reciprocal compensation must “provide for

the mutual and reciprocal recovery by each carrier of costs associated with the

transport and termination on each carrier’s network facilities of calls that originate on

the network facilities of the other carrier”). The parties dispute the per-minute rate to

be used for reciprocal compensation as well as the obligation to pay one another for

telecommunications traffic that predated the Nebraska Commission’s approval of the

interconnection agreement.

II. Factual Background

Great Plains, the incumbent local exchange carrier, operates in specific areas

of Nebraska known as local exchange service areas. Western Wireless, the

competitive wireless carrier, operates under the trade name CellularOne throughout

a substantial part of Nebraska known as a major trading area. The Western Wireless

major trading area is larger than and overlaps or encompasses multiple Great Plains

local exchange service areas.3

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local calling area for a cell phone user is determined by the cell phone user’s MTA.”).

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Great Plains, as an incumbent local exchange carrier, has substantial network

infrastructure in each of its local exchange areas. This infrastructure includes wire

loops that connect land-line phones as well as switching equipment for the physical

routing of calls. The switches Great Plains currently uses are called end office

switches. From these end office switches, Great Plains delivers and receives calls to

and from locations outside its own networks over trunk lines. The trunk lines are

connected to different switches called tandem switches. The tandem switches are

owned by larger, interexchange carriers such as Qwest (formerly U.S. West

Communications) and Alltel. Often, the tandem switches owned by the larger carriers

are located at points that are physically outside the Great Plains local exchange

networks. 

Historically, when Great Plains routed calls outside its local exchange networks

and passed the calls off to the interexchange carriers at the tandem switches, Great

Plains treated the calls as toll calls for dialing and billing purposes, with the Great

Plains customers using ten-digit dialing to place the calls. Great Plains treated calls

within its individual local exchange networks, between numbers assigned to the same

rate center, as local calls with seven-digit dialing. 

Western Wireless began sending calls from its wireless customers to the landline customers of Great Plains via interexchange carriers prior to March 1998. This

practice was possible because Western Wireless entered into contracts with

interexchange carriers and established physical points of interconnection with the

interexchange carriers. Through these contracts and physical points of

interconnection, Western Wireless was indirectly connected to the Great Plains

networks.

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The amount of traffic between Western Wireless and Great Plains increased

quickly and substantially, and the two companies began informal negotiations on their

own interconnection agreement in July 2001. Informal negotiations continued

through August 26, 2002, when Western Wireless submitted a formal, bona fide

request for the commencement of negotiations under Section 252 of the Act. See 47

U.S.C. § 251(c)(1) (imposing on requesting competitive carriers and incumbent

carriers alike the duty to negotiate in good faith to establish terms and conditions for

interconnection agreements); Id. at § 252 (setting forth the procedure for the

negotiation, arbitration, and approval of interconnection agreements). Formal

negotiations resulted in partial resolution, but the companies deadlocked on eight

separate issues. The Nebraska Commission, which is required to approve

interconnection agreements, referred the disputed issues to a neutral arbitrator for

resolution. See 47 U.S.C. § 252(e)(1) (assigning the duty to approve interconnection

agreements to state commissions). 

Both parties submitted proposed contract language, testimony, and evidence in

hearings before the arbitrator. On July 1, 2003, the arbitrator issued an opinion

resolving most of the outstanding issues in Western’s favor. Subsequently, on

September 23, 2003, the Nebraska Commission reversed or modified the arbitrator’s

decision as to every issue presently on appeal. Western appealed the decision to the

district court under 47 U.S.C. § 252(e)(6). On January 20, 2005, the district court

reversed in part and affirmed in part.

III. Discussion

We do not discuss every issue decided by the arbitrator, Nebraska Commission,

and district court because not all issues are presented for appeal. We discuss only

those issues that remain in dispute and such other issues necessary to paint a complete

picture of the case. The issues that remain are identified by the parties as: (A) tandem

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4

The parties use the term “tandem routing” to refer to the routing of calls

through interexchange carriers’ tandem switches rather than through direct points of

connection inside the Great Plains networks. Since Western Wireless’s customers

might live within an area inside the geographic boundaries of Great Plains network,

the customers could have numbers that are rated to that location. With tandem

routing, however, a call from the Great Plains network to the Western customer would

have to travel to a routing point at the interexchange carrier’s tandem switch, a

location potentially far away from the edge of the Great Plains network and the rating

location. The parties refer to this divergence as the issue of separate rating and

routing points for numbers or separately rated and routed calls.

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routing and local dialing parity; (B) reciprocal compensation rate; and (C) retroactive

compensation.

A. Tandem Routing and Local Dialing Parity

The issue of tandem routing4

 and local dialing parity concerns the effects of

Western Wireless’s election not to connect directly with the Great Plains networks in

each of the Great Plains local exchange areas. As noted above, Western Wireless

elected to indirectly connect with Great Plains through third parties’ tandem switches

rather than placing actual points of interconnection in the Great Plains local

exchanges. Because Great Plains historically treated calls from its own local

exchange networks that had to be sent to interexchange carriers’ tandem switches as

long distance or toll calls, Great Plains’s hardware and software is not currently

configured to send local calls to the tandem switches. As a result, Great Plains argues

that if calls from its customers to Western’s customers have to pass outside the

originating local exchange network and pass through a tandem switch for delivery

(i.e., if the calls have to be tandem routed), they need to be treated as toll calls. Great

Plains advocates this position regardless of the fact that the Western customers

receiving the calls might live next door to the Great Plains customers placing the calls

and regardless of the fact that customers’ numbers might be assigned to the same rate

center. 

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5

Equal access and toll dialing parity are terms related to the duty of local

carriers to permit customers to select their own choice between long distance carriers

and the duty of local carriers to treat the selected long distance carriers in a

nondiscriminatory fashion.

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Great Plains’s argument, in essence, is that the duty to provide local dialing

parity under 47 U.S.C. § 251(b)(3) is dependent on the existence of a direct point of

interconnection such that the duty to provide local dialing parity stops at the physical

edges of the local exchange networks. As a practical matter, Great Plains argues this

position because providing local dialing parity through tandem routing would impose

various costs on Great Plains including transport costs and costs related to equipment

and/or software changes. To buttress its argument, Great Plains asserts that local

dialing parity with tandem routing is incompatible with (1) the telecommunications

networks in Nebraska, (2) Great Plains’s current switches (hardware), (3) Great

Plains’s current routing and billing software, and (4) Great Plains’s equal access and

toll dialing parity obligations under federal and Nebraska law.5

The contract language proposed by Great Plains and adopted by the Nebraska

Commission regarding this issue was as follows:

In those Great Plains exchanges where Western Wireless has not

requested a direct connection to Great Plains . . . , Great Plains shall

continue to route calls originating from its exchanges to Interexchange

Carriers in compliance with its equal access and toll dialing parity

requirements.

(Emphasis added).

Western Wireless counters that, consistent with the Act, Great Plains has a duty

to provide local dialing parity for all calls placed by Great Plains customers to

Western customers if the Western customers’ numbers are from the same rate center

as the Great Plains customers’ numbers. Western demands local dialing parity even

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though, in most cases, Great Plains would have to incur transport costs or make new

technical arrangements to physically route the locally dialed call outside the Great

Plains network to an interexchange carrier’s tandem switch before it could be passed

to Western’s network for delivery to the Western customer. 

Western argues that such parity is necessary to truly enable competition because

if Great Plains customers are not able to call Western customers on a local, seven-digit

basis, the inconvenience could deter customers from switching to Western. Western

characterizes the Great Plains position as an attempt to create a barrier to competition

inconsistent with the goals of the Act. Western argues that the obligation to provide

local dialing parity is a general duty that is not conditioned on the existence of a direct

connection. Western argues further that the duty to provide local dialing parity is

compatible with tandem routing and cannot be excused based on technical difficulties

or expense to the incumbent.

The contract language proposed by Western regarding this issue was as follows:

If Western Wireless obtains numbers, and [rates] those numbers to a

Great Plains rate center where Western Wireless is licensed to provide

service, calls from that rate center to the Western Wireless number block

must be dialed as local calls and delivered to Western Wireless at a point

of direct interconnection (if applicable) or at the third-party tandem.

(Emphasis added).

The arbitrator ruled in favor of Western and adopted Western’s contract

language, finding that Great Plains had to provide the tandem routing and local dialing

parity demanded by Western. In so finding, the arbitrator relied on cases from other

circuits that had held indirect connections sufficient to trigger reciprocal compensation

duties and that held incumbent carriers could not charge competitors fees for the cost

of delivering local traffic to distant points of indirect interconnection. See Atlas Tel.

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6

Earlier in his ruling, the arbitrator found that the local area for the purpose of

reciprocal compensation under 47 U.S.C. § 252(b)(5) should be the entire Western

Wireless major trading area. In so ruling, the arbitrator relied on the First Report and

Order. The Nebraska Commission subsequently rejected the arbitrator’s ruling on this

separate issue. The district court, in turn, agreed with the arbitrator and reversed the

Nebraska Commission. Neither party appeals the district court’s ruling on this issue.

Accordingly, it is now undisputed that the local area for purposes of reciprocal

compensation under § 252(b)(5) for calls in both directions between Great Plains and

Western is the entire Western Wireless major trading area. For a detailed analysis of

the issue of local calling areas for the purpose of reciprocal compensation, see Atlas,

400 F.3d at 1262-68. The remaining dispute, as described above deals with the

provision of local dialing parity under § 251(b)(3), not reciprocal compensation. 

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Co. v. Okla. Corp. Comm’n, 400 F.3d 1256, 1262-68 (10th Cir. 2005) (holding that

all calls between wireless and wireline carriers that originate and terminate within the

same major trading area are subject to reciprocal compensation even if the wireline

carrier is required to deliver calls to a distant point of interconnection); MCIMetro

Access Transmission Servs., Inc. v. Bellsouth Telecom., Inc., 352 F.3d 872, 881 (4th

Cir. 2003) (holding that a wireline carrier could not charge transport fees for

delivering a wireless carrier’s intra-major-trading-area calls to a point of

interconnection outside the originating local exchange network). The arbitrator also

relied on the fact that the FCC had designated major trading areas as the local areas

for wireless providers for the separate and distinct purpose of defining the class of

calls subject to reciprocal compensation under 47 U.S.C. § 251(b)(5). See

Implementation of the Local Competition Provisions in the Telecommunications Act

of 1996, 11 F.C.C.R. 15,499, at ¶ 1036, 1996 WL 452885 (August 8, 1996) (“First

Report and Order”) (“Accordingly, traffic to or from a [wireless provider’s] network

that originates and terminates within the same MTA is subject to transport and

termination rates under section 251(b)(5), rather than interstate and intrastate access

charges.”)6

 The arbitrator found that when the FCC characterized the major trading

area as the local area, the FCC “meant for [wireless providers] to enjoy all the benefits

of that designation of a [major trading area], including local dialing parity.”

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7

Western’s Interrogatory No. 11 stated:

Western has proposed obtaining numbers with a routing point at a Qwest

or Alltel tandem but a rating point at a Great Plains end office served by

that tandem. Identify any technical reason why Great Plains could not

deliver traffic to Western Wireless on a local basis pursuant to Western

Wireless’[s] proposal.

Great Plains, in its response, stated:

Great Plains objects to this Interrogatory on the grounds that it inherently

involves legal and public policy issues that are not proper matters for

discovery and is not a “technical” matter.

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The arbitrator did not find potentially costly technical impediments for Great

Plains to be material in identifying the scope of Great Plains’s statutory duty to

provide local dialing parity. Further, the arbitrator expressly rejected the claim by

Great Plains that the provision of local dialing parity through tandem routing was not

technically feasible. In doing so, the arbitrator noted that one of Great Plains’s

witnesses testified that the current Great Plains switches could be programmed to

insert digits into dialed numbers so that a number dialed with only seven digits would

look like a “1+” or ten-digit number when leaving the Great Plains end office switch.

Further, the arbitrator was swayed by the fact that Western had asked, in an

interrogatory to Great Plains, whether there existed any technical impediments to the

provision of tandem routed local traffic. Great Plains responded to the interrogatory

by objecting and characterizing the question as a legal or policy issue rather than a

technical issue.7

 Accordingly, the arbitrator found Great Plains’ assertion of purported

technical impediments to be disingenuous.

The Commission rejected the arbitrator’s conclusion as to the issue of local

dialing parity and tandem routing, adopted Great Plains’s argument, and held that

Western Wireless had to directly connect with each Great Plains network where it

wanted to receive the benefits of local dialing parity. In doing so, it cited technical

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features of the trunk line system in Nebraska and the end office switches used by

Great Plains. It stated the current configuration of switches and software used by

Great Plains and the nature of the trunk system in Nebraska would not permit Great

Plains to distinguish between toll calls and local calls sent to the interexchange

carriers’ tandem switches. The Commission further stated that Great Plains would

have to violate its toll dialing parity obligations in order to provide local dialing parity

through tandem routing outside the local exchange network. It did not address the

testimony from the Great Plains witness regarding technical feasibility nor did the

Commission address the failure by Great Plains to respond to the interrogatory that

asked Great Plains to identify any technical impediments.

The district court reversed, found the arbitrator’s ruling to be consistent with

the Act and held, essentially, that the Commission had created an exception to the

incumbent’s duty to provide local dialing parity where no such exception exists in the

Act. 

Great Plains appeals the district court’s ruling on the issues of tandem routing

and local dialing parity. 

We understand the issue of local dialing parity and tandem routing to be an

issue of cost apportionment. If Western Wireless is required to establish and maintain

points of direct interconnection within each individual Great Plains local exchange

area, Western Wireless will face a substantial price for market entry. On the other

hand, if Great Plains is required to extend local dialing parity to those Western

Wireless customers who possess locally rated numbers, Great Plains will be required

to bear the expense of transporting calls outside its local exchange networks. This will

force Great Plains to change its software and/or switches to enable it to send sevendigit local calls to the interexchange carriers (or make some other arrangements for

the delivery of local calls to a tandem switch for termination on Western’s network).

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Our analysis of this issue turns largely on the applicable standard of review.

We apply the same standard of review to the Commission’s decision as did the district

court. We review the Commission’s factual determinations and mixed questions of

law and fact under a deferential standard, affirming unless the Commission’s decision

is arbitrary and capricious. Qwest Corp. v. Koppendrayer, 436 F.3d 859, 863 (8th Cir.

2006). We owe no deference to the Commission’s interpretations of federal law,

however, and our review of the agreement for compliance with the Act is de novo.

Id.; see also Atlas, 400 F.3d at 1262 (applying de novo review to a state commission’s

interpretation of the Act); MCIMetro, 352 F.3d at 876 (same); Mich. Bell Tel. Co. v.

MFS Intelenet of Mich., Inc., 339 F.3d 428, 433 (6th Cir. 2003) (setting forth a dual

standard of review: review of interconnection agreements for compliance with the Act

is de novo while review of further issues regarding state commission analysis of

interconnection agreements is under a deferential standard). Finally, in our

interpretation of the Act, we owe deference to the Federal Communications

Commission (“FCC”) based on the fact that Congress expressly charged the FCC with

the duty to promulgate regulations to interpret and carry out the Act. See AT&T

Corp. v. Iowa Utils. Bd., 525 U.S. 366, 378 (1999) (holding that Congress expressly

authorized the FCC to promulgate regulations under the Act, even regarding issues

that had traditionally been under the exclusive jurisdiction of state utility

commissions).

In each section below, we discuss the applicable standard of review that applies

to each separate issue. We find that the applicable standards for our review of the

Commission’s determinations are de novo as to the tandem routing/local dialing parity

issue and arbitrary and capricious as to the rate-related issues.

Great Plains characterizes the issue of tandem routing and local dialing parity

as a mixed issue of law and fact such that resolution of this issue turns on factual

distinctions novel to the networks and equipment in play in this case. As a result,

Great Plains argues that we must reverse the district court and affirm the Nebraska

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8

We note also that Great Plains has switched positions in the course of these

proceedings, first refusing to respond to discovery by calling the compatibility of local

dialing parity and tandem routing a legal or policy issue and now demanding that we

treat the issue as one that rests entirely on factual issues concerning Great Plains’

equipment and networks in Nebraska. 

-15-

Commission unless the Commission’s ruling is arbitrary and capricious. Western

argues that this issue presents a pure question of federal law because it only requires

us to interpret 47 U.S.C. § 251(a) (regarding the duty to interconnect directly or

indirectly) and § 251(b)(3) (regarding the duty to provide local dialing parity). 

We agree with Western Wireless. The technical impediments and factual issues

specific to Nebraska in general or Great Plains in particular could only be material if,

as a matter of law, expense, inconvenience, or technical difficulty are recognized

exceptions to the duties under 47 U.S.C. § 251(a) and (b). As already noted, the

exemption provision of §251(f) is not at issue in this case, and Great Plains seeks

interpretation of § 251(a) and (b) rather than a determination regarding the

applicability of any exemption provisions in the Act. Because resolution of the

tandem routing/local dialing parity issue requires only interpretation of the Act, and

because nothing in the Act makes the Commission’s findings concerning the nature

of the Great Plains network material to our analysis, our review is de novo.8

Turning to the merits, Great Plains emphasizes that § 251(b)(3) and the relevant

regulation, 47 C.F.R. § 51.207, do not expressly state that a local exchange carrier

must deliver locally dialed calls to a point outside the local exchange carrier’s

network. Great Plains infers from this silence that the duty to provide local dialing

parity does not extend beyond the physical bounds of the local exchange network and

is therefore dependent upon the existence of a competitor’s direct point of

interconnection within the local exchange. We believe that this inference is

unwarranted. The relevant statutory and regulatory sections are not written in such

narrow terms. Rather, the Act and the regulation state a broad duty without listing

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exceptions and without expressly defining a geographic limitation. The statute

provides:

Each local exchange carrier has the following duties:

. . .

(3) Dialing Parity

The duty to provide dialing parity to competing providers of

telephone exchange service and telephone toll service, and the duty to

permit all such providers to have nondiscriminatory access to telephone

numbers, operator services, directory assistance, and directory listing,

with no unreasonable dialing delays.

47 U.S.C. § 251(b). The regulation states:

A LEC shall permit telephone exchange service customers within a local

calling area to dial the same number of digits to make a local telephone

call notwithstanding the identity of the customer’s or the called party’s

telecommunications service provider.

47 C.F.R. § 51.207. While the regulation speaks in terms of “customers within a local

calling area” it does not specifically deal with issues of routing or interconnection, it

does not define the term local calling area, and it does not suggest on its face that the

phrase “local telephone call” has a meaning in this context different from the meaning

assigned in other contexts. Accordingly, we do not find it appropriate to adopt the

inference urged by Great Plains.

We do, however, find several factors that aid in our interpretation of the local

dialing parity provisions. First, all else being equal, if a provision of the Act is vague

we are inclined to interpret the provision in a manner that promotes competition. It

is undisputed that Congress passed the Act with the intention of eliminating

monopolies and fostering competition. We do not suggest that this general intent

should be used to impose duties on incumbents beyond those created by Congress.

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We do, however, believe that this general intent should guide our consideration of

competing interpretations of the Act. Such guidance suggests that we should be wary

of interpretations that simultaneously expand costs for competitors (such as a

requirement for direct connections) and limit burdens on incumbents (such as a

limitation of dialing parity to local exchange boundaries). If a cost is imposed on a

competitor, it becomes a barrier to entry and rewards the company who previously

benefitted from monopoly protection. Because Congress passed the Act with a clear

intent to foster competition, we are more inclined to interpret a vague provision in a

manner that reduces barriers to entry. 

Second, the FCC has spoken unequivocally and stated that a wireless provider’s

major trading area is the local area for the purpose of reciprocal compensation. Great

Plains does not dispute this issue on appeal, and numerous other circuits have held

that an incumbent carrier is required to respect a competitor’s election to establish a

point of interconnection at a location distant from the local exchange network. See

Atlas, 400 F.3d at 1268; Mountain Comm’ns, Inc. v. FCC, 355 F.3d 644, 649 (D.C.

Cir. 2004); MCIMetro, 352 F.3d at 881. In each of these cases, the duty of reciprocal

compensation rather than local dialing parity was at issue. This does not mean,

however, that the holdings are immaterial to our analysis. Reciprocal compensation,

like local dialing parity, is a § 251(b) duty, and Great Plains offers no authority to

support the position that we must apply a different meaning in the context of local

dialing parity.

That having been said, neither Congress nor the FCC has expressly defined the

relevant area for a local exchange carrier’s provision of local dialing parity to a

wireless competitor. Further, the FCC and the industry are well aware of this

outstanding question, as demonstrated by the subject matter of a pending petition for

declaratory ruling before the FCC. See Sprint Corp. Petition for Declaratory Ruling

Regarding the Routing and Rating of Traffic by ILECs, CC Docket No. 01-92 (May

9, 2002) (“Sprint Petition”) (asking the FCC to define the scope of the duty to provide

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9

More precisely, because Great Plains argues that we should apply the arbitrary

and capricious standard to analyze the issue of tandem routing and local dialing parity,

Great Plains argues that if the FCC considers this issue debatable, the Commission’s

position cannot be considered arbitrary and capricious. Because we apply de novo

review, this argument carries no weight.

-18-

local dialing parity when there exists no direct point of interconnection within the

local exchange network); Comments Sought on Sprint Petition for Declaratory Ruling

Regarding the Routing and Rating of Traffic by ILECs, 17 F.C.C.R. 13859, 2002 WL

1586410 (July 18, 2002) (establishing the pleading cycle and soliciting public

comment on the Sprint Petition). In fact, on March 3, 2005, the FCC solicited further

comments on the Sprint Petition, but the FCC has not yet issued a ruling. See

Developing a Unified Intercarrier Compensation Regime, CC Docket No. 01-92,

Further Notice of Proposed Rulemaking, FCC-05-33 (2005) (recognizing the

continuing pendency of the Sprint Petition and calling for further comments). 

Great Plains suggests the FCC necessarily will limit local exchange carriers’

dialing parity obligations and not carry over the local area definition applicable to

reciprocal compensation. Great Plains infers that, if the FCC intended to interpret the

local dialing parity duty as extending beyond local exchange network boundaries, it

would have done so immediately rather than delaying and soliciting further comments.

Great Plains suggests that we act in reliance on this prediction of the outcome in the

pending Sprint Petition.9

 While it is possible that the FCC might rule in a manner

consistent with Great Plains’s current position, and while it is true that we would owe

deference to the FCC if it were to issue a ruling or regulation interpreting the Act in

this regard, we owe no deference to the FCC’s silence. If and when the FCC rules, we

may be required to revisit this issue. At such time, we would be armed with better

arguments and a better understanding of the issue based on the FCC’s expertise. Until

then, however, we must interpret the Act without the benefit of agency guidance on

this specific point. Without textual support, agency guidance, or other authority to

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treat reciprocal compensation differently than dialing parity, we will not impose on

Western the duty to connect directly.

Third, the statutory provision that imposes the duty to interconnect networks

expressly permits direct or indirect connections. 47 U.S.C. § 251(a)(1). Nothing in

the Act suggests that Congress intended a carrier’s duties to be altered based on the

carrier’s election to connect indirectly rather than directly. We believe that if

Congress intended there to be consequences attendant to choosing an indirect rather

than a direct connection, Congress could have made that fact clear. Accordingly, any

distinction we might draw based on the existence of a direct connection would be

textually unsupported. 

We note also that the structure of the Act suggests that we should reject a direct

connection requirement as a condition on local dialing parity. In Atlas, 400 F.3d at

1265-66, incumbents who wanted to force direct connections argued that the general

duty to interconnect directly or indirectly was superceded by a specific provision, §

251(c)(2)(B), that imposes upon an incumbent carrier a duty to permit a requesting

carrier to interconnect directly with the incumbent’s local exchange network “at any

technically feasible point within the carrier’s network.” 47 U.S.C. §251(c)(2)(B). The

Tenth Circuit examined the structure of the Act to reject this argument. It noted that

the subsection (c) duty applied only to incumbent carriers and only if a competitor

requested a direct connection. Id. Since the section (c) duty did not apply to

competitors, the Tenth Circuit was unwilling to impose on competitors a duty to

connect directly rather than indirectly. Further, that court noted that Congress created

specific exceptions for the subsection (c) duties as set forth in 47 U.S.C. § 251(f), such

that it would be “inconceivable” that the drafters would have imposed a direct

connection requirement on competitors while at the same providing an exemption to

the accommodation duty of the incumbents because such a duty would function “as

a significant barrier to the advent of competition.” Atlas, 400 F.3d at 1266.

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Finally, to the extent that Great Plains argues that technical issues control in this

case, we reject that argument. The statutory duties under examination are not limited

with reference to technical feasibility or expense. Further, Great Plains did not invoke

the protections of subsection (f) when dealing with the Commission. Finally, even if

technical matters carried weight in our analysis, Great Plains’s own expert and Great

Plains’s responses to discovery demonstrate that technical infeasibility should not

excuse performance in this case.

Because we do not believe the Act permits the Commission to impose a direct

connection requirement as a condition on the receipt of local dialing parity, we affirm

the district court and reverse the Commission as to the issue of tandem routing and

local dialing parity.

B. Reciprocal Compensation Rate

The district court determined that all calls between Western Wireless and Great

Plains that originate and terminate in the Western Wireless major trading area are

subject to reciprocal compensation. Neither party appeals the district court’s finding

in this regard. See supra note 6. What the parties dispute is the actual reciprocal

compensation rate. 

The parties agree that the rate must be based on a forward-looking, long-term

network model that attempts to determine the incremental cost per minute of use on

a modern network. This model includes costs calculated using the Total Element

Long Run Incremental Costs (“TELRIC”) method. The FCC defines TELRIC as:

The total element long-run incremental cost of an element is the forwardlooking cost over the long run of the total quantity of the facilities and

functions that are directly attributable to, or reasonably identifiable as

incremental to, such element, calculated taking as a given the incumbent

LEC’s provision of other elements.

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47 C.F.R. § 51.505(b). In addition, the rate may include “[a] reasonable allocation of

forward-looking common costs.” Id. at § 51.505(a)(2). The parties disagree as to

whether the evidence in the current record is adequate to support certain of the cost

elements claimed by Great Plains. In addition to this evidentiary skirmish, there are

outstanding disputes regarding the propriety of including certain specific switching

and transport costs. Because of the fact intensive nature of this inquiry into pricing,

we owe deference to the Nebraska Commission’s rate determination and must affirm

unless it acted arbitrarily and capriciously when it set the rate. See Qwest Corp. v.

Koppendrayer, 436 F.3d 859, 863 (8th Cir. 2006) (applying the arbitrary and

capricious standard of review to determinations by a state commission concerning

rate-setting issues).

In front of the arbitrator, Great Plains submitted the results of a cost study based

on a forward-looking model. Western elected not to conduct its own study, but rather,

offered a critique of the Great Plains study. Both parties had submitted initial rate

proposals, and both parties compromised to a limited extent before submitting final

offers to the arbitrator. The arbitration was issue-by-issue arbitration as mandated by

the Nebraska Commission, and the arbitrator was forced to choose one of the two

parties’ proposed rates without amendment. Great Plains had proposed a final rate of

$0.0232 per minute of use. Western had proposed a final rate of $0.00609 per minute

of use. The arbitrator determined that the most appropriate rate would be in the range

of $0.01-0.014 per minute of use and, reluctantly, selected the Western rate.

Unlike the arbitrator, the Commission was not bound to accept one party’s

proposal without amendment. It considered both parties’ final proposals as well as the

arbitrator’s analysis. It then took the arbitrator’s mid-range number as a starting point

and adjusted upward to a final rate of $0.0208 per minute of use, resolving several

individual points of dispute to reach the final rate. The district court affirmed the

Nebraska Commission’s rate determination.

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We need not address each individual cost element that contributed to the

Nebraska Commission’s overall, composite figure of $0.0208 per minute of use.

Rather, we focus only on those elements that remain in dispute. The rate is comprised

of two categories of cost elements. $0.0079 per minute of use is allocated to

termination or switching costs, and $0.0129 per minute of use is allocated to transport

costs. The parties dispute both of these cost element categories.

(1) Switching/Termination Rate

Regarding switching costs, Western argues that $0.0060 per-minute-of-use out

of the $0.0079 total fails to meet the pricing standards set forth in 47 U.S.C. §

252(d)(2). Section 252(d)(2) requires that costs be determined on the “basis of a

reasonable approximation of the additional costs of terminating such calls.” Western

argues that the disputed $0.0060 per minute of use is based on the cost of certain

switches that Great Plains included in its cost study. Western argues that these

switches are necessary for Great Plains to have a network capable of servicing its own

local exchange customers even without consideration of traffic with Western.

Western therefore argues that the cost of these switches should be considered part of

the necessary equipment for a local network (like wire loops), should be charged on

a flat-rate, per-line basis to Great Plains’s network customers, and should not be

included in the reciprocal compensation rate. Western also argues that the current and

reasonably anticipated volume of traffic on the networks is so small, and that the

smallest available switches are so powerful, that it is not appropriate to characterize

the switches as having any cost that varies with use or that contributes additional cost

to the termination of calls. Thus, Western argues the entire cost should be allocated

to Great Plains’s customers on a flat rate basis. In making this argument, Western

relies on the FCC’s First Report and Order, cited above, which sets forth a principle

of “cost causation” as follows:

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Only those costs that are incurred in the provision of the network

elements in the long run shall be directly attributable to those elements.

Costs must be attributed on a cost-causative basis. Costs are causallyrelated to the network element being provided if the costs are incurred

as a direct result of providing the network elements, or can be avoided,

in the long run, when the company ceases to provide them.

First Report and Order at ¶ 691.

Although Western’s argument has some appeal, it fails to recognize that the

FCC has interpreted the Act to permit state commissions to assign some common

costs, like switching costs, not only on a flat-rate, per-line basis, but also on a perminute-of-use basis, or on some combination of the two methods. See 47 C.F.R. §

51.505(a)(2) (stating that forward looking costs are a combination of TELRIC and a

“reasonable allocation of forward-looking common costs”); 47 C.F.R. § 51.509(b)

(“Local switching costs shall be recovered through a combination of a flat-rated

charge for line ports and one or more flat-rated or per-minute usage charges for the

switching matrix and for trunk ports.”). This is in contrast to costs such as local loop

and subloop costs that must be recouped on a flat-rate basis. See id. at § 51.509(a)

(“Loop and subloop costs shall be recovered through flat-rated charges.”). Because

the Commission permissibly used a combination of the two methods prescribed by

Rule 51.509(b), we cannot say that it acted arbitrarily or capriciously when it found

that it was reasonable to apportion some of the cost of the switches to the termination

of calls on a per-minute basis rather than charging all switch costs on a flat, per-line

basis.

To reach the $0.006 per-minute-of-use switching figure for inclusion in the

overall rate, the Commission specifically found that the disputed switching costs were

attributable 70% to usage and 30% to flat-rate loop costs. It is a much closer question

whether the Commission acted arbitrarily or capriciously when it found that it was

reasonable to attribute, specifically, 70% of the cost of the switches on a per-minute,

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usage basis. We note that state commissions enjoy wide latitude on this issue because

not only is our review deferential, but also because the substantive standard applied

by state commissions is only one of reasonableness. Still, the only reference we find

in the present record to the 70%/30% figure is a conclusory statement by Great

Plains’s cost model expert that “30 percent of the switching costs were excluded as

nontraffic sensitive to account for line equipment of the switch.” 

This conclusory statement from an expert likely would not be sufficient for us

to rely upon under a de novo standard of review. However, our deferential review is

due in part to the superior technical expertise of state commissions. As such we

should not lightly reverse a state commission’s assessment of reasonableness. Further,

Western has not attacked the particular election of the 70%/30% split as unreasonable;

rather, Western attacks the inclusion of switching costs in general as impermissible.

As a result, we do not fault the Commission for the absence of an extensive record

setting forth the complete foundation for the precise apportionment. Further, we note

that the Great Plains expert testified and was subject to cross-examination in

arbitration and there is no allegation that the arbitration was tainted by procedural

irregularities. Although this issue is close, given our conclusion that it is permissible

to include some switching costs, we are not prepared to declare the Nebraska

Commission’s reasonableness determination arbitrary and capricious merely because

that body was willing to rely on the expert’s conclusion.

(2) Transportation Rate

Regarding the transportation rate, there are two points of dispute, one

evidentiary and one substantive. The evidentiary dispute arises because, after

evidence was submitted, Great Plains included a table of figures in its briefing that the

Commission relied upon to set the transportation rate. Western argues that many of

the figures in the table enjoy no support in the record, and therefore, should not be

treated as evidence. Having carefully reviewed the testimony of Great Plains’s pricing

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expert, it is clear that the figures in the table do, in fact, enjoy support in the record.

As explained more fully below, the specific figures at issue concern the allocation of

certain costs between functions to be included or excluded from the transportation

rate. In his testimony, the Great Plains expert identified the appropriate percentage

allocation for inclusion in the transportation rate as 70-75%. The disputed table

includes figures not found in the record, but generated from data found in the record

modified to take into account the expert’s range, using an assumption of 72%. There

is no error in relying on specific data points not in the record if those data points are

derived from evidence that is in the record.

Regarding the substantive dispute, we again affirm the Nebraska Commission’s

rate determination. The $0.0129 per-minute-of-use transportation rate is a final

number that Great Plains arrived at by calculating a larger, gross transportation rate

and subtracting a percentage from that gross rate based on the fact that some

transportation services provided by Great Plains are related to services not charged on

a per-minute-of-use basis. Western does not currently challenge the determination of

the larger, gross transportation cost figure, and the parties agree that it is necessary to

subtract at least a portion of the gross transportation figure. Rather Western

challenges the particular apportionment of 72% of the transportation costs to functions

that can be included in the net transportation rate of $0.0129 per-minute-of-use.

Specifically, the forward-looking network proposed by Great Plains for the

purpose of rate calculations is a network that provides functions over different kinds

of circuits, including functions above and beyond those necessary to carry traditional

usage-based switched services. The parties refer to these other functions as special

access services and state that such functions include elements such as high capacity

transport circuits dedicated to single users who pay flat monthly charges rather than

charges based on per-minute rates. An example of a special access service provided

by Great Plains is dedicated video service to schools.

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In determining the proper method to reduce the gross transport figure to isolate

proper, cost-causative transport functions from costs that are unrelated to the provision

of per-minute, usage-based services, it is necessary to choose a method of calculation.

The Act and the regulations do not mandate the use of a particular method. Of three

possible methods cited and discussed by the parties, Western attacks one method as

impermissible. This one method is the method employed by Great Plains. 

The three possible methods for determining a proper allocation are identified

as (1) the circuit count method, (2) the rate equivalency method, and (3) the

bandwidth method. It suffices to note that Great Plains and Western agree that there

is no legal impediment to the use of the circuit count or bandwidth methods. Roughly

speaking, these two methods apportion costs between usage-based and special access

services, respectively, based on the number of circuits dedicated to each function or

based on the percentage of total bandwidth dedicated to each function. Using the

circuit count method, the Great Plains cost expert initially recommended the allocation

of 89% of the gross transportation rate to usage-based services. Western advocated

use of the bandwidth method, and, before the arbitrator, concluded that 14-25% of the

gross transport costs should be allocated to usage-based services.

Using the challenged rate equivalency method, the Great Plains expert testified

that an allocation of 70-75% would be appropriate, and Great Plains provided

calculations that the Commission relied upon using an allocation of 72%. This rate

is within the broad range (14% - 89%) defined using the two unchallenged methods.

As such, we should not reject the Commission’s final transportation rate determination

as arbitrary and capricious even if the precise method used appears problematic.

That having been said, even if the resulting percentage were not within the

permissible range, it is not clear that use of the rate equivalency method in this context

would rise to the level of reversible error. Under the rate equivalency method, Great

Plains looked at its retail rates for both types of services (per-minute usage services

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and special access services) as those retail rates then existed under state tariffs. Great

Plains then used the percentage break-down in rates to infer a percentage break-down

for the allocation of transportation costs. In general, the use of retail costs and

historical, embedded costs as reflected in existing tariffs rather than costs based on

forward-looking networks is prohibited. See 47 C.F.R. § 51.505(d)(2) (stating that

retail costs “shall not be considered in a calculation of the forward-looking economic

cost of an element”). Here, however, the rates were not used to determine the costs,

i.e., the gross transportation rate. That gross figure was based on a forward-looking

network model. The retail tariffs were only used to estimate a distribution between

special and usage-based services. It is not clear that Rule 51.505(d)(2) prohibits the

use of existing tariff rates in this manner.

We need not firmly resolve the question of whether this particular use of retail

rates runs afoul of the Rule 51.505(d)(2) prohibition on considering retail costs. As

already noted, the challenged method resulted in an allocation well within the range

established by the unchallenged methods, and it was not arbitrary and capricious for

the Nebraska Commission to select an allocation within that range. As a result, we

affirm the district court and Commission as to the rate determination.

C. Retroactive Compensation

The parties agree as to the effective date of the interconnection agreement (the

date of approval by the Commission) and its duration. They disagree, however, as to

whether compensation must be paid for any period of time that predates the effective

date of the interconnection agreement. Great Plains sought compensation going back

to approximately March 1998, a point in time well after Western began terminating

calls on the Great Plains network and prior to the start of the parties’ informal

negotiations towards an interconnection agreement. Western sought a ruling that no

compensation was due prior to finalization of the interconnection agreement. 

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The arbitrator found that compensation was due dating back to March 1998.

In so finding, the arbitrator concluded that the agreements between Western and US

West/Qwest (that enabled Western to terminate traffic to the Great Plains networks)

made Great Plains a third party beneficiary and “were and are in the nature of ‘interim

arrangements’ regarding Great Plains” and that Great Plains was a beneficiary under

those agreements. The Commission agreed that compensation was owed to Great

Plains. The Commission disagreed, however, that compensation was due dating back

to 1998. Rather, the Commission found that Western’s formal request for negotiation

of an interconnection agreement under the Act was a precondition to any entitlement

to reciprocal compensation. See 47 C.F.R. § 51.715(a)(2) (stating that “[a]

telecommunications carrier may take advantage of such an interim arrangement only

after it has requested negotiation with the incumbent LEC”). Accordingly, the

Commission determined that the appropriate start date for compensation was the date

that Western formally requested negotiation of an interconnection agreement under

the Act: August 26, 2002. Because the Commission had held that reciprocal

compensation was not owed by Great Plains for calls sent to a tandem switch (an issue

later reversed by the district court and not appealed by Great Plains), the Commission

found that Great Plains had not terminated any traffic to the Western network. As a

result, the Commission held that Western owed Great Plains interim payments for

traffic terminated on the Great Plains network, but that Great Plains owed Western no

such interim compensation. The district court agreed with the Commission as to the

appropriate date, but held that compensation was owed by each carrier to the other

effective August 26, 2002.

Western appeals. Because this issue turns largely on the Nebraska

Commission’s interpretation of facts including the history of the parties’

interconnection status and any arrangements that existed prior to the approval of an

interconnection agreement, we apply the deferential standard of review. We will

affirm the Nebraska Commission unless we find its ruling arbitrary and capricious.

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10The regulation provides:

§ 51.715 Interim transport and termination pricing.

(a) Upon request from a telecommunications carrier without an

existing interconnection arrangement with an incumbent LEC, the

incumbent LEC shall provide transport and termination of

telecommunications traffic immediately under an interim arrangement,

pending resolution of negotiation or arbitration regarding transport and

termination rates and approval of such rates by a state commission under

sections 251 and 252 of the Act.

(1) This requirement shall not apply when the requesting

carrier has an existing interconnection arrangement that provides

for the transport and termination of telecommunications traffic by

the incumbent LEC.

(2) A telecommunications carrier may take advantage of 

such an interim arrangement only after it has requested

 negotiation with the incumbent LEC pursuant to § 51.301.

(b) Upon receipt of a request as described in paragraph (a) of this

section, an incumbent LEC must, without unreasonable delay, establish

an interim arrangement for transport and termination of

telecommunications traffic at symmetrical rates.

. . .

(d) If the rates for transport and termination of

telecommunications traffic in an interim arrangement differ from the

rates established by a state commission pursuant to § 51.705, the state

commission shall require carriers to make adjustments to past

compensation. Such adjustments to past compensation shall allow each

carrier to receive the level of compensation it would have received had

the rates in the interim arrangement equalled the rates later established

by the state commission pursuant to § 51.705.

-29-

The regulation that authorizes interim payments is 47 C.F.R. § 51.715. The

Nebraska Commission correctly characterized this regulation as one that permits a

carrier to request interconnection and transport and termination services, imposes a

duty of timely cooperation on the incumbent carrier, and permits payments under an

interim arrangement as a quid pro quo for the incumbent carrier’s cooperation.10

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On appeal, Western presents an argument based on the plain text of the

regulation. Western argues that rule 51.715 only applies when a carrier formally

requests negotiations with an incumbent, seeks to establish an interim arrangement,

and, in fact, establishes such an arrangement. Western characterizes the requirement

for an “arrangement” as a requirement for a contract with offer, acceptance, definite

terms, and consideration. Western then argues that because it did not at any time

request to establish an interim arrangement with Great Plains, because the

Commission did not affirmatively state that there was an interim arrangement, and

because the Commission merely determined that “interim compensation is warranted,”

interim compensation is not authorized under the rule.

Great Plains counters that, through agreements with Qwest, Western, in fact,

began terminating traffic to the Great Plains network as early as January 1997. Great

Plains further states that an iteration of the agreement between Qwest and Western

that became effective in July 2000 has been in force and effect throughout all times

material to the question of interim compensation and makes Great Plains a third party

beneficiary. Great Plains presented evidence to prove the number of minutes of traffic

terminated by Western on the Great Plains network and Western did not dispute that

evidence. Great Plains does not adopt the strict contract theory for interim

arrangements as advocated by Western, and instead, states that the history of interim

services between the parties—services that were actually provided in this

case—suffices to prove the existence of an interim arrangement.

Great Plains also argues that, to the extent Western relies on the absence of a

request for an interim arrangement to defeat interim compensation, Western’s

arguments are without merit. Western was, from January 1997 onward, obtaining

termination and transport for telecommunications traffic on the Great Plains network

without having asked Great Plains for such services. Great Plains argues that because

an arrangement actually existed, there was no need for Western to ask for an

arrangement.

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No party disputes the actual rate set for interim compensation as an issue

separate and distinct from their general challenges to the overall reciprocal

compensation rate discussed above. In other words, there is no issue on appeal

dealing specifically with the rate-setting provisions of Rule 51.715.

It is clear that the history of this case, involving transport and termination on

the Great Plains network without a request from Western, differs from the situation

envisioned by the FCC when the FCC fashioned Rule 51.715. That rule anticipates

that competitors will approach incumbents to gain access, not that competitors will

first terminate traffic and then discuss interconnection. It is also clear that Western

received the benefit that the FCC sought to promote when it promulgated Rule

51.715—timely access prior to the negotiation of an interconnection agreement. We

agree with Great Plains that nothing in Rule 51.715 mandates that an interim

arrangement rise to the level of a definite contract between the parties. Such a

requirement would be wholly incompatible with the interim, expedited nature of the

actions demanded by the rule. The purpose of the rule is to permit parties to operate

in the absence of a formal agreement, during a time that a formal agreement is being

negotiated. As such, it was not arbitrary and capricious for the Nebraska Commission

to find that interim compensation was due in this case, nor for it to select the date of

Western’s formal request for negotiations as a beginning date.

Finally, we agree with the district court that it is necessary to reverse the

Commission to the extent that it limited interim compensation to one-way payments

from Great Plains to Western. The rule explicitly calls for symmetrical compensation.

47 C.F.R. § 51.715(b). The Commission’s ruling that Great Plains had not terminated

any traffic to the Western Wireless network was based on the Commission’s nowoverruled determination regarding the scope of reciprocal compensation and the

termination of traffic to the tandem switch. As we stated repeatedly above, traffic in

both directions between an incumbent and a wireless carrier within a major trading

area is subject to reciprocal compensation. Accordingly, the Commission erred as a

matter of law when it found that traffic sent to a tandem switch and bound for the

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Western Wireless network was not traffic terminated to the Western Wireless

network. As a result, we agree with the district court and affirm its judgment as to this

issue.

In summary, we affirm the district court in all respects. Local dialing parity is

consistent with tandem routing and consistent with the Act, and the Commission erred

as a matter of law when it approved contract language that excused Great Plains from

the local dialing parity obligations of § 251(b)(3). The Nebraska Commission did not

act arbitrarily or capriciously when it set the reciprocal compensation rate or the

effective date for interim compensation. The Nebraska Commission did, however, err

when it failed to make interim compensation symmetrical as required by 47 C.F.R. §

51.715.

______________________________

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