### TEXA S C OU R T OF A PPEAL S, THIR D DIST R ICT , AT AU STIN

NO. 03-05-00172- CV

ASA P P ag ing Inc ., App e lla nt

v. P ubl ic Utility Com m ission of T exas and CenturyTel of S an Marcos, Inc., Appellees

F ROM THE DISTRICT CO URT OF TRAVIS COUNTY , 261ST JUDICI AL DISTRICT NO. GN304831 , HO NORAB LE LORA J. LIVINGSTO N, JUDGE PRESIDI NG

O P I N I O N ASAP Paging , I nc. (A SAP) is a Comm erc ial Mobile Radio Service ( CM RS ) p r o v ider that also provide s wireline c onnections for I nterne t Service Provider s (I SPs ). ASAP alleg es that Ce ntu ry Te l of San M arc os , Inc . ( Ce ntu

ry Te l) c ha rg e d Cen tur

y Te l’ s c us tom e rs a

lon g -d ist anc e tol l for c alls to ASAP’s pag ing a nd I SP custom ers in violation of fe dera l and state tele communications law. Acc ording to A SAP, these calls should be rate d as toll-fre e loca l calls under E x tended L ocal Calling Servic e (EL CS), and, if they are not so rated, the tol l ch ar ge wi ll deter Century Tel’s
c us tom e rs fr om c a lli ng ASA P’ s cus tom e rs . I n re sp on se , Cen tur y Te l con te nd s tha t it is e nti tle d to char g e a toll bec ause the calls do not qualify for EL CS and are pr operly rate d as long -distance . The Pub lic Ut ili tie s Co mmi ssi on (P UC ) f ound that c a lls fr om C e ntu

ry Te l’ s c us tom e rs in S an M arc os toSee In r e Implementation of the Local Competiti on Provisions in the Telecomms. Ac t of 1 1996 , 11 FCC R cd 1 5 4 99, 15505 (1996), aff’d in part and vacated in part sub nom ., Competitive Te le c om ms . A ss’n v . F

CC , 117 F.3d 1068 ( 8th Cir. 1997) (L ocal Competition Order ). 2 ASAP’s pag ing a

nd I SP custom ers we re pr operly charged long- distance toll. The district cour t
re nd e re d ju dg me nt a ff

ir min g the PUC ’s or de r. We w ill a ff ir m th e jud g me nt o f t

he dis tr ic t c ourt
. BACK GR OUND The regulatory fram ework

To understa

nd the context of the p re sent dispute, we be g in by survey ing the framework of

fede ral a nd state telec ommunications reg ulation within which this di spute arose
. Fe de ra l au tho rit

y The Te lecommunications Ac t of 1996 (the “Telec ommunications Act”) amende d the Fe dera l Comm unications Act of 1934 a nd, in do i n g s o, fundame ntally altere d the nature of telecommunications. See Pub. L . No. 104-104, 110 Stat. 56 (codified in scattered se ctions of 15 and 47 U. S.C. ). Hi sto ri c a lly , r e g ulatio n of th is i nd us tr y wa s p re mis e d o n th e be lie f t hat se rv ic e c ou ld be pr ov ide d at th e low e st c os t to the ma ximumnumbe r o f c on su me rs thr ou g h a re g ulate d mo no po ly
ne tw or k. Ov e r m any

de c a de s, state and

fe de ra l a g e nc ie s re g ulate d th e pr ic e s and pr a c tic e s o f t

he se
mon op oli e s and pro tec te d th e m a g a ins t c omp e tit ive e ntr y . T he Te le c omm

un ic a tio ns Ac t a do pts pr e c ise ly the op po sit e a

pp ro a c h. Ra the r tha

n sh ie ldi ng te le ph on e c omp anie s f ro m c omp e tit ion , th is Act require s telephone companies to ope n their networks to c ompetition. The leg isla t i o n was 1
enac ted in an ef

fort to “pr omote competition and reduc e regulation in or der to sec ure lowe r price s
and hig he r q ua lity se rv ic e s f

or Am e ri c an te le c omm

un ic a tio n c on su me rs and e nc ou rage th e ra

pidSe c tio n 2 51 (e ) p ro vid e s: 2 Th e Com mis sio n s ha ll c re a te or de sig nate on e or

mor e impart ial e nti tie s to a dmi nis te r t e le c omm

un ic a tio ns numbe ri ngand to m a ke su c h numb e rs a va ila ble on a n e qu it a

b le b a s is
. T h e Co mm is s io n s h a ll h a v e e xc lu s iv e ju r is d ic ti on over those portions of t he Nor

th America

n NumberingPlan that pertain to the United States. Nothing in this para g raph sha ll prec lude t he C ommissi on from dele g ating to State commissions or other e ntities all or any portion of such jurisdiction. 47 U.S.C.A. § 251(e) ( West 2001). “Te lecommunications ser vice” is defined as the offering of telec ommunications for a f ee 3 direc tly to the public, or to such cla sses of user s as t o be effec tively available direc tly

to the public, reg ardle ss of the fa cilities used. 47 C.F.R. § 52.5(h) ( 2005). 3 de plo y me nt o f n e w t e le c omm

un ic a tio ns te c hn olo g ie s. ” Te le c omm un ic a tio ns Ac t pm

bl, 11 0 St a t. at 56. T h e T e le c o mm

u n ic a ti o ns Act g rants the F eder al Communications Com mission (FCC) plenary jur isd ic tio n o ve r t e le ph on e numbe ri ngiss ue s and g ive s th e F CC th e a

uth or ity to d e le g a te to s ta te commissions or certa in other entities all or a ny portion of i ts jurisdiction. See 47 U.S.C.A. § 251(e) (West 2001). 2
Rat ec e nte rs Telephone numbers ar e assig ned on a nondisc riminatory basis under the FCC by

the North Amer ican Numbe ring Plan Administ rator ( NANPA). 47 C.F
. R
. § 52.13(a) , (d) ( 2005). 3 NA NPAiss ue s te le ph on e numbe rs in blo c ks of 10 ,0 00 , and e a c h te le ph on e numbe r h a s te n d ig its , appea ring g ener ically

as: NPA-NXX -XXX X. The first three digits (NPA) repr esent the a rea code; the sec ond three digits (NX X) identify the par ticular c arr ier a

nd switch to which the c all is routed; and the last four digits (XXXX) ide ntify the customer se rved by

the switch. Se e id . §§ 52.7(a) , (c)
.Wir e le ss c arr ie rs inc lud e c e llu lar a nd pa g ingc arr ie rs . 4 4 Th e sw itc h is a de vic e that c ha nn e ls inc omi ng data fr om any of mul tip le inp ut p or

ts to the specific output port that will take the data toward i ts intended destination. I n the traditional circ uit-switched telephone network, one or more switches are used to set up a tempora ry connec tion or circ uit for an e x chang e betwe en two or more parties.

Th e NXX digits ca

rry specia l importance to this case beca use they signify the applicable “rate ce nter” for e ach te lephone number
. Rate centers are a ssociated with the switche s servingthe ca lling and c alled par ties to determine whe ther a call is local or toll and to compute the air mile di stance for rating the t oll call. Calls place d from one rate cente r t o another cente r not on the local list for the ca ller’s rate ce nter g ener ally are considere d toll calls. Thus, most carrier billing sy stems rely

on NPA-NXXcode inf ormation fo r rating ca lls. In re Numbe ring Resource Optimization , 14 FCC Rcd 10322, 10370 (1999) ( FCC NRO) (inter nal citations omitted). To provide suff

icient telephone numbers for their customers, telephone c ompanies need to acqu ir e a

rate c e nte r, de pe nd ingon wh e the r t

he y a re wi re le ss or

wi re lin e pr ov ide rs . 4 Wir e lin e se rv ic e s are fi xed to a sp e c if ic loc a tio n, and

a su bs c ri be r’ s te le ph on e numbe r i s li mit e d to use within the rate cente r within which it is assigne d. Wireless service s, on the other ha nd, are not fix ed to a specific location because they are mobile. Thus, while the wire less subscriber ’s number is associated with a spec ific g eog raphic rate cente r, the wire less service is not li mited to use wi thi n that rate cente r. F or wire line service s, “[NXXs] allocate d to a wire line Service Provider ar e to be utiliz ed to provide se rvice to a customer’s premise phy sically located in the s ame r ate c enter that the [NXXs] are assig ned.” B ut wire le ss service providers “ offe r larg er c alling a rea s and thus requireT h e te r m “ lo c a l e xc h an g e c ar

r ie r ” me an s an y p e r s o n th a t is e n g a g e d in th e p r o vision of 5 telephone e x chang e ser

vice or exchang e ac cess. Such ter m does not include a pe rson insofar as such person is eng ag ed in the provision of a c ommercia l mobile service, see 47 U. S.C. A. § 3 32 (c ) ( Wes t 2001), except to the extent that the FCC finds that such service should be included in the definition of such ter

m. Id . § 153(26). Under traditional regulatory

structure s for tele phone serv i ce , one telec ommunications company would hold the exclusive right to provide customers within specific g eog raphic reg ions of th e s t at e wi t h basic loca l telephone se rvice . Many of these c ompanies still provide telecommunications service in Te x as and a re nowref

err ed t o i n the industry

as “inc umbent local exchang e carrie rs” or “I L ECs.” See Texas Bldg. Owners &Managers Ass’n v . Public Util. Comm’n , 11 0 S. W.3 d 52 4, 52 7 & n. 1 ( Te x. Ap p. —A us tin 20 03 , p e t. d e nie d) . In th e Te le c omm un ic a tio ns Ac t, Congr ess cr eate d “compe titive local ex chang e carrie rs, or CL ECs, defined the r ights a nd obligations of th ese new c arr ie rs and

of the I L ECs , a

nd e lim inate d b arr ie rs to c omp e tit ive e ntr y int o ma rk e ts. Se e id . at 52 8. CL ECs are pe rm itt e d to cho os e to pr ov ide se rv ic e s to cus tom e rs in one of tw o w a y s. Id . CL ECs can c hoose to buy the servic es of other

providers at wholesale r ates a nd then re sell them at re tail to end-user customers, or they can acquir e and install their own equipment so as to limit or eliminate re liance on the networks of other provide rs. Id . I L ECs and CL ECs may

be re fe rr e d to collectively

as “L ECs.” “Mobile service ” means a radio communication service car ried on betwee n mobile stations or re ceive rs and land stations, and by mobile stations communicating amo ng themselves, and includes (A) both one-w ay and two-way radio communication service s, (B ) a mobil e ser vice whic h provides a regularly

interac ting g roup of ba se, mobile, portable, a nd associate d control and r elay stations (whether

licensed on a

n individual, cooperative, or multipl e basis) for private one-w ay or two-wa y land mobile r adio communications by elig ible users ove r desig nated a rea s of oper ation, and (C ) an y s er v ice f

or which a

license is re quired in a pe rsonal communications service e stablished pursuant to the proc eedingentitled “Amend m ent t o the Commiss ion’s Rules to Establish New 5 few er N XX code s for the w ireless ser vice, [so] they

often must reque st as m any NXX codes as are require d to permit wireless c ustomers to be ca lled by wireline c ustomers on a loca l basis.” Id
. Interconnection

Af t er t h e i mp l em en t at i o no f t h e T el ec o m m u n i ca t i o n s Ac t , i n cu m b en tl o ca l ex ch an ge
car riers ( I L ECs) strug gl ed with the onset of compe titive local exchang e ca rrier s (CL ECs) and
commerc ial mobile radio ser vice ( CMRS ) provider s. To make it ea sier for new c ompanies to enter 5Personal Communications Services.” 47 U.S.C.A. § 153(26).

Acc ording to the FCC , C M R S providers, suc h as pag ing c arr iers, off er “telec ommunications” as define d in the Telec ommunications Act. See I n re TSR W

ireless, LLC

v. US W est Comms., Inc ., 15 F CC Rc d 1 11 66 , 1 11 68 (2 00 0) ; se e als o 47 U.S.C. § 153(43). “Int er co n n ec t i o n ” r ef

er s t o t h e p h y s i ca l l i n k i n g o f t wo n et wo rk s fo r t h e m u tu al ex ch an ge 6 of traf fic. There are a minimum set of five “te chnica lly fea sible” points at which I L ECs must provide 7 interconne ction: (1) the line side of a loca l switch (for example, at t he main distribution frame); (2) the trunk side of a

local switch; (3) the trunk interconne ction points for a tandem switch; (4) centr al of fi c e c ro ss- c o nn e c t po int s; a nd (5 ) o ut- of -b and sig na lin g fa c ili tie s, su c h a s si g na lin g tr ans fe r p oin ts, nece ssary to exchang e tra ffic a

nd acc ess ca ll-relate d databa ses. More pa rticularly , ASAP uses Ty

pe 2A interconne ctions. Ty pe 2A inter connec tions give 8 the CMRS car

rier the ability

to connec t to the Publi c Switched Ne twork in the same ma nner a s any wireline c arr ier. The interconne cti o n s , wh i ch may be either

solely to acc ess tandems or to a 6 the telec ommunications market, the T elec ommunications Act requir es I L ECs to provide interconne ction at their pre -existi ng networks to any reque sting tele communications car rier at any 6 te c hn ic a lly

fe a sib le po int
. See 47 U.S .C.A . § 25 1( c )( 2) (We st 2 00 1) . T his int e rc on ne c tio n mu st 7 be at lea st e qu a l in qu a li ty to th a t p r o v id e d b y th e I L E C to it s e lf o r it s a f f il iate s , an d mu s t be provided on rates, terms, and c onditions t hat ar e just, rea sonable, a nd nondiscriminatory
. Id
. T wo b asic ty

pes of inter connec tion ex ist. Ty pe 1 ser vice involves interc onnection to a telephone company

end off ice similar t o t h at provided to a pr ivate bra nch exchang e (PB X). Under Ty pe 1 interconne ction, the telephone company owns the switch servingthe CMRS network and, there fore , perf

orms the orig ination a

nd termination of both inc oming a nd outgoingcalls. Unde r Ty pe 2, the CMRS pr ov ide r ow ns the sw itc h, e na bli ngit t o o ri g inate ou tg oin g c a lls and to t e rm inate inc omi ngc a lls
. See ge nerally Cellular Interconne ction Procee ding , 4 F CC Rc d 2 3 6 9 , 2372 & n. 16 (1 98 9) . A SAP us e s o nly Ty pe 2 in te rc on ne c tio ns . 8combination of tande ms and other c entra l office s, are true trunk- side conne ctions using trunk- side

signa ling pr otocols. Se e In re Eq ua l A c c ess & In te rc on ne c tio n Oblig

ati on s P e rta ini ng

to Com me rc ial

Mo bile Ra dio Se rv

s. , 9 FCC Rcd 5408, 5452 (1994). The F CC has determined that pa g ing te rminals p er form a terminating function. 9 “Te rmination” is define d as “the switching or loca l telecommunications traf fic at the terminating car rier’ s end off

ice switch, or

equivalent f

ac i l i t y , and deliver

y of such tra ffic to the c alled par ty ’s pr e mis e s. ” 47 CF R § 51 .7 01 (d ). A pa g ing te rm ina l per fo rm s a “te rm inatio n” fu nc tio n be c a

us e it rec eives calls that orig inate on the L EC’s network and transmits the calls from its ter mi n al t o t he pag er of the ca lled party
. TSR W ire le ss , 1 5 F CC Rc d at 11 17 8- 79 . T his fu nc tio n is ana log ou s to what an e nd o ff

i ce switch does whe n it transmits a call to the telephone of the c alled par ty
. Id . at 11 17 9. To pe rf

or m th is f un c tio n, the te rm ina l fir st dir e c ts the pa g e to an a pp ro pr ia te tr ans mit te r i n the pag ing ne twork, and the n that transmitter de l i v er s t he pag e to the re cipient’s pag ing unit. Id
. The terminal and the network thus perf orm routing or switchingand ter mination. Id
. Thus, a pag ing termi n al i s often conside red the equivalent of a switch for

the purpose of

identifying the point of termination of a pa g ing c all. Id
. 7

In a d d i t i o nt o p r o v i d i n g i n t e r c o n n e c t i o n , anIL E C m u s ta l s o p r o v i d e d i a l i n g p a r i t y. See 47 U. S
. C
. A § 153(15) ( West 2001). Dialing pa rity enable s a customer

of a ne w L EC to dial others with the co n v en i en ce an incumbent pr ovides, reg ardle ss of which c arr ier the c ustomer has chosen as the local service provider. See 47 C.F .R § 51 .2 07 . U nd e r t his re qu ir e me nt, an I L EC w ill allow customers w ithin a local calling area to dial the s ame number of dig its (seven or te n) to make a loca l phone call, reg ardle ss of t he customer ’s servic e provide r. Id . The F CC has concluded that th is r e qu ir e me n t mu s t a

p p ly to in tr a s tate , lo c a l an d to ll s e rvice s. See In re I mpleme ntation of t he Local Competition Provisions of the T el ec o mm s . Act of 1996 , 11 FCC Rcd 19392, 19400, 19406 (1996) ( Second Report & Orde r).

For CMRS providers, in orde r for the provider ’s cu s t o m er s to be pag ed or c alled, these c all s wo u l d

t ra v el o v er

— an d ev en tu al l y

t er m i n at e at

— I L E C n et wo rk s . Du e to t he depe ndency 9 on these pre -existi ng networks, the F CC has established specia l guidelines. I L ECs are oblig ated, pursua nt to section 251(b)(5) of the Te lecommunications Ac t and the cor respondingpricing“ Poi nt of int e rc on ne c tio n” is the po int be tw e e n the loc a l e xch ang e c arr ie r a nd a wi re le ss 10 service provider that establishes the points for testing a nd the technic al interfa ce. It also establishes wh e re e a c h c arr ie r h a s r e sp on sib ili ty fo r t he c a ll. 8 sta nd ard s o f s e c tio n 2 52 (d )( 2) , to e nte r i nto re c ipr oc a l c omp e ns ati on arra ng e me nts wi th C MRS p r o v id e r s , in c lu d in g p a g in g p r o v id e r s , f o r th e tr a n s p o rt a n d te r mi n a ti o no f

tr a f f ic o ne a c h o th e r’s networks. Se e TSR W

ire le ss , 15 FCC Rcd at 11168-69, 11183. Be cause m an y CMRS providers offe r te le p h o n e e xc h an g e s e r v ic e an d e xc h an g e a c c e s s , th e I L E Cs th e r e f o r e mu s t make interconne ction available to these CM RS providers in confor mity with sections 251(c) and 252. See id . at 11183. Reciprocal compensati on

The Telecommunications Act require s interconne cting L ECs to establish reciproc al compensation arra

ng ements for

the transpor

t and termination of tele communications. 47 U.S.C.A. § 251(b)( 5) (West 2001). A reciproc al compensation arra ng ement is one in which a car rier r ece ives
c omp e ns a tio n f

ro m ano the r c arr ie r f

or the tr ans po rt

and te rm inatio n o f t e le c omm un ic a tio ns tr a ff

ic
o n t h e fi rs t carrier ’s networ k fac iliti es. See 4 7 C. F
. R. § 5 1
. 7 0 1 ( e )
. T h is is a ls o r e f e r r e d to a s “tra nsiting traf

fic” : traff ic that o ri ginates fr om a ca rrier other than the interconne cting L EC but nonetheless is ca

rried over the L EC network to the pa g ing c arr ier’s ne twork. TSR W ire le ss , 1 5 F CC Rc d a t 11 17 7 n .7 0; see Local Competition Order , 11 FCC Rcd at 16016-17. In addition, the pag ing
c arr ie r w ou ld b e re sp on sib le fo r p ay ingc ha rg e s f or fa c ili tie s o rd e re d f

ro m th e L EC t o c on ne c t po int s on the pag ing car

rier’ s side of t he point of interc onnection, such as f acilities order ed to conne ct the 10 pa g ingte rm ina l w ithits ante nn a s. TSR W ireless, 15 FCC Rcd at 11177 n.70.Acc ess cha rg es existed in the prior regulatory reg ime, but Congre ss de cided to continue 11 enfor cing these c h ar ges for local tra ffic. See 47 U.S.C.A. § 251(g ) (West 2001). The Te le c omm

un ic a tio ns Ac t st a te d th a t an L EC: shall provide exchang e ac cess, infor mation a cce ss, and exchang e ser vices for su c h a c c e ss t o in te re xchange ca rr ie rs and inf or ma tio n s e rv ic e pr ov ide rs in acc ordanc e with the s ame e qual ac cess a nd nondiscriminatory

interconne ction re str ic ti on s and

ob lig a tio ns (i nc lud ingre c e ipt of c omp e ns a tio n) that a

pp ly to such ca rrier on t h e d ate immediately prec eding the date of

enac tment of the Telec ommunications Act . . . under a ny court order , co nsent dec ree , or regulation, order, or

poli cy o f t he Commissi on, until such restrictions and obli gations are expli citly superse ded by

regulations prescr ibed by the Com mis sio n a ft e r s uc h d a te of e na c tme nt. Id
. I t does not addre ss the char g es that ca rrier s may

impose upon their end use rs. 12 Th e te rm

“ loc a l a c c e ss a

nd tr ansp or t are a ” or “ L AT A” me ans a

c on tiguo us g e og ra

ph ic 13 are a: (A) established bef ore the date of enac tment of the Telec ommunications Act of 1996 by a B ell operating c ompany such that no exchang e ar ea inc ludes points withi n more than 1 me tropolitan statisti cal a rea , cons o l i d ated 9 Acce ss charges 11 The F CC has concluded that L ECs are not re q u i re d to offer wide-a rea calling or sim ila r s e rv ic e s at a ll , nor ar e they require d to offer

these ser vices without cha

rg e. Id . at 11183-84. Thus, the FCC has deter

mined that its rule s do not pr eclude L ECs f rom char g ing CMRS providers for offer ing wide-a

rea calling or similar servic es. Id . I nstead, the F CC concer ns itself only

with how
c arr ie rs mus t c omp e ns a te e a c h o the r f or the tr ans po rt

and te rm inatio n o f c a lls
. See 47 CFR 12 § 5 1. 70 3( b) ; se e ge ne ra lly TSR W ire le ss , 15 FCC Rcd at 11177-78, 11181, 11184- 85. Telephone serv i ce is org anized into mult iple local ac cess a nd transport a

rea s (LAT As ), wh ic h o ft e n c ro ss s ta te bo un da ri e s. “ I ntr a L AT A” c a lls or ig ina te and te rm inate wi thi n 13metropolitan statistical are a, or State, e x cept a s expressly permitted under the AT& T Consent Dec ree ; or (B ) established or modified by a B ell opera t i n g company afte r such date of enac tment and appr oved by the Commiss ion. 47 U.S.C.A. § 153(25) (West 2001).

See SB C Communications, Inc. v. Fe deral Communications Comm’n , 154 F.3d 226, 231 14 n. 3 ( 5th Cir . 1 99 8) ; Implem entation of the Non-Acc ounting Safeguards of Se ctions 271 and 272 of the Communications Act of 1934, as amende d , 61 Fe d. Re g. 3 9,397, 39,398-99 (July 29, 1996); Stuart Minor Be njamin, et al., Communications Law & Policy 678-79 (2001)
. 10 a sing le L ATA wher eas “interLATA” calls cross L ATA bounda ries. Althoug h intraL ATA c alls may sh owup on

a c us tom e r’ s b ill s a s lo c a l c a lls , th e y may a lso a pp e ar a s “ in- state lon g dis tanc e ” c a lls
. Th e se c a te g or ie s and

the ir a pp lic a ble rate s are le ft

to th e di scr e tio n o f t

he state pu

bli c uti lity commissions. The purpose of establishing the L ATAs wa s only to delineate the are as within which 14 the forme r B ell companies w ould be per mitted to provide telecommunications services ( intraL ATA service s); it was “not to distinguish the are a in w hich a telephone call [would] be ‘loc al’ fr om that in which it becomes a

‘toll’ or long distance c all.” United States v. W estern Elec. Co. , 569 F. Supp. 990, 995 (D.C. Circ. 1983).

To avoid ac cess c harg es, it is possibl e to assig n customer s “v i rt u al NXXs,” or “VNX Xs,” so that a c all termination is ide ntified not by its phy sical location but by a location of the customer’ s choice
. See G lobal NAPS, Inc. v
. Verizon New England Inc ., 327 F. Supp. 2d 290, 295 (D. Ver
. 2004). The customer thus does not pay toll charg es if the VN XX is the same a s the NXX of the c all termination, and the c all would n o t b e subject to ac cess c harg es for purposes of interca rrier compensation. Id . “ Es se nti a lly , V NXX s e rv ic e c on ve rt s w hat w ou ld o the rw ise be tol l calls into local ca lls.” Id
.11 Ac c e ss c ha

rg e s are us ua lly

de te rm ine d b y the loc a tio n o f t he c a lle rs , b ut C MRS customers are mobile a

nd may trave l betwee n locations during a sing le ca ll. Implem entation of the Local Compe tition Provisions in the Telecomm s. Act of 1996 ( Part II) , 61 Fe d. Reg . 45476, 45579 (Aug. 29, 1996) (

Implem entation, Part II

)
. T h e F CC h a s p r o v id e d s o me g u id an c e f o r service p ro v iders in deter

mining whe ther the c all should be local or toll. Id
. I t is n o t n ece ssary for incumbent L ECs and CMRS providers to a scer tain g eog raphic loc a

ti o n s wh e n

d e termining the rating for a ny particula

r call at the moment the ca ll is connected. Id . “F or administrative c onvenienc e, the loc a tio n of the ini tia l c e ll sit e wh e n a c a ll be g ins sh a ll be us e d a s the de te rm ina nt of the g e og ra

ph ic location of the mobile c ustomer.” Id . As an a lternative, I L ECs and CMRS providers ma y use the point of interconne ction betwee n the two ca rrier s at t h e b egi nning of the ca ll to determine the lo c a ti o n o f th e mo b il e c a ll e r o r c a ll e d p arty
. Id
. Ul tim a te ly , CM RS pr ov ide rs and L ECs , b oth incumbent and competitive, wil l rec eive r ecipr ocal c ompensation for te rminating cer tain traff ic that orig inates on the networks of other car riers, and will pa

y such compensation f

or ce rtain traf

fic that they transmit and terminate to other ca rrier s. Id
. ISP -b ound tra ff ic Th e int e rn e t is an in te rn a tio na l ne tw or k o f int e rc on ne c te d co mpute rs e na bli ngpe op le to communicate with one a nother a nd to acc ess information fr om around the w orld. Se e In re Implem entation of the L ocal Competition Provisions in the T elec omms. Act of 1996 , 14 FCC Rcd 3689, 3690 (1999) (

Initia l Or der). Th e int e rn e t f

un c tio ns by

sp lit tin g up inf

or ma tio n in to “ sma ll chunks or ‘pac kets’ that are individually routed . . . to t heir de stination.” In re Fe deral-State Joint Bd. on Unive rsal Serv. , 13 FCC Rcd 11501, 11531-32 (1998). Wit h packe t-switching , “eve n two12

packe ts from the same me ssag e may trave l over diff

ere nt phy sical paths throug h t h e networ k”
e na bli ng us e rs to inv ok e mul tip le int e rn e t se rv ic e s simult ane ou sly and “ to a c c e ss i nf

or ma tio n w ith no knowledg e of the phy sical location of the servic e whe re the information re sides.” Id
.

An I nte rn e t Se rv ic e Pr ov ide r ( I SP) is an e nti ty that pr ov ide s it s c us tom e rs the a bil ity t o obtain online information throug h the interne t. See I nitial Order , 1 4 F C C R c d a t36 90 . I SPs purcha se analog and digital lines from L ECs to connec t to their dial-up subscribe rs. Id . I n a ty pical dia l- up arr ang e me nt, an I SP c us tom e r d ia ls a se ve n- dig it n

umb e r t o r e a c h th e I SP se rv e r i n th e same local ca lling ar ea. Id . The I SP, i n turn, combines “c om p u t er proce ssing, infor mation storag e, protocol conve rsion, and routing wi t h transmission to enable user s to acc ess I nterne t content and service s.” Id . (q u o t i n g In r e Federal-State Joint Bd. on Unive rsal Serv. , 13 FCC Rcd at 11531). Under this arr ang ement, the end user g ener ally pay s the L EC a flat monthly fee for use of the loca l exchang e networ

k and g en er al l y p ay s the I SP a flat, monthly fee for inter

net ac cess. Id . T he I SP ty pically purcha ses business lines from an L EC, for wh i ch it pay s a flat monthly fee that allows unlimit ed incoming calls. Id
. Sta te aut hority The Public Utility Reg ulatory Act (PURA) g overns tele communications regulation in Texas. See Tex. Util . Code Ann. §§ 51.001-65.252 ( West 1998 & Supp. 2005).

Historically , in rural a

rea s and small towns in Texas, calls within a small area wer e considere d local, but ca lls to adjoini n g t o wn s we re t reated as toll calls. In the rura l are as, ca llers
wer e cha rg ed a toll when they called ge og raphic ally near by phone numbers. I n 1993, the leg islature
cre ated the E x panded T oll-Fre e L ocal Calling Are as (EL CS), authorizi ng the PUC to ex pand “aThe statute, origina lly written in 1993, ref

ers to I L ECs. Bec ause of

telephone de regulation 15 and the e merg ence of CL ECs, CL ECs may also obtain EL CS s er v ice f or their c ustomers. See 16 Tex. Admin. C ode § 26.272(d) (4)( A)(ii) ( 2005). 13 toll-free local ca lling ar ea into an exchang e that is not in a metropolit an exchang e but is in a local
c a lli ngare a

that is c on tiguo us to a me tr op oli tan e xch ang e that th e [PUC] d e te rm ine s h a s a
c omm un ity of int e re st w iththe e xch ang e .” Te x. Ut il. Cod e Ann. § 5 5. 04 2 ( Wes t 19 98 ); see ge ne ra lly id . §§ 55.041-.048. In particular, rura l telephone c ustomers may petition the PUC for
e xpans ion

of a tol l- fr e e loc a l c a lli ng are a by de mon str a tin g that th e y have a “ c omm un ity of int e re st” with the reque sted exchang e ar ea. Id
. § 55.042. Telephone subscriber s of an I L EC exchang e that 15
serve s no t m o re t han 10,000 ac cess lines may petition the PUC for expansion of the company ’s toll-free local ca lling ar ea if : (1 ) the pe tit ion inge xch ang e ’s c e ntr a l sw it chi ng of fi c e is l oc a te d w ith in 2 2 mi le s, u s i n g vertica l and horizontal ge og raphic coordinates, of the c entra l switching office of the e x chang e re quested for expanded local c alling se rvice ; or (2) the petitioning e x chang e’s c entra l office i s n o t more than 50 miles fr om the centr al offic e of the exchang e requested for expanded loca l calling service and the e xch ang e s sh are a

c omm un ity of int e re st.
Id . § 55.045. The PUC may decline the petition for a va riety of re asons. Id . § 55.044. I f t he PUC a pp ro ve s an E L CS, custome rs wi ll n ot b e c ha rg e d a tol l w he n th e y

c a ll wi th in th e EL CS . T he or e tic a lly , th e I L EC w ou ld l os e mon e y by ro uti ngthe se c a lls be y on d th e ir initial loca l calling scope w ithout rece iving the a pplicable toll char g es. To compe nsate for this, the I L EC m ay i m p o s e a monthly fee ag ainst eac h individual and business customer in the pe titioni ngSpecifica lly , ASAP bought and the n assig ned the 512/580 block t o Ky l e, t he 512/265 16 block to Fe ntress, and the 512/384 block to L ockhar t. ASAP has obtained other blocks of numbers for use in its pagingbusiness. Those blocks ar e not at issue in this case. Be fore obtaining the three blocks of NXXs, ASAP established an are a-w ide calling plan 17 (“ re ve rs e tol l bi lli ngarr ang e me nt” ) w ithSou thw e ste rn B e ll T e le ph on e and

Ce ntu ry Te l f or its 512/222 NXX. Unde r this arra ng ement, ASAP pay s compensation to t hese I L ECs to allow callers in a wide c entra l Texas area to call ASAP’s pag ing c ustomers without incurring a t o l l
. M o s t of ASAP’s pag ing c ustomers use this 512/222 block, while the L ockhar t, K y le, and Fe ntress NXX s are assig ned pre dominantly to the I SPs
. None of ASAP’s I SP customers use numbers fr om the 512/222 block. 14 exchang e. Id . § 55.048(b). The I L EC may also impose a monthly fee ag ainst eac h of its customers in the state. Id . § 55.048(c)
.

I n 1995, the PUC established an EL CS between the r ate c enter of Kyle, Fe ntress, and L ockhar t and t h at of San Mar cos. Ac cording ly , calls made betwee n telephone c ustomers or businesses within these cities do not have to pay a toll char g e, but they

do have to pay a monthly fee to their I L EC. This EL CS does not include Austi n. EL CS service in that ar ea is provide d by means of direc t en d -t o -e n d o ffice trunks betwee n the San Marc os and the Ky le, Fe ntress, and L ockhar t exchang es.
The di spu te ASA P Pa g ing , Inc . ( ASA P) is a CMRS that pr ov ide s p a g ingse rv ic e s to its c us tom e rs . I t also provides interne t-bound servic es to I SPs
. ASAP boug ht a nd obtained three blocks of NXX s
a sso c ia te d w iththe EL CS c omm un iti e s o f K

y le , Fe ntr e ss a

nd L oc kh art
. I t a ssi g ne d a

pp ro xima te ly 16 thirty numbers in the L ockhar

t block to its paging customers but did not assign any of the Ky le and 17 Fe ntress blocks to pag ing c ustomers, instead assig ning those numbers only to I SPs . Over

99% ofSW BT is now A T& T. 18 Ta ndem is a t e le ph on y

te rm me anin g “ to c on ne c t in

se ri e s. ” A t and e m of

fi c e pe rf or ms 19 trunk to trunk switching . I t is the midpoi nt o f a ca l l b etween two other of fice s. A tandem off

ice differ s from an end office
. Trunks to a n end office are only for the benef it of subscriber

lines which terminate w ithin that end office . Thus, a tande m switch connec ts one trunk t o another . A tandem switch is an intermediate switch or c onnection betwe en an or iginating tele phone call or location and the fi na l de sti natio n o f t

he c a ll. 15 calls to ASAP’s Ky le, Fe ntress, and L ockar t NXXs ar e d i rected to ASAP’s I SP custom ers, a ll of whom are located in Austin.

ASAP is i nterc onnecte d with two Austin L ATA acce ss tandems owned by Sou thw e ste rn

B e ll T e le ph on e (S WB T) (G re e nw oo d a nd Ho me ste a d). I ts s wi tc h is loc a te d in 18 19 downtown Austin and ser vices a ll of i ts Austin L ATA operations. ASAP does not have a switch, end off ice, nor a point of interc onnection in e ither Kyle, Fe ntress or L ockhar t. For its pag ing se rvice , an L EC ca

n ch oo se the path by wh ic h to trans po rt the c a ll to ASA P’ s Aus tin sw itc h. Up on re c e ipt , ASA P tr ans mit s th e c a ll t o it s p a g ingte rm ina l, a lso loc a te d in Au sti n. Th e te rm ina l th e n tr ans mit s the call, via the internet, to a satellite service in Chicag o, I llinois , which then se nds a wire less signa l to pag ing te rminals, acc ording to the pag ing c ustomer’s fe e p l an wi t h ASAP. I SP calls are transmitted to ASAP’s switch in A u stin over landline interc onnection trunks betwe en SWBT and ASA P. Whe n ASA P’ s swit c h re c e ive s th e c a ll, ASA P r ou te s th e c a ll o ve r w ir e lin e c on ne c tio ns to th e I S P , wh o i s either loc ated at ASAP’s Austin swit ch pre mises or has fa cilities at the switch pr e mis e s to tr ans po rt

the c a ll t o a

no the r s ite
. ASA P’ s c on tr a c t wi th the I SPs re qu ir e s a ll c a ll tra ff ic to terminate at ASAP’s Austin swit ch.

Ce ntu ry Te l is a n I L EC i n Sa

n M arc os and

ha s a po int of int e rc on ne c tio n th e re wi th SWB T. Whe n a Ce ntu

ry Te l c us tom e r c a lls an ASA P c us tom e r, Ce ntu ry Te l r ou te s th e c a ll f

ro m it sCenturyTel claims that it wa s unawa re that San Marc os I SPs wer e us i n g telephone 20 numbers assig ned to ASAP until i t rec eived a call fr om San Marcos I nterne t complaining that it was experiencingbusy

calls fr om its di al-up c ustomers. ASAP’s operations manag er c lai m s t h at he investigated th e complaints and re alized that San Marcos Interne t was using telephone numbe rs ass igned to a pagi ng carri er. D uri ng th is ti me, Ce nt ury Tel repo rt s tha t i t al so hadcal ls fro m S W BT that “a n ad d i t ional number of tr unks would have to be place d in service betwee n the San Marc os tandem an d

th e A u s ti nta

n d e m t o h an d le anin c r e a s e d f lo w o f tr a f f ic
. ” T h e o p e r a ti o n s ma

n ag er claims that CenturyTel did not have the appropr iate agr eeme nts in place with ASAP for ca rriag e of that level of tra ffic.

Ac c or din g to C e ntu

ry Te l, A SAP c ou ld e sta

bl ish a po int of int e rc on ne c tio n w ith 21 Southwestern Bell Telephone Company in L ockhar

t, which would allow the c alls to be completed over EL CS t runks. CenturyTel’s trunks used to r oute Austin calls ar e toll trunks. 16 end off ice to ASAP’s Austin tandem over SW BT’ s intraL ATA toll tru n k s . I nitially , CenturyTel routed these calls to A SAP’s Austin tandem toll-free on a temporar y basis pending the neg otiation of ag ree ments reg ardingthose ca lls. AS AP re fused to ente r into any toll-free ag ree ment, and, conseque ntly , CenturyTel beg an to cha rg e its own San Marc os customers a toll when they called 20 ASAP’s NXX. This re quired c ustomers to dial the 1+ ten dig it phone number if they wished to place
a ca ll from CenturyTel’s San Mar cos switch to AS AP’s exchang e. CenturyTel claims that it cannot route c alls from i ts switch to ASAP’s exchang e by using the EL CS t runks, beca use ASAP’s switch 21 is i n A u s t i n . A c c o r d i n g t o C e n tu r y T e l , o n l y t h e t o l l t r

u n k s ar e d e s i g n e d t o c ar

r y t h e s e c a lls to ASAP’s Austin switch.

To preve nt CenturyTel from imposing this toll charg e on CenturyTel’s San Mar cos
c us tom e rs , A SAP fi le d a

c omp la int

wi th t he PUC , cla imi ngthat a ll c a lls fr om S an M arc os to i ts L oc kh art c us tom e rs are “ loc a l” purs ua nt t o th e EL CS. T he Ad

min ist rativ e L aw Jud g e (A L J) he ld a hea ring and issued a Proposa l for De cision (PFD) denying r elief to A SAP. The PUC issued a finalTh e PUC dis a g re e d with the AL J re g a rd ing jur isd ic tio na l issu e s tha t are no t r a ise d in thi s 22 a pp e a l. We wi ll r e vie w i n d e ta il r e le va nt p or tio ns of the or de r w he n w e a dd

re ss A SAP ’s a

pp e llate iss ue s. I n addition to this appe al, ASAP has filed a pe tition wit h the FCC, which r emains pending

23 at this tim e. 17 or de r, a do pti ng , f

or the mos t pa

rt , the AL J’s PF D. ASA P br ou g ht s uit in t he dis tr ic t c ourt

in T ra vis 22 County , which af

firmed the or der. This a

ppeal f ollowed. 23
DI SCU SSIO N ASAP presents eig ht issues on appea l. I n its first, second, and f ourth issues, ASAP contends that the district court err ed in af firming the PUC’s determination that the c alls in question
are tol l c a lls un de r C e ntu ry Te l’ s ta ri ff s and a pp lic a ble re g ulatio ns . A SAP ur g e s in ste a d th a t c a lls to its NXXs should be cate g orized as EL CS l ocal c alls and that its Austin switch is not t he te rm inatio n p oin t of

the c a lls . In it s f

if th iss ue, ASA P c on te nd s th a t th e dis tr ic t c ourt e rr e d in aff irming that Century Tel’s a cti ons were not anticompetitive in violation of PURA sections 52.108(3), 55.003( c), 55.005 a nd 55.006
. I n i t s seventh a nd eig hth issues, ASAP arg ues that the dis tr ic t c ourt

e rr e d in a ff

ir min g the c a te g or iza tio n of ASA P’ s I SP se rv ic e s. ASA P ur g e s th a t it s I SP service is “ incidental” to its CMRS service and that it thus does not have to reg ister its I SP s ervic e wi th t he PUC . F ina lly , in

its thi rd and si x th is su es, ASA P argue s th a t th e dis tr ic t c ourt e rr e d in aff irming that Century Tel was not in violation of fede ral tele communications law re g ardingthe rig ht to interconne ction and the r ight to loca l dialing pa rity
.18

Stand ard of review

Be cause m an y

of ASAP’s issues conce rn fa ctual dete rminations made by the PUC and re viewed by

the trial cour

t, we re view them under the s ubstantial-evidenc e standa rd. See T e x. Ut il. Cod e Ann. § 15 .0 01 (We st 1 99 8) ; Reliant Energy, I nc. v. P ublic Util. Comm’n , 153 S.W .3d 174, 184 (Tex. App.—Austin 2004, no pet.). We presume that the Commi ssion’ s findings a re supported by

substantial evidence , and the c ontestant bea rs the burde n of provingotherwise. See Southwestern P u b

. S

erv. Co. v. P ublic Util. Comm’n , 9 62 S.W. 2d 20 7, 21 5 ( Te x. Ap p. —A us tin 1998, pet. denied)
. We w ill re verse and re mand the ca use to the ag ency

when substantial rig hts of the appel l an t h ave be en pre judiced by

an ag ency ’s finding s that are not rea sonably supported by substantial evidence consideringthe re liable evidenc e in the re cord a s a whol e. T ex . Go v’t Code Ann. § 2001.174(2)( E) (West 2000). How ever , we may not substit ute our judgme nt for that of the agency on the weig ht of the evide nce. Southwestern Pub. Serv. Co. , 9 6 2 S. W. 2 d a t 2 1 5. “Substantial evidenc e” doe s not mean a la rg e or considera

ble amount of evidenc e but such rele vant evidenc e as a

rea sonable mind might a cce pt as adequate to suppor t a conc lusion of fac t. Pierce v. Underwood , 4 87 U.S. 552 , 5 64 -6 5 ( 19 88 ); Lau de rd alev . D e pa rtm e nt o

f A gr ic ., 923 S.W .2d 834, 836 (Tex. App.—Austin 1996, no writ ). T h e t es t is not whether the a g ency made the c orre ct conclusion in our view but whe ther some r easona ble b as i s ex i sts in the recor d for the a g ency ’s action. Railroad Comm’n v. P end Ore ille Oil & Gas Co. , 8 17 S.W. 2d 36 , 4 1 ( Te x. 19 91 ). We m us t
u p h o l d an age n cy ’s fi n d i n g ev en i f t h e e v i d en ce ac tu al l y p re p o n d er at es aga i n s ti ts o l o n g as en o u gh
e vid e nc e su g g e sts the a g e nc y ’s de te rm inatio n w a s w ith in t he bo unds of

re a so na ble ne ss. So uth weste rn Pub. Serv. Co. , 962 S.W .2d at 215.19

ELCS I n its fir st, se cond, and fourth issues, ASAP a rg ues that the PUC err ed in foc using on the g e og ra

ph ic loc a tio n o f i ts s wi tc h. I ns te a d, ASA P argue s tha t, und e r PURA , a n E L CS c re a te s a new L EC for a g eog raphic are a and that the assigned NXX is the only rele vant fa ctor in dete rmining wh e the r a c a ll i s lo c a l f

or an E L CS. Accord ing ly , A SAP be lie ve s th a t th e ph y sic a l lo c a tio n o f i ts po int of int e rc on ne c tio n a

nd sw itc h a nd the PUC ’s c ha

ra c te ri zat ion

of its bu sin e ss a s b e ingpr ima ri ly I SP-based ar e irre levant. B eca use ca lls to i ts NXX must theref ore be local, ASAP further asser ts that CenteryTel is violating the or der that created the EL CS and that the PUC’s order, a llowing Ce nt uryTe l to imp os e lon g dis tanc e c ha rg e s o n c a lls ma de by

its c us tom e rs in S an M arc os to ASAP’s customers, per

mits C enturyTel to violate its own tariff
. Ge og ra phicloc ation o r a ssi

gne d N XX We begi n with ASAP’s first issue, whether the district court er red in a ffirming the PUC’s determination t h at an EL CS i s a spec ial arr ang ement that expands I L EC’s toll-free calling only for c alls that have a “g eog raphic corr elation” to the EL CS ar ea. ASAP has not challeng ed the ag ency rules but alleg es only

that the rules have bee n misapplied to the fac ts. I n construing a statute, “ our o bjective is to deter mine and g ive ef

fec t to the L eg islature’s intent.” National Liab. & Fire Ins. Co. v

. A l l en , 15 S.W .3d 525, 527 (Tex. 2000). Ordinar ily , we f

irst look at the statute’s plain and c ommon meaning
. Id
. at 52 7. “But if a statut e define s a term, a

court is bound to construe that term by its statutory

definition only .” Texas De p’t of Transp. v. Needham , 82 S.W .3d 314, 318 (Tex. 2002). Statutory construction is a que stion of law20

for the court to decide
. Id .; J oh ns on v . City of Fo rt W

or th , 7 7 4 S. W. 2 d

6 5 3 , 6 5 6 ( T e x. 1 9 8 9 )
. We
re vie w s uc h le g a l qu e sti on s de novo
. Needham , 82 S.W .3d at 318.

I n deter mining the sc ope of the PUC’s a u t h o ri t y , we must rea d PURA and the Te le c omm

un ic a tio ns Ac t as a who le to dis c ov e r the un de rl y ingle g isl ativ e int e nt. Sta te v . P ub lic Ut il. Comm’n , 8 83 S.W. 2d 19 0, 19 6 ( Te x. 19 94 ); Citi es of Corpus Chri sti v. Public Util. Comm’n , 2005 Tex. App. L EXI S, at *21-22 (Tex. App.—Austin, Sept. 23, 2005, pet. filed). We g ive weig ht to how the PUC interprets its own power s, but only if that interpre tation is reasona ble and not inconsistent with the statute. Con tin e nta l Ca s. Co
. v. Downs , 8 1 S. W.3 d 8 03 , 8 07 (T e x. 20 02 ); Citi es of Corpus Chr ist i , 2005 Tex. App. L EXI S, at *22. T h e le g is latu r e in te n d s to g iv e ana g e n c y , c r e a te d to c e n tr a li ze
e xpe rt ise in a

c e rt a in r e g ulator

y are a , a larg e de g re e of

la tit ud e in the me tho ds it us e s to a c c omp lis h its reg ulatory

function. State v. Public Util. Comm’n , 883 S.W .2d 190, 197 (Tex. 1994); Texas Mun. Power Agenc

y v. Public Util. Comm’n , 150 S.W .3d 579, 586 (Tex. App.—Austin 2004, pet. g rante d). Nonethele ss, an ag ency

may not, in the guise of implied powers, e x erc ise what is ef fec t ively a new power , or a power contra ry to statute, on the theory that such exercise is e x pedient for t h e a gen cy ’s purpose, City of Au s t i n v. S o u thwestern Bell Tel. Co. , 9 2 S. W.3 d 4 34 , 4 41 (T e x. 20 02 ), no r m a y it
c on tr a ve ne sp e c if

ic statut or y langua g e , r

un c ounte r t o th e g e ne ra l ob

je c tiv e s of

the statut e , o r i mpo se additional burdens, c onditions, or restrictions in excess of or inconsist ent wit h the re levant statutory pr ov isi on s. State v. Publi c Ut i l

. Comm’n , 1 31 S.W. 3d 31 4, 32 1 ( Te x. Ap p. —A us tin 20 04 , p e t. denied)
. We construe the te x t of an administrative rule under the same princ iples as if it were a statute. Conti nen ta l Cas . Co . v . R iv e ra , 1 24 S.W. 3d 70 5, 70 9- 10 (T e x. Ap p. —A us tin 20 03 , p e t.See also Buddy Gregg Motor Homes, I

nc. v. M otor Vehicle Bd. , 156 S.W .3d 91, 98-99 n.5 24 (Tex. App.—Austin 2004, pet. denied) ( de novo construction of statutes unde r substantial-evide nce revie w should g ive due de fer ence to ag ency ’s interpre tation of its own statutes). 21 denied) . We bear

in mind that an administrative ag ency has the powe r to interpre t its own rule s, and its int erpr etation is entitled to gr eat we ight a nd defe renc e. Id . at 710. The ag ency ’s construc tion of its rule is controlling unless it is pl ainly err oneous or inconsistent. Id
. We do no t c on sid e r t he me ri ts 24 of the PUC’s rules on a

case -by -ca se basis. City of Garland v. P u b l i c Ut i l

. C o mm’n of T ex. , 165 S.W .3d 814, 819 (Tex. App.—Austin 2005, p et
. filed). Rathe r, we consider w hether the rule: (1) contravenes spe cific statutory lang uag e; (2) r

uns counter to the gene ral objectives of t he st atute; or (3) imposes additional burdens, conditions, or restrictions in excess of or inconsistent with the rele vant statutory provisions. Public Util. Comm’n , 131 S.W .3d at 321. I n PURA, the leg islature g ave the PUC authority to de f in e the meaning s and boundar ies of the EL CS. Tex. Util. Code Ann. § 55.041. The PUC m ay “expand a toll-fr ee loc al ca lling ar ea that is n o t in a me tr o p o li ta

n e xc h an g e b u t is in a lo c a l c a ll in g ar e a th a t is c o n ti g u o u s to a metropolitan exchang e that the [PU C ] d et er m i n es has a c ommunity of intere st with the ex chang e for which a petition is filed.” Id . § 55 .0 42 . A c omm un ity may pe tit ion the PUC fo r e xpans ion

of the L EC’ s to llf r e e l o c a l

- c a l l i n g ar e a i f t h e p e t i t i o n i n g e x c h an g e ’ s c e n t r a l s w i t c h i n g o f f i c e i s l o c a t e d

w i t h i nt w e n t ytwo miles of the ce ntral switching office of t he exchang e re quested for expanded local c alling se rvice or if it is “not more than 50 miles from the centr al office of the exchang e re quested for expanded local calling service and the e x chang es shar e a c ommunity of intere st.” Id . § 55.045.Ex chang e ar ea” is defined a s: “[t] he geog raphic territory delineate d as an exchang e ar ea 25 by of fi c ia l c omm iss ion

bo un da ry ma ps . A n e xch ang e are a

us ua lly e mbr a c e s a

c ity or tow n a nd its environs. The re is usually a uniform se t of cha

rg es for telecommunications s er v i ce within the exchang e ar ea.” 16 Tex. Admin. C ode § 26.5(79) (West 2005). 22 The PUC thus defined the E L CS as a “ two-way toll-free local ca lling ser vice pr ovided by an I L EC to t el ephone service subscriber s.” 16 Tex. Admin. Code §§ 26.219(b)(1) , .221(b)( 3) (2005). Mirroring the s tatute, t he P UC rules mandate t hat t he requested e x chang e ar eas have c entra l 25 switching office s wi thin twenty -two miles from one a nother, or that they

share a “c ommunity

of int e re st, ” wh ic h is satis fi e d wh e re the “ pe tit ion ing and pe tit ion e d e xch ang e s have a rel ations hip beca use of sc hools, hospitals , l ocal g overnme nts, or business cente rs, or that the pe titioni ng or petit i o n ed exchang es have other re lationships that make the unava ilability of EL CS a hardship on residents of the are a.” Id . § § 2 6. 21 9( d) (3 )( C) , (d )(3 )(D) (2 00 5) ; se e als o Tex. Util . Code Ann. § 55.046(b), ( c); 16 Te x . Admin Code § 26.219(d)(3) (A) ( EL CS st atus n o t av ail able whe n centr al switching office s of petitioning a nd petitioned exchang e ar e more than fifty miles apart)
. B o t h P U RA an d

t h e P U C r

u l e s f o c u s o ng e o g r a

p h i c a l d a t a

w h e nc r e a t i n g anE L CS. EL CS r e ta il r a tin g re qu ir e s a g e og ra ph ic a l ne xus o f t

we nty -t wo mil e s, or

a c omm un ity of int e re st i f the g e og ra

ph ic a l ne xus is no t mo re tha n f if ty mil e s, be tw e e n th e c a lle d and cal li ng pa rt ie s. Historically , the PUC would use the NXX to de termine whe ther the c alls terminate within the EL CS’s g eog raphic al re quirements. Althoug h the PUC no longe r requires a g eog raphic terminal point for a n NX X, wh e n a carr ie r lik e ASA P a llo ws its c us tom e rs to c ho os e the ir NX Xs irrespective of

g e og ra ph ic location, i t is a reasonable interpre tation of t he st atutes t o require a geog raphic al nexus between theI n fac t, in assig ning an Austin switch to the NXXs at issue here , it is AS AP’s actions, and 26 not those of the PUC, that stand in conflict with traditional g eog raphic number a ssignments.

We n ote a g a in t

hat, a lth ou g h A SAP ne g oti a te d com pen satio n f or c a lls a sso c ia te d w ith 27 other NX Xs, it has declined to do so for those at issue in this case. ASAP further a

rg ues that the re sult here unf airly bars CMRS providers from be nefitting 28 from the c reation of an EL CS. W e note, howe ver, that the PUC did not make such a ruling and that ASA P c ou ld r e me dy

the pr ob le m by e sta

bli sh ing a g e og ra

ph ic pr e se nc e in t

he loc a tio ns a t is su e in thi s c a se by arr ang ing to re c e ive c a lls a t th e loc a l r a te c e nte r o r t he tand e m sw itc h s e rv ingthe rate cente r. 23 customer and the NXX. We e mphasize that the defa ult r ule in this case, without the creation of t he 26 ELC S , would be that the c alls in ques t i o n would be toll calls. Only with the establishment of the EL CS, a creature of T exas state law conc erningintrastate c ommunications, could the ca lls be made toll free. Par

ticularly , calls fr om San Marc os to one of the NXX e x chang es in this case c ould only be toll fr ee if made under the terms of the statute and the PUC rules. Despite ASAP’s ar g uments to the contra ry , there is n o n e w

“ Sa n Marc os-Kyle-F entre ss-L ockhar tlocal ca lling ar ea,” only

a new ly cre ated EL CS, for which the e x isting L EC must be compensated in some manner for the costs loss of reve nue associate d with the cre ation of the EL CS. See Tex. Util . Code Ann. § 55.048. 27

Th e PUC ’s c on str

uc tio n o f P UR

A a nd PUC ru le s c on tr ols u

n l e s s it i s p la inl y

e rr on e ou s. See Riv e ra , 1 2 4 S. W. 3 d a t 7 1 0
. We f

in d n o r e a s o nto b e li e v e th at t h e PU C’ s r e qu ir e me n t of g eog raphic proxi mity

in the EL CS is err oneous. I nstead, we g ive def ere nce to the PUC’s a

pproac h 28 to t his dy namic and

sh if tin g are a of te le c omm

un ic a tio ns pr a c tic e . A c c or din g ly , b e c a us e the EL CS require s a geog raphic al nex us, EL CS elig ibilit y may not be deter

mined solely

by the assig ned NXX in this circumstance . We overrule ASAP’s first issue.24

Subs tanti al-ev idence re view

I n its second issue, A SAP asserts that the PUC’s order incorre ctly

held that CenturyTel did not violate the PUC’s orders e stablishing the EL CS betwe en San Marc os and Kyle, Fe ntress, and L ockhar t. We construe this argument to consist of a substantial-evide nce c halleng e to the PUC’s conclusion that ca lls from Century Tel’s San Mar cos customer s to A SAP’s pa g ing and I SP custom ers
wer e toll calls and not EL CS t oll-fre e.

ASAP concede s that it has neither a s wi t ch nor a

point of interconne ction within the EL CS. W hen a c all is made fr om a CenturyTel customer to a n ASAP customer, whethe r to a pa g ing customer or

to an I SP, t he ca ll must be route d outside of the EL CS to AS AP ’s sw itc h— loc a te d in Austin—before it can be tr ansfe rre d to the end-c aller. Aside from its pa g ing se rvice s, the rec ord shows that the ma

jor ity of c a lls to ASA P’ s c us tom e rs we re dir e c te d to ASA P’ s A us tin I SP f a c ili tie s. On ly one identified I SP customer, San Marc os I nterne t, ha s office s in San Marcos. H oweve r, San Mar cos I nterne t rec eives its calls t hroug h ASAP’s tandem in Austin, and then it arr ang es for

the ca ll to reac h its fa c ili tie s in

San M arc os . I n ad dit ion , A SAP ’s c on tr a c ts w ithits I SP c us tom e rs pr ov ide that c a lls terminate at ASAP’s switch in Austin. We f ind the re to be substantial e vidence that the ca lls at issue in this case ar e not entitled to local EL CS rating. We over rule ASAP’s sec ond issue.
Centu ryTel’

s tariff We have de termined that c alls to ASAP’s Austin s witch and point of interconne ction
are no t ent itled

to E L CS r e ta il r a tin g be c a us e the y are loc a te d o uts ide of

the EL CS g e og ra

ph ic proxi mity
. We now t urn t o ASAP’s fourth is sue, whether C enturyTel vi olated it s own tariff —whichASAP also points out that, in its bills to customers, Century Tel i dentifies ca lls to AS AP 29 numbers with L ockhar

t NXXs as being calls to L ockhar t. We are not bound by

CenturyTel’s billing ide nti fi e rs wh e n c on sid e ri ngthe le g a l qu e sti on be fo re us . 25 p er m i t s C en tu ry T el cu s t o m er s t o m ak e u n l i m i t edca l l s wi t h i nt h e “ l o ca l ” e x ch an ge— b y i mp o s i n g a to ll on Century

Tel customer s for c alls to ASAP’s NXXs. I n particula r, ASAP argues that CenturyTel’s tariff define s an exchang e ar ea a s the
unit establish edb y

[ C en tu ry T el ] fo r t h e a d m i n i s t ra t i o nof telec ommunications service in a s p e c if

ie d ar e a f o r w h ic h a s e p ar a te lo c a l r a te s c h e d u le is p r o v ide d. The a rea usually embra ces a

city , town, or villag e and its environs. I t consists of one or more centr al offic es, tog ether with associated plant fac iliti es used in fur nishing telecommincations services in that ar ea.
ASA P th e n n ote s th a t, a ft e r t he e sta bli sh me nt o f t

he San M arc os -K

y le -F e ntr e ss- L oc kh art

EL CS, Centu r y T e l h a s c o n n e c te d c a ll s w it h o u t im p o s in g a to ll w it

h SW B T an d V e r iz o n o u ts id e of San Marc os but within t he EL CS. I t concludes that failing to charge a t o l l for c alls to SW BT a nd Ver izon custom ers in Ky le, Fe ntress, and L ockhar t violates th e t er ms of CenturyTel’s tar iff. Otherw ise, ASAP insis ts, the onl y means by which Century

Tel ca n act c onsistently

with its t ariff

and not char g e tolls on calls t o S W BT an d Ve ri zon customers is to consider that the inclusion of an
a dd iti on a l $. 39 c ha

rg e in Ce ntu

ry Te l’ s tar if f to co mpe ns a te it fo r the c os ts as so c ia te d w iththe EL SC expands the definition of “e x chang e” in the tariff itself. That expansion must , by nece ssity , include
c a lls to A SAP ’s c us tom e rs . 29

Be cause we ha

ve alr eady

decide d that calls to AS AP’s Austin switch and point of int e rc on ne c tio n d o n ot q

ua lif y fo r E L CS, C e ntu

ry Te l ha s n ot v iol a te d it s ta

ri ff wh e n it

c on ne c ts c a lls26

without impos ing a

toll from its customers to SWBT and Ve rizon customers in Ky le, Fe ntress, and L oc kh art . T he re c or d e sta bli sh e s tha t Cen tur

y Te l did not

tr e a t c a lls to A SAP ’s c us tom e rs dif fe re ntl y from ca lls to Verizon or SW BT c ustomers. Both Ve rizon and S W BT h av e arr ang ed phy sical network f acilities and points of interc onn ection within the EL CS t o car ry calls direc tly

from San Mar cos to Ky le, Fent res s, a n d Lo c k h art . AS AP has no t. Th erefo re, c all s t o Ve ri z on andS W BT customers a

re loc al ca lls under the EL CS, and calls to ASAP customers are not. Ac cording ly , we ag ree with the PUC’s deter mination that CenturyTel di d not violate i ts tariffs. We over rule ASAP’s fourth issue.
P UR A’ s a nt i- c om pe ti ti ve pr ov isi ons I n its fifth issue, ASAP contends that the PUC and the district co u rt er red by assuming that the calls t o its customers were not loca l and by concludingthat CenturyTel’s a ctions
wer e not anticompetitive or discriminatory
. Acc ording to A SAP, these calls are local and, f or that
re a so n, Ce ntu

ry Te l a c te d a

nti c omp e tit ive ly

and dis c ri min a tor ily

by no t c ha rg inga tol l on c a lls to
c us tom e rs se rv e d b y

wi re lin e I L ECs in K

y le , F e ntr e ss, and

L oc kh art wh ile imp os inga tol l on c a lls to ASAP’s pag ing a

nd I SP custom ers. See Tex. Util . Code Ann. §§ 52.108(3) (West Supp. 2005), 55 .0 03 (c), .0 05, . 00 6 ( Wes t 19 98 ). We h a ve a lr e a dy de c ide d th a t th e PUC did no t e rr in char acte rizing the c alls to ASAP as non-local bec ause the y termin at e at ASAP’s Austin switch, outside of the EL CS. I n fac t, Century Tel does not tre at ca lls to AS AP customers any differ ently than calls to Ver izon and SW BT customers. Those companies have e stablished interconne ction fac iliti es in t he g e og ra ph ic are a to c arr y EL CS c a lls fr om San Ma rc os to Kyle , F e ntr e ss, and L oc kh art . Ca lls27

to ASAP customers are alway s routed to Austin. ASAP could establish the phy sical fac iliti es in the
are a or it c ould e nter into billing ag ree ments for those c alls, but it has failed to do so. We theref ore find that substantial e vidence to suppor t the PUC’s de termination in that Century Tel’s imposition of tol ls o n c a lls to A SAP ’s c us tom e rs wa s no t ant icom pe tit ive or

dis c ri min a tor

y . We ov e rr

ule ASAP’s fifth issue.
St at e r e gul at ion of A SAP ’s ISP servic es

I n it s se ve nth and e ig hth iss ue s, ASA P c on te nd s that it s I SP se rv ic e is “ inc ide nta l” to its C MRS s ervic e and, a ccor dingly , cannot be regulated by Texas or the PUC because states may not r eg ulate purely

CMRS providers. Se e id . § 51.003(5) ( West 1998). ASAP further c ontends that the PUC cann o t as s er t jurisdiction over it beca use ASAP “provides only interstate se rvice s,” as opposed to both interstate a nd intrastate se rvice s. ASAP concludes that, because the PUC does not have jurisdiction over it, the P UC may not require it to reg ister for its I SP s ervic es as a “basic local telecommunications service” as def ined in utilit ies code section 51.002(1)
. Incidental services

Spe c if ic to i ts s e ve nth

iss ue , A SAP argue s th at, if a te le c omm

un ic a tio ns se rv ic e is “incidenta l” to a CMRS service, a state may not regulate that “incidental” service. See 47 U.S.C.A. § 332 (c )( 3) (We st 200 1)
. B e c a us e ASA P be lie ve s tha t it s I SP se rv ic e is “ inc ide nta l” to i ts C MRS
se rv ic e , it ass ert s th a t th e dis tr ic t c ourt e rr e d in a ff ir min g the PUC ’s de te rm inatio n th a t it c ou ld require ASAP to reg ister those ser vices. See Tex. Util . Code Ann. § 52.103 (West 1998).“ I nc ide nta l” c omm un ic a tio ns se rv ic e s h a ve no t bee n e xplic itl y de fi ne d b y

the PUC
. 30 Ho we ve r, fe de ra l a

uth or ity g ra nts the ri g ht to us e mob ile statio ns in pr ov idi nginc ide nta l se rv ic e s: Carrie rs authorized to provide other communications service s incidental to the primary public mobile service for whic h the authorizations were issued, pr ov ide d th a t: (a) The c ost s an d ch arge s of subscribe rs who do not wish to use incidental se rv ic e s are no t in c re a se d a s a re su lt of pr ov isi on of inc ide nta l se rv ic e s to oth e r s ub sc ri be rs ; (b ) Th e qu ality

of the pr ima

ry pu bli c mob ile se rv ic e do e s n ot m a te ri a lly d et er iorate a s a re sult of provision of incidental ser vices, a nd neither g r o w t h n o r a v a i l a

b i l i t y o f t h e p r i m ar

y p u b l i c m o b i l e s e rv ic e is signific antly

diminis hed as a

result of provision of i ncidental services; a nd (c) The provision of the inc idental servic es is not inconsistent with the Communi cations Ac t of 1934, as amen d ed, or with FCC rules and policies. 47 C.F.R. § 22.323.

Al tho ug h th e F CC h a s n ot d e fi ne d th e te rm , “ inc ide nta l” as def ine d b y the Me rr iamWebster Dictionar

y , means “ occur

ring mere ly

by chanc e o r wi thout intention or calculation.” Merr iam-Webster Dic tionary Online, av ail

ab le at www.m-w .com/dictionary (Mar ch 5, 2006). 28 State authority

is lim ited by

the fe dera l act, which states that “no State or loc al g overnme nt sha ll ha

ve any authority to r eg ulate the entry of or the r ates c harg ed by any commerc ial mob ile se rv ic e or

any pr ivate mob ile s e rv ic e , e xce pt t hat th is p ara g ra

phsh a ll n ot p ro hib it a

State from re g ulating the other ter ms and conditions of commerc ial m o b i l e s ervic es.” 47 U .S.C.A. § 3 32 (c )( 3) (We st 2 00 1) . T he PUC de c ide d tha t A SAP ’s se rv ic e to I SPs w a s n ot “ inc ide nta l” to i ts CMRS se rv ic e s and , th e re fo re , th a t it c ou ld r e qu ir e ASA P to re g ist e r i ts I SP se rv ic e s. 30 I n this c a se , the re c or d sho ws that none of the Ky le or F e ntr e ss N XX s, and

on ly thi rt y of the L ockhar

t N XXs, wer e assig ned to ASAP’s pag ing c ustomers (CMRS service). T here fore , the29

re ma ini ngNX Xs in L oc kh art , an d a ll o f t ho se in K y le and F e ntr e ss, we re a ssi g ne d to ASA P’ s I SP customers (non- CMRS service ). I n a d d it io n , A SA P p r o v id es its I SP custom ers a wireline c onnection so that they

can a cce ss the I nterne t. As the AL J observe d, the rec ord establishes that the only service that A SAP pr ov ide s I SPs i s w ir e lin e tr ans mis sio ns of c a lls so that th e I SPs’ c us tom e rs c an a c c e ss the interne t. This service doe s not involve ASAP’s CMRS ser vice in a ny way . I nstead, while not disputing t he evidence in this case , ASAP would have us consider its unrelated use of the interne t to t ra ns mit its pa g ingc a lls to i ts s a te lli te se rv ic e in C hicag o, whi ch the n tr ans mit s th e sig na l to pag ing te rminals. The AL J and the PUC reje cted ASAP’s conte ntion that the Chicag o-bound internet messa g e, which mig ht be proper ly char acte rized as internet use inc idental to CMRS service , could be attributed broadly to ASAP’s transmission of calls to Austin to its I SP customers. W e find that r e c or d c on ta ins su

bs tanti a l e vid e nc e to su pp ort the PUC ’s de te rm inatio n. B e c a us e the I SP service s are not incidental to ASAP’s CMR S services, the State may require ASAP to reg ister that service . We overrule ASAP’s seventh issue.
Interstat e serv ices I n it s e ig hth

iss ue , A SAP argue s that the PUC c ann ot a c c e pt jur isd ic tio n o ve r t he I SPbo un d c a lls be c a

us e tho se c a lls are int e rs ta te and thu s ma y be re gulate d o nly

by the F CC. State law is pre- empted under the Supremac y

Cl a u s e o f th e Un it e d

St a te s Constit ution in three c ircumstance s. See U. S. Co ns t. ar t. VI
. F ir st, Con g re ss c an d e fi ne e xplic itl y the e xten t to which its ena ct m en t s p re- empt state law. See Shaw v . Delta Air Lines, Inc. , 463 U.S. 85, 95-98 (1 98 3) . Pr e -e mpt ion

fu nd a me nta lly

is a que sti on of

c on g re ssi on a l in te nt, se e Sc hn e ide win d v . A NR Pipeline Co. , 4 8 5 U. S
. 2 9 3 , 2 9 9 (1 9 8 8 ), an d “w h en C o n gre s s h as m ad e i t s i n t en tkn o wn t h ro u gh30

expli cit statutory

lang uag e, the c ourts’ task is an e asy one.” English v. Gene ral Elec. Co. , 469 U. S. 72, 79 (1990). In this case , Congr ess has made its int ent clea r that the F CC and state commissions sh are a uth or ity , a

nd so we wi ll n ot f

oll owthi s p ro ngof

the ana ly sis
. Second, in the abse nce of expli cit statutory lang uag e, state la w is pre- empted whe re i tr e g u l a t e s c o n d

u c ti na f i e l d t h a t C o n g r e s s i n t e n d e d t h e f e d e r a l g o v e r

n m e n tt o o c c u

p y e x c l u s i v e l y. Id . Such an intent may

be infe rre d from a “ scheme of fe dera l regulation . .
. so perva sive as t o make
rea sonable the infe renc e that Cong ress lef t no room for the States to supplement it,” or w here an ac t of Con g re ss “ tou c he s a fi e ld in wh ic h the fe de ra l int e re st is so do min ant that the fe de ra l sy ste m w ill be assumed to pr eclude enfor ceme nt of state laws on the same subjec t.” Rice v. Santa F e Elev ator Corp. , 331 U.S. 218, 230 (1947). “Wher e . . . the field which congr ess i s said to have pr e-e mpted” includes ar eas tha

th av e “ b ee nt ra d i t i o n al l y

o cc u p i edb y t h e S t at es , ” c o n gre s s i o n al i n t en tt o s u perse de state laws must be “‘c lear and manife st.’” Jones v . Rath Packing Co. , 430 U.S. 519, 525 (1977), (q u o t i n g Rice , 331 U.S., at 230). Ag ain, the federa l statutory lang uag e is clea

r that the states sha

re
re gu l at o ry

au t h o ri t y , an d

s o we wi l l n o tap p l y

t h e s ec o n d

p ro n g. Finally , state law is pr e-e mpted to the extent that it a ctually conflicts with fe dera l law. Thus , th e Court

ha s fo un d pr e -e mpt ion wh e re it is i mpo ssi ble fo r a pr ivate pa

rt y to c omp ly

wi th b oth state and f

eder al re quirements, see , e. g. , Florida Lime & Avoc ado Growers, Inc. v . Paul , 3 73 U. S. 132, 142-143 (1963) , or whe re state law “stands as an obstacle to the acc omplishm ent and e x ecution of the full purpose s and objec tives of Cong ress.” Hi ne s v . D av ido witz , 312 U.S. 52, 67 (1 9 4 1 ). I n 1 99 9, the F CC c on sid e re d is su e s in vo lvi ngre c ipr oc a l c omp e ns a tio n th a t L ECs wanted to rec over from I SPs for c ommunications delivered to I SPs
. Initial Order , 14 FCC Rcd at31

36 89 -9 0. I n c on sid e ri ngits ow n ju ri sd ic tio n to c on sid e r t

he iss ue , th e F CC h a d to de te rm ine if I SP
c a lls we re int

ra state (a nd thu s o uts ide of

the F CC’ s juri sd ic tio n) or int e rs ta te (a nd thu s w ith in i ts jurisdiction). Id
. at 3696-97. The FCC thus turned to the nature of the tra nsmissi on of information at issue in conductinginternet business and de cided I SP calls terminated at the we bs i t e being
acc essed, not at the point at whic h the ca ll is receive d by t h e I S P ; t h u s , I SP calls could not be
c h ar a c te r iz e d a s “ lo c a l” calls. Se e id
. at 3697-98. As a result, the F CC found that I SP calls were
e xe mp t f r o m r e c ip r o c a l c o mp e n s a ti o n r u le s. Se e id
. Notin g that it ha d n ot y e t a do pte d a

ru le g overningcompensation for this ty pe of c ommunication, se e id . at 3703, howeve r, the F CC held that L ECs c ou ld r e a c h th e ir

ow n in te ri m a g re e me nts fo r t he re c ov e ry

of c osts, to b e e nf

or c e d b y state
c omm iss ion s, or

that st a te c omm iss ion s c ou ld r e g ulate thi s are a un til the fo rm a l ado pti on of an F CC rule. Id . at 37 03 -0 5. Th e D. C. Cir c uit va c a te d the ru lin g , fi nd ing that the F CC ha d no t a de qu a te ly explained its reasoning for de termining that I SP calls we re not “ local” calls. Bell Atl. Tel. Cos. v. Fede ral Communications Comm’n , 206 F.3d 1, 9 ( D.C. Cir. 2000).

On re mand, the F CC aga in concluded that such traf fic is not s u b

j ec t to rec iproca l compensation. Implem entation of the Local Competition Provisions in the Telecomm s. Act of 1996 , 16 FCC Rcd 9151, 9152-53 (2001) ( Remand O rder). Ag ain, t h e centr al issue was r ecipr ocal compensation—when I L ECs transporte d calls t o I SPs related t o CL ECs, the I L ECs arg ued that the call d i d n o t t er m i n ate on a CL EC line but somewhere on the interne t itself, thus obviating the
rec iprocra l compensation re quirements. Id . at 9159. CL ECs instea d argued that the ca lls terminated at the I SP, t hus making them local ca ll s for whic h the CL ECs would be entitled to compensation. Id
.32 Th e F CC found that, u

nd e r s e c tio n 2 51 (g ) o f t

he Te le c omm

un ic a tio ns Ac t, C on g re ss “ca rved out” I SP service s from the rec iproca l compensation mandates of sec tion 251(b)(5). Id . at 9152-53. The F CC abandoned its previous analy sis that focuse d the “ter mination” of the c all and instead adopte d a position focusing on the inter/intrastate nature of the c ommunication, concluding that “tra ffic bound f

or information service pr oviders (inc luding Interne t acc ess traf fic) of ten has a n interst at e co mponent.” Id . at 9175. B eca use “the interstate a

nd intrastate c omponents cannot be reliably separ ated . . . I SP t raf fic is prope rly classified as interstate, a nd it falls under the Commi ssion’s” jurisdiction to re g ulate cha rg es. Id . In doing so, the Commi ssion no longer found i t n ec es sary

to define at what point an interne t-bound ca ll “terminates.” Id . at 9177. I nstead, the FCC focuse d on the nature of the “ communication”:
Mo st Inte rnet-b ound

tr a ff ic tr a ve lin g be tw e e n a

L EC’ s su

bs c ri be r a

nd an I SP is indisputably

interstate in natur e whe n viewed on a n end-to-e nd basis. Users on the I nterne t a r e intera cting with a g lobal network of connec ted computer s. The consume r contra cts with an I SP to provide acce ss to the I nterne t. Ty pically , when the c ustomer wi sh e s to int e ra c t wi th a

pe rs on , c on te nt, or

c omp ute r, the c us tom e r’ s c omp ute r c a lls a numbe r p ro vid e d b y

the I S P th at is assi g ne d to an I SP mo de m ba nk . T he I SP modem answe rs the ca ll (the familiar sque lch of computers handshaking ). The user ini tiate s a c omm un ic a tio n o ve r t

he I nte rn e t by tr ans mit tin g a c omm and
. I n th e c a se of the we b, the user r equests a w ebpag e. This re quest may be sent to the c omputer that hosts the webpag e. I n rea l time, the w eb host may reque st that differe nt pieces of tha t w e bp a g e , w hic h c an be sto re d on dif fe re nt se rv e rs a c ro ss the I nte rn e t, b e se nt, also in rea l time, to the user. For example, on a sports pag e, only the format of the webpa g e may

be sto re d at t he host computer in Chica g o. The a dvertisement may come fro m a

c o mp u te r

in Ca li f o r n ia ( an d it ma y b e a d if f e r e n t a d v e rti s e me n t e ach time the pag e is reque ste d ), t h e s ports score s may come f rom a c omputer in New York City , and a p ar t of the we bpag e that mea sures Interne t traff ic and r ecor ds the user’ s visit m ay

involve a computer in Virg inia. I f the user decide s to buy

something from this webpa g e, say a sports jersey , the user c licks on the purcha se pag e and ma y be tra nsfer red to a secur e web serve r in Ma ryland for the transac tion. A single w eb a dd re ss f re qu e ntl y re su lts in t

he re tur n o f i nf or ma tio n f ro m mu lti ple co mp ut ers inWe n ote , h ow e ve r, that e a c h c arr ie r u lti ma te ly re c e ive s c omp e ns a tio n f or its se rv ic e s. 31 Whe the r u

nd e r a re c ipr oc a l c omp e ns a tio n o r b ill and ke e p s y ste m, e a c h c arr ie r i s a ble to r e c ov e r a ll c os ts a sso c ia te d w ithpr ov idi ngits se rv ic e s. 33 various locations globally . These dif fer ent pi ece s of t he we bpag e will be sent to the u s e r o v e r d i f f e r e n tn e t w o r

k p a t h s an d

a s s e m b l e d

o nt h e u s e r ’ s d i s p l ay.
Id . at 9178. When “end- to-end” communications involving ISP s cr o s s state lines, the F CC thus cate g orized the link that the L EC provides to connec t the end-use r with an e nhance d service provider as i nterstate acc ess s ervic e. Id
. I SPs only technica lly modify and translate c ommunication, so that their customer s will be able to inter act with c omputers acr oss the g lobal internet; acc ording to the FCC, they

are not the focus of

the communication. Id . at 9180. The F CC then ad o pted a “bill-and-ke ep” c ompensation sy stem, where by eac h car

rier r ecove rs its costs from its own end-use rs, in the place of re ciproc al compensation ag ree ments. Id . at 9154-57. 31

Upon re view of the Remand O rder , the D.C. Circuit a g ain rema nded the ca se, finding
err or in the F CC’s interpretation of se ctions 251(b)(5) and 251(g ), which f ormed t h e basis for the FCC’s orde r. W

orldCom, Inc. v. Fe deral Communications Comm’n , 288 F.3d 429, 430, 4 3 2 -34 (D .C. Cir . 2 00 2) . T he c ourt did no t vac a te the Re mand Or de r, ho we ve r, fi nd ingthat “ the re is p la inl y a non-trivial likelihood that the Commi ssion ha s authority to e lect such a sy stem [of compensation].” Id . at 43 4. Th e F CC p ro c e e din g s are sti ll pe nd ing on re mand and the Or de r o n Re mand re ma ins in eff ect. See P acific Bell v. Pac -W est Telecom m, Inc

. , 325 F.3d 1114, 1122- 1123 (9th Cir. 2002). The situation at issue in this case is fundame ntally differ ent from the one considere d by the FCC in its reciproc al compensation decisions. I n the rec iproca l c ompensation problem, the FCC has bee n attempting to solve in w hat manner L ECs c an rec over their costs, but it is clear they34

will be rec overe d in some manner . I n this case, we have a simpler problem—the c alls at issue trave l over lines that under Te x as law a re toll ca lls. Century Tel ca nnot rec over its costs for tr ansporting tho se c a lls thr ou g h s uc h me c ha nis ms a s h a ve be e n p ro vid e d b y the EL CS st a tut e s b e c a

us e no EL CS inc lud e s Sa

n Marco s and Au sti n, and ASA P ha s r e fu se d to e nte r i nto int e rc on ne c tio n a g re e me nts to obviate the tec hnical proble ms here. I n this case, it does not matter w hether the termination point of the se c a lls is i n T e xas o r a ny oth e r l oc a tio n b ut in wha t man ne r t he c a lls are ph y sic a lly transporte d, which is throug h lines from San Mar cos t o Austin that require a toll. State regulation of the intrastate servic e, eve n if it affe cts interstate se rvice , is not preempted unless it thwar ts or impedes a v al i d fe dera l policy
. Se e En gli sh , 4 96 U. S. at 78 -7 9; Louisi ana Pub. Serv. Comm ’n v. Fede ral Communications Comm’n , 476 U.S. 355, 375 n.4 (1986). Be ca u s e our holding does not thw art or imp e de fe de ral po lic y

in t his are a , b ut c on c e rn s an e nti re ly Te xas p ro ble m, w e ov e rr ule ASAP’s eig hth issue.
F ederal r ights I

n i t s t h i r d an d s i x t h i s s u e s , A S A P c o mp l a i n s t h a t , b y p e r m i t t i n g C e n tu r

y T el t o ch ar ge a toll on calls t o ASAP’s NXXs, the PUC violated ASAP’s fe dera l interconne ction and loca l dialing pa ri ty ri g hts
. Interconnection

ASAP first arg ues that the PUC’s orde r denie s it int erc onnection and numbe ri ng
resour ce r ights a s a CMRS carrier . I n particula r, ASAP argues that charac terizing it s CMRS service35

as “te rminating ” at its Austin switch in effe ct treats ASAP as an end-use customer of the L EC and not as a c o-ca

rrier . We disag ree . Ac c or din g to t

he F CC, a pa g ingte rm ina l pe rf

or ms a te rm inatio n fu

nc tio n b e c a

us e it
rec eives c alls that orig inate on the L EC’s network a nd transmits the calls fr o m i t s terminal to the pag er of the called pa

rty
. In re TSR , 15 FCC Rcd at 11179. To per form this function, the ter minal first direc ts the pag e to an a ppropriate transmitter in the pag ing network, and then that transmitter d e li v e r s th e p a g e to th e r e c ip ie n t’ s p a g in g u n it. Id
. T h e t er minal and the networ k thus perfor

m
ro u t i n g o r s wi t ch i n g and

termination. Id . I n addition, Ty p e 2 i nterc onnections, such a s the ones ASAP employ s, are interconne ction options wh e r e th e CM RS p rovider ow ns the switch and pr ovides call orig ination and termination func tions. Id . at 11180.

Ac c or din g to t

he F CC, a c arr ie r’ s in te rc onne c tio n r ig hts c on c e rn ho w c arr ie rs mus t compensate each other for the transport and termination of ca lls. Id
. at 11184. They do not conce rn char g es which ma

y be prope rly

imposed on end user s. Id
. As a re s u l t , beca use of the ove rlap of F CC r e g ulatio ns , state re g ulatio ns , a nd the natur e of

the te le c omm

un ic a tio ns ind

us tr y , th e same c a ll may be viewed as a loca l call by the ca rrier s and a toll ca ll by

the end- user. Id
. Even if, in this case , the pa g ingc a lls are loc a l f or the purp os e of

c arr ie r- to- c arr ie r c omp e ns a tio n, the PUC did no t vi olate tho se int e rc on ne c tio n r ig hts by imp os inglon g -d ist ance to lls fo r t ho se c a lls on

the e nd -u se rs . I nterc onnection rig hts do not inidicate whether the ca ll is a toll call to the end use r, an issue f or the states to deter

mine within their sy stems of classify ing loc al and toll calls. Thus, we do not find an int e rc on ne c tio n p ro ble m in thi s c a se . Fu rt

he rm or e , w e no te that it

is w ith in A SAP ’s a

bil ity to ameliorate this problem by enter ing into a n interconne ction ag ree ment with Century Tel, but it hasI n addition, ASAP has entere d i n t o s u ch agr eeme nts with S WBT for c alls from San 32 Marc os to ASAP’s 512-222 NXX. 36 chosen not to do so. The r ecor d shows that CenturyTel off ere d to neg otiate s uch an ag ree ment and that ASAP did not do s o. 32
Lo c al d ial ing pa rit y Next, ASAP urg es that the PUC’s orde r violates its local dialing parity rig hts. See 47 U.S.C.A. § 251(b)(3) (West 2001). ASAP arg ues that, bec ause its NXXs a re loc al, ca lls from CenteryTel’s c ustomers in San Marc o s t o ASAP’s customers should only require local dialing—se ven dig its (NXX-X XXX) —in the same wa y that calls entire ly

within San Marcos do. Un de r se cti on 25 1(b )(3 ) of th e Tel ecom mu ni cat io ns Act , an L EC i s r e qu ir e d to pe rm it telephone e x chang e ser

vice customers within a defined l ocal calling are a to dial the same numbe r of dig its to make a local telephone call as t hey would to other customer s of the L EC, notwithst anding the identity

of a c ustomer’s or the called pa rty ’s local telephone service provider. Implem entation of the L ocal Competition Provisions of the T elec omms. Act of 1996, Part III , 61 Fe d. Reg . 47,284, 47,297 (Sept. 6, 1996) (a dopting 47 C.F.R. pts. 51, 52). To the ex tent that a C MRS provider offe rs t e l e p h o n e e x c h an g e s e r

v i c e , s u c h a

p r o v i d e r i s e n t i t l e d

t o r e c e i v e t h e b e n e f

i t s o f l o c a l d i a l i n g p a r i t y. Id
. at 4 7 , 2 9 8
. L o ca l d i al i n g p ar i t y wi l l b e a cc o mp l i s h edt h ro u gh i mp l em en t at i o no f t h e u nb u n d l i n g, number porta

bility and interc onnection re quirements of se cti o n 2 51. Id . The provision of
no nd isc ri min a tor

y a c c e ss to te le ph on e numbe rs , by its e lf , do e s no t fu lf

ill the loc a l dialin g pa ri ty mandate of

section 251(b) (3). Id
.37 I n a dopti ngru le s c on c e rn ingloc a l di a lin g pa ri ty , th e F CC h a s r e c og nize d th a t a te le ph on e c a l l r e qu i r i n g s e v e n - d i g i td i a l i n g i s n o tn e c e s s ar i l y a l o c a l c a l l , t h a ta

t e l e p h o n e c a ll
re qu ir ingte n- dig it d ia lin g is n ot n e c e ssa ri ly a tol l c a ll, and

that so me state s w ithEL CS arr ang e me nts may have va rying inter

pretations as to what c onstitut es a loca l or toll call. Id . at 47 ,2 99 . T he F CC has not imposed a loca l dialing pa rity rule in contra

vention of var ious state prac tices. Se e id
. I nstead, it defe rs to the s t at es ’ d ef initions of loca l and toll calls and only mandates that service pr ov ide rs be g ive n lo c a l d i a lin g pa ri ty ba se d o n th e state ’s a

pp ro a c h to de fi nin g loc a l c a lls , r e g a rd le ss of wh e the r t

he se rv ic e pr ov ide r c ho os e s to uti lize se ve n o r ten d ig it d ia lin g pr oc e dure s f or tho se calls. Id
. I n th is c a se , b oth Ve ri zon and SWB T h a ve po int s o f i nte rc on ne c tio n w ith in t he EL CS and thus are able to off

er loc al ca lling with seve n-dig it dia l i ng . I n contra st, we have alre ady deter mined that the PUC did not err in f inding that c alls from CenturyTel’s San Mar cos customer s to A SAP ’s NX Xs are no t lo c a l un de r T e xas l aw. CMRS pr ov ide rs su c h a s A SAP have c on sid e ra ble latitude in as s i gn i n g numbers. Althoug h the wire less service is not li mited to us e wi thi n th a t r a te cente r, t he wireless subscriber ’s num ber is associate d with a spec ific g eog raphic rate cente r. See I n
re Te le ph on e Num be r P or tab ili ty , 18 F.C.C. Rcd 23,697, 23,701(2003). N XXs that have a nominal g e og ra ph ic a ssi g nme nt, bu t th a t are div or c e d b y the a c tua l meth od of tr ans po rt fr om t he g e og ra ph ic rate cente r, ca

nnot be used a s the sole fa ctor in dete rmi n i n g local dialing parity issues. I n other words, it does not matter whe re A SAP’s pag ing c usto m er i s ; i t d o es matter how ASAP requires CenturyTel to transport the call from San Marc os to ASAP for transmission of a pa g ing sig nal to the customer.38 The e vidence in this record e stablishes that calls to ASAP’s pag ing cu s t o m er s are transporte d from San Mar cos to Austin. The nominal assig nment of ASAP’s NXXs to Kyle, F e ntr e ss, and

L oc kh art

do e s n ot c ha

ng e thi s te c hn olo g ic a l fact . In a dd iti on , th e re c or d a lso establishes that the majority of ca lls to AS AP’s NXXs are calls to A SAP’s I SP custom ers, c alls that
are pr op e rl y

un de rs too d as wir e lin e and no t CM RS c a lls . A SAP ha s n o p oin t of int e rc on ne c tio n in the EL CS. Based on this evidenc e, we find that the Commissi on did not violate any local dialing parity issues.
Other issu es

ASAP makes furt

h e r a r g u me nts that the PUC wrong ly equate d CMRS with a wire line network a nd violated ASAP’s CMRS rig hts to use Ty pe 2 interc onnections. The thr ust of ASAP’s
argume nts on

thi s p oin t is that th e PUC

wr on g ly a pp lie s w ir e lin e c on c e pts to A SAP ’s mob ile , p a g ing ser vi ce wh e n it c on c lud e s th a t Centu ry Te l c an im po se re ta il t oll c ha

rg e s o n it s e nd

us e rs wh o c a ll ASA P’ s p a g ingc us tom e rs wh o a re no t (or are dee me d to no t be ) w ith in t he EL CS are a. We ar e addr essing mobi l e s er v i ce. B eing mobile—and occ asionally outside the wi re lin e loc a l c a lli ngare a —is no t a c ri me that is punis ha

ble by a tol l.
As we ha ve no te d, it is not the loc a tio n of the pa g ing c us tom e r that is a t issu e he re . Ins te a d, it i s o nly the means by

which ca lls must be transporte d from San Marc os to ASAP for ASAP to send a pag ing sig na l to its c us tom e rs . No c us tom e r of ASA P is b e ing“ punis he d” fo r b e ingmob ile . T he PUC is
on ly a llo wi ngCe ntu

ry Te l to re c ou

p it s c os ts f

rom it s S an Marc os c us tom e rs fo r p la c inga c a ll t o Austin, outside the EL CS.The F CC and the D.C. Circuit have not fully deter mined this iss ue. The case s we have 33 re vie we d c on c e rn

iss ue s of w ir e lin e -t o- wi re le ss p or ta bil ity that ha ve be e n r e so lve d a g a ins t th e F CC on proce dural g rounds. We w ill re view their holding s inasmuch as they aid an unde rstanding of the p u r p o s e an d f u n c t i o no f

n u mb e r p o rt a b i l i t y. 39 I n a dd iti on , A SAP a tte mpt s to c omp are the iss ue s in thi s c a se to t

ho se that ari se in the context of number porta bility
. See Central Tex . Tel. Coop. v. Federal Communications Comm’n , 40 2 F .3 d 2 05 , 2 11 -1 2 ( D. C. C ir . 2 00 5) ; United States Telecom Ass’n v. Fede ral C o mmunications Comm’n , 4 0 0 F
. 3 d 2 9 , 3 2 ( D
. C
. C i r . 2 0 0 5 )
. T w o t yp e s o f “ p o rt a b i l i t y” e x i s t
. “ N u mb e r

p o rt a b i l i t y” 33 is “the ability

of user s of telec ommunications service s to ret ai n , at the same location, exist ing telecommunicati o n s n umbers without impairment of quality , reliability , or conve nience when switching from one telecommunications car rier to another .” 47 U.S.C.A. § 153(30) (West 2001). “Loc ation portability ” to which ASAP makes its compar ison, is “the ability of user s of telecommunications services to re tain exis ting tele communications numbers without impairment of quality , reliability , or conve nience when moving from one phy sical location t o an o t her.” Central Tex. Tel. Coop. , 402 F.3d a t 206- 0 7
. T h e FC C rules curr ently permit only

a limited location portability
. See U

nited States Telecom Ass’n , 400 F.3d at 38. The Tele communications Act’s

“ re qu ir e me nt t o p ro vid e numbe r p or ta bil ity is l imi te d to sit

uatio ns wh e n us e rs re ma in ‘a t the same location,’ and ‘switch[] from one te lecommunications ca rrier to another,’ and thus does not include service an d l o ca tion portability .” In re Te le ph on e Num be r P or tab ili ty , 11 FCC Rcd 8352, 8447 (1996) ( citing 47 U .S.C.A. § 153(30)). As the D .C. Circuit has observed, loc ation po rt ab i lity has a distinctly

g eog raphic focus. Uni t ed States Telecom Ass’n , 400 F.3d at 32, 37. Telephone
su bs c ri be rs mus t c ha

ng e the ir te le ph on e numbe rs wh e n th e y mov e ou tsi de the are a

se rv e d b y

the ir40

curr ent ce ntral off

ice, de fined a s the location of the switch. Central Tex. Tel. Coop. , 402 F.3d at 207. Thus, location portability only exis ts w hen a wireline customer moves phy sical location within the
are a c ov e re d b y

the sw itc h id e nti fi e d w iththe e xistin g NX X. “ I n th e c omp le te ly wi re le ss c on te xt, howeve r, customer s who move, tempora rily or per manently , may reta in the ir numbers. The y may do so no t bec a

us e the re is l oc a tio n p or

ta bil ity , b ut b e c a

us e , d e sp ite the ir

mov e s, the y

are sti ll w ith in
an are a their curr ent wirele ss c arr ier ser ves.” Id
. at 212. I n other words, calls to wirele ss customers utiliz e the tec hnologic al rate ce nters as or igina lly assig ned; there are no location portability issues beca use a call to the wireless customer is still transporte d to the same switch a s orig inally assig ned without reg ard to the loc ation of the wire less customer.

Th e r e l a t i o n s h i p b e tw e e n a

wi re lin e and

a wi re le ss c omp any

in p or ta bil ity is d if fe re nt. Although the g eog raphic location of the w irele s s customer may not be controlling , when porting

nu mb e rs to wi re le

ss c arrie rs that do not have a point of prese nce in the loc al ar ea, a donating car

rier deliveringa ca ll to a ported number m i gh t b e forced to deliver the ca ll outsi de of its local se rvice
are a. Se e id . at 208. I t would thereby incur tra nsport char g es that we re not fac tored int o its rate. Id
. To focus on the “l o ca t i o n ” of the telephone numbe r, base d solely on its nomi nal rate ce nter assig nment, “is at best metaphy sical.” See U nited States Telecom Ass’n , 400 F.3d at 37. ASAP’s r efe renc e to the number porta bility issues does not inform our a naly sis here. Portability , in e ssence , require s the rating of former ly local calls as loca l when the number has bee n “porte d” to another

car rier w ithin the same g eog raphic rate cente r. Problems ha ve ar isen conc erning the p o rta b il it y o f w ir e li n e n umb e r s to w ir e le s s p r o v id e r s w h e n th e c u s to me r h a s also moved g eog raphic locations. Howe ver, the portability issues only

prec lude cha

rg ing a toll on a call that was41

local bef ore the number wa s ported to a nother car rier and might thus be come a toll ca ll but for the portability

require ments. ASAP’s numbers neither wer e porte d from anothe r ca rrier nor have they
ever been in Centu ry T el ’s geog raphic rate cente r. Thus, we do not find that portability issues illumi nate the pr oblems in this case.
Conc lusion a s to inte rc onne c tio n and loc al d ial ing pa rit y rig hts We have r ejec ted ASAP’s arguments c o n c e r n ing its interc onnection and loc al dialing pa ri ty ri g hts . We ov e rr

ule ASA P’ s th ir d a

nd sixthiss ue s.
CO NC LU SION Havingoverr

uled ASAP’s issues on appea l, we a ffirm the judg ment of the district
c ourt a ff ir min g the or de r o f t

he PUC
.

Bob Pembe rton, J ustice Be fore Chief J ustice L aw, Justi ces Pembe rton and Waldrop Affir med Filed: May

5, 2006