FILED

United States Court of Appeals

Tenth Circuit

August 26, 2011

Elisabeth A. Shumaker

Clerk of Court

PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

QWEST CORPORATION, 

Plaintiff-Appellant/CrossAppellee,

v. Nos. 10-1187 & 10-1212

COLORADO PUBLIC UTILITIES

COMMISSION; RON BINZ, in his

official capacity as Chairman of the

Colorado Public Utilities Commission;

JAMES TARPEY, in his official

capacity as a member of the Colorado

Public Utilities Commission; MATT

BAKER, in his official capacity as a

member of the Colorado Public

Utilities Commission,

 Defendants-Appellees/Cross- 

 Appellants,

and

CBEYOND COMMUNICATIONS,

LLC,

 Defendant-Intervenor - 

 Appellee/Cross-Appellant.

---------------------------

FEDERAL COMMUNICATIONS

COMMISSION,

 Amicus Curiae.
2

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

(D.C. No. 1:08-CV-02653-RPM)

John M. Devaney, (John K. Roche with him on the briefs), of Perkins Coie LLP,

Washington, D.C., for Plaintiff-Appellant/Cross-Appellee, Qwest Corporation.

Charles Eugene Watkins, III, Cbeyond Communications, LLC, Atlanta, Georgia

(Mark A. Davidson, Holland & Hart LLP, Denver, Colorado, on the briefs for

Cbeyond Communications, LLC; John W. Suthers, Attorney General, and David

A. Beckett, First Assistant Attorney General, State Services Section, Denver,

Colorado, on the briefs for Colorado Public Utilities Commission, Ron Binz,

James Tarpey, and Matt Baker), for Defendant-Intervenor-Appellee/CrossAppellant Cbeyond Communications, LLC.

Austin C. Schlick, General Counsel, Peter Karanjia, Deputy General Counsel,

Richard K. Welch, Acting Associate General Counsel, and Laurel R. Bergold,

Counsel, Washington, D.C., filed an amicus brief for the Federal Communications

Commission.

Before BRISCOE, Chief Judge, SEYMOUR and LUCERO, Circuit Judges.

BRISCOE, Chief Judge.

Plaintiff Qwest Corporation (Qwest) and defendants Colorado Public

Utilities Commission (CPUC), individual commissioners, and Cbeyond

Communications, LLC (Cbeyond) (together, defendants), cross-appeal from the

district court’s decision construing 47 C.F.R. § 51.5, a Federal Communications

Commission (FCC) regulation relating to local telephone service providers. In

order to facilitate competition in the local telephone service market, federal law
3

requires incumbent local exchange carriers (ILECs), such as Qwest, to lease

certain parts of their telecommunications networks to competitive local exchange

carriers (CLECs), such as Cbeyond. ILECs are relieved of this obligation if,

among other circumstances, the number of “business lines” in a local exchange

reaches a certain threshold because, in the FCC’s view, a sufficient number of

business lines shows that it would be economic for CLECs to invest in their own

infrastructure. The term “business line” and the method of counting business

lines are defined in 47 C.F.R. § 51.5. The parties disagree as to which types of a

particular network element—UNE loops—are included in the business line count. 

The district court held that UNE loops serving non-business customers are

included in the business line count and that non-switched UNE loops are not

included in the business line count. Exercising jurisdiction under 28 U.S.C. §

1291, we affirm in part and reverse in part.

I

Legal Background

The Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56

(codified in scattered sections of 47 U.S.C.) (the 1996 Act), effected significant

deregulation of local telephone markets. Prior to 1996, states typically granted

monopolies in local service areas to a local exchange carrier (LEC). The LEC

“owned, among other things, the local loops (wires connecting telephones to

switches), the switches (equipment directing calls to their destinations), and the
1

 “Unbundled” means priced separately from other elements. See Iowa

Utils., 525 U.S. at 394. ILECs are required to provide unbundled elements at

“TELRIC” prices, which are lower than the prices ILECs would like to charge.

4

transport trunks (wires carrying calls between switches) that constitute a local

exchange network.” AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 371 (1999). 

The 1996 Act subjects the monopolist LECs (ILECs) to duties designed to

facilitate market entry by new (i.e., competitive) LECs (CLECs). See id. Among

other things, ILECs must lease certain network elements to CLECs on an

“unbundled” basis and at reasonable rates.1

 47 U.S.C. § 251(c). These leased

network elements are called “UNEs” (unbundled network elements). The District

of Columbia Circuit has described unbundling as follows:

Suppose a CLEC . . . wants to serve customers in Washington, D.C. 

One way of doing so is for [the CLEC] to purchase its own switches,

trunks, and loops, which it can then use to offer service to its new

customers. However, given that the local ILEC . . . has already

deployed switches, trunks, and loops to serve the market, it might be

economically impossible for [the CLEC] to duplicate competitively

[the ILEC’s] infrastructure. Through regulatory unbundling,

however, [the CLEC] might be able to lease [the ILEC’s] switches,

trunks, and loops as UNEs. [The CLEC] could then use

combinations of UNEs to cobble together a network and compete

against [the ILEC] in Washington.

Covad Commc’ns Co. v. FCC, 450 F.3d 528, 532 (D.C. Cir. 2006).

Congress delegated to the FCC the authority to determine the circumstances

under which ILECs must provide particular network elements as UNEs. In

making these determinations, Congress directed the FCC to consider, at a
5

minimum, whether access to proprietary network elements is necessary and

whether “the failure to provide access to [particular] network elements would

impair the ability of the telecommunications carrier seeking access to provide the

services that it needs to offer.” 47 U.S.C. § 251(d)(2).

The FCC’s first three attempts at implementing a necessity/impairment test

were invalidated, in relevant part, by the Supreme Court and the United States

Court of Appeals for the District of Columbia Circuit. See Iowa Utils., 525 U.S.

366; U.S. Telecom Ass’n v. FCC, 290 F.3d 415 (D.C. Cir. 2002); U.S. Telecom

Ass’n v. FCC, 359 F.3d 554 (D.C. Cir. 2004). In 2005, the FCC tried a fourth

time, issuing its Triennial Review Remand Order (the TRRO). In the Matter of

Unbundled Access to Network Elements, Order on Remand, 20 FCC Rcd. 2533

(Released Feb. 4, 2005), pet. for review denied, Covad, 450 F.3d 528. In the

TRRO, the FCC developed an impairment standard based in part on business line

density. The FCC reasoned that if sufficient potential to generate revenue

existed, it would be economically feasible for CLECs to invest in their own

facilities and thus they would not be “impaired” without access to UNEs. The

FCC also found a correlation between revenue opportunities and the number of
2

 “A fiber-based collocator is an arrangement that allows a CLEC to

interconnect its facilities with those owned and operated by an ILEC.” Covad,

450 F.3d at 535 n.2.

3

 A wire center is the area where an exchange carrier terminates its local

lines. See Harry Newton, Newton’s Telecom Dictionary 940 (21st ed. 2005).

6

business lines and/or fiber-based collocators2

 in a wire center.3 Therefore, as the

FCC explained in its amicus brief in this case, “[w]hen the number of business

lines reaches a specified threshold, [CLECs] that operate in the area served by the

wire center are deemed to be economically capable of deploying their own highcapacity loops and transport facilities (i.e., they are no longer ‘impaired’ without

access to those UNEs at cost-based rates).” FCC Br. at 6-7. Thus, the number of

business lines and/or fiber-based collocators in a wire center dictates whether an

ILEC must provide high-capacity loops and/or transport as UNEs. Rather than

look at total lines in a wire center, the FCC decided to focus on business lines as

a proxy for development opportunities “because transport development largely

has been driven by the high bandwidth and service demands of businesses,

particularly in areas where business locations are highly concentrated.” TRRO ¶

103. The specific impairment thresholds for high-capacity loops and transport are

set forth in 47 C.F.R. §§ 51.319(a)(4), (a)(5), and (e).

“Business line” is defined in 47 C.F.R. § 51.5. The regulation provides, in

relevant part:

Business line. A business line is an incumbent LEC-owned switched

access line used to serve a business customer, whether by the
7

incumbent LEC itself or by a competitive LEC that leases the line

from the incumbent LEC. The number of business lines in a wire

center shall equal the sum of all incumbent LEC business switched

access lines, plus the sum of all UNE loops connected to that wire

center, including UNE loops provisioned in combination with other

unbundled elements. Among these requirements, business line

tallies:

(1) Shall include only those access lines connecting end-user

customers with incumbent LEC end-offices for switched services,

(2) Shall not include non-switched special access lines,

(3) Shall account for ISDN and other digital access lines by counting

each 64 kbps-equivalent as one line. For example, a DS1 line

corresponds to 24 64 kbps-equivalents, and therefore to 24 “business

lines.” 

47 C.F.R. § 51.5. The parties disagree as to which UNE loops are included in a

wire center’s business line count. Qwest contends that the business line count

includes all UNE loops connected to a wire center. The defendants argue that the

business line count includes only UNE loops that serve business customers and

that are connected to switches.

History of this matter

State utility commissions, like the CPUC, are charged with determining

whether particular wire centers within their jurisdictions exceed the impairment

thresholds. In 2008, the CPUC made such a determination for Qwest’s wire

centers in Colorado. The CPUC interpreted 47 C.F.R. § 51.5 to include in the

business line count only those UNE loops that served business customers and

were connected to switches. This resulted in an impairment finding (and
8

consequent unbundling obligations) with respect to high-capacity loops and

transport at certain of Qwest’s Colorado wire centers. 

Qwest disagreed with the CPUC’s decision and filed a complaint for

declaratory and injunctive relief against the CPUC and its individual

commissioners in the United States District Court for the District of Colorado. 

Cbeyond intervened as an additional defendant. The district court entered a

judgment declaring that the CPUC order was correct in part and incorrect in part,

and ruling that non-business UNE loops are part of the business line count but

non-switched UNE loops are not. Qwest and the defendants both appealed. At

our invitation, the FCC filed an amicus brief. The FCC’s position is that both

non-business and non-switched UNE loops are part of the business line count.

II

Standard of Review

We review a state utility commission’s and a district court’s interpretation

of the 1996 Act and its associated regulations de novo. Sw. Bell Tel. Co. v.

Apple, 309 F.3d 713, 717 (10th Cir. 2002) (state commission); Metzger v. UNUM

Life Ins. Co. of Am., 476 F.3d 1161, 1165 (10th Cir. 2007) (district court).

We must defer to the FCC’s interpretation of its own ambiguous regulation,

even if that interpretation is reflected only in an amicus brief. Talk Am., Inc. v.

Mich. Bell Tel. Co., 131 S. Ct. 2254, 2260-61 (2011) (“In the absence of any

unambiguous statute or regulation, we turn to the FCC’s interpretation of its
9

regulations in its amicus brief.”). An agency’s interpretation in a legal brief is

entitled to deference “unless the interpretation is ‘plainly erroneous or

inconsistent with the regulations’ or there is any other ‘reason to suspect that the

interpretation does not reflect the agency’s fair and considered judgment on the

matter in question.’” Id. at 2261 (quoting Chase Bank USA, N.A. v. McCoy, 131

S. Ct. 871, 880-81 (2011) (internal quotations and alterations omitted)). This type

of deference is commonly described as Auer deference. See Auer v. Robbins, 519

U.S. 452, 461-62 (1997).

III

Does the number of business lines in a wire center include UNE loops that serve

non-business customers?

The first two sentences of the business line definition state:

A business line is an incumbent LEC-owned switched access line

used to serve a business customer, whether by the incumbent LEC

itself or by a competitive LEC that leases the line from the

incumbent LEC. The number of business lines in a wire center shall

equal the sum of all incumbent LEC business switched access lines,

plus the sum of all UNE loops connected to that wire center,

including UNE loops provisioned in combination with other

unbundled elements. 

47 C.F.R. § 51.5. Defendants argue that the definition of business line in the first

sentence limits the phrase “all UNE loops connected to that wire center” in the

second sentence, and that “all UNE loops” actually means only those UNE loops

that also fit within the first sentence. Thus, under the defendants’ interpretation,

only UNE loops that are used to serve business customers count towards the
4

 Because we conclude that the first two sentences of the business line

definition are not ambiguous, we do not defer to the FCC’s interpretation. 

Nonetheless, our interpretation of the regulation’s plain meaning is consistent

with the FCC’s.

10

number of business lines in a wire center. We agree with Qwest, the district

court, and the FCC and hold that the second sentence means that all UNE

loops—whether used to serve business or non-business customers—are included

in the business line count.

We begin with the plain language of the regulation. Valley Camp of Utah,

Inc. v. Babbitt, 24 F.3d 1263, 1270 (10th Cir. 1994). If the regulation’s language

is clear, “our analysis ends and we must apply its plain meaning.” Thomas v.

Metro. Life Ins. Co., 631 F.3d 1153, 1161 (10th Cir. 2001). If the regulation is

ambiguous, then we look beyond the plain language, “examining [regulatory]

intent and overall statutory construction.” Id. A regulation is ambiguous “if it is

‘capable of being understood by reasonably well-informed persons in two or more

senses.’” Id. (quoting United States v. Hinckley, 550 F.3d 926, 932 (10th Cir.

2008)).

We conclude that 47 C.F.R. § 51.5 plainly states that all UNE loops count

towards the number of business lines in a wire center.4

 Accord Logix Commc’ns,

L.P. v. Pub. Util. Comm’n of Tex., 521 F.3d 361, 365 (5th Cir. 2008) (“The plain

meaning of the business line count definition is that the number of business lines

in a wire center is equal to the number of previously defined business lines in that
11

center plus all UNE loops, even if those loops do not serve a business

customer.”); see also Mich. Bell Tel. Co. v. Lark, No. 06-11982, 2007 WL

2868633, at *9 (E.D. Mich. Sept. 26, 2007) (determining that the state

commission’s ruling that only business UNE loops are included in the business

line count “ignores the plain language of the regulation, and transforms an

otherwise unambiguous phrase, ‘all UNE loops,’ to mean only some UNE loops”).

The first sentence provides a general definition of business lines. The

second sentence prescribes the procedure for determining number of business

lines in a wire center. The second sentence clearly states that the number of

business lines is equal to (1) “all incumbent LEC business switched access lines”

plus (2) “the sum of all UNE loops connected to that wire center.” 47 C.F.R. §

51.5 (emphasis added). The method of determining the number of business lines

for impairment purposes is not to actually count the number of business lines as

defined in the first sentence. Accord Logix, 521 F.3d at 367 (“[T]here is a

distinction between the definition of a ‘business line’ and the methodology of

counting business lines for impairment purposes.”). Some UNE loops connected

to the wire center could serve residential customers and, therefore, may not meet

the first sentence’s definition of business line. However, the fact that the method

of counting business lines might be over-inclusive (and the business line count

might include some lines that are not, in fact, business lines) does not render the

counting method ambiguous.
5

 Not all lines that CLECs lease from ILECs are UNE loops. See Defs.

(continued...)

12

A basic principle of statutory construction supports our conclusion that

non-business UNE loops are part of the business line count. If an agency includes

a term in one provision of a regulation but excludes it in another, this court will

not presume that the term applies to the provision from which it is omitted. Atlas

Tel. Co. v. Okla. Corp. Comm’n, 400 F.3d 1256, 1265 (10th Cir. 2005). In the

definition’s second sentence, the UNE loops subtotal is not modified by the term

“business,” whereas the incumbent LEC switched access lines subtotal is. 47

U.S.C. § 51.5 (“The number of business lines in a wire center shall equal the sum

of all incumbent LEC business switched access lines, plus the sum of all UNE

loops connected to that wire center . . . .” (emphasis added)). We assume that the

FCC intended the “business” modifier to apply only where the FCC inserted it. 

Accord Logix, 521 F.3d at 365 (“The FCC knew how to demarcate lines used to

serve businesses and did not do so in the case of UNE loops.”).

Defendants contend that the first sentence’s definition of business line

limits the entire second sentence because the first sentence describes lines used

“by the incumbent LEC itself or by a competitive LEC that leases the line from

the incumbent LEC.” 47 C.F.R. § 51.5. Essentially, defendants argue that the

first sentence means: a business line is an ILEC switched access line used to serve

a business customer, whether it is used by the ILEC or it is a UNE loop.5

 Defs.
5

(...continued)

Resp. Br. at 11 (“Special access, resale and state tariffs, as well as some private

agreements, are the remaining ways competitive LECs lease facilities from

Qwest.”). Therefore, a line that is used by “a competitive LEC that leases the line

from the incumbent LEC” is not necessarily a UNE loop. 47 C.F.R. § 51.5. The

“whether . . . or by a competitive LEC” phrase does not appear to refer

specifically or exclusively to UNE loops. Id.

13

Br. at 15. The flaw in defendants’ logic lies, again, in their view of the

relationship between the first and second sentences. The first sentence makes

clear that a UNE loop or other leased line can be a business line. The second

sentence prescribes the method of counting business lines. As discussed supra,

the “number of business lines in a wire center” is not determined by counting the

number of lines that meet the first sentence’s definition. The number of business

lines in a wire center is determined by counting exactly those lines that the FCC

listed: (1) the sum of all incumbent LEC business switched access lines, plus (2)

the sum of all UNE loops connected to that wire center.

Because we conclude that the regulation is not ambiguous regarding

business and non-business UNE loops, we do not need to look beyond the

regulation itself, including to the TRRO. Nonetheless, we have examined the

TRRO and conclude that it does not contradict our holding that non-business UNE

loops are included in the business line count. 

In the TRRO, the FCC explained how it arrived at the impairment

thresholds codified in 47 C.F.R. § 51.319. The FCC analyzed wire center data
6

 ARMIS is the FCC’s Automated Reporting Management Information

System. The ARMIS 43-08 report requires ILECs to report total switched access

lines in service and to break that number down by business and residential

switched access lines. See FCC Report 43-08 - Report Definition, at 8 (Dec.

2004), available at

http://www.fcc.gov/wcb/armis/documents/2004PDFs/4308c04.pdf (hereinafter,

ARMIS Report Definition).

7

 UNE-P is a UNE loop combined with UNE switching.

8

 Further, the regulation states that “UNE loops provisioned in combination

with other unbundled elements” are part of “the sum of all UNE loops.” 47

C.F.R. § 51.5. UNE-P is a UNE loop provisioned in combination with another

unbundled element. 

14

“based on ARMIS 43-08 business lines,[6] plus business UNE-P,[7] plus UNEloops.” TRRO ¶ 105 (original footnotes omitted). The FCC used the modifier

“business” to refer to the ARMIS 43-08 lines and UNE-P, but not the UNE loops. 

This supports our conclusion that the FCC intended for all UNE loops to be

counted. 

The defendants point to the TRRO’s discussion of business UNE-P to

support its argument that only business UNE loops count towards the business

line threshold. The TRRO’s separate mention of business UNE-P is somewhat

confusing because the set “all UNE loops” necessarily includes all UNE-P. See

Defs. Br. at 15. Ultimately, however, we do not consider the discussion of UNEP in the TRRO particularly relevant because the regulation itself makes no

mention of UNE-P.8

 The FCC looked at business UNE-P when developing its

impairment thresholds, but did not direct state commissions to separately consider
15

UNE-P when determining the number of business lines in a wire center. The

language of the regulation is more important than the TRRO’s explanation of how

the FCC arrived at the threshold numbers, particularly because we can determine

the plain meaning of “all UNE loops” without reference to the TRRO. We hold

that a UNE loop is included in the business line count regardless of whether it is

used to serve a business or non-business customer.

Does the number of business lines in a wire center include only UNE loops

connecting end-user customers with ILEC offices for switched services?

The second and third sentences of the business line definition state:

The number of business lines in a wire center shall equal the sum of

all incumbent LEC business switched access lines, plus the sum of all

UNE loops connected to that wire center, including UNE loops

provisioned in combination with other unbundled elements. Among

these requirements, business line tallies:

(1) Shall include only those access lines connecting end-user

customers with incumbent LEC end-offices for switched services,

(2) Shall not include non-switched special access lines,

(3) Shall account for ISDN and other digital access lines by counting

each 64 kbps-equivalent as one line. For example, a DS1 line

corresponds to 24 64 kbps-equivalents, and therefore to 24 “business

lines.” 

47 C.F.R. § 51.5. Qwest and the FCC contend that the first two clauses of the

third sentence apply to ILEC lines only and, therefore, that non-switched UNE

loops are included in the business line count. Defendants argue that the third

sentence’s limitations apply to all access lines, whether ILEC lines or UNE loops. 
9

 The FCC’s interpretation also does not override the second sentence’s

directive that the business line count shall include all ILEC business switched

access lines because that set is already limited to switched access lines.

16

First, we conclude that the regulation is ambiguous in this regard. Second, we

conclude that the FCC’s interpretation is not plainly erroneous or inconsistent

with the regulation, and we have been provided no reason to suspect that the

FCC’s brief does not reflect the agency’s fair and considered judgment on the

matter. Therefore, although we are reluctant to afford such solicitude to an

agency’s amicus brief and we would not necessarily reach the same result if not

required to defer to the FCC, cf. Talk Am., 131 S. Ct. at 2266 (Scalia, J.,

concurring) (“It is comforting to know that I would reach the Court’s result even

without Auer.”), Supreme Court precedent requires us to defer to the FCC’s

interpretation. See id. at 2261 (majority opinion). 

The FCC contends that “the third sentence of the business line rule does not

override the explicit directive in the second sentence that the business line count

shall include ‘all UNE loops.’”9 FCC Br. at 23 (footnote omitted). In order to

ensure that all UNE loops are included, “the first and second subsections of the

third sentence are best read to relate solely to the first element of the business line

count - ‘all incumbent LEC business switched access lines.’” Id. This reading is

not inconsistent with the regulation’s language. Defendants argue that the third

sentence’s limitations must apply to both ILEC lines and UNEs because the third

sentence applies to “business line tallies.” Defendants argue that the term
10 A more legitimate criticism of the FCC’s interpretation of clauses (1) and

(2) would be that it renders them superfluous because there are already no nonswitched ILEC lines in the subtotal established in the second sentence. However,

the defendants do not make such an argument. Further, the third sentence begins

with the phrase “among these requirements.” This suggests that the subsequent

requirements might reiterate or duplicate previous requirements— as opposed to

requirements introduced by the phrase “in addition to these requirements.”

17

“tallies” must refer to the two separate “tallies” established in the second

sentence: incumbent LEC business switched access lines and UNE loops. See

Defs. Resp. to FCC Br. at 7-8. We disagree. The phrase “business line tallies”

could also refer generally to business line counts. This would mean that the third

sentence provides modifications to the business line count established in the

second sentence.

Defendants also argue that the FCC’s interpretation is erroneous because it

affords an inconsistent meaning to the word “all” in the second sentence. 

Defendants’ argument misses the mark. The third sentence does not change the

meaning of “all” when it provides adjustments to the business line count. “All”

means the same thing in both parts of the second sentence — it means that every

ILEC business switched access line and every UNE loop is counted. The third

sentence then removes certain lines from that subtotal.10

The FCC’s interpretation is also consistent with its explanation in the

TRRO of how it developed the method of counting business lines. In order to

create an easily administrable standard, the FCC based business line counts on

“an objective set of data that incumbent LECs already have created for other
18

regulatory purposes.” TRRO ¶ 105. These objective data were “an ARMIS filing

required of incumbent LECs, and . . . UNE figures, which must also be reported .

. . .” Id. The ARMIS filing requires ILECs to separately report their switched

and non-switched access lines in service, see ARMIS Report Definition, but the

filing relating to UNEs does not, see In the Matter of Local Telephone

Competition and Broadband Reporting, 19 FCC Rcd. 22340, App. D (Released

Nov. 12, 2004); see also FCC Br. at 22 (stating that reported UNE data “cover

aggregate UNE loop figures – not just the subset of UNE loops that are connected

to switches”). The FCC’s interpretation of § 51.5 is consistent with existing

reporting requirements, whereas the defendants’ interpretation would require state

utility commissions to obtain data relating to CLECs’ use of UNEs in order to

determine whether a UNE was connected to a switch or not. Such data is not

generated for other regulatory purposes. Because the FCC’s interpretation is not

plainly erroneous or inconsistent with the language of the regulation, we must

defer to the FCC’s position and hold that the business line count includes UNE

loops that are not connected to switches.

IV

The judgment of the district court is AFFIRMED in part and REVERSED

in part. The district court’s ruling that the business line count includes nonbusiness UNE loops is AFFIRMED, and the district court’s ruling that the

business line count does not include non-switched UNE loops is REVERSED.