Opinion ID: 185999
Heading Depth: 2
Heading Rank: 2

Heading: Interpretation of the Agreements

Text: 31 The ambiguity in the agreements arises from the hybrid nature of a call to an ISP and the failure of the parties expressly to state whether ISP-bound traffic should be treated as local or non-local. When an end user's modem dials up an ISP, it is not for the purpose of communicating with the ISP. The ISP is merely a gateway through which to connect with a website, which could be located anywhere. A call to an ISP, therefore, has both local and non-local characteristics. See Bell Atlantic Tel. Cos. v. FCC, 206 F.3d 1, 5 (D.C.Cir.2000). Indeed, the Commission regulates ISP-bound traffic as local for some purposes and as non-local for other purposes. See Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Intercarrier Compensation for ISP-Bound Traffic, Order on Remand and Report and Order, 16 FCC Rcd. 9151, ¶ 45, 2001 WL 455869 (2001) (stating ISPs may purchase access using local business tariffs although jurisdictionally ISP-bound traffic is considered interstate). Nothing in the present agreements unambiguously elevates one aspect of ISP-bound traffic over the other. 32 The Commission makes two principal arguments in defense of its interpretation of the agreements: First, the agreements clearly invoke the non-local end-to-end jurisdictional nature of ISP-bound traffic. Second, the definition of Local Traffic in each agreement tracks the Commission's interpretation of § 251(b)(5), see 47 C.F.R. § 51.701(b)(1) (1997), which does not require compensation for ISP-bound traffic. For its part, Starpower argues that the context in which the term end-to-end was used in each agreement — designating a call as Local versus Toll in the 1998 Agreement, and providing data on local versus interstate trunk usage in the 1999 Agreement — shows that the parties did not invoke an end-toend jurisdictional analysis for the purpose of reciprocal compensation; the definition of Local Traffic in the respective agreements has a meaning independent of the Commission's interpretation of the statute; and the Commission's interpretation of § 251(b)(5) to exclude ISP-bound traffic from reciprocal compensation has been twice rejected by this court. See Bell Atlantic, 206 F.3d 1; WorldCom, Inc. v. FCC, 288 F.3d 429 (D.C.Cir.2002). Intervenor WorldCom adds that the term end-to-end was used to ensure[] that calls were properly classified depending on the location and telephone numbers of the parties to the call, not the path that a call might take.  33 We will assume, for purposes of this case, the Commission is correct that an ISP-bound call is jurisdictionally interstate. We have previously endorsed the Commission's end-to-end analysis for determining whether traffic is within federal or state jurisdiction. See Bell Atlantic, 206 F.3d at 5. We agree nevertheless with Starpower that the 1998 and 1999 Agreements do not unambiguously incorporate the Commission's end-to-end analysis. 34 Section 5.7.5 of the 1998 Agreement uses the term end-to-end to modify call; the agreement does not explain the meaning of the phrase end-to-end call, and nowhere does it use the word jurisdiction. The Commission focused exclusively upon the term end-to-end in § 5.7.5, to the exclusion of other terms in the same sentence (such as terminating points) that pointed to an alternative interpretation under which reciprocal compensation would be due for ISP-bound traffic. Indeed, the VSCC, in construing the identical agreement, held that it required reciprocal compensation for ISP-bound traffic. See Cox Virginia Telecom, Inc., Case No. PUC970069, Final Order at 2. Although the decision of the VSCC is short on analysis, it suggests at least that reasonable minds can disagree about the meaning of the 1998 Agreement. Further in that vein, we note that WorldCom's explanation of the term end-to-end, which focuses upon the phone number involved in the call, also offers a plausible alternative to the Commission's interpretation of § 5.7.5. 35 Neither does the use of end-to-end in § 4.1 of the 1999 Agreement unambiguously exclude ISP-traffic from reciprocal compensation. Although that agreement refers to the end-to-end jurisdictional nature of each call, it does so only in § 4.1, which deals with the manner in which the parties are to gather data about trunk usage, not in the section (4.2) of the agreement dealing with reciprocal compensation. Although one may argue that end-to-end in § 4.1 informs the interpretation of reciprocal compensation in § 4.2, it does not follow apodictically that the 1999 Agreement incorporates the Commission's end-to-end jurisdictional analysis for the purpose of requiring reciprocal compensation. 36 The Commission's second argument is that the definition of Local Traffic in each agreement invokes the Commission's interpretation of § 251(b)(5), under which ISP-bound traffic is not subject to compensation. Intervenor Verizon adds that the definition of Reciprocal Compensation in the 1998 Agreement specifically incorporates federal law as described in the [Communications Act of 1934, as amended by the Telecommunications Act of 1996]. 37 Starpower responds that the parties' having defined local traffic in their agreements by using terms similar to those the Commission used in interpreting a related statute does not imply that the parties intended to allow the FCC to define this concept for them. Here the petitioner notes that several state commissions have interpreted the terms local traffic and terminates in an interconnection agreement to require reciprocal compensation for ISP-bound traffic, with the approval of the federal courts of appeals. See, e.g., Southwestern Bell Tel. Co. v. Public Utility Comm'n of Texas, 208 F.3d 475, 485-88 (5th Cir.2000); Southwestern Bell Tel. Co. v. Brooks Fiber Communications of Oklahoma, Inc., 235 F.3d 493, 499 (10th Cir.2000) (The [Oklahoma Corporation Commission] reasoned that because the FCC treats ISPs as end-users, the point of termination of calls to ISPs is the location of the ISP. Moreover, where the calling party and the called party, in this case the ISP, are located in the same local calling area, the call is `local traffic' under the express terms of the Agreement.... We believe the OCC reasonably interpreted the Agreement to mean that calls to ISPs are `terminating traffic' subject to reciprocal compensation); Illinois Bell Tel. Co. v. Worldcom Technologies, Inc., 179 F.3d 566, 573-74 (7th Cir.1999) (upholding determination of Illinois Commerce Commission that calls to ISPs can, by contract, be treated as local traffic subject to reciprocal compensation under the terms of an interconnection agreement). 38 We agree with Starpower that the definitions of Local Traffic in the 1998 and 1999 Agreements do not unambiguously incorporate the Commission's interpretation of § 251(b)(5). If the parties wanted to use the same definition of local traffic as does the Commission, then they could have simply said so, but they did not do so in either agreement. In addition, Starpower advances a plausible interpretation of the terms local traffic and terminate, as they appear in the two agreements: Simply put, a call to an ISP terminates at the ISP and therefore qualifies for reciprocal compensation. Consider what the Fifth Circuit said in affirming the determination of the Texas Public Utilities Commission that calls made to an ISP are subject to reciprocal compensation: 39 As for the modem calls here at issue, the ISPs are [the CLEC's] customers, making [the CLEC] the terminating carrier. So, under the [Commission's] definition, termination occurs when [the CLEC] switches the call at its facility and delivers the call to the called party's premises, which is the ISP's local facility. Under this usage, the call indeed terminates at the ISP's premises. 40 Southwestern Bell, 208 F.3d at 486. In sum, the 1998 and 1999 Agreements could certainly support a reading that a call to an ISP terminates at the ISP and is therefore compensable. 41 Nor does Verizon's separate argument concerning the definition of Reciprocal Compensation in the 1998 Agreement establish that the agreement unambiguously excludes ISP-bound calls from reciprocal compensation. As Verizon points out, the first clause of the definition of Reciprocal Compensation in § 1.61 of the 1998 Agreement, insofar as it refers to the Act as from time to time interpreted by the Commission in rules and regulations, implies the parties intended automatically to follow the Commission's interpretation of § 251(b)(5). That phrase may not be viewed in isolation, however. The second clause of the same definition provides that reciprocal compensation refers to the payment arrangements that recover costs incurred for the transport and termination of Local Traffic originating on one Party's network and terminating on the other Party's network. This clause uses terms — such as termination and Local Traffic — that, as shown above, could be read to mean that the carriers are required to pay reciprocal compensation for ISP-bound traffic. 42 In sum, the 1998 and 1999 agreements are models of ambiguity with respect to reciprocal compensation for ISP-bound traffic. Certain terms, such as local traffic and terminate, could readily support an interpretation that would require Verizon and Starpower to compensate each other for ISP-bound traffic. At the same time, the term end-to-end in § 5.7.5 of the 1998 Agreement and in §§ 4.1 and 4.2 of the 1999 Agreement implies that the Commission's jurisdictional end-to-end analysis controls, so that reciprocal compensation is not due. Thus, the agreements are susceptible to two meanings, and the Commission erred in holding the agreements unambiguously exclude ISP-bound traffic.