Opinion ID: 795390
Heading Depth: 2
Heading Rank: 1

Heading: Tandem Routing and Local Dialing Parity

Text: 13 The issue of tandem routing 4 and local dialing parity concerns the effects of Western Wireless's election not to connect directly with the Great Plains networks in each of the Great Plains local exchange areas. As noted above, Western Wireless elected to indirectly connect with Great Plains through third parties' tandem switches rather than placing actual points of interconnection in the Great Plains local exchanges. Because Great Plains historically treated calls from its own local exchange networks that had to be sent to interexchange carriers' tandem switches as long distance or toll calls, Great Plains's hardware and software is not currently configured to send local calls to the tandem switches. As a result, Great Plains argues that if calls from its customers to Western's customers have to pass outside the originating local exchange network and pass through a tandem switch for delivery (i.e., if the calls have to be tandem routed), they need to be treated as toll calls. Great Plains advocates this position regardless of the fact that the Western customers receiving the calls might live next door to the Great Plains customers placing the calls and regardless of the fact that customers' numbers might be assigned to the same rate center. 14 Great Plains's argument, in essence, is that the duty to provide local dialing parity under 47 U.S.C. § 251(b)(3) is dependent on the existence of a direct point of interconnection such that the duty to provide local dialing parity stops at the physical edges of the local exchange networks. As a practical matter, Great Plains argues this position because providing local dialing parity through tandem routing would impose various costs on Great Plains including transport costs and costs related to equipment and/or software changes. To buttress its argument, Great Plains asserts that local dialing parity with tandem routing is incompatible with (1) the telecommunications networks in Nebraska, (2) Great Plains's current switches (hardware), (3) Great Plains's current routing and billing software, and (4) Great Plains's equal access and toll dialing parity obligations under federal and Nebraska law. 5 15 The contract language proposed by Great Plains and adopted by the Nebraska Commission regarding this issue was as follows: 16 In those Great Plains exchanges where Western Wireless has not requested a direct connection to Great Plains . . . , Great Plains shall continue to route calls originating from its exchanges to Interexchange Carriers in compliance with its equal access and toll dialing parity requirements. 17 (Emphasis added). 18 Western Wireless counters that, consistent with the Act, Great Plains has a duty to provide local dialing parity for all calls placed by Great Plains customers to Western customers if the Western customers' numbers are from the same rate center as the Great Plains customers' numbers. Western demands local dialing parity even though, in most cases, Great Plains would have to incur transport costs or make new technical arrangements to physically route the locally dialed call outside the Great Plains network to an interexchange carrier's tandem switch before it could be passed to Western's network for delivery to the Western customer. 19 Western argues that such parity is necessary to truly enable competition because if Great Plains customers are not able to call Western customers on a local, seven-digit basis, the inconvenience could deter customers from switching to Western. Western characterizes the Great Plains position as an attempt to create a barrier to competition inconsistent with the goals of the Act. Western argues that the obligation to provide local dialing parity is a general duty that is not conditioned on the existence of a direct connection. Western argues further that the duty to provide local dialing parity is compatible with tandem routing and cannot be excused based on technical difficulties or expense to the incumbent. 20 The contract language proposed by Western regarding this issue was as follows: 21 If Western Wireless obtains numbers, and [rates] those numbers to a Great Plains rate center where Western Wireless is licensed to provide service, calls from that rate center to the Western Wireless number block must be dialed as local calls and delivered to Western Wireless at a point of direct interconnection (if applicable) or at the third-party tandem. 22 (Emphasis added). 23 The arbitrator ruled in favor of Western and adopted Western's contract language, finding that Great Plains had to provide the tandem routing and local dialing parity demanded by Western. In so finding, the arbitrator relied on cases from other circuits that had held indirect connections sufficient to trigger reciprocal compensation duties and that held incumbent carriers could not charge competitors fees for the cost of delivering local traffic to distant points of indirect interconnection. See Atlas Tel. Co. v. Okla. Corp. Comm'n, 400 F.3d 1256, 1262-68 (10th Cir.2005) (holding that all calls between wireless and wireline carriers that originate and terminate within the same major trading area are subject to reciprocal compensation even if the wireline carrier is required to deliver calls to a distant point of interconnection); MCImetro Access Transmission Servs., Inc. v. BellSouth Telecom., Inc., 352 F.3d 872, 881 (4th Cir.2003) (holding that a wireline carrier could not charge transport fees for delivering a wireless carrier's intra-major-trading-area calls to a point of interconnection outside the originating local exchange network). The arbitrator also relied on the fact that the FCC had designated major trading areas as the local areas for wireless providers for the separate and distinct purpose of defining the class of calls subject to reciprocal compensation under 47 U.S.C. § 251(b)(5). See Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, 11 F.C.C.R. 15,499, at ¶ 1036, 1996 WL 452885 (August 8, 1996) ( First Report and Order ) (Accordingly, traffic to or from a [wireless provider's] network that originates and terminates within the same MTA is subject to transport and termination rates under section 251(b)(5), rather than interstate and intrastate access charges.) 6 The arbitrator found that when the FCC characterized the major trading area as the local area, the FCC meant for [wireless providers] to enjoy all the benefits of that designation of a [major trading area], including local dialing parity. 24 The arbitrator did not find potentially costly technical impediments for Great Plains to be material in identifying the scope of Great Plains's statutory duty to provide local dialing parity. Further, the arbitrator expressly rejected the claim by Great Plains that the provision of local dialing parity through tandem routing was not technically feasible. In doing so, the arbitrator noted that one of Great Plains's witnesses testified that the current Great Plains switches could be programmed to insert digits into dialed numbers so that a number dialed with only seven digits would look like a 1 + or ten-digit number when leaving the Great Plains end office switch. Further, the arbitrator was swayed by the fact that Western had asked, in an interrogatory to Great Plains, whether there existed any technical impediments to the provision of tandem routed local traffic. Great Plains responded to the interrogatory by objecting and characterizing the question as a legal or policy issue rather than a technical issue. 7 Accordingly, the arbitrator found Great Plains' assertion of purported technical impediments to be disingenuous. 25 The Commission rejected the arbitrator's conclusion as to the issue of local dialing parity and tandem routing, adopted Great Plains's argument, and held that Western Wireless had to directly connect with each Great Plains network where it wanted to receive the benefits of local dialing parity. In doing so, it cited technical features of the trunk line system in Nebraska and the end office switches used by Great Plains. It stated the current configuration of switches and software used by Great Plains and the nature of the trunk system in Nebraska would not permit Great Plains to distinguish between toll calls and local calls sent to the interexchange carriers' tandem switches. The Commission further stated that Great Plains would have to violate its toll dialing parity obligations in order to provide local dialing parity through tandem routing outside the local exchange network. It did not address the testimony from the Great Plains witness regarding technical feasibility nor did the Commission address the failure by Great Plains to respond to the interrogatory that asked Great Plains to identify any technical impediments. 26 The district court reversed, found the arbitrator's ruling to be consistent with the Act and held, essentially, that the Commission had created an exception to the incumbent's duty to provide local dialing parity where no such exception exists in the Act. 27 Great Plains appeals the district court's ruling on the issues of tandem routing and local dialing parity. 28 We understand the issue of local dialing parity and tandem routing to be an issue of cost apportionment. If Western Wireless is required to establish and maintain points of direct interconnection within each individual Great Plains local exchange area, Western Wireless will face a substantial price for market entry. On the other hand, if Great Plains is required to extend local dialing parity to those Western Wireless customers who possess locally rated numbers, Great Plains will be required to bear the expense of transporting calls outside its local exchange networks. This will force Great Plains to change its software and/or switches to enable it to send seven-digit local calls to the interexchange carriers (or make some other arrangements for the delivery of local calls to a tandem switch for termination on Western's network). 29 Our analysis of this issue turns largely on the applicable standard of review. We apply the same standard of review to the Commission's decision as did the district court. We review the Commission's factual determinations and mixed questions of law and fact under a deferential standard, affirming unless the Commission's decision is arbitrary and capricious. Qwest Corp. v. Koppendrayer, 436 F.3d 859, 863 (8th Cir.2006). We owe no deference to the Commission's interpretations of federal law, however, and our review of the agreement for compliance with the Act is de novo. Id.; see also Atlas, 400 F.3d at 1262 (applying de novo review to a state commission's interpretation of the Act); MCImetro, 352 F.3d at 876 (same); Mich. Bell Tel. Co. v. MFS Intelenet of Mich., Inc., 339 F.3d 428, 433 (6th Cir.2003) (setting forth a dual standard of review: review of interconnection agreements for compliance with the Act is de novo while review of further issues regarding state commission analysis of interconnection agreements is under a deferential standard). Finally, in our interpretation of the Act, we owe deference to the Federal Communications Commission (FCC) based on the fact that Congress expressly charged the FCC with the duty to promulgate regulations to interpret and carry out the Act. See AT & T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 378, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999) (holding that Congress expressly authorized the FCC to promulgate regulations under the Act, even regarding issues that had traditionally been under the exclusive jurisdiction of state utility commissions). 30 In each section below, we discuss the applicable standard of review that applies to each separate issue. We find that the applicable standards for our review of the Commission's determinations are de novo as to the tandem routing/local dialing parity issue and arbitrary and capricious as to the rate-related issues. 31 Great Plains characterizes the issue of tandem routing and local dialing parity as a mixed issue of law and fact such that resolution of this issue turns on factual distinctions novel to the networks and equipment in play in this case. As a result, Great Plains argues that we must reverse the district court and affirm the Nebraska Commission unless the Commission's ruling is arbitrary and capricious. Western argues that this issue presents a pure question of federal law because it only requires us to interpret 47 U.S.C. § 251(a) (regarding the duty to interconnect directly or indirectly) and § 251(b)(3) (regarding the duty to provide local dialing parity). 32 We agree with Western Wireless. The technical impediments and factual issues specific to Nebraska in general or Great Plains in particular could only be material if, as a matter of law, expense, inconvenience, or technical difficulty are recognized exceptions to the duties under 47 U.S.C. § 251(a) and (b). As already noted, the exemption provision of § 251(f) is not at issue in this case, and Great Plains seeks interpretation of § 251(a) and (b) rather than a determination regarding the applicability of any exemption provisions in the Act. Because resolution of the tandem routing/local dialing parity issue requires only interpretation of the Act, and because nothing in the Act makes the Commission's findings concerning the nature of the Great Plains network material to our analysis, our review is de novo. 8 33 Turning to the merits, Great Plains emphasizes that § 251(b)(3) and the relevant regulation, 47 C.F.R. § 51.207, do not expressly state that a local exchange carrier must deliver locally dialed calls to a point outside the local exchange carrier's network. Great Plains infers from this silence that the duty to provide local dialing parity does not extend beyond the physical bounds of the local exchange network and is therefore dependent upon the existence of a competitor's direct point of interconnection within the local exchange. We believe that this inference is unwarranted. The relevant statutory and regulatory sections are not written in such narrow terms. Rather, the Act and the regulation state a broad duty without listing exceptions and without expressly defining a geographic limitation. The statute provides: 34 Each local exchange carrier has the following duties: 35 ... 36 (3) Dialing Parity 37 The duty to provide dialing parity to competing providers of telephone exchange service and telephone toll service, and the duty to permit all such providers to have nondiscriminatory access to telephone numbers, operator services, directory assistance, and directory listing, with no unreasonable dialing delays. 47 U.S.C. § 251(b). The regulation states: 38 A LEC shall permit telephone exchange service customers within a local calling area to dial the same number of digits to make a local telephone call notwithstanding the identity of the customer's or the called party's telecommunications service provider. 39 47 C.F.R. § 51.207. While the regulation speaks in terms of customers within a local calling area it does not specifically deal with issues of routing or interconnection, it does not define the term local calling area, and it does not suggest on its face that the phrase local telephone call has a meaning in this context different from the meaning assigned in other contexts. Accordingly, we do not find it appropriate to adopt the inference urged by Great Plains. 40 We do, however, find several factors that aid in our interpretation of the local dialing parity provisions. First, all else being equal, if a provision of the Act is vague we are inclined to interpret the provision in a manner that promotes competition. It is undisputed that Congress passed the Act with the intention of eliminating monopolies and fostering competition. We do not suggest that this general intent should be used to impose duties on incumbents beyond those created by Congress. We do, however, believe that this general intent should guide our consideration of competing interpretations of the Act. Such guidance suggests that we should be wary of interpretations that simultaneously expand costs for competitors (such as a requirement for direct connections) and limit burdens on incumbents (such as a limitation of dialing parity to local exchange boundaries). If a cost is imposed on a competitor, it becomes a barrier to entry and rewards the company who previously benefitted from monopoly protection. Because Congress passed the Act with a clear intent to foster competition, we are more inclined to interpret a vague provision in a manner that reduces barriers to entry. 41 Second, the FCC has spoken unequivocally and stated that a wireless provider's major trading area is the local area for the purpose of reciprocal compensation. Great Plains does not dispute this issue on appeal, and numerous other circuits have held that an incumbent carrier is required to respect a competitor's election to establish a point of interconnection at a location distant from the local exchange network. See Atlas, 400 F.3d at 1268; Mountain Comm'ns, Inc. v. FCC, 355 F.3d 644, 649 (D.C.Cir.2004); MCImetro, 352 F.3d at 881. In each of these cases, the duty of reciprocal compensation rather than local dialing parity was at issue. This does not mean, however, that the holdings are immaterial to our analysis. Reciprocal compensation, like local dialing parity, is a § 251(b) duty, and Great Plains offers no authority to support the position that we must apply a different meaning in the context of local dialing parity. 42 That having been said, neither Congress nor the FCC has expressly defined the relevant area for a local exchange carrier's provision of local dialing parity to a wireless competitor. Further, the FCC and the industry are well aware of this outstanding question, as demonstrated by the subject matter of a pending petition for declaratory ruling before the FCC. See Sprint Corp. Petition for Declaratory Ruling Regarding the Routing and Rating of Traffic by ILECs, CC Docket No. 01-92 (May 9, 2002) (Sprint Petition) (asking the FCC to define the scope of the duty to provide local dialing parity when there exists no direct point of interconnection within the local exchange network); Comment Sought on Sprint Petition for Declaratory Ruling Regarding the Routing and Rating of Traffic by ILECs, 17 F.C.C.R. 13859, 2002 WL 1586410 (July 18, 2002) (establishing the pleading cycle and soliciting public comment on the Sprint Petition). In fact, on March 3, 2005, the FCC solicited further comments on the Sprint Petition, but the FCC has not yet issued a ruling. See Developing a Unified Intercarrier Compensation Regime, CC Docket No. 01-92, Further Notice of Proposed Rulemaking, FCC-05-33 (2005) (recognizing the continuing pendency of the Sprint Petition and calling for further comments). 43 Great Plains suggests the FCC necessarily will limit local exchange carriers' dialing parity obligations and not carry over the local area definition applicable to reciprocal compensation. Great Plains infers that, if the FCC intended to interpret the local dialing parity duty as extending beyond local exchange network boundaries, it would have done so immediately rather than delaying and soliciting further comments. Great Plains suggests that we act in reliance on this prediction of the outcome in the pending Sprint Petition. 9 While it is possible that the FCC might rule in a manner consistent with Great Plains's current position, and while it is true that we would owe deference to the FCC if it were to issue a ruling or regulation interpreting the Act in this regard, we owe no deference to the FCC's silence. If and when the FCC rules, we may be required to revisit this issue. At such time, we would be armed with better arguments and a better understanding of the issue based on the FCC's expertise. Until then, however, we must interpret the Act without the benefit of agency guidance on this specific point. Without textual support, agency guidance, or other authority to treat reciprocal compensation differently than dialing parity, we will not impose on Western the duty to connect directly. 44 Third, the statutory provision that imposes the duty to interconnect networks expressly permits direct or indirect connections. 47 U.S.C. § 251(a)(1). Nothing in the Act suggests that Congress intended a carrier's duties to be altered based on the carrier's election to connect indirectly rather than directly. We believe that if Congress intended there to be consequences attendant to choosing an indirect rather than a direct connection, Congress could have made that fact clear. Accordingly, any distinction we might draw based on the existence of a direct connection would be textually unsupported. 45 We note also that the structure of the Act suggests that we should reject a direct connection requirement as a condition on local dialing parity. In Atlas, 400 F.3d at 1265-66, incumbents who wanted to force direct connections argued that the general duty to interconnect directly or indirectly was superceded by a specific provision, § 251(c)(2)(B), that imposes upon an incumbent carrier a duty to permit a requesting carrier to interconnect directly with the incumbent's local exchange network at any technically feasible point within the carrier's network. 47 U.S.C. § 251(c)(2)(B). The Tenth Circuit examined the structure of the Act to reject this argument. It noted that the subsection (c) duty applied only to incumbent carriers and only if a competitor requested a direct connection. Id. Since the section (c) duty did not apply to competitors, the Tenth Circuit was unwilling to impose on competitors a duty to connect directly rather than indirectly. Further, that court noted that Congress created specific exceptions for the subsection (c) duties as set forth in 47 U.S.C. § 251(f), such that it would be inconceivable that the drafters would have imposed a direct connection requirement on competitors while at the same providing an exemption to the accommodation duty of the incumbents because such a duty would function as a significant barrier to the advent of competition. Atlas, 400 F.3d at 1266. 46 Finally, to the extent that Great Plains argues that technical issues control in this case, we reject that argument. The statutory duties under examination are not limited with reference to technical feasibility or expense. Further, Great Plains did not invoke the protections of subsection (f) when dealing with the Commission. Finally, even if technical matters carried weight in our analysis, Great Plains's own expert and Great Plains's responses to discovery demonstrate that technical infeasibility should not excuse performance in this case. 47 Because we do not believe the Act permits the Commission to impose a direct connection requirement as a condition on the receipt of local dialing parity, we affirm the district court and reverse the Commission as to the issue of tandem routing and local dialing parity.