Opinion ID: 77289
Heading Depth: 2
Heading Rank: 2

Heading: The Telecommunications Act

Text: 7 Before the Telecommunications Act became law, most areas were served by a single local exchange carrier, now known as the incumbent local exchange carrier. See AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 371, 119 S.Ct. 721, 726, 142 L.Ed.2d 835 (1999). Over the years, the incumbent local carrier constructed hardware networks to deliver residential and commercial telephone service to the area. Id. Because they were without competition and were often compensated based on how much they spent (the rate-of-return method), incumbent local carriers had an incentive to construct networks that were inefficient. See Nat'l Rural Telecom Ass'n v. FCC, 988 F.2d 174, 178 (D.C.Cir.1993). 8 The Telecommunications Act was enacted to uproot[ ] the monopolies that traditional rate-based methods had perpetuated. Verizon Commc'ns Inc. v. FCC, 535 U.S. 467, 488, 122 S.Ct. 1646, 1660, 152 L.Ed.2d 701 (2002). The Act preempted state laws that protected local monopolies, and it imposed on local carriers affirmative duties to facilitate market entry by new local carriers, known as competitive local exchange carriers. See AT&T Corp., 525 U.S. at 371, 119 S.Ct. at 726. Central to this appeal is the duty of an incumbent local carrier to provide access to its network to competitive local carriers. See 47 U.S.C. § 251. 9 The Telecommunications Act requires incumbent carriers to make available to potential competitors their unbundled network elements. Id. § 251(c)(3). The Act encourages incumbent and competitive local carriers to negotiate access rates. Id. § 251(c)(1). In the event an agreement cannot be reached, any party may petition the state telecommunications commission to arbitrate any open issues. Id. § 252(b)(1). Once arbitration has been invoked, the state commission must adhere to federal law when it sets the rates. See id. § 252(e)(1); Verizon Cal. Inc. v. Peevey, 413 F.3d 1069, 1071 (9th Cir.2005) (citing AT&T Corp., 525 U.S. at 385, 119 S.Ct. at 733). 10 Congress delegated to the Federal Communications Commission the authority to promulgate regulations that govern the setting of rates. See 47 U.S.C. § 251(d)(1). The methodology the FCC selected is called the Total Element Long-Run Incremental Cost method. 47 C.F.R. § 51.505. The TELRIC of an element is the forward-looking cost over the long run of an element, taking as a given the incumbent LEC's provision of other elements. Id. § 51.505(b). The TELRIC must be measured based on the use of the most efficient telecommunications technology currently available and the lowest cost network configuration. Id. § 51.505(b)(1). The regulations also require geographically-deaveraged rates: State commissions shall establish different rates for elements in at least three defined geographic areas within the state to reflect geographic cost differences. Id. § 51.507(f). Congress delegated to each state commission the authority to approve the interconnection agreement, including the pricing of unbundled network elements. See 47 U.S.C. § 252(e). 11 The Telecommunications Act also allowed incumbent local carriers to participate in the long-distance service market upon approval of the FCC. Id. § 271(d)(3). In a section 271 proceeding, the FCC permits the incumbent local carrier to enter the long-distance market only after the carrier implements the competitive checklist, one item of which is [n]ondiscriminatory access to network elements in accordance with the requirements of sections 251(c)(3) and 252(d)(1) of this title. Id. § 271(c)(2)(B)(ii). Section 271 proceedings are streamlined; the FCC must approve or deny the petition of the local carrier within 90 days of receiving it. Id. § 271(d)(3).