Opinion ID: 785238
Heading Depth: 1
Heading Rank: 4

Heading: Unbundling of Enhanced Extended Links (EELs)

Text: 144 Enhanced extended links (EELs) are high-capacity loop/transport combinations that run directly between an end user (usually a large business customer) and an IXC/CLEC office. Supplemental Order Clarification, 15 FCC Rcd 9587, 9593 (2000), ¶ 10 n.36. EELs can be used to provide local exchange services, but they can also be used to originate and terminate long-distance calls. IXC providers have traditionally purchased these services from ILECs for long distance purposes as a special access service, i.e., under the ILEC's tariff rather than at TELRIC rates. 145 In its first Order implementing the 1996 Act, the FCC did not impose any limits on the telecommunications services that a CLEC could provide with the UNEs to which it was entitled access. Order ¶ 134 & n.446 (citing Third Report and Order, 15 FCC Rcd at 3911-12 ¶ 484 and First Report and Order, 11 FCC Rcd at 15671-72 ¶ 356). But in 1999 the FCC modified this principle with respect to EELs, and issued (as an interim measure) a supplemental order that limited access to EELs as UNEs to those CLECs that would use unbundled EELs to provide a significant amount of local exchange service. Supplemental Order, 15 FCC Rcd 1760, 1760 ¶ 2. The FCC subsequently clarified and refined this principle, adopting three safe harbors that required CLECs to certify sufficient local traffic percentages in order to qualify for unbundled access to EELs, Supplemental Order Clarification, 15 FCC Rcd 9587, 9598-60 ¶ 22, and restricting commingling by CLECs of EELs and tariffed special access services used for interoffice transmission, id. at 9602 ¶ 28. We upheld these rules — which the FCC characterized as interim restrictions — in Competitive Telecommunications Ass'n v. FCC, 309 F.3d 8 (D.C.Cir.2002) ( CompTel ). 146 In the Order under review, the Commission revised its approach to EELs. First, the Commission generalized the principle underlying its earlier EELs rulings by interpreting the unbundling obligations of § 251(c)(3) to apply only to qualifying services, defined as those telecommunications services that competitors provide in direct competition with the incumbent LECs' core services. Order ¶ 139. The FCC also decided that, once a CLEC obtained access to a UNE for a qualifying service, the CLEC could use that UNE to provide additional non-qualifying services. Order ¶ 143. Under these principles, CLECs are entitled to unbundled EELs only if they use these facilities for local exchange service (which counts as a qualifying service), but not for use exclusively for non-qualifying long distance service. Order ¶¶ 591, 595. 147 The Commission also changed its strategy for enforcing this basic principle and for preventing gaming by carriers that, while not bona fide providers of local service, might seek to take advantage of the low (TELRIC) price of unbundled EELs. It abandoned the safe harbor approach, agreeing with the CLECs that this regime had proved intrusive, unworkable, and susceptible to abuse by ILECs. Order ¶ 596 & n.1831, ¶ 614. It also lifted the prohibition on commingling. Id. ¶¶ 579-84. In place of the old restrictions, the Commission established new eligibility criteria as prerequisites for a competitor to enjoy the access entitlement of a bona fide provider of a qualifying service. Id. ¶¶ 591-611. Each applicant would have to show, first, that it had a state certification to provide local voice service and, second, that at least one local number was assigned to each circuit to be acquired as a UNE. Id. ¶¶ 597, 601-02. In addition, the Commission imposed a variety of technical requirements aimed at preventing firms from gaming the system. Id. ¶¶ 597, 603-11. 148 While the Commission admitted that none of the antigaming requirements by itself would prevent gaming, it concluded that they were  collectively sufficient to restrict the availability of these UNE combinations to legitimate providers of local voice service. Order ¶ 600 (emphasis in original). It justified this conclusion on the logic that the burdens and inefficiencies for a provider to meet these criteria for nonqualifying service would deter a carrier of non-qualifying service from redesigning its operations to subvert our rules. Id. The Commission also allowed CLECs that met the eligibility criteria, but that currently purchased EELs from ILECs as special access services at wholesale rates (i.e., not TELRIC), to convert these wholesale services to UNEs. Order ¶ 586. The CLECs object both to the concept of distinguishing between qualifying and non-qualifying service, and to the eligibility criteria used to implement the distinction. 149
150 The CLECs object to the FCC's decision that long distance is not a qualifying service, claiming that this conclusion is foreclosed by §§ 251(c)(3) and 251(d)(2)(B) of the Act. Long distance services, including the origination and termination functions performed by EELs, are clearly telecommunications services, and § 251(d)(2) directs the Commission to provide unbundled access to elements where the lack of such an element would impair the ability of the telecommunications carrier seeking access to provide the services it seeks to offer. (The Commission assumes, as we believe it must, that the reference to services in § 251(d)(2) is meant to refer to the telecommunications services covered by § 251(c)(3). Order ¶ 138). The CLECs therefore argue that the FCC cannot arbitrarily exclude them from this impairment analysis. 151 The Commission asserts that section 251(d)(2)'s reference to the `services that [the carrier] seeks to offer' is ambiguous as to the question of which services we should analyze in the context of our impairment analysis. Order ¶ 137 (alteration in original). Having thus conclude[d] that the language of section 251(d)(2) is ambiguous concerning the scope of the impairment inquiry, Order ¶ 138, the FCC looked to the history and purposes of the Act and concluded that a reasonable interpretation of the statute would restrict the impairment inquiry to those services offered in direct competition with ILEC core services such as local voice and data services, id. ¶ 139. 152 In CompTel we agreed with the Commission that § 251(d)(2) was ambiguous on the question whether the FCC could make impairment decisions on a service-by-service basis. 309 F.3d at 12. That is, we considered a situation where an element could be used to provide services A and B, and a carrier requested unbundling for both. We held that the Commission acted reasonably in disaggregating the impairment issue, and in ordering unbundling only with respect to the service for which it found impairment. 309 F.3d at 12-13 (service-by-service impairment analysis permissible); 14 (impairment finding made by FCC as to local service but not as to long distance). 153 Here the Commission asserts an entirely different sort of statutory ambiguity, namely, whether long distance services are services at all and therefore require the Commission, on request, to perform an impairment analysis. We are not persuaded by the Commission's claim that the ambiguity regarding the permissibility of service-by-service impairment determinations extends to whether long distance services (or other telecommunications services that do not compete directly with core ILEC services) are services within the meaning of § 251(d)(2) in the first place. Even under the deferential Chevron standard of review, an agency cannot, absent strong structural or contextual evidence, exclude from coverage certain items that clearly fall within the plain meaning of a statutory term. The argument that long distance services are not telecommunications services has no support. 154 The Commission does suggest that the impairment requirement is closely linked to natural monopoly conditions that prevail only with respect to the core ILEC services that the Commission defined as qualifying services. FCC Br. at 77 (citing USTA I, 290 F.3d at 427). But that argument addresses impairment, not the definition of services. We therefore remand those sections of the Order (¶¶ 132-53) resting the exclusion of non-qualifying services on the Commission's reading of the phrase telecommunications services in § 251(d)(2)(B). 155 This does not, of course, necessarily invalidate the Commission's effort to prevent the use of EELs for long distance service. The CLECs have pointed to no evidence suggesting that they are impaired with respect to the provision of long distance services, and in CompTel we emphatically held that the Act did not bar a service-by-service analysis of impairment. 309 F.3d at 12-14. The CLECs do not deny that they have been able to purchase use of EELs as special access. As we noted with respect to wireless carriers' UNE demands, competitors cannot generally be said to be impaired by having to purchase special access services from ILECs, rather than leasing the necessary facilities at UNE rates, where robust competition in the relevant markets belies any suggestion that the lack of unbundling makes entry uneconomic. 156 On remand, therefore, the Commission will presumably turn to the issue of impairment. Because it may well find none with reference to long distance service, we now turn to the eligibility criteria.
157 Both the CLECs and the ILECs object to the FCC's eligibility criteria. The CLECs say they are too stringent and are over-inclusive insofar as they preclude access to EELs used to provide services for which CLECs are impaired. The ILECs claim they are too lax and are under-inclusive insofar as they fail to prevent CLECs from using unbundled EELs exclusively for long distance services. 158 We think that the Commission's eligibility criteria, though imperfect, reflect a reasonable effort to establish an administrable system that balances two legitimate but conflicting goals: the prevention of gaming by CLECs seeking to offer services for which they are not impaired, and the preservation of unbundled access for CLECs seeking to offer services for which they are impaired. We accord considerable deference to such administrative determinations, see WorldCom, Inc. v. FCC, 238 F.3d 449, 459 (D.C.Cir.2001); Home Box Office, Inc. v. FCC, 567 F.2d 9, 60 (D.C.Cir.1977), and find that the proxies the FCC used, though imperfect (as the Commission itself candidly admits, Order ¶ 600), are neither inconsistent with the Act nor arbitrary and capricious. The Commission also satisfactorily explained both the problems with the regime previously in place (which the ILECs thought should be retained), Order ¶ 614, and with the CLECs' proposed alternatives, id. ¶¶ 615-19. 159 The ILECs make an independent attack on the Commission's decision to allow conversions of wholesale special access purchases to UNEs. As we discussed in the section on wireless carriers, the presence of robust competition in a market where CLECs use critical ILEC facilities by purchasing special access at wholesale rates, i.e., under § 251(c)(4), precludes a finding that the CLECs are impaired by lack of access to the element under § 251(c)(3). We realize that this might create anomalies, as CLECs hitherto relying on special access might be barred from access to EELs as unbundled elements, while a similarly situated CLEC that had just entered the market would not be barred. On the other hand, if history showed that lack of access to EELs had not impaired CLECs in the past, that would be evidence that similarly situated firms would be equally unimpaired going forward. Because we have already determined that we must remand to the Commission, given the invalidity of the line it drew between qualifying and non-qualifying services, the Commission can consider and resolve any potential anomaly on remand.