Opinion ID: 206188
Heading Depth: 1
Heading Rank: 2

Heading: Similarly Situated Requirement

Text: CMC argues that AT & T further violates the Act by allowing resale of individualized contracts only to customers that are similarly situated to the customer for which the contract was designed. As recognized by the district court, there are actually two components to CMC's objection to AT & T's similarly situated requirement: the first objection is to the requirement itself, and the second objection is to the opacity of the process by which AT & T determines whether one of CMC's proposed resale customers is similarly situated to an existing individualized-contract customer. The answer to CMC's argument is that although the Act significantly limits incumbents' ability to impose restrictions on resale, AT & T's similarly situated requirement is not in itself such a restriction. However, the process by which AT & T determines whether two customers are similarly situated is independent of the requirement itself and may constitute a limitation or restriction on resale that must be approved by the state commission. CMC has not challenged this process before the state commission, and therefore any objection to the process is not properly before this court. The Act prohibits incumbents from imposing unreasonable or discriminatory conditions or limitations on the resale of their retail services. Id. § 251(c)(4). The regulations identify two restrictions on resale that incumbents may impose without prior approval: cross-class selling and short term promotions, neither of which is involved in this case. 47 C.F.R. § 51.613(a). Beyond these, incumbents may impose other restrictions on resale only after proving to the state commission that the restriction is reasonable and nondiscriminatory. Id. § 51.613(b). CMC argues that AT & T disregarded this regulation by imposing its similarly situated requirement without first seeking approval from the commission. However, the similarly situated requirement is not a restriction on resale. Rather, it is a way for AT & T to ensure that CMC is reselling the same product that AT & T offers at retail, which is all the Act requires of incumbents. Sw. Bell Tel. Co. v. Apple, 309 F.3d 713, 718 (10th Cir.2002). Individualized contracts derive pricing from a variety of customer-specific factors. Therefore, allowing competitors to sell those specially priced contracts to any customerregardless of the customer's call volume, location, or other pertinent factorswould distort the nature of the offering and force incumbents to provide discount services to customers who would not qualify for special rates under the incumbent's own pricing scheme. Although the similarly situated requirement is not a restriction or limitation on resale, the requirement is distinct from the process by which AT & T determines whether two customers are similarly situated. This is because the requirement itself is simply a way of ensuring that competitors are only reselling products that AT & T sells, whereas the determination of which customers are similarly situated to others, if not transparent, could be used unlawfully to prevent resale of existing products to virtually identical customers. As currently structured, AT & T alone determines whether a competitor's proposed customer is similarly situated to an existing individualized-contract customer. Therefore, competitors prepared to offer individualized contracts to similarly situated customers must successfully clear AT & T's undisclosed determination process, and that process could be a limitation or restriction on resale that must be approved by the commission. However, CMC's complaint to the commission focused on the requirement itself, and any concerns about the process have not been properly presented to the commission. In fact, the commission emphasized that the process must be reasonable and nondiscriminatory. Without a ruling from the state commission, CMC is not positioned to argue to this court that the commission has violated federal law with respect to this issue. As suggested by the commission, CMC and AT & T may devise a scheme for determining similarity of situation in negotiating their interconnection agreement. Or, as it did with its initial claims in this case, CMC may file a complaint with the commission addressing this issue. Because it is initially for the commission to determine whether the process by which AT & T makes its similarly situated determination is reasonable, the district court was premature in articulating a set of appropriate factors to be considered in the process before the commission has properly considered the matter. The district court below held that particular factors articulated in the Bell Atlantic-Delaware v. McMahon, 80 F.Supp.2d 218 (D.Del.2000), decision were reasonable and non-discriminatory. CMC Telecom, 654 F.Supp.2d at 692. Neither this court nor the district court is in a position to prescribe beforehand what factors the commission could or should apply. On subsequent review, we can determine whether the analysis applied by the commission is consistent with the Act.