Opinion ID: 618656
Heading Depth: 3
Heading Rank: 1

Heading: Circuit Demand

Text: This issue concerns the pricing for unbundled transport network elements, which are connections between PRTC switching centers that WorldNet leases for its use. To determine the rate for these elements, the Board considers (1) the cost of equipment needed to establish transport circuits and (2) total demand for such circuits. PRTC proposed a cost model based on 2005 and 2007 prices for the equipment, divided by the 2001 circuit demand in order to get the forward-looking rate. WorldNet disputed the use of the 2001 circuit demand level, and offered expert testimony to establish a more current figure. The arbitrator determined that the future demand projection provided by WorldNet's expertunrefuted by PRTC was reasonable and applied that figure to the model. The Board reversed the arbitrator, finding that the arbitrator had failed to account for the match between investment and demand and that therefore the arbitrator's order was inconsistent with Section 252(d) in not considering all of the data and the effect of the decision in determining forward-looking rates. Accordingly, the Board imposed PRTC's model with the 2001 circuit demand figure. The district court reversed the Board's decision, reinstating the arbitrator's determination. See WorldNet III, 707 F.Supp.2d at 196. The court noted that the Board did not discuss how the arbitrator's decision conflicted with TELRIC or the Act, and there is simply no indication that the arbitrator did not consider `all of the costs.' Id. The court then held that the Board's use of the words `inconsistent with Section 252(d)' is not sufficient to give it carte blanche to overturn the arbitrator. Id. Rather, here the Board merely had a difference of opinion with the arbitrator as to the weight given to evidence in the record. To the district court, it appeared that the arbitrator did consider all of the data and the TELRIC requirements. Id. In such a situation, the district court found that the Board cannot overturn the arbitrator merely because it would have reached a different conclusion if framing the agreement itself. Id. (quoting WorldNet I, 497 F.3d at 8). With respect to Circuit Demand, the entirety of the Board's resolution and explanation is the following: We agree with PRTC that in making her determination, the Arbitrator did not account for the match between investment and demand. In this matter, the Order was inconsistent with Section 252(d) in not considering all of the data and the effect of the decision in determining forward-looking rates. Consequently, upon reconsideration, we reject the Arbitrator's requirement to increase demand by 35.15 percent over a five year period (approximately 7 percent per year). We conclude that PRTC has provided a reasonable projection of demand. For Circuit Demand, then, the Board did not appeal to Puerto Rico law, Board rules, or Board policy. In this case, the Board explicitly reasoned that the arbitrator's Circuit Demand determination was inconsistent with Section 252(d) of the federal Act. Therefore, the Board's decision rests principally on its interpretation of the federal Act, and is thus subject to de novo review. See Global NAPs III, 444 F.3d at 70. On a de novo review, the only part of Section 252(d) that appears to be relevant is Section 252(d)(1)(A)(i), which mandates that the Board's rate determinations must be based on the cost of providing the network element. This requirement does not establish much. Neither PRTC nor the Board has shown how the arbitrator's determination was inconsistent with Section 252(d). As the district court rightly observed, merely invoking the words inconsistent with Section 252(d) does not give the Board the authority to overrule an arbitrated provision. WorldNet III, 707 F.Supp.2d at 196. Contrary to the Board's assertion, there is no indication that the arbitrator did not consider all of the costs. Rather, it seems that the Board merely disagreed with the arbitrator's determination based on a difference of opinion as to the weight of the evidence. Under the Federal Act and First Circuit precedent in WorldNet I, such a difference of opinion is not a valid basis for the Board to overrule an arbitrated provision in an ICA. See 497 F.3d at 8; 47 U.S.C. § 252(e)(2)(B). Therefore, the district court properly reversed the Board's determination and reinstated the determination of the arbitrator.