Opinion ID: 186282
Heading Depth: 2
Heading Rank: 3

Heading: The UNE Remand Proceeding and the Clarification Order

Text: 12 Two references in paragraph 56 of the merger conditions warrant further explanation. First, paragraph 56 refers to the UNE remand proceeding, which was an ongoing FCC proceeding that was reconsidering, among other things, its unbundling rules. The FCC commenced that proceeding in response to the Supreme Court's January 1999 decision that had held unlawful in substantial part those initial rules. See AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 387-92, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999). The initial rules had broadly ordered ILECs to provide CLECs with unbundled access to network elements, including shared transport. E.g., Local Competition Order, 11 FCC Rcd 15499 ¶ 440. But the rules, the Court had held, rested on an unreasonable and overly broad construction of when not having access to network elements would impair CLECs. Iowa Utils. Bd., 525 U.S. at 387, 119 S.Ct. 721. 13 In response to Iowa Utilities Board, the FCC issued its order in the UNE remand proceeding on November 5, 1999, about a month after the merger order issued. That proceeding concluded that an ILEC should, as a general matter, provide a CLEC with shared-transport services if the ILEC provides the CLEC with unbundled switching. UNE Remand Order ¶¶ 369-79. The order also concluded that as a general matter ILECs were required to unbundle local circuit switching. Id. ¶ 253. Several ILECs and CLECs petitioned for clarification of the UNE Remand Order. The FCC issued a clarification in response. Clarification Order, 15 FCC Rcd 9587 (2000), petitions for review denied, Competitive Telecomms. Ass'n v. FCC, 309 F.3d 8 (D.C.Cir.2002). 14 As relevant to the present case, the clarification addressed the proper methodology for analyzing whether an ILEC must unbundle exchange-access service, assuming it was also required to unbundle local-exchange service. Id. ¶¶ 13-14. Exchange-access service is the process of originating and terminating calls on the ILEC's network, i.e., providing access to the users physically connected to the ILEC's local loops and switches, so that they may send and receive calls to and from other networks. Local-exchange service, in contrast, is simply the practice of providing local telephone service to customers using the ILEC's local network. 15 The core of the methodology the FCC outlined was that each of these services, even though they both employ the same physical facilities owned by the ILEC, needed to be analyzed separately, service by service, for purposes of determining whether the ILEC had to unbundle each of them. The FCC noted that the Act explicitly distinguishes the markets for the two services. Id. ¶ 14. (Again, under the Act, whether a given network element must be unbundled depends, in part, on whether the CLEC would be impair[ed] absent access to the network element. 47 U.S.C. § 251(d)(2).) Therefore, the Commission reasoned, a finding that CLECs would be impaired absent access to one of these markets did not mean for that reason alone, and without further inquiry that the CLEC would be impaired absent access to another of these markets, even though both exchange-access service and local-exchange service use the same physical facilities. Clarification ¶ 14. In other words, unbundling local-exchange service did not necessarily mean that exchange-access service should also be unbundled. The Commission's task, it explained, instead should be to resolve whether the markets for local exchange service and special access are so closely interrelated from an economic and technological perspective that a showing of impairment with respect to the former market would by itself tend to suggest, as a practical matter, that the `impair' standard is satisfied with respect to the latter market. Id. ¶ 16. The Commission did not in the clarification, however, resolve whether local-exchange-service unbundling should be tied to exchange-access-service unbundling; it merely stated its intention to do so in a future rulemaking using the methodology it had described. 16 The Commission also noted, more generally, that this market-specific impairment analysis outlined in the clarification was a departure from the analysis it had employed in its initial set of unbundling rules. Before the Supreme Court issued its decision in Iowa Utility Board,  the Commission explained, we sometimes approached an incumbent's obligation to unbundle network elements as though it were an all-or-nothing proposition, suggesting that, if a competitor were entitled to obtain access to an element for one purpose, it was generally also entitled to obtain access to that element for wholly different purposes as well. Id. ¶ 12. Now that the Supreme Court has rejected our previous interpretation of that provision as insufficiently rigorous, it continued, it is appropriate for us to revisit the issue. Id. The new methodology described by the Commission was the result of that revisiting. On petition for review, this Court held that the Commission's new methodology was a reasonable interpretation of the Act. Competitive Telecomms. Ass'n v. FCC, 309 F.3d 8, 12-13 (D.C.Cir.2002). 17