Opinion ID: 795390
Heading Depth: 2
Heading Rank: 3

Heading: Retroactive Compensation

Text: 71 The parties agree as to the effective date of the interconnection agreement (the date of approval by the Commission) and its duration. They disagree, however, as to whether compensation must be paid for any period of time that predates the effective date of the interconnection agreement. Great Plains sought compensation going back to approximately March 1998, a point in time well after Western began terminating calls on the Great Plains network and prior to the start of the parties' informal negotiations towards an interconnection agreement. Western sought a ruling that no compensation was due prior to finalization of the interconnection agreement. 72 The arbitrator found that compensation was due dating back to March 1998. In so finding, the arbitrator concluded that the agreements between Western and U.S. West/Qwest (that enabled Western to terminate traffic to the Great Plains networks) made Great Plains a third party beneficiary and were and are in the nature of `interim arrangements' regarding Great Plains and that Great Plains was a beneficiary under those agreements. The Commission agreed that compensation was owed to Great Plains. The Commission disagreed, however, that compensation was due dating back to 1998. Rather, the Commission found that Western's formal request for negotiation of an interconnection agreement under the Act was a precondition to any entitlement to reciprocal compensation. See 47 C.F.R. § 51.715(a)(2) (stating that [a] telecommunications carrier may take advantage of such an interim arrangement only after it has requested negotiation with the incumbent LEC). Accordingly, the Commission determined that the appropriate start date for compensation was the date that Western formally requested negotiation of an interconnection agreement under the Act: August 26, 2002. Because the Commission had held that reciprocal compensation was not owed by Great Plains for calls sent to a tandem switch (an issue later reversed by the district court and not appealed by Great Plains), the Commission found that Great Plains had not terminated any traffic to the Western network. As a result, the Commission held that Western owed Great Plains interim payments for traffic terminated on the Great Plains network, but that Great Plains owed Western no such interim compensation. The district court agreed with the Commission as to the appropriate date, but held that compensation was owed by each carrier to the other effective August 26, 2002. 73 Western appeals. Because this issue turns largely on the Nebraska Commission's interpretation of facts including the history of the parties' interconnection status and any arrangements that existed prior to the approval of an interconnection agreement, we apply the deferential standard of review. We will affirm the Nebraska Commission unless we find its ruling arbitrary and capricious. 74 The regulation that authorizes interim payments is 47 C.F.R. § 51.715. The Nebraska Commission correctly characterized this regulation as one that permits a carrier to request interconnection and transport and termination services, imposes a duty of timely cooperation on the incumbent carrier, and permits payments under an interim arrangement as a quid pro quo for the incumbent carrier's cooperation. 10 75 On appeal, Western presents an argument based on the plain text of the regulation. Western argues that rule 51.715 only applies when a carrier formally requests negotiations with an incumbent, seeks to establish an interim arrangement, and, in fact, establishes such an arrangement. Western characterizes the requirement for an arrangement as a requirement for a contract with offer, acceptance, definite terms, and consideration. Western then argues that because it did not at any time request to establish an interim arrangement with Great Plains, because the Commission did not affirmatively state that there was an interim arrangement, and because the Commission merely determined that interim compensation is warranted, interim compensation is not authorized under the rule. 76 Great Plains counters that, through agreements with Qwest, Western, in fact, began terminating traffic to the Great Plains network as early as January 1997. Great Plains further states that an iteration of the agreement between Qwest and Western that became effective in July 2000 has been in force and effect throughout all times material to the question of interim compensation and makes Great Plains a third party beneficiary. Great Plains presented evidence to prove the number of minutes of traffic terminated by Western on the Great Plains network and Western did not dispute that evidence. Great Plains does not adopt the strict contract theory for interim arrangements as advocated by Western, and instead, states that the history of interim services between the parties—services that were actually provided in this case—suffices to prove the existence of an interim arrangement. 77 Great Plains also argues that, to the extent Western relies on the absence of a request for an interim arrangement to defeat interim compensation, Western's arguments are without merit. Western was, from January 1997 onward, obtaining termination and transport for telecommunications traffic on the Great Plains network without having asked Great Plains for such services. Great Plains argues that because an arrangement actually existed, there was no need for Western to ask for an arrangement. 78 No party disputes the actual rate set for interim compensation as an issue separate and distinct from their general challenges to the overall reciprocal compensation rate discussed above. In other words, there is no issue on appeal dealing specifically with the rate-setting provisions of Rule 51.715. 79 It is clear that the history of this case, involving transport and termination on the Great Plains network without a request from Western, differs from the situation envisioned by the FCC when the FCC fashioned Rule 51.715. That rule anticipates that competitors will approach incumbents to gain access, not that competitors will first terminate traffic and then discuss interconnection. It is also clear that Western received the benefit that the FCC sought to promote when it promulgated Rule 51.715—timely access prior to the negotiation of an interconnection agreement. We agree with Great Plains that nothing in Rule 51.715 mandates that an interim arrangement rise to the level of a definite contract between the parties. Such a requirement would be wholly incompatible with the interim, expedited nature of the actions demanded by the rule. The purpose of the rule is to permit parties to operate in the absence of a formal agreement, during a time that a formal agreement is being negotiated. As such, it was not arbitrary and capricious for the Nebraska Commission to find that interim compensation was due in this case, nor for it to select the date of Western's formal request for negotiations as a beginning date. 80 Finally, we agree with the district court that it is necessary to reverse the Commission to the extent that it limited interim compensation to one-way payments from Great Plains to Western. The rule explicitly calls for symmetrical compensation. 47 C.F.R. § 51.715(b). The Commission's ruling that Great Plains had not terminated any traffic to the Western Wireless network was based on the Commission's now-overruled determination regarding the scope of reciprocal compensation and the termination of traffic to the tandem switch. As we stated repeatedly above, traffic in both directions between an incumbent and a wireless carrier within a major trading area is subject to reciprocal compensation. Accordingly, the Commission erred as a matter of law when it found that traffic sent to a tandem switch and bound for the Western Wireless network was not traffic terminated to the Western Wireless network. As a result, we agree with the district court and affirm its judgment as to this issue. 81 In summary, we affirm the district court in all respects. Local dialing parity is consistent with tandem routing and consistent with the Act, and the Commission erred as a matter of law when it approved contract language that excused Great Plains from the local dialing parity obligations of § 251(b)(3). The Nebraska Commission did not act arbitrarily or capriciously when it set the reciprocal compensation rate or the effective date for interim compensation. The Nebraska Commission did, however, err when it failed to make interim compensation symmetrical as required by 47 C.F.R. § 51.715.