Court Opinion

ID: 59488
Source: CourtListenerOpinion
Date Created: 2010-04-26 03:19:21+00
Date Added: 2024-06-11T17:19:49.400586
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                FOR THE FIFTH CIRCUIT United States Court of Appeals
                                               Fifth Circuit

                                                               FILED
                                                              March 17, 2008
                              No. 06-51697
                                                        Charles R. Fulbruge III
                                                                Clerk

LOGIX COMMUNICATIONS, L.P.,
Doing Business as Logix Communications,

                                       Plaintiff-Appellant,
v.

THE PUBLIC UTILITY COMMISSION OF TEXAS,
PAUL HUDSON, in His Official Capacity as
Chairman of the Public Utility Commission of Texas,
JULIE CAURTHERS PARSLEY, in Her Official Capacity as
Commissioner of the Public Utility Commission of Texas,
BARRY SMITHERMAN, in His Official Capacity as
Commissioner of the Public Utility Commission of Texas,

                                       Defendants-Appellees,

SOUTHWESTERN BELL TELEPHONE, L.P.,
Doing Business as AT&T Texas,

                                       Intervenor-
                                       Plaintiff-Appellee.

               Appeal from the United States District Court
                    for the Western District of Texas
                                         No. 06-51697

Before REAVLEY, SMITH, and GARZA, Circuit Judges.
JERRY E. SMITH, Circuit Judge:

       On June 30, 2005, AT&T Texas (“AT&T”) initiated an arbitration proceed-
ing before the Public Utility Commission of Texas (“PUC”) regarding its inter-
connection agreement with Logix Communications, L.P. (“Logix”), seeking post-
interconnection agreement dispute resolution regarding unbundled network ele-
ment (“UNE”) declassification by wire center.1 AT&T sought to establish that
its method of determining the volume of business, and thus the necessity for
UNE access, in the Texas market was correct. The PUC upheld AT&T’s method
of counting business lines in a wire center, and Logix challenged that determina-
tion. The district court, having jurisdiction over Logix’s challenge pursuant to
47 U.S.C. § 252(e)(6) and 28 U.S.C. § 1331, granted summary judgment for
AT&T. We affirm.

                                                I.
       The Telecommunications Act of 1996 (“Act”), Pub. L. No. 104-104, 110 Stat.
56, codified at 47 U.S.C. § 251 et seq., sought to open local telecommunication
services to competition by allowing the Federal Communications Commission
(“FCC”) to require an ILEC to “unbundle” certain of their “network elements,”
such as loops, and lease them to other carriers for use in providing competing lo-
cal services at substantially discounted, cost-based rates. 47 U.S.C. § 251(c)(3).
In February 2005, the FCC issued the Triennial Review Remand Order
(“TRRO”), 20 FCC Rcd. 2533 (2005), which addressed the scope of an ILEC’s du-
ty to provide UNE access to a competing local exchange carrier (“CLEC”), such

       1
        A “wire center” is the central office of an incumbent local exchange carrier (“ILEC”)
such as AT&T; “loops” connect the “wire center” to the customer’s premises. DS1’s and DS3’s
are high-capacity facilities, each of which has the capacity to carry the equivalent of many indi-
vidual voice-grade linesSSin engineering terms, “64 kbps-equivalents.”

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                                  No. 06-51697

as Logix, under the Act.
      The TRRO meant to provide a metric for determining when an ILEC’s fail-
ure to provide CLEC’s with UNE access would impair competition. See 47
U.S.C. § 251(d)(2)(B). The analysis looks to the volume of business in a particu-
lar wire center to determine impairment. The theory is that when business
volume reaches a certain threshold, a CLEC could make enough money in an
area such that “the CLEC has the incentive to install and operate its own fiber
facilities, and thus there is no reason to require the ILEC to provide them.”
Cbeyond Commc’n, L.P. v. Pub. Util. Comm’n, No. A-05-CA-862-SS, 2006 U.S.
Dist. LEXIS 7381, at *6 (W.D. Tex. Jan. 24, 2006) (citing TRRO ¶¶ 93-95).

                                       II.
      Logix challenges the district court’s determination that AT&T’s method of
counting business lines in a wire center was correct. This case concerns how to
count two types of telecom linesSSUNE loops and 64 kbps-equivalent, digital
access linesSSunder the business line proxy set forth in 47 C.F.R. § 51.5. The
PUC and the district court determined that all UNE loops and 64 kbps-equiva-
lent, digital access lines count as business lines even if they do not serve busi-
ness customers. We review state commission interpretations of the FCC’s imple-
menting regulations and summary judgments de novo. Southwestern Bell Tel.,
L.P. v. PUC, 467 F.3d 418, 421 (5th Cir. 2006).
      The FCC defines a “business line” as
      an incumbent LEC-owned switched access line used to serve busi-
      ness customers, whether by the incumbent LEC itself or by a com-
      petitive LEC that leases the line from the incumbent LEC. The
      number of business lines in a wire center shall equal the sum of all
      incumbent LEC business switched access lines, plus the sum of all
      UNE loops connected to the wire center, including UNE loops pro-
      vision in combination with other unbundled elements. Among these
      requirements, business line tallies:

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                                   No. 06-51697

        (1) Shall include only those access lines connecting end-user cus-
      tomers with incumbent LEC end-offices for switched services,

        (2) Shall not include non-switched special access lines,

        (3) Shall account for ISDN and other digital access lines by count-
      ing each 64 kbps-equivalent as one line. For example, a DS1 line
      corresponds to 24 64 kbps-equivalents, and therefore to 24 “business
      lines.”

47 C.F.R. § 51.5. The FCC uses this definition throughout the TRRO to establish
proxies for impairment, which in turn helps show where competition is sufficient
such that CLEC’s have an incentive to provide their own facilities. In particular,
the TRRO looks to the density of business lines:
      Business line density also is an administrable proxy for determining
      where significant revenues are available sufficient for competitors
      to deploy transport facilities, despite the fixed and sunk costs of de-
      ployment. Wire centers that possess a high level of demand for tele-
      communications services are most likely to attract and support com-
      peting carrier transmission facilities that duplicate the incumbent
      LEC’s network. . . . Further, business lines are a more accurate
      predictor than total lines because transport deployment largely has
      been driven by the high bandwidth and service demands of busi-
      ness, particularly in areas where business locations are highly con-
      centrated.

TRRO ¶ 103.

                                        A.
      Logix challenges the PUC’s and the district court’s determination that all
UNE loops, not just those serving business customers, count as “business lines.”
Logix argues that the first line of the business line definition limits the remain-
der of the definition such that: (1) only business (as opposed to residential) lines
are counted; (2) the line must be a switched access line; and (3) whether the line
should be counted is not affected by whether the services are provided by an

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                                   No. 06-51697

ILEC or a CLEC leasing the line.
      The remainder of the definition, according to Logix, is an elaboration of the
first sentence and must comport with those three criteria. Logix claims the
second sentence in the definition identifies which lines served by ILEC’s and
CLEC’s should be candidates for meeting the business line criteria and clarifies
that “incumbent LEC switched access lines” qualify.
      Logix’s reading of the definition is against its plain meaning. The first
sentence goes to the definition of a business line. The second sentence repeats
the definition of the business line from the first sentence and adds to that “the
sum of all UNE loops, including UNE loops provisioned in combination with oth-
er unbundled elements,” to arrive at the number of business lines at a wire cen-
ter. 47 C.F.R. § 51.5 (emphasis added).
      Only the first part of the business line count definition explicitly referenc-
es serving business customers. The next clause, concerning UNE loops, makes
no reference to businesses. The FCC knew how to demarcate lines used to serve
businesses and did not do so in the case of UNE loops. The plain meaning of the
business line count definition is that the number of business lines in a wire cen-
ter is equal to the number of previously defined business lines in that center plus
all UNE loops, even if those loops do not serve a business customer.
      Logix next contends that, aside from the plain language, its reading most
comports with the policy expressed in the TRRO. In particular, it reasons that
the FCC understood that it was the higher revenue characteristic of business
lines that made them appropriate to be counted in the impairment analysis for
high-capacity loops and interoffice transport. This is a correct expression of the
policy, but it ultimately provides no support for Logix’s position.
      As quoted above, the TRRO looks to business line density as a proxy for de-
termining impairment, in the process distinguishing the number of business
lines from the number of total lines. This does not mean that the TRRO is in

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                                      No. 06-51697

conflict with § 51.5, much less that it evidences a different policy.
      AT&T and the PUC have persuasive responses to Logix’s policy argu-
ments. AT&T points out that the FCC counted all UNE loops when it formulat-
ed the rules. The PUC argues that counting all UNE loops regardless of the
identity of the customer best comports with the goal of fostering competition,
because it is the method used by the FCC itself to determine when impairment
had been overcome to such a degree that CLEC’s no longer need special unbund-
ling agreements.
      The FCC established various criteria to determine whether impairment
existed at a wire center and thus whether unbundling would be required there.
The number of business lines available at a wire center formed, in part, the basis
for the thresholds established in 47 C.F.R. § 51.319. As the TRRO states, the
“wire center data we analyze in this Order is based on ARMIS 43-08 business
lines, plus business UNE-P, plus UNE-loops.” TRRO ¶ 105. If the FCC counted
all UNE loops, and not just those serving business customers, in coming to its
conclusions about business line count thresholds for wire centers, it would make
sense to use that same data in the real world. Therefore, when the FCC speaks,
in the TRRO, of business line counts in respect of those lines serving as a proxy
for impairment, it is referring to the “business line count” methodology of the
business line definition.
      The PUC argues that the reading advanced by Logix, that only UNE loops
that served business customers should be counted as business lines, fails be-
cause it requires the count to be based on competitor-provided data that the FCC
expressly rejected as a basis for the business line proxy in the TRRO.2
      Logix responds by pointing out that AT&T does collect UNE loop use data

      2
        See TRRO ¶ 105 (“[B]usiness line counts are an objective set of data that incumbent
LECs already have created for other regulatory purposes. [B]y basing our definition in an
ARMIS filing required of incumbent LECs, and adding UNE figures, which must also be re-
ported, we can be confident in the accuracy of the thresholds . . . .”).

                                            6
                                      No. 06-51697

in the Midwest. Alternatively, Logix insists that instead of counting all UNE
loops as business lines, AT&T could use some objective factor to estimate how
many UNE loops are being used to service business customers.
       There is a problem with each suggestion. As to the former, the FCC based
its impairment analysis on information already collected, not information that
could be collected. And as to the latter, nowhere in the TRRO or the definition
of business lines does the FCC speak of using a factor-based analysis of business
line count.
       The FCC goes further in its rejection of Logix’s argument. Paragraphs
155-159 of the TRRO address the requisite granularity for impairment analysis.
The FCC rejects building-by-building3 analysis as that would require “collection
and analysis of information that is not easily verifiable, and is often within the
possession of competitive LECs.” TRRO ¶ 158. Instead, the agency adopted a
wire center level of granularity and looked particularly to the number of busi-
ness lines in the wire center. Id. ¶ 155. This level of granularity was chosen
even though “such a test may in some cases be under-inclusive . . . or over-in-
clusive.” Id. ¶ 155. The FCC was comfortable with that, because it considered
“not only actual competition within a given market, but also potential com-
petition within that market.” Id. ¶ 156.
       Business lines were therefore chosen as easily administrable proxies for
determining where significant revenue opportunities were available. The FCC
chose wire centers, not commercial buildings, as the appropriate level of analy-
sis. With this choice came the recognition of the imprecision of the method, but
the FCC determined that, because it was measuring potential competition in ad-
dition to actual competition, a certain level of imprecision was acceptable. It fol-

       3
          The FCC explicitly discusses its method in relation to an alternative method that
would count the number of commercial buildings, i.e. where business customers were. TRRO
at n.441.

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                                   No. 06-51697

lows that “over-counting” UNE loops by including those that serve residential
customers along with those that serve business customers comports not only
with the text of the rule but also with the policy underlying the TRRO.

                                        B.
      Logix’s second argument is that counting high capacity loops at the full
digital equivalency, rather than by looking to end user of each line in the high
capacity loop, is inconsistent with subpart (3) of the business line definition. See
47 C.F.R. § 51.5(3). In particular, Logix believes that only those lines in a high
capacity loop that are (1) connected to an end-user business customer, (2) provid-
ing switched access service, and (3) provided by either the ILEC or CLEC leasing
the UNE loop should be counted as business lines. Logix urges that if the FCC
had wished to declare all high capacity services as Business Lines, it could have
simplified the definition to say so. The FCC, however, does say so.
      First, as discussed above, there is a distinction between the definition of
a “business line” and the methodology of counting business lines for impairment
purposes. In counting business lines, the FCC expressly chose not to look to
end-users.
      Second, the requirement at issue provides that “business line tallies . . .
[s]hall account for ISDN and other digital access lines by counting each 64 kbps-
equivalent as one line.” 47 C.F.R. § 51.5. The regulation does not indicate that
ILEC’s or CLEC’s should, for the first time, undertake building-by-building, end-
user analysis. Instead, the plain language indicates that all lines in a high- ca-
pacity loop should count as business lines.
      Logix argues that the illustration that follows supports its case. The illus-
tration provides that “a DS1 line corresponds to 24 64 kbps-equivalent, and
therefore to 24 ‘business lines.’” Id. Nowhere does this example require separat-
ing the 24 lines into those that serve business customers and those that do not.

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                                        No. 06-51697

Instead, it seems to illustrate just the opposite result by requiring that each
64 kbps-equivalent should be counted as a separate business line without refer-
ence to its use.4

                                              III.
       The purpose behind the business line count methodology is impairment
analysis, which aims at determining whether the market in a particular locale
is robust enough to support unregulated competition. The FCC wanted to meas-
ure competition generally without the need for litigation or overly fact-based an-
alysis. It should not be surprising that the method is not absolutely precise.
Read as written, the regulation supports the PUC’s interpretation.
       AFFIRMED.

       4
         The quotation marks around “business lines” at the end of the illustration also point
in favor of the PUC. In common usage, quotation marks may be used ironically. WEBSTER’S
THIRD NEW INTERNATIONAL DICTIONARY 1868 (1986). Irony is sometimes used to “remov[e]
the semantic security of ‘one signifier: one signified.’” LISA HUTCHEON, IRONY’S EDGE: THE
THEORY AND POLITICS OF IRONY 13 (1994). In other words, to use quotation marks as they are
used in the definition is a method of referring to something, here 64 kbps-equivalents, that
ordinarily would not be encapsulated in the ordinary, un-ironic use of the term “business line.”
Sometimes, a “business line” is a “switched access line used to serve business customers.” For
purposes of impairment analysis, however, “business lines” are all 64 kbps-equivalents in a
high capacity loop.

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