Court Opinion

ID: 3041732
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:06:45.881318+00
Date Added: 2024-06-11T11:49:00.556781
License: Public Domain

United States Court of Appeals
                         FOR THE EIGHTH CIRCUIT
                                 ___________

                                 No. 05-3579
                                 ___________

Rural Iowa Independent                    *
Telephone Association,                    *
                                          *
             Plaintiff - Appellant,       *
                                          *
       v.                                 *
                                          *
Iowa Utilities Board, Utilities Division, *
Department of Commerce, sued as:          *
Iowa Utilities Board; Diane Munns,        *
individually and in her official          *
capacity as a member of the Iowa          *
Utilities Board; Mark O. Lambert,         * Appeal from the United States
individually and in his official          * District Court for the
capacity as a member of the Iowa          * Southern District of Iowa.
Utilities Board; Elliot Smith,            *
individually and an his official          *
capacity as a member of the Iowa          *
Utilities Board,                          *
                                          *
             Defendants - Appellees,      *
                                          *
Qwest Corporation,                        *
                                          *
             Intervenor Defendant -       *
             Appellee.                    *
                                    ___________

                            Submitted: May 15, 2006
                               Filed: January 8, 2007
                                ___________
Before BYE, HANSEN, and SMITH, Circuit Judges.
                            ___________

BYE, Circuit Judge.

        The Rural Iowa Independent Telephone Association (RIITA), an industry
association comprised of rural telephone carriers, challenges a decision of the Iowa
Utilities Board (IUB) regarding wireless phone calls which originate and terminate
within the same major trading area (MTA), or intraMTA wireless calls. The IUB
determined the rural carriers could not charge Qwest Corporation long-distance access
charges when Qwest bundled inbound intraMTA wireless traffic with long-distance
traffic before delivering it to the rural carriers. The IUB further determined the rural
carriers could not force their customers to use Qwest as an interexchange carrier (IXC)
(commonly understood as a long-distance carrier) for outbound intraMTA wireless
calls. The district court1 granted summary judgment upholding the IUB's decision.
We affirm.

                                           I

       This case exemplifies the tension which can result when the regulatory scheme
created by the Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56
(codified in scattered sections of 47 U.S.C.) (the Act), is applied to wireless phone
service. The "two types of charges which one carrier can extract from another for the
provision of telecommunication services" are reciprocal compensation, which governs
local service, and "access fee[s] charged by common carriers for use in carrying
long-distance telecommunications via their infrastructure, or toll services." Iowa
Network Servs., Inc. v. Qwest Corp., 363 F.3d 683, 686 (8th Cir. 2004). Under the
Act, phone companies are supposed to reach interconnection agreements to determine

      1
        The Honorable James E. Gritzner, United States District Judge for the Southern
District of Iowa.

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the charges and amounts paid amongst themselves for local phone calls. See 47
U.S.C. §§ 251(a) & (b) (setting forth the duties to interconnect and to establish
reciprocal compensation arrangements), and 252 (outlining the procedures for
reaching interconnection agreements). Access charges, on the other hand, are
determined by tariffs which carriers file either with the Federal Communications
Commission (FCC) (when the charges pertain to purely interstate communications)
or the applicable state utility commissions (when the charges pertain to intrastate
communications). See Iowa Network, 363 F.3d at 686.

       Wireless phone service, and the manner in which wireless calls are transported
over existing telephonic infrastructure, does not always "fit neatly," id. at 687, into
these two categories of charges. For example, the geographical boundaries of the
MTAs associated with wireless calls are not always the same as the boundaries for the
local exchange areas associated with traditional local phone service. Consequently,
intraMTA wireless calls can pass through or over more than one local exchange area
and thus be considered interexchange traffic and be delivered with long-distance
calls.

       Until 1999, Qwest not only delivered intraMTA wireless calls together with
long-distance traffic to the rural carriers in Iowa, but also paid access charges to the
rural carriers on the intraMTA wireless calls. Three years earlier, however, the FCC
had determined intraMTA wireless calls should be considered local in nature rather
than long-distance, and therefore be subject to reciprocal compensation rather than
access charges. See Implementation of the Local Competition Provisions of the
Telecommunications Act of 1996, Interconnection between Local Carriers and
Commercial Mobile Radio Service Providers, First Report and Order, 11 F.C.C.R.
15499, ¶¶ 1036, 1043 (1996) (hereinafter Local Competition Order). In April 1999,
although Qwest continued to deliver intraMTA wireless calls to the rural carriers
bundled together with long-distance traffic, it advised the rural carriers that it planned

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to stop paying access charges on such calls pursuant to the FCC's Local Competition
Order.

       When the rural carriers disagreed with Qwest's position on the continued
payment of access charges for intraMTA wireless traffic, Qwest filed a petition with
the IUB for a declaratory order regarding its obligations, as a transiting carrier, with
respect to wireless traffic exchanged between cellular phone companies and the rural
carriers using Qwest's network. The IUB opened a docket on Qwest's petition,
allowed a number of intervenors to join the action, and held extensive proceedings
including a nine-day evidentiary hearing. Following these proceedings, the IUB
issued a "Proposed Decision and Order"2 concluding the intraMTA wireless traffic at
issue was local in nature, and Qwest was not required to pay access charges to the
rural carriers. The IUB indicated cellular phone companies and rural carriers should
negotiate interconnection agreements amongst themselves for reciprocal
compensation.

        RIITA filed an administrative appeal of the proposed decision challenging the
conclusion that Qwest was not required to pay access charges for intraMTA wireless
traffic. Another issue raised on appeal was whether the proposed decision failed to
recognize the "right" of the rural carriers' customers to dial "0" or "1" prior to dialing
an intraMTA wireless number, thereby routing the outbound call through an IXC
(long-distance carrier) in order to complete the call, and triggering access charges.
The final decision issued by the IUB reaffirmed that Qwest was not responsible for
access charges for intraMTA wireless traffic. With respect to a customer's "right" to
dial an outbound local wireless call as a long-distance call, the IUB said:

      2
        Under the statutes and rules governing the IUB, a proposed decision issued by
the presiding officer becomes final unless a party files a timely administrative appeal.
See Iowa Code § 17A.15(3).

                                           -4-
      [This] argument assumes that customers should pay [access] charges in
      order to make local calls to wireless customers. However, it is obvious
      that if the customers were given the choice between making a local call
      to a wireless customer or making a toll call to the same wireless
      customer, most customers would likely waive their "right" to make a toll
      call using their preferred interexchange carrier in favor of making the
      same call as a local one, with no additional charges. The Board will
      affirm the Proposed Decision and Order on this issue and direct the [rural
      carriers] to allow their customers to dial these local calls as local calls.

Appellant App. at 87.

       RIITA filed an action against the IUB in federal district court challenging this
final administrative decision. After the district court allowed Qwest to intervene,
Qwest argued the case should be dismissed because RIITA was directly challenging
an FCC ruling, and therefore its suit should be brought in the first instance in a court
of appeals pursuant to the Hobbs Act, 28 U.S.C. § 2342. The district court agreed and
dismissed the suit. The case then took a detour through our court to determine
whether the Hobbs Act deprived the district court of jurisdiction to review the IUB's
decision. See Rural Iowa Indep. Tel. Ass'n v. Iowa Utils. Bd., 362 F.3d 1027 (8th
Cir. 2004). We disagreed with the conclusion that RIITA's suit directly challenged
an FCC ruling, and remanded to the district court to determine whether the IUB's
decision was consistent with the FCC's rulings and other federal law. Id. at 1030.

       On remand, the district court determined the IUB's decision did not violate
federal law. Specifically, the district court determined the IUB was within its
authority to require the rural carriers to engage in the negotiation/arbitration process
set forth in sections 251 and 252 of the Act. Further, the district court held the IUB
was within its authority to determine a transit carrier, like Qwest, should not have to
pay access charges for intraMTA wireless traffic.

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        RIITA filed a timely appeal. On appeal, RIITA contends the district court erred
in affirming the IUB's decision regarding inbound wireless traffic claiming the "core
issue is not whether the [carriers] can charge wireless carriers for local calls, but
whether they can charge Qwest for forcing the traffic on them." RIITA's Br. at 18.
RIITA further contends the district court failed to address the IUB's error in holding
rural carriers cannot use IXCs for outbound wireless traffic.

                                          III

      We review de novo whether the IUB's decision complied with federal law.
Connect Commc'ns Corp. v. Sw. Bell Tel., L.P., 467 F.3d 703, 708 (8th Cir. 2006).

        RIITA first argues rural carriers should be allowed to collect access charges
from Qwest for inbound intraMTA wireless calls, and the IUB could not require the
rural carriers to negotiate reciprocal compensation with wireless carriers. We
disagree, noting we have already upheld the sum and substance of the IUB's decision
in the related case of Iowa Network Services, Inc. v. Qwest Corp., 466 F.3d 1091 (8th
Cir. 2006) (Iowa Network II).

       Iowa Network II dealt with the same dispute over intraMTA calls, but between
Qwest and Iowa Network Services (INS). Like Qwest, INS acted as a transiting
carrier for the inbound intraMTA calls (i.e., when a wireless customer calls a rural
carrier's customer, the wireless carrier delivers the call to Qwest's network, which in
turn delivers the call to INS's network, which in turn delivers the call to the rural
carrier for termination at its customer's phone). The dispute between INS and Qwest
was also over access charges, and involved two of the same basic issues here: 1)
whether the IUB erred in determining the calls were local calls to which access
charges should not apply, and 2) whether the IUB was within its authority to require
the parties involved to seek reciprocal compensation for payment of the calls via the
negotiation/arbitration process set forth in sections 251 and 252 of the Act. With

                                         -6-
respect to both of those issues, we held the IUB acted within its authority and did not
violate federal law. See Iowa Network II, 466 F.3d at 1096, 1097-98.

       On this point, RIITA makes only one additional argument – not directly
addressed in Iowa Network II – that merits discussion. RIITA contends the FCC's
order in In the Matter of Developing a Unified Intercarrier Compensation Regime, T-
Mobile et al., 20 F.C.C.R. 4855 (2005) (hereinafter T-Mobile) allows a carrier to
charge access fees for intraMTA traffic, and thus the IUB's decision prohibiting such
charges is inconsistent with federal law. We disagree.

      The primary import of T-Mobile was to amend an FCC rule to prohibit local
exchange carriers (like RIITA's members) from collecting payment for wireless
intraMTA calls via access charges. The FCC did, however, state it was not per se
unlawful for parties terminating wireless calls to collect charges from wireless carriers
through the use of tariffs (i.e., access charges), as long as such tariffs did not conflict
with an existing interconnection agreement. T-Mobile, 20 F.C.C.R 4855 at ¶ 9.
RIITA relies upon that portion of the T-Mobile order to contend the FCC specifically
affirmed the use of tariffs by companies receiving local wireless traffic.

       T-Mobile is distinguishable from this case. First, it addressed disputes which
were directly between local exchange carriers and wireless carriers. Here, Qwest
merely acts as a conduit to facilitate what is essentially a transaction between a
wireless carrier and a local exchange carrier. The rural carriers want Qwest, a
transiting carrier, to pay for the calls in question instead of negotiating payment
directly with the originating carriers. Thus, T-Mobile does not stand for the
proposition RIITA espouses, i.e., that terminating carriers can make transiting carriers
pay access charges for intraMTA calls instead of seeking payment directly from the
originating carriers.

                                           -7-
        In addition, the FCC limited the holding in T-Mobile, indicating it did not apply
to tariffs that "purport[] to apply . . . even when a valid interconnection agreement
could be in place." Id. at ¶ 13 n.52 (emphasis added) (internal quotations and citation
omitted). Thus, T-Mobile actually reaffirms the FCC's "clear preference for
contractual arrangements for non-access" (i.e., intraMTA traffic), id. at ¶ 14, precisely
what the IUB required RIITA members to seek in this case. See Iowa Network II, 466
F.3d at 1098 (noting the FCC's "stated desire to move away from tariffs and toward
negotiation and arbitration in order to facilitate market competition," as reflected in
the T-Mobile order). Because nothing prevents the rural carriers from having in place
valid interconnection agreement between themselves and the originating wireless
carriers, T-Mobile does not apply.

       Finally, although the FCC indicated tariffs imposed by a terminating carrier
upon an originating carrier were not "per se" unlawful, nothing in T-Mobile requires
state public utility commissions to allow tariffs, or prevents state public utility
commissions from doing what the IUB did here, that is, requiring terminating carriers
to negotiate interconnection agreements directly with originating wireless carriers.
As a consequence, we reiterate what we said in Iowa Network II, and once again hold
that the IUB acted within its authority and did not violate federal law.

                                           IV

        RIITA next argues the IUB erred when it prohibited the rural carriers from
using Qwest as an IXC for outbound intraMTA traffic. Some additional background
will be helpful in understanding this issue. As we previously noted, carriers
compensate one another for local calls with reciprocal compensation agreements. But
because the originating and terminating traffic between two carriers tends to balance
itself out (i.e., the same number of Qwest customers originate local phone calls for
termination to Verizon customers as Verizon customers originate for termination to
Qwest customers, and the cumulative length of the phone calls terminated by either

                                          -8-
carrier is about the same), there would normally be very little difference in the
payment exchanged between two carriers. For this reason, the IUB adopted a rule
called "mutual exchange of traffic" by which each carrier bills its own customers for
local traffic and keeps the resulting revenue. This type of agreement is referred to
under the Act as a "bill-and-keep" agreement. See 47 U.S.C. § 252(d)(2)(B)(i). In
Iowa, only when one carrier can show a significant imbalance in the local traffic flow
for at least six months does one carrier actually have to make payment to another
carrier under a reciprocal compensation agreement. See Iowa Admin. Code 38.6(2).

       In the proceedings before the IUB, the Iowa Telecommunications Association
(ITA) argued the "bill-and-keep" method of payment should not apply to local
wireless traffic. The ITA contended the rural carriers should be able to charge any
carrier delivering calls from wireless carriers' customers because the traffic was not
in balance. The IUB rejected that position, noting the record contained very little
evidence of a traffic imbalance. The IUB further noted what evidence there was of
a traffic imbalance was skewed by the fact the rural carriers often required that
outbound intraMTA traffic be treated as long distance calls. The rural carriers
accomplished this by forcing their own customers to dial a "0" or "1" at the beginning
of an intraMTA wireless call, thus routing the call to an IXC (long-distance carrier).
This practice decreased the number of outbound local wireless calls. The IUB
recognized that by forcing their customers to initiate calls in this manner, the rural
carriers got a double benefit – not only would there be fewer outbound calls to balance
inbound traffic under a reciprocal compensation agreement, but the calls would then
be carried by an IXC and subject to access charges.

      In claiming the IUB erred on the issue of outbound traffic, RIITA is merely
attempting to perpetuate its members' practice of treating local wireless traffic as long-
distance traffic subject to access charges. If the rural carriers can force their
customers to dial a "0" or "1" to complete an intraMTA call, they can continue to
force carriers like Qwest to pay access charges for local wireless traffic. As a

                                           -9-
consequence, we conclude the IUB acted within its authority when it directed the rural
carriers to allow their customers to dial intraMTA calls as local calls.

                                          V

      For the reasons stated, we affirm the district court's grant of summary judgment
and uphold the IUB's decision.
                       ______________________________

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