Qwest Corp. v. Public Utilities Commission

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
March 5, 2007
UNITED STATES CO URT O F APPEALS Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT

QW EST CORPO RATION, a Colorado
corporation,

Plaintiff - Appellant, No. 06-1132

v.

THE PUB LIC U TILITIES
C OM M ISSIO N O F TH E STA TE OF
COLORADO, a regulatory agency of
the State of Colorado; GR EGO RY E.
SOPKIN, POLLY PAGE, and CARL
M ILLER, in their official capacities as
Commissioners of the Public Utilities
Commission of Colorado,

Defendants - Appellees.

----------------

V ERIZO N ,

Amicus Curiae.

QW EST CORPO RATION, a Colorado
corporation,

Plaintiff - Appellant, No. 06-4021

v.

PU BLIC SER VIC E C OM M ISSION
OF U TAH, a regulatory agency of the
 State of Utah; RICHARD M .
CAM PBELL; CONSTANCE B.
W HITE; TED BOYER, in their
official capacities as Commissioners
of the Public Service Commission of
Utah,

Defendants - Appellees.

A PPE AL FR OM T HE UNITED STATES DISTRICT COURT
FOR T HE D IST RICTS OF COLORADO AND UTAH
(D.C. No. 04-CV-2596-W YD-M JW )
(D .C . No. 04-CV-1136-TC)

John M . Devaney, Perkins, Coie, L.L.P., W ashington, D.C., for Plaintiff -
Appellant.

M ark T. Valentine, (John Suthers, Colorado Attorney General and Paul C. Gomez,
First Assistant Attorney General, State Services Section, on the brief), Denver,
Colorado, for Defendants - Appellees Public Utilities Commission of Colorado.

Scott H . Angstreich, Kellogg, Huber, H ansen, Todd, Evans & Figel, P.L.L.C.,
W ashington, D.C. (and G regory M . Romano, General Counsel - Northw est
Region, Everett, W ashington, on the brief), for Amicus Curiae Verizon.

Sandy J. M ooy, Attorney for Public Service Commission and Individual
Commissioners, Salt Lake City, Utah, for Defendants - Appellees Public Service
Commission of Utah.

Before KELLY, A LA RC ÓN, * and LUCERO, Circuit Judges.

KELLY, Circuit Judge.

*
The Honorable Arthur L. Alarcón, Senior Circuit Judge, United States
Court of Appeals for the Ninth Circuit, sitting by designation.

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 In these consolidated appeals, Plaintiff-Appellant Qwest Corporation asks

us to determine whether it was obligated to seek state utility commission approval

of a contract in which it agreed to provide M CImetro Access Transmission

Services, LLC (“M CImetro”), with access to a service known as Q west Platform

Plus™ . The Public Utility Commission of Colorado and the Public Service

Commission of Utah both independently determined that the Telecommunications

Act of 1996 (“the Act”)–specifically, 47 U.S.C. § 252(a)(1)–required Qwest and

M CImetro to submit their agreement for approval, and the district courts in

Colorado and Utah agreed. Qwest challenges this conclusion, asserting that the

filing obligation in § 252 arises only if an agreement contains network elements

that Q west must make available to other carriers pursuant to 47 U.S.C. § 251.

Our jurisdiction to review the district courts’ final orders arises under 28 U.S.C.

§ 1291, and we affirm.

Background

Through a merger, Qwest obtained U.S. W est, a former subsidiary of

AT& T which was divested pursuant to a consent decree between AT& T and the

United States government. Under current parlance, Qwest is known as a Bell

operating company (“BOC,” meaning a former AT& T subsidiary) and an

incumbent local exchange carrier (“ILEC,” meaning a local telephone service

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provider that used to have a monopoly in a certain area) in both Colorado and

Utah. As such, the Telecommunications A ct of 1996 requires Q west to share its

network resources with other telecommunications carriers (“competitive local

exchange carriers” or “CLECs”), that wish to enter Q west’s local markets.

M CImetro is a CLEC in Utah and Colorado.

I. Statutory Framew ork: The Telecommunications Act of 1996

For most of its history, “local phone service was thought to be a natural

monopoly.” A T& T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 371 (1999).

Accordingly, states alone regulated the industry, seeking to ensure that each local

monopolist provided adequate service at reasonable prices. 1 This regime began to

change in 1982, when AT& T agreed to divest itself of the local exchange carriers

that it owned. See United States v. AT& T, 552 F. Supp. 131 (D.D.C. 1982), aff’d

sub nom. M aryland v. United States, 460 U.S. 1001 (1983). Fourteen years later,

“Congress enacted the Telecommunications A ct of 1996, which fundamentally

changed telecommunications regulation by introducing competition in the local

service market.” Sw. Bell Tel. Co. v. Apple, 309 F.3d 713, 715 (10th Cir. 2002)

(internal quotation marks omitted). In passing the legislation, Congress hoped to

1
“States typically granted an exclusive franchise in each local service area
to a local exchange carrier (LEC), which owned, among other things, the local
loops (wires connecting telephones to switches), the switches (equipment
directing calls to their destinations), and the transport trunks (w ires carrying calls
between switches) that constitute a local exchange network.” Id.

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obtain the benefits of competition for the American consumer while avoiding, as

much as possible, the potential that established entities would use their existing

m arket pow er to prey on w ould-be market entrants. See Thomas G.

Krattenmaker, The Telecommunications Act of 1996, 29 Conn. L. Rev. 123, 129-

31 (1996).

Therefore, “incumbent LECs are subject to a host of duties intended to

facilitate market entry.” Iowa Utils. Bd., 525 U.S. at 371. These duties

“essentially require the incumbents to interconnect with and to rent parts of their

networks to new entrants–especially those parts of a local network that it is least

economic for a new entrant to duplicate.” James B. Speta, Antitrust and Local

Competition Under the Telecommunications Act, 71 Antitrust L.J. 99, 102-03

(2003). At the same time, the A ct provides for targeted monitoring of these

interconnections by state and federal regulators. See 47 U.S.C. § 252(e).

In this case, three provisions of the Act are at issue. The first is § 251,

which–among other things–imposes a duty on ILECs to “interconnect” w ith

would-be competitors. See 47 U.S.C. § 251(a)(1). The second is § 252, which

provides that an ILEC faced with a request for interconnection may either

negotiate an agreement with the requesting party or submit to arbitration by a

state regulatory agency; in either case, the resulting “interconnection agreement”

must be submitted to the state regulatory agency for approval. Id. § 252(a)-(b),

(e). The third provision at issue is § 271, which allows BOCs to provide long-

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distance telephone service to their customers as long as they comply with certain

conditions enumerated in the statute. Id. § 271(a). The dispute in this case is

whether the agreements between Qwest and M CImetro are “interconnection

agreements” that must be approved by state regulatory bodies pursuant to § 252,

whether they are simply agreements wherein Qwest agrees to provide the services

enumerated in § 271, or whether they are both.

A. Section 251: The D uties Imposed on Telecommunications Carriers

“Section 251 of the Act establishes a three-tier system of obligations

imposed on separate, statutorily defined telecommunications entities.” A tlas Tel.

Co. v. Okla. Corp. Comm’n, 400 F.3d 1256, 1262 (10th Cir. 2005). Under the

first tier, all carriers have the duty “to interconnect directly or indirectly with the

facilities and equipment of other telecommunications carriers.” 47 U.S.C. §

251(a)(1). In the second tier, all local exchange carriers (both ILECs and CLECs)

have the duty to resell telecommunications services without “unreasonable or

discriminatory conditions or limitations . . . .” Id. § 251(b)(1). They are also

obligated to provide number portability, dialing parity, access to rights of way,

and reciprocal compensation. Id. § 251(b)(2)-(5). Finally, the third tier contains

the “[f]oremost among these duties[:] . . . the [ILEC’s] obligation . . . to share its

netw ork with competitors.” Iowa Utils. Bd., 525 U.S. at 371; see 47 U.S.C. §

251(c).

The statute establishes three methods of providing access to an ILEC’s

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local network. See M CI Telecomm. Corp. v. Bell Atl.-Pa., 271 F.3d 491, 498 (3d

Cir. 2001). First, a CLEC “may build its own network and interconnect with the

[ILEC’s] network.” Id. (internal quotation marks omitted). 2 Second, a CLEC

“may lease individual elements of the existing network on an ‘unbundled basis’ at

‘any technically feasible point’ on ‘rates, terms, and conditions that are just,

reasonable, and nondiscriminatory.’” Id. at 499 (quoting 47 U.S.C. § 251(c)(3)).

Finally, a CLEC may purchase at wholesale prices the entire package of services

provided by the ILEC and simply resell them to customers. Id.; see also 47

U.S.C. § 251(c)(4)(A).

Each of these options benefits the CLEC because “[t]he firm need not build

that which the incumbent LEC has already built; the entrant may just plug into it,

at prices deemed fair by the FCC.” Krattenmaker, supra, at 139. The requirement

that ILECs share their networks is an integral part of the new regulatory scheme

because “[w]ithout [it], a new carrier’s entry barriers would be insurmountable.”

Speta, supra, at 118.

B. Section 252: The Filing Obligation

“Section 252 . . . specifically describes how § 251’s obligations are to be

implemented . . . .” Iowa Utils. Bd., 525 U.S. at 419 (Breyer, J., concurring in

2
The statute requires ILECs to “provide, for the facilities and equipment
of any requesting telecommunications carrier, interconnection with the local
exchange carrier’s network . . . for the transmission and routing of telephone
exchange service and exchange access.” 47 U.S.C. § 251(c)(2).

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part and dissenting in part). First, it permits carriers to negotiate interconnection

agreements on their own initiative:

Upon receiving a request for interconnection . . . services, or network
elements pursuant to section 251 of this title, an incumbent local
exchange carrier may negotiate and enter into a binding agreement
with the requesting telecommunications carrier or carriers without
regard to the standards set forth in subsections (b) and (c) of section
251 of this title. . . . The agreement . . . shall be submitted to the
State commission under subsection (e) of this section.

47 U.S.C. § 252(a)(1). This subsection allows the ILEC “to negotiate and enter

into a binding agreement with the new entrant to fulfill the duties imposed by §§

251(b) and (c) . . . .” Verizon M d., Inc. v. Pub. Serv. Comm’n of M d., 535 U.S.

635, 638-39 (2002) (internal quotation marks omitted). However, the “without

regard” clause indicates that “the parties may make agreements that go beyond or

contradict the specific statutory requirements that an incumbent must follow.”

Speta, supra, at 119.

After prescribing the procedure by which a CLEC may seek compulsory

arbitration by the state commission, the statute requires that all interconnection

agreements–those reached by negotiation and those reached by arbitration–be

submitted to the state agency for approval:

Any interconnection agreement adopted by negotiation or arbitration
shall be submitted for approval to the State commission. A State
commission to which an agreement is submitted shall approve or
reject the agreement, with w ritten findings as to any deficiencies.

47 U.S.C. § 252(e)(1). The statute offers only two permissible grounds for

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rejecting a negotiated agreement: (1) the agreement discriminates against a

non-party telecommunications carrier, or (2) the implementation of the agreement

is inconsistent with the public interest. Id. § 252(e)(2). Section 252(e)(6) permits

a party aggrieved by the action of a state commission to appeal the decision to the

district court, which must then determine “whether the agreement or statement

[submitted for approval] meets the requirements of section 251 of this title and

this section.”

C. Section 271: The Competitive Checklist and InterLATA Service

Section 271 allows an ILEC carrier to provide long-distance service

(“interLATA services”) 3 in its local market if that market is sufficiently

competitive. The ILEC may only provide in-region interLATA services if: (A) “it

has entered into one or more binding agreements that have been approved under

section 252 of this title specifying the terms and conditions under which the

[ILEC] is providing access and interconnection to its network facilities for the

network facilities of one or more unaffiliated competing providers of telephone

exchange service . . . to residential and business subscribers;” or (B) no CLEC

has requested access and interconnection. 47 U.S.C. § 271(c)(1)(A)-(B). Thus,

3
“All former Bell System territory has been divided into Local Access and
Transport Areas, or ‘LATAs.’ InterLATA service refers to what consumers know
as long-distance service; intraLA TA to what they know as local service (although
some intraLA TA calls may be ‘toll’ calls, depending upon classifications made by
the state regulatory bodies).” SBC Commc’ns, Inc. v. F.C.C., 138 F.3d 410, 412
n.1 (D.C. Cir. 1998) (internal citation omitted).

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the first condition “visualizes a demonstration of a competitor in the local

exchange market,” while the second is a “default” to prevent an ILEC from being

penalized simply because no competitor wishes to enter its market. SBC

Commc’ns, Inc. v. F.C.C., 138 F.3d 410, 413-14 (D.C. Cir. 1998).

If the ILEC is operating in a competitive market and wishes to qualify

under § 271(c)(1)(A), it must meet the requirements of § 251 as well as the

additional requirements of the “competitive checklist” in § 271(c)(2)(B):

“[n]ondiscriminatory access to the poles, ducts, conduits, and rights-of-way

owned or controlled by the [incumbent LEC] at just and reasonable rates;”

unbundled local loop transmission; unbundled “local transport from the trunk side

of a wireline local exchange carrier switch;” “local switching unbundled from

transport, local loop transmission, or other services;” and nondiscriminatory

access to other network resources (e.g., 911 and E911 services). 47 U.S.C. §

271(c)(2)(B)(ii)-(vii). “M ost of these conditions relate to the interconnection

obligations . . . that other provisions of that Act impose on each incumbent LEC. .

. . In short, the B OCs’ ability to offer long distance services and to manufacture

equipment is conditioned on their meeting their new open interconnection

responsibilities.” Krattenmaker, supra, at 141-42.

II. Regulatory Background: The FCC’s Interpretation of the Act

In 2002, Qwest petitioned the FCC for a declaratory ruling “about the types

of negotiated contractual arrangements between incumbent local exchange

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carriers (LECs) and competitive LECs that should be subject to the filing

requirements of [§ 252(a)(1)].” In re Qwest Commc’ns Int’l, Inc., 17 F.C.C.R.

19337, 19337 (2002). Qwest argued that “the following categories of

arrangements should not be subject to [the filing requirement in] section

252(a)(1): . . . agreements regarding matters not subject to sections 251 or 252

(e.g., . . . network elements that have been removed from the list of elements

subject to mandatory unbundling).” Qwest Corp. v. Pub. Serv. Comm’n of Utah,

No. 2:04-CV-1136 TC, 2005 W L 3534301, at *5 (D. Utah Dec. 21, 2005)

(quoting Qwest’s Petition Br.).

The FCC rejected this approach, advising that:

[A]n agreement that creates an ongoing obligation pertaining to
resale, number portability, dialing parity, access to rights-of-way,
reciprocal compensation, interconnection, unbundled network
elements, or collocation is an interconnection agreement that must be
filed pursuant to section 252(a)(1). . . . [W ]e do not believe that
section 252(a)(1) can be given the cramped reading that Qwest
proposes. Indeed, on its face, section 252(a)(1) does not further limit
the types of agreements that carriers must submit to state
commissions.

In re Qwest, 17 F.C.C.R. at 19341. However, the FCC also disagreed with

commentators w ho had urged that § 252 requires “the filing of all agreements

between an incumbent LEC and a requesting carrier.” Id. at 19341 n.26. Instead,

it ruled that “only those agreements that contain an ongoing obligation relating to

section 251(b) or (c) must be filed under 252(a)(1).” Id. Although it held that

agreements need not be filed if they “simply provide for ‘backward-looking

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consideration,’” the FCC otherwise “decline[d] to address all the possible

hypothetical situations presented in the record before [it].” Id. at 19342. Rather,

the FCC emphasized “that the state commissions should be responsible for

applying, in the first instance, the statutory interpretation we set forth today to the

terms and conditions of specific agreements.” Id. at 19340.

III. Procedural Background

Shortly after the passage of the Telecommunications Act, Qwest and

M CImetro entered into negotiations and reached an interconnection agreement

governing their relations in fourteen states, including Colorado and Utah.

Pursuant to 47 U.S.C. § 252, the carriers filed their agreement with the state

comm issions in Utah and Colorado, which approved it. Then, in early 2004,

Qwest and M CImetro culminated additional negotiations and reached two new

agreements, which M CImetro filed with both state commissions. The first was an

amendment to the earlier interconnection agreement, and the second was the

“Qwest M aster Services Agreement” (“QPP A greement”) at issue in this case. 4

Under the QPP A greement, Qwest contracted to provide M CImetro with a

service referred to as Qwest Platform Plus™ , which is comprised of two network

elements: switching and shared transport. Prior regulations required ILECs like

Qwest to provide these network elements pursuant to the duties imposed by

4
Both commissions approved the amendment to the original
interconnection agreement, and that action is not challenged here.

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§ 251(c)(3), but the FCC’s Triennial Review Remand O rder determined that

switching and shared transport were no longer required elements in most

instances. See In re Review of the Section 251 Unbundling Obligations of

Incumbent Local Exchange Carriers (TRRO), 18 F.C.C.R. 16978, 16989 (2003),

vacated in part, U.S. Telecom Ass’n v. F.C.C., 359 F.3d 554 (D .C. Cir. 2004).

Accordingly, Qwest may refuse to provide these elements to CLECs without

violating its obligations under § 251. How ever, 47 U.S.C. § 271 requires Qwest

to provide switching and shared transport if it wishes to offer long-distance

service to its local customers, and Qwest asserts that the sole purpose of the QPP

Agreement was to satisfy this § 271 obligation.

In July 2004, M CImetro petitioned both state commissions seeking

approval of the Q PP Agreement. Qwest timely moved to dismiss M CImetro’s

petitions, arguing that the commissions lacked the authority to approve the QPP

Agreement because it w as not an “interconnection agreement” under 47 U.S.C. §

252. Specifically, Qwest contended that it was not required to provide QPP

services by 47 U.S.C. § 251(b) or (c) and that the state commissions only had

authority to review agreements for services enumerated in those subsections.

Both comm issions disagreed, denying Qwest’s motions to dismiss and approving

the QPP Agreement. 5

5
Aside from denying Qwest’s motion to dismiss, the Utah Public Service
Commission took no action with respect to M CImetro’s petition for approval.

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 Qwest then filed actions against both commissions in the appropriate

district courts seeking declaratory and injunctive relief. It argued again that only

agreements containing obligations enumerated in § 251(b) and (c) are subject to

the filing requirement in § 252. The courts rejected Qwest’s arguments, and the

commissions’ orders w ere affirmed. Now, Qwest appeals both district court

rulings. The two cases were consolidated for oral argument, and we decide them

both in this opinion.

Discussion

I. Jurisdiction and Standing

Before reaching the merits of this case, we have an “independent duty” to

ensure that the district courts properly asserted jurisdiction over Q west’s lawsuits.

See Phelps v. Hamilton, 122 F.3d 1309, 1315-16 (10th Cir. 1997). Qwest sought

both a declaratory judgment, pursuant to 28 U.S.C. §§ 2201 and 2202, and an

injunction, invoking the district court’s jurisdiction under 28 U.S.C. § 1331 as

well as 47 U.S.C. § 252(e)(6). Although § 252(e)(6) by its own terms confers

jurisdiction only “to determine whether the agreement or statement meets the

requirements of section 251 of this title and this section,” the Supreme Court has

held that this statement “does not divest the district courts of their authority under

W hen a state commission fails to take action on a petition for approval within
ninety days, the agreement is deemed approved. See 47 U.S.C. § 252(e)(4).

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28 U.S.C. § 1331 to review [a] Commission’s order for compliance with federal

law.” Verizon M d., 535 U.S. at 642. The Court has also held that the district

courts’ federal question jurisdiction extends to lawsuits seeking declaratory and

injunctive relief against a state commission even though the challenged action

was neither the approval nor the rejection of a filed agreement. Id. at 642-43.

Accordingly, we have recognized that § 252(e)(6) “grants federal courts

jurisdiction in ‘any case’ in which a state commission makes a ‘determination’

under this section.” Sw. Bell Tel. Co. v. Brooks Fiber Commc’ns of Okla., Inc.,

235 F.3d 493, 497 (10th Cir. 2000). W e conclude that the district courts properly

asserted jurisdiction.

W e are likewise obliged to satisfy ourselves that Qwest had standing to

invoke the district courts’ jurisdiction. DaimlerChrysler Corp. v. Cuno, 126 S.

Ct. 1854, 1861 (2006). Article III of the Constitution bars the federal courts from

issuing advisory opinions; accordingly, “[a] plaintiff must allege personal injury

fairly traceable to the defendant’s allegedly unlawful conduct and likely to be

redressed by the requested relief.” Allen v. W right, 468 U.S. 737, 751 (1984).

Here, the injury-in-fact asserted by Qwest is an obligation (which it contends does

not apply) to file under § 252, which could force Qwest to provide switching and

shared transport services (no longer required under § 251(c)(3)) to other CLECs

on the same terms that it reached with M CImetro. See 47 U.S.C. § 252(i); In re

Qwest Corp., 19 F.C.C.R. 5169, 5180 (2004); Aplt. Supp. Br. on Juris. Issues at

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5-6. This claimed injury could be redressed if we determined that the Utah and

Colorado commissions were in error in requiring Qwest to file the QPP

Agreement; if we vacated the commissions’ orders, § 251(i) would be rendered

inapplicable and no CLEC could force Qwest to accept the same terms it agreed

upon w ith M C Imetro. A ccordingly, we conclude that Qwest has standing, and w e

proceed to consider Qwest’s appeals on the merits.

II. Is the QPP A greement an Interconnection Agreement Subject to Filing?

The question presented in these appeals is w hether the QPP Agreement is

an interconnection agreement that must be filed pursuant to § 252 of the

Telecommunications Act of 1996. W e apply “a de novo standard when reviewing

state commissions’ interpretations of the Act . . . , as those decisions turn on

determinations of federal law .” Sw. Bell, 309 F.3d at 717; see also Atlas Tel.

Co., 400 F.3d at 1260.

Our own statutory interpretation begins with the plain language of the Act.

United States v. Saenz-Gomez, 472 F.3d 791, 793 (10th Cir. 2007). W e “construe

the words of the statute in their ordinary sense . . . giv[ing] effect, if possible, to

every word of the statute.” Quarles v. U.S. ex rel. Bureau of Indian Affairs, 372

F.3d 1169, 1172 (10th Cir. 2004). How ever, given that “[i]t would be a gross

understatement to say that the 1996 Act is not a model of clarity. It is in many

im portant respects a model of ambiguity or indeed even self-contradiction,” Iow a

Utils. Bd., 525 U.S. at 397, we must defer to reasonable FCC interpretations of

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the Act where they are applicable, see Chevron U.S.A., Inc. v. Natural Res. Def.

Council, Inc., 467 U.S. 837, 842-43 (1984).

The parties agree that a contract must be filed as an interconnection

agreement if it “contain[s] an ongoing obligation relating to section 251(b) or (c) .

. . .” In re Qwest, 17 F.C.C.R. at 19341 n.26. 6 Section 251(c) imposes “[t]he

duty to provide, for the facilities and equipment of any requesting

telecommunications carrier, interconnection with the local exchange carrier’s

network . . . .” 47 U.S.C. § 251(c)(2). “Interconnection” is defined as “the

physical linking of two networks for the mutual exchange of traffic.” In re

Implementation of the Local Competition Provisions in the Telecomms. Act of

1996 (First Local Competition Order), 11 F.C.C.R. 15499, 15514 (1996), vacated

in part, People of the State of Cal. v. F.C.C., 124 F.3d 934 (8th Cir. 1997), rev’d

in part sub nom. AT& T Corp. v. Iowa Utils. Bd. 525 U.S. 366 (1999). 7 Therefore,

6
The parties have not contested the validity of this FCC interpretation,
nor could they. See 28 U.S.C. § 2342. Indeed, Qwest asserts that the FCC’s
interpretation of 47 U.S.C. § 252 in its Declaratory Order is “entirely consistent
with the plain language and structure of the Act.” Qwest Utah Br. at 50.
7
Neither the Eighth Circuit nor the Supreme Court undermined the
Commission’s definition of “interconnection,” and it has continued to rely on that
definition in its adjudications. See, e.g., In re Verizon New England, Inc., 17
F.C.C.R. 7625, 7740-41 (2002); In re Total Telecomms. Servs., Inc., 16 F.C.C.R.
5726, 5736 (2001) (“W e have previously held that the term ‘interconnection’
refers solely to the physical linking of two networks, and not to the exchange of
traffic between networks.”). Furthermore, the D.C. Circuit has accepted this
definition as a reasonable interpretation of the Act. AT& T Corp. v. F.C.C., 317
F.3d 227, 235 (D.C. Cir. 2003); see also Brooks Fiber, 235 F.3d at 494 (“The
terms under which the networks are connected are contained in ‘interconnection

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we must affirm if the QPP A greement contains ongoing obligations related to the

physical linking of two networks.

Alternatively, we must affirm if we conclude that the QPP A greement

contains an ongoing obligation relating to unbundled network elements. Section

251(c) imposes the duty “to provide . . . nondiscriminatory access to network

elements on an unbundled basis at any technically feasible point,” 47 U.S.C.

§ 251(c)(3), if “the failure to provide access to such network elements w ould

impair the ability of the telecommunications carrier seeking access to provide the

services that it seeks to offer,” id. § 251(d)(2)(B). Congress has provided that

“[t]he term ‘network element’ means a facility or equipment used in the provision

of telecommunications service. Such term also includes features, functions, and

capabilities that are provided by means of such facility or equipment . . . .” Id. §

153(29). Accordingly, the QPP Agreement was subject to filing under § 252 if it

contains an ongoing obligation relating to a facility or equipment used in the

provision of telecommunications service.

A. Sw itching

Switches are “equipment directing calls to their destination.” Iowa Utils.

Bd., 525 U.S. at 371. Although the FCC has not given a simple and authoritative

definition of the term “switching,” its discussion of the term in the TRRO makes

agreements.’”). Qwest has not challenged its validity here.

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very clear that switching relates to the physical linking of two networks. The

FCC began by noting “that an important function of the local circuit switch is as a

means of accessing the local loop.” TRRO, 18 F.C.C.R. at 17244 ¶ 429.

M oreover, “one of the most essential functions a switch performs is to provide

routing information that sends a call to the appropriate destination.” Id. at 17246

¶ 434. The FCC explained that CLECs must either gain access to the ILEC’s

switches or create physical connections between their own switches and the

ILEC’s loop in order to provide local service. Id. at 17244 ¶ 429. Additionally,

switching “performs several specific functions, including connecting loop

facilities to the network, switching loops to other lines and trunks, and providing

service capabilities to customers, such as dial tone and vertical features.” Id. at ¶

430. The Commission has defined switching “to encompass line-side and

trunk-side facilities, plus the features, functions, and capabilities of the switch . . .

includ[ing] the basic sw itching function of connecting lines to lines, lines to

trunks, trunks to lines, and trunks to trunks.” Id. at 17245-46 ¶ 433 (internal

citations omitted).

In the TRRO, the FCC determined that ILECs were not required to provide

switching as an unbundled network element pursuant to § 251(c)(3) because the

failure to provide access to sw itching would not impair a CLEC’s ability to

provide local telephone service to its customers. See TRRO, 18 F.C.C.R. at

16989; 47 U.S.C. § 251(d)(2)(B). However, the conclusion that § 251(c)(3) does

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not require ILECs to provide sw itching says nothing about whether sw itching is

related to the obligation to interconnect found in § 251(c)(2). Insofar as the FCC

has described “the basic sw itching function of connecting lines to lines, lines to

trunks, trunks to lines, and trunks to trunks,” TRRO, 18 F.C.C.R. at 17246 ¶ 433,

switching is unmistakably related to the physical connection of two netw orks.

See also M CI, 271 F.3d at 502 (characterizing remote switching

modules–instruments that contain multiple switches–as “devices used for

interconnection”). Accordingly, we conclude that agreements–such as the QPP

Agreement–that permit ongoing access to an ILEC’s switches are interconnection

agreements that must be filed under 47 U.S.C. § 252.

Furthermore, the switching service in the QPP A greement is related to the

provision of unbundled network elements under § 251(c)(3). Qwest does not

dispute that switching is a network element, see Qwest Utah Br. at 69, and the

QPP A greement gives M CImetro ongoing access to switching on an unbundled

basis. Although the FCC has concluded that a lack of access to sw itching would

not impair M CImetro’s ability to provide services within the meaning of

§ 251(d)(2)(B), the FCC has also determined that access to sw itching generally

facilitates a CLEC’s ability to provide services, especially in the mass market.

TRRO, 18 F.C.C.R. at 17249-55 ¶¶ 438-47. Thus, while access to sw itching is

not required by § 251(c)(3), it is related to Qwest’s § 251(c)(3) obligations

because it will assist M CImetro in providing services. As a result, § 252 required

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Qwest and M CImetro to file the Q PP Agreement with the state commissions.

B. Shared Transport

Transport trunks are “wires carrying calls between sw itches.” Iowa Utils.

Bd., 525 U.S. at 371. The FCC has defined shared transport as “transmission

facilities shared by more than one carrier, including the incumbent LEC, between

end office switches, between end office switches and tandem switches, and

between tandem switches in the incumbent LEC’s network.” TRRO, 18 F.C.C.R.

at 17319 ¶ 533; see also U.S. Telecom Ass’n v. F.C.C., 359 F.3d 554, 588 (D.C.

Cir. 2004). 8 It has also noted that “sw itching and shared transport are

inextricably linked,” such that a CLEC must be given access to unbundled shared

transport if it is entitled to unbundled switching under 47 U.S.C. § 251(c)(3).

TRRO, 18 F.C.C.R. at 17319-20 ¶ 534.

In light of this understanding of shared transport, we conclude that shared

transport relates to the physical linking of two networks. Indeed, calls must often

8
According to the QPP Agreement:

Qwest will provide Shared Transport to carry originating access
traffic from, and terminating to, M CI Q PP™ End User Customers.
M CI traffic will be carried on the same transmission facilities
between End Office Switches, between End Office Switches and
Tandem Switches, and between Tandem Switches in its network
facilities that Qwest uses for its own traffic.

Qwest Utah Br. Attach. 3 (QPP Agreement) ¶ 1.5.2. This clearly envisions a
linking of M CImetro’s network and Qwest’s network.

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pass through a switch, travel across a shared transport trunk, and then pass

through another sw itch in order to cross from one network to another. In this

way, switching and shared transport are “inextricably linked” and both relate to

the physical connection of two networks.

Likewise, shared transport relates to Qwest’s obligation to provide

unbundled network elements. Shared transport is a network element that Qwest is

providing on an unbundled basis. The FCC has determined that a lack of access

to shared transport impairs a CLEC’s ability to provide services to the extent that

a lack of access to switching impairs the CLEC’s ability to provide services. Id.

As with switching, access to shared transport facilitates the CLEC’s provision of

services to its customers. It is therefore related to the ILEC’s § 251(c)(3) duty to

provide access to unbundled network elements whose absence would impair the

CLEC’s ability to provide services.

III. Qwest’s Contrary Arguments

Qwest valiantly attempts to persuade us to adopt a very narrow reading of

the Act and the FCC’s precedents. It conveniently ignores the word “relating” in

the FCC’s interpretation of the Act, asserting that “[i]f an agreement does not

involve these Section 251 [(b) and (c)] duties, the Section 252 process cannot be

triggered and the agreement, as a matter of law, cannot be an ‘interconnection

agreement’ subject to the Section 252 filing requirement.” Qwest Utah Br. at 39-

40 (emphasis added). In support of this reading, Qwest advances four main

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arguments, all of which we find unpersuasive. 9

A. Section 252’s “Pursuant to Section 251” Clause

First, Qwest argues that the introductory clause of § 252(a) excludes the

QPP A greement from the filing requirement. According to § 252(a), “[u]pon

receiving a request for interconnection, services, or network elements pursuant to

section 251,” an ILEC may negotiate an interconnection agreement, which must

be submitted to the state commission. Qwest argues that “pursuant to 251” means

that the CLEC must have requested access to an element that the ILEC has a duty

to provide under § 251(c) and that the ultimate agreement must “implement [a]

Section 251 requirement.” Qwest Utah Br. at 46-47.

In support of this position, Qwest points to a recent federal district court

decision from M ontana. Qwest Corp. v. Schneider, No. CV-04-053-H-CSO , 2005

U.S. Dist. LEXIS 17110 (D. M ont. June 5, 2005). In Schneider, Qwest appealed

from a decision by the M ontana Public Service Commission that asserted

jurisdiction over a line sharing agreement betw een Qwest and Covad. Id. at *1-2.

The parties in Schneider–like the parties in this case–agreed that the agreement

was for access to an element that was not a required unbundled network element

under § 251(c)(3). See id. at *14. Thus, the court was confronted with the legal

9
Qwest has also made innumerable ancillary arguments–which we have
considered and necessarily rejected given our resolution of the main questions–in
the 235 pages of briefing that it has submitted in this case.

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question of w hether § 252’s filing obligation could apply to elements that were

not required by § 251. In holding that the agreement was not subject to filing

under § 252, the court interpreted “pursuant to section 251” to limit the filing

obligation to “those agreements that contain section 251 obligations.” Id. at *20

(emphasis added). It also held that its interpretation was consistent with the

language “ongoing obligation relating to section 251(b) or (c)” in the FCC’s

Declaratory Order. See id. at *21.

Qwest argues that the state commissions reached the opposite result after

considering that exchange carriers who receive requests pursuant to section 251

may negotiate agreements “without regard to the standards set forth in subsections

(b) and (c) of section 251.” 47 U.S.C. § 252(a)(1). Qwest asserts that the

comm issions believed that this phrase freed their approval authority from the

specific provisions of those subsections, and it urges us to interpret the phrase as

permitting the parties to reach terms not required by § 251 (for example, a

different pricing method) but only with respect to the network elements included

in § 251(c)(3). An alternative understanding of the statute, Qwest contends,

leaves “no practical limit on the agreements over which state commissions w ould

have jurisdiction.” Qwest Utah Br. at 47.

However, Qwest’s reading of the “without regard” clause does not confirm

its interpretation of “pursuant to” in § 252(a). The plain language of § 252

directs that when an ILEC has received a request for network access as described

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in § 251(b) and (c)–resale, number portability, dialing parity, access to rights-of-

way, reciprocal compensation, interconnection, unbundled access, or

collocation–it may negotiate an agreement for one or more of these means of

network access. See 47 U.S.C. § 252(a)(1). The statute does not say that the

agreement may only provide what is described in § 251(b) and (c). Instead, it

must be given a broader reading that is consistent with the FCC’s understanding

of “interconnection, services, or network elements.” 10 Id. § 252(a). The most

logical reading of the statute is that the filing obligation in § 252 covers

agreements reached following a request for interconnection–that is, “the physical

linking of two networks,” First Local Competition Order, 11 F.C.C.R. at

15514–or network elements–that is, “facilit[ies] or equipment used in the

provision of telecommunications service,” 47 U.S.C. § 153(29) 11 –or services.

Qwest’s reading is too narrow, both because it would exclude an agreement that

contained an “ongoing obligation relating to section 251(b) or (c)” if it did not

specifically include a required element under those subsections and because it

would exclude an agreement that contained a required element but was initiated

10
After all, the statute terms the resulting agreements “interconnection
agreements.”
11
Qwest suggests that this definition “is so broad that it is difficult to
conceive of anything in a telecommunications network that does not fall within its
terms.” Qwest Utah Br. at 69. W e believe, however, that the breadth of the
definition shows Congress’s desire to subject a broad range of agreements to the
filing requirement.

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by a request for a non-required element. 12

It is notable that Congress chose three terms with broad meanings–

“interconnection, services or network elements”–rather than the more specific and

narrow language it used in § 251. Qwest argues that Congress used the term

“network elements” when it meant “unbundled network elements” as that term is

used in § 251. Adopting this interpretation would require us to ignore the word

“unbundled” in contravention of the “familiar principle of statutory construction

that courts should give effect, if possible, to every word that Congress has used in

a statute.” Conn. Dep’t of Income M aintenance v. Heckler, 471 U.S. 524, 530

n.15 (1985). This we refuse to do.

Sections 251 and 252 were designed to address different concerns, and

Congress prescribed different criteria by which to judge compliance with the

obligations they impose. W hile the mandatory provision of a network element

under § 251(c)(3) is triggered by a finding that a lack of access “impairs” a

CLEC’s ability to provide services, see 47 U.S.C. § 251(d)(2)(B), a state

12
Imagine that Qwest’s interpretation is correct. In this case, M CImetro
initiated the negotiations with a request for switching and shared transport, which
are not required unbundled network elements under § 251(c)(3). If Qwest had
offered to include collocation in the agreement, as well, the agreement would not
be subject to the filing requirement even though collocation is covered by
§ 251(c)(6) because the initiating request was not made “pursuant to section 251.”
This odd result suggests that Qwest’s interpretation is not correct. See Clinton v.
City of N ew York, 524 U.S. 417, 429 (1998) (refusing to adopt a statutory
reading that “w ould produce an absurd and unjust result which Congress could
not have intended.”).

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comm ission can only reject a voluntarily negotiated agreement if it finds that the

agreement is discriminatory or inconsistent with the public interest, see id. §

252(e)(2)(A)(i)-(ii). Thus, § 251 obligations reflect Congress’s concern for the

interests of the requesting carrier, whereas the § 252 filing requirement is driven

by concerns for the public interest and the interests of other non-party carriers.

Congress sensibly recognized that the class of network elements whose non-

provision would impair a CLEC’s ability to enter the market is substantially

narrower than the class of network elements whose provision on favorable terms

could discriminate or impact the public interest. Accordingly, we conclude that

Congress used “unbundled network elements” in § 251(c)(3) and “network

elements” in § 252(a) because it intended to convey different meanings in those

tw o sections.

It is also significant for the purposes of this case that switching and shared

transport are undoubtedly “network elements,” 13 although they are not included in

the category of network elements that must be offered on an unbundled basis

pursuant to § 251(c)(3) and § 251(d)(2). Sw itching and shared transport do not

qualify as unbundled network elements under § 251(c)(3), but we need not look to

§ 251(c)(3) for a definition of “network element” because Congress defined the

term in § 153(29). The TRRO leaves no doubt that the FCC considers switching

13
Indeed, Qwest admits as much. See Qwest Utah Br. at 69.

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and shared transport to be network elements, and that understanding is entirely

consistent with the definition given in § 153(29).

Therefore, we are not persuaded by Qwest’s argument that the QPP

Agreement was not subject to filing under § 252 because it was not negotiated

following a request made “pursuant to section 251.” Qwest does not challenge

the FCC’s determination that agreements must be filed if they contain an

“ongoing obligation relating to section 251(b) or (c),” and the Commission’s use

of the w ord “relating” is entirely consistent with Congress’s use of terms that are

similar to, but broader than, those found in § 251. Schneider’s holding that

agreements containing an “ongoing obligation relating to section 251(b) or (c)”

are “those agreements that contain section 251 obligations” is entirely untenable.

See Schneider, 2005 U.S. Dist. LEXIS at *20-21 (emphasis added). The

“practical limit” that Qwest seeks comes not from the “pursuant to” clause but

from the FCC’s use of the word “relating.” Thus, not all agreements between

carriers must be filed; rather, only those containing an “ongoing obligation

relating to section 251(b) or (c)” are subject to § 252’s filing requirement.

B. The Arbitration Element of Section 252

Qwest next contends that the range of negotiated agreements subject to

filing is coextensive with the range of arbitrated agreements that must be filed

pursuant to § 252. Because a CLEC may only compel arbitration of issues that

the ILEC is under a duty to negotiate pursuant to § 251(c)(1), the

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“interconnection agreements” that result from arbitration necessarily include only

the issues mandated by § 251(b) and (c). See, e.g., M CI Telecomms. Corp. v.

BellSouth Telecomms., Inc., 298 F.3d 1269, 1274 (11th Cir. 2002). Qwest argues

that it would be strange to interpret “interconnection agreement” to cover a

broader spectrum of issues when the agreement is generated by negotiation than

when it is created by arbitration.

W e disagree. It makes perfect sense that the commission may only compel

an ILEC to arbitrate with respect to services that it is under a duty to provide.

Arbitration is an option specifically designed to address situations where an ILEC

is under a duty to provide a service but cannot reach an agreement with a CLEC;

deadlock would violate the ILEC’s statutory duty to provide the element, but

allowing no alternative would permit the CLEC to force the ILEC to accept

unfavorable terms in order to avoid violating its duty. W hen negotiations fail,

arbitration must be broad enough to allow the ILEC to fulfill its statutory

obligation. However, the state commissions cannot create a duty to provide

services not required by the statute, so their arbitration power cannot extend

beyond the four corners of § 251.

Negotiation, on the other hand, has no such constraints. A negotiated

agreement may cover any number of issues, som e required by § 251 and others

not. Negotiated agreements may include more issues than arbitrated agreements,

but both can still be considered “interconnection agreements” under § 252.

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Nothing in the statute suggests that the term “interconnection agreement” covers a

field precisely as broad as the arbitration option and no more so. The fact that

arbitrated agreements are confined to § 251 duties in no way limits the scope of

negotiated agreements that are subject to filing under § 252.

C. The Limited Scope of Permissible Judicial Review

Pursuant to § 252(e)(6), federal courts are empow ered to review

determinations by state commissions concerning interconnection agreements to

ensure that “the agreement or statement meets the requirements of section 251 of

this title and this section.” 47 U.S.C. § 252(e)(6). Qwest argues that “[i]f

Congress had intended to give state commissions the authority to review and

approve agreements that do not contain the duties listed in Section 251, it would

not have limited judicial review in this manner.” Qwest Utah Br. at 42. The

Supreme Court has made clear, however, that district courts have broad federal

question jurisdiction to review determinations made by state commissions,

including decisions made wholly independent of § 251. Verizon M d., 535 U.S. at

642. Furthermore, the FCC has ruled that state commissions have approval

authority over any agreement that contains ongoing obligations relating to § 251

duties. Thus, even if Qwest is correct that Congress intended the scope of

judicial review to be coextensive w ith the scope of the state commissions’

authority over interconnection agreements, it is clear that the federal courts are

empow ered to review a decision under § 252 that an agreement contains ongoing

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obligations related to § 251 duties.

D. Section 271

Finally, Qwest urges us to rely on the QPP A greement’s self-

characterization as an effort to fulfill Q west’s obligations under 47 U.S.C. § 271.

Of course, we determine de novo–without regard to the parties’ stated

intent–whether the QPP A greement is an interconnection agreement that must be

filed pursuant to § 252. M oreover, Qwest’s argument is unconvincing because

the requirements of § 271 and § 251 are not mutually exclusive. Indeed, the

competitive checklist in § 271 specifically requires Qwest to comply with the

obligations in § 251(c)(2) and (3). See id. § 271(c)(2)(B). All interconnection

agreements that fulfill the duties imposed by § 251(c)(2) or (3) necessarily fulfill

competitive checklist obligations, as well. The QPP A greement may well have

been intended to satisfy the requirements of § 271, but this has no bearing on

whether the agreement should also be considered an interconnection agreement

under § 252.

W e likewise reject Qwest’s contention that the Colorado Commission erred

in concluding that § 271 included an independent filing requirement. See Qwest

Colo. Br. at 65-67. This is a spurious interpretation of the Commission’s order;

the Commission merely noted that the filing of interconnection agreements under

§ 252 assists it in discharging its § 271(c) obligation to consult with the FCC

regarding a BOC’s compliance with the competitive checklist. See In re: the

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Application for Approval of Interconnection Agreement Between U .S. W est

Commc’ns, Inc., and M CImetro Access Transmission Servs., LLC, Docket No.

96A-366T, Decision No. C04-1349, Order Approving Interconnection Agreement

(P.U.C. Colo. Nov. 16, 2004). The Commission made its holding very clear:

W e do not accept Qwest’s interpretation of the Declaratory Order.
W e believe that the FCC set forth guidelines as to what constitutes an
interconnection agreement, and intends that state commissions apply
those guidelines in determining what agreements need to be filed for
approval. W e believe that the QPP A greement is an “interconnection
agreement.” As argued by M CImetro, the agreement, which relates
to mass market switching and shared transport, is an agreement for
“network elements,” even if they are provided under § 271 of the
Act. The QPP Agreement meets the criteria set forth in the FCC
Declaratory Order . . . for evaluating what is an interconnection
agreement. It sets forth ongoing obligations that relate to
interconnection and unbundled network elements. As an
interconnection agreement, it must be filed under § 252(e)(1).
Indeed, we believe that all agreements which set forth ongoing
obligations which relate to interconnection and unbundled network
elements must be filed with this Commission pursuant to § 252(e)(1).

Id. at 8. W e wholly agree.

A FFIR ME D.

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