Global Naps, Inc. v. Verizon New England, Inc.

United States Court of Appeals
For the First Circuit
No. 04-1711

GLOBAL NAPS, INC.,

Plaintiff, Appellant,

v.

VERIZON NEW ENGLAND, INC.; MASSACHUSETTS
DEPARTMENT OF TELECOMMUNICATIONS AND ENERGY;
PAUL B. VASINGTON, in his capacity as Commissioner;
JAMES CONNELLY, in his capacity as Commissioner;
W. ROBERT KEATING, in his capacity as Commissioner;
DIEDRE K. MANNING, in her capacity as Commissioner; and
EUGENE J. SULLIVAN, in his capacity as Commissioner,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Rya W. Zobel, U.S. District Judge]

Before
Lynch, Lipez, and Howard, Circuit Judges.

William J. Rooney, Jr., with whom Jeffrey Melick was on brief,
for appellant.
Scott H. Angstreich, with whom Bruce P. Beausejour, Keefe B.
Clemons, Sean A. Lev, Mary Ann McGrail, and Kellogg, Huber, Hansen,
Todd, & Evans were on brief, for appellee Verizon New England, Inc.
Thomas A. Barnico, Assistant Attorney General, with whom
Thomas F. Reilly, Attorney General, was on brief, for appellee
Massachusetts Department of Telecommunications and Energy.

January 19, 2005
 LYNCH, Circuit Judge. This appeal represents one part of

a larger dispute between Global NAPs, a competitive local exchange

carrier (CLEC), and Verizon New England, Inc., an incumbent local

exchange carrier (ILEC), in their attempt to reach an

interconnection agreement under the Telecommunications Act of 1996

(TCA), Pub. L. No. 104-104, 110 Stat. 56 (codified as amended in

scattered sections of 47 U.S.C.). The TCA sets up detailed

procedures for the creation of interconnection agreements in order

to serve the TCA's goal of fostering competition in local telephone

markets. Those procedures allow competing carriers to gain access

to the incumbent carrier's telecommunications network and

facilities and govern the terms and fees of that access.

Global NAPs appeals from the district court's judgment

affirming a February 19, 2003 order of the Massachusetts Department

of Telecommunications and Energy (DTE), the state commission given

the power to arbitrate disputes over interconnection agreements

under the TCA. 47 U.S.C. § 252(b). The February 19, 2003

administrative order followed an earlier December 12, 2002 DTE

order deciding the arbitration between Verizon and Global NAPs.

That arbitration had been initiated by Global NAPs after a period

of negotiation with Verizon failed to produce an agreement on all

issues.

The challenged February 19 order allowed a remedial

motion by Verizon to force Global NAPs to sign an interconnection

-2-
agreement consistent with the terms of the DTE's earlier December

12 arbitration order. Verizon brought this motion because Global

NAPs had balked at the December 12 arbitration order, said it was

not bound by the result of the arbitration, and that it was instead

exercising what it thought was its unconditional right under

§ 252(i) of the Act to adopt the terms of an interconnection

agreement Verizon had with Sprint, which preexisted Global NAPs'

arbitration request.

The merits of the underlying December arbitration order

from the DTE are not before us. The merits issue before us is

whether in its February order the DTE acted in violation of

§ 252(i) of the TCA in precluding Global NAPs from nullifying and

avoiding the effect of the arbitration –- which binds Global NAPs

and Verizon to an agreement –- by instead opting into the terms of

an older agreement Verizon had signed with Sprint. If Global NAPs

were free to so opt in, that would moot the challenge to the

underlying December arbitration order. We find that the DTE's

February 19 order was not in violation of the TCA and affirm the

district court.

I.

Before the passage of the TCA, local telephone service

was provided mainly by state-regulated monopolies, such as Verizon.

These monopolies, the ILECs, owned all networks and facilities

(including telephone lines, poles, trunks, etc.) attendant to the

-3-
provision of local telephone service. See AT&T Corp. v. Iowa

Utils. Bd., 525 U.S. 366, 371 (1999). A purpose of the TCA was to

end the local telephone monopolies and create a national

telecommunications policy that strongly favored competition in

local telephone markets. See P.R. Tel. Co. v. Telecomm. Regulatory

Bd. of P.R., 189 F.3d 1, 7 (1st Cir. 1999).

Section 251 of the TCA imposes obligations on both

competing carriers and incumbent carriers. Section 251(a)(1)

imposes a duty on all carriers "to interconnect directly or

indirectly with the facilities and equipment of other

telecommunications carriers." 47 U.S.C. § 251(a)(1). The TCA

imposes on an incumbent carrier more stringent duties, including

"the duty to permit other carriers to interconnect with its

facilities, to provide other carriers with access to elements of

its local network on an 'unbundled' basis, to sell to other

carriers at wholesale prices the services that it provides to its

customers, and to negotiate interconnection agreements in good

faith." P.R. Tel. Co., 189 F.3d at 8; see 47 U.S.C. § 251(c).

Section 252 provides the procedures for the creation of

interconnection agreements.1 Interconnection agreements govern the

1
In addition to pursuing an interconnection agreement, a
competitor may also seek access to the incumbent's network by
purchasing local telephone services at wholesale rates for resale
to end users or by leasing elements of the incumbent's network on
an "unbundled basis." 47 U.S.C. § 251(c); U.S. West Communication,
Inc. v. Sprint Communication Co., 275 F.3d 1241, 1244 (10th Cir.
2002).

-4-
terms and conditions by which CLECs may gain access to the ILECs'

local telephone network and facilities, thus allowing the CLECs to

provide competing local telephone service. Incumbents and

competitors may negotiate freely an interconnection agreement, and

both parties have a duty to negotiate in good faith. 47 U.S.C.

§ 251(c)(1). If the parties reach an agreement through

negotiation, that agreement need not satisfy the substantive

requirements of §§ 251(b) and (c). Id. § 252(a)(1). If after a

period of negotiation the parties are not able to come to an

agreement on some issues, either party may petition a state

commission to decide those open issues in arbitration. Id.

§ 252(b)(1). The commission then has the authority to decide the

open issues between the parties, and to impose conditions on the

parties for the implementation of the terms of arbitration into an

agreement. Id. § 252(b)(4)(C). In deciding those issues, the

commission must "ensure that such resolution and conditions meet

the requirements of section 251 of this title, including the

regulations prescribed by the [Federal Communications Commission]

pursuant to section 251." Id. § 252(c)(1). Further, either

party's refusal to negotiate or to cooperate with the state

commission acting as arbitrator constitutes a breach of its duty to

negotiate in good faith. Id. § 252(b)(5).

In addition, the TCA requires ILECs to allow any

requesting CLEC to adopt the terms and conditions of any

-5-
interconnection agreement it has with any other CLEC, provided that

agreement has been approved by the requisite state

telecommunications commission. Id. § 252(i).

Once a negotiated or arbitrated agreement is completed,

it must be submitted to the state commission for approval. Id.

§ 252(e)(1). The commission may reject any negotiated agreement if

it discriminates against a third party carrier or if its

implementation is "not consistent with the public interest,

convenience, and necessity." Id. § 252(e)(2)(A). The commission

may reject an arbitrated agreement if it fails to meet the

substantive requirements of § 251, including the FCC's implementing

regulations, or the pricing standards set forth in § 252(d). Id.

§ 252(e)(2)(B). That commission decision is subject to federal

judicial review:

In any case in which a State commission makes
a determination under this section, any party
aggrieved by such determination may bring an
action in an appropriate Federal district
court to determine whether the agreement or
statement meets the requirements of section
251 of this title and this section.

Id. § 252(e)(6).

Verizon and Global NAPs began the negotiation process for

a new interconnection agreement in early 2002, because their

previous agreement was approaching expiration. On July 30, 2002,

Global NAPs filed a petition with the DTE to arbitrate several

issues on which the parties could not agree. The DTE issued an

-6-
order on December 12, 2002, resolving all open issues and ordering

the parties to incorporate the arbitrated terms into an agreement

and file that agreement with the DTE within 21 days, or by January

2, 2003. The DTE allowed the parties' joint motion for extension

of time to file the agreement until January 17, 2003.

On December 30, 2002, Global NAPs brought an action in

federal district court challenging the merits of the DTE's

arbitration determination.2 The merits of that December 12, 2002

DTE order are not before us.

On January 9, 2003, Global NAPs informed Verizon that,

rather than entering into the agreement embodying the DTE's

arbitration decision, it would seek to adopt the terms of a

preexisting December 19, 2001 agreement Verizon had with Sprint

("Sprint agreement"). Global NAPs contended that it has an

unconditional right to do so pursuant to 8 U.S.C. § 252(i). Global

NAPs said its adoption of the preexisting Sprint agreement was

consistent with the arbitration order, under which Global NAPs

retained its § 252(i) rights.

On January 16, 2003, Global NAPs informed the DTE of its

intention to opt into the Sprint agreement, in place of the

2
The most important contested issue in that arbitration
between the parties relates to the reciprocal compensation
requirements between ILECs and CLECs for toll-free calls placed by
the ILEC's customers to a CLEC's internet service provider (ISP)
customers. This issue has prompted much litigation, including
issues concerning the validity of FCC rulings on the issue. See,
e.g., WorldCom, Inc. v. FCC, 288 F.3d 429 (D.C. Cir. 2002).

-7-
arbitrated agreement. In response, on January 17, 2003, Verizon

filed a motion with the DTE to approve the arbitration order,

seeking, in essence, to force Global NAPs to execute an agreement

consistent with the arbitration order, or alternatively, should the

DTE allow Global NAPs to opt into the Sprint agreement, to order

that the "agreement be modified to reflect the [DTE]'s legal and

policy determinations set forth in the Arbitration Order."

On February 19, 2003, the DTE granted the initial portion

of Verizon's motion and ordered the parties to sign and file an

agreement consistent with the initial arbitration order. That

February 19, 2003 order is the subject of this appeal. All parties

agree that this order left Global NAPs free to challenge the

substance of the December 12, 2002 arbitration order.

In the February 19 order, the DTE rejected Global NAPs'

claim that it retained the unconditional right to opt into the

Sprint Agreement even after the DTE issued its arbitration order.

The DTE first held that a final arbitration order pursuant to

§ 252(b) is binding on both parties,3 noting that it had always

3
The DTE also rejected Global NAPs' claim that when the
FCC stated, in the Local Competition Order ¶ 1293, that "competing
providers do not have an affirmative duty to enter into agreements
under section 252," the FCC meant that CLECs were not bound by the
results of an state arbitration under § 252(b). Local Competition
Order, 11 F.C.C.R. 15499, 16131 (1996). Rather, the DTE held that
a fuller reading of the TCA and FCC rules shows that this paragraph
stood for the narrower proposition that competing carriers, unlike
incumbents, cannot be forced to enter into an interconnection
agreement, but rather can purchase services directly through the
incumbent's tariff. The DTE held that it does not mean that CLECs

-8-
required that arbitration be binding on both parties. It held that

its rule that arbitrations be binding on both parties was

consistent with FCC regulation. See 47 C.F.R. § 51.807(h).

Further, the DTE noted that the FCC's Local Competition Order,

which embodies the FCC's initial post-enactment interpretation of

the statute, stated that the states may consider the FCC's rules

when implementing their own standards for arbitration. See Local

Competition Order, 11 F.C.C.R. 15499, 16127 (1996).

Further, the DTE held that since the arbitration order

directed the parties to file an agreement containing the arbitrated

terms, and provided no alternatives, Global NAPs' attempt to opt

into the Sprint agreement was in violation of that earlier order.

The DTE held that "[t]he § 252(i) adoption process permits a CLEC,

during the negotiation process, to opt into another carrier's

contract, not to do so after a decision has been reached through

arbitration."

It also noted that Global NAPs' interpretation of the TCA

was contrary to public policy, as it would allow carriers to "game

the system" by always attempting to arbitrate, and if unhappy with

the results, merely to opt into an existing agreement.4 The DTE

can avoid the terms of a valid arbitration order.
4
The DTE reasoned that competing carriers would have no
incentive to negotiate and would always seek arbitration, because
the ability to opt into an existing agreement post-arbitration
would mean that such competitors could only benefit and never be
made worse off by arbitration. That would waste the DTE's limited

-9-
ordered the parties to file an agreement consistent with the

initial arbitration order within seven days. The parties signed

and entered an agreement consistent with the court's ruling, under

Global NAPs' protest. The DTE did not, contrary to Global NAPs'

assertion, hold that a party to an arbitrated agreement can never

exercise rights under § 252(i). It also did not, contrary to

Verizon's assertion, hold that a party subject to a valid

arbitration order could never, under § 252(i), take advantage of

terms in a previously available agreement.

On March 6, 2003, Global NAPs filed a second action in

district court, this time challenging the DTE's February 19 order.

On March 11, 2003, all parties to the second litigation

(Global NAPs, Verizon, and the DTE) filed a joint motion to

consolidate Global NAPs' two actions. In that motion, the parties

proposed that the district court rule on Global NAPs' challenge of

the DTE's February 19 order –- whether Global NAPs is permitted to

opt into the Sprint Agreement –- prior to ruling on its challenge

to the DTE's underlying arbitration order –- the merits of the

arbitration agreement. The district court granted the motion and

accepted the parties' briefing schedule, under which the parties

filed cross motions for summary judgment in the first action on the

issue whether § 252(i) would permit Global NAPs to opt into the

Sprint agreement despite the existence of the DTE's arbitration

resources and be unduly burdensome to incumbents.

-10-
order to the contrary. The district court granted Verizon's and

the DTE's motions for summary judgment, and denied Global NAPs'

motion. Global NAPs timely appealed.

II.

Appellate Jurisdiction

The parties agree the federal courts have subject matter

jurisdiction to review state agency determinations under the TCA

for compliance with federal law, pursuant to 28 U.S.C. § 1331.

Verizon Md., Inc. v. Public Serv. Comm'n of Md., 535 U.S. 635, 642

(2002). See also, 47 U.S.C. § 252(e)(6).

Verizon initially argues that this court lacks appellate

jurisdiction to hear Global NAPs' appeal due to (1) the lack of a

final judgment under 28 U.S.C. § 1291 and (2) lack of standing in

Global NAPs. The DTE does not join Verizon in arguing lack of

appellate jurisdiction or lack of standing, but briefs the case on

the merits.

Verizon argues that the district court's ruling was not

a final judgment because Global NAPs' two actions were

consolidated, thus rendering them one case, and the grant of

summary judgment disposed of only one of the two consolidated

cases. This argument is without merit. The disposition of one

case in a consolidated action is a final and appealable judgment

unless the cases were consolidated "for all purposes." See Bay

State HMO Management, Inc. v. Tingley Sys., Inc., 181 F.3d 174, 178

-11-
n.3 (1st Cir. 1999). In moving to consolidate these cases, the

parties expressly requested that the district court review the

February 12, 2003 DTE order before proceeding with its review of

the December 12, 2002 order, and the district court agreed to do

so.5 Review of the merits of the December 12, 2002 arbitration

order was, in essence, stayed pending the court's determination of

the challenge to the second DTE order; the parties proposed

completely separate briefing schedules for the review of the two

consolidated cases. Verizon's claim that the cases were

consolidated "for all purposes" is wrong and Verizon's last minute

assertion is inconsistent with how it presented its case in the

trial court.

These circumstances bring the case squarely within the

bounds of In re Massachusetts Helicopter Airlines, Inc., 469 F.2d

439 (1st Cir. 1972). There, this court determined that the claims

in a consolidated action remained separate, and therefore a Rule

54(b) determination was not required for appellate jurisdiction to

be proper, because "[e]xcept for the consolidation of the[] cases

for the convenience of pre-trial and trial procedure, the cases

maintained their separate identities throughout the litigation.

Separate judgments were entered in each of the five cases." Id. at

441. We found this to be consistent with the theory behind

5
Further, we note that Verizon did not move to challenge
jurisdiction upon the filing of Global NAPs' appeal, waiting
instead until the filing of its brief to do so.

-12-
consolidation, which was a procedural mechanism meant to serve the

purposes of judicial economy and convenience of the parties, as

here, but not to alter the substantial rights the parties had in

the separate actions.6 Id.

Verizon relies on a notation in the district court docket

from the clerk of court that the second complaint, i.e. the present

case, was consolidated "for all future proceedings," and that this

removes it from the Massachusetts Helicopter rule. See Bay State

HMO Management, Inc, v. Tingley Sys., Inc., 181 F.3d 174, 178 n.3.

The reality of the situation is that the consolidation was for

purposes of convenience and efficiency.

Verizon also urges us to overrule Massachusetts

Helicopter in favor of the Ninth Circuit rule in Huene v. United

States, 743 F.2d 703, 705 (9th Cir. 1984), also followed in Trinity

Broad. Corp. v. Eller, 827 F.2d 673, 675 (10th Cir. 1987) and

Spraytex, Inc. v. DJS&T & Homax Corp, 96 F.3d 1377, 1382 (Fed. Cir.

1996). The advantage, it says, of the Ninth Circuit rule is that

it provides a bright line –- no ruling in a consolidated case may

be appealed until there is an ultimate final judgment on all

matters. That is true. The disadvantage of the rule is that it

may cause injustice on particular facts, and the rule acts as a

6
Verizon's attempt to characterize the district court's
order as a grant of partial summary judgment is in error. There is
nothing in the district court's memorandum or judgment that
suggests it was a grant of partial summary judgment.

-13-
disincentive which may prevent consolidation for purely pragmatic

reasons of convenience and efficiency.

In any event, our adherence to the Massachusetts

Helicopter rule was reaffirmed more recently in Bay State HMO

Management, 181 F.3d at 178 n.3. As a panel, we are not free to

overrule circuit precedent. The district court's grant of summary

judgment is a final order within the meaning of 28 U.S.C. § 1291.

Verizon's challenge to Global NAPs' standing to pursue an

appeal is also without merit. Verizon's claim of lack of standing

seems to be predicated on the notion that, if Global NAPs is

allowed to opt into the Sprint agreement, the DTE will construe the

Sprint agreement in a manner consistent with the terms of the

arbitration order, and thus Global NAPs will be no better off.

Global NAPs disagrees, and recites injury to itself.

Further, Verizon's position is contrary to its position below in

several respects. Among them is that Verizon requested from the

DTE that, should the DTE allow Global NAPs to adopt the Sprint

agreement, then the agreement be modified to adopt legal and policy

determinations made in the arbitration order. If the Sprint

agreement were not materially different from the challenged

agreement, such modification would not be necessary. Indeed,

Global NAPs would not be trying to join the Sprint agreement.

Further, the possibility that the DTE might construe the Sprint

agreement consistently with the December 12 arbitration order, and

-14-
that doing so would be upheld against a likely challenge, is

insufficient to render Global NAPs without standing in this case.

We reject the lack of standing argument.

III.

Interpretation of the TCA § 252(i)

The precise legal question under review is narrow, though

one of first impression in the circuit courts of appeals: does a

competing carrier have an unconditional right, under § 252(i) of

the TCA, to avoid the terms of a final arbitration order from a

state telecommunications commission, adjudicating a dispute between

the CLEC and ILEC, by seeking to opt into the terms of a previous

interconnection agreement that the ILEC has with another CLEC?

This is an issue of federal statutory interpretation of the TCA.7

We agree with the DTE and the district court that the TCA grants no

such right.

Standard of Review

This circuit has not previously articulated precisely the

standard of judicial review of state agency determinations under

the TCA. Issues of law, as here, are subject to de novo review,

P.R. Tel. Co. v. Telecomm. Regulatory Bd. of P.R., 189 F.3d 1, 7

7
Since the FCC, and not the individual state commissions,
is the agency with the power granted by Congress to administer the
TCA, through the formulation of policy, rulemaking, and regulation,
we do not afford deference to the DTE's interpretation of the
statute under Chevron, U.S.A., Inc. v. Natural Res. Def. Council,
Inc., 467 U.S. 837, 843 (1984).

-15-
(1st Cir. 1999), and we apply that standard to state agency

determinations under the TCA.8

In interpreting a statute, we begin with the text.

BedRoc Ltd. v. United States, 124 S. Ct. 1587, 1593 (2004).

Section 252(i) states:

A local exchange carrier shall make available
any interconnection, service, or network
element provided under an agreement approved
under this section to which it is a party to
any other requesting telecommunications
carrier upon the same terms and conditions as
those provided in the agreement.

47 U.S.C. § 252(i). In urging the court to hold that § 252(i)

gives it an unconditional right to avoid the terms of an

arbitration order and opt into a previously available agreement,

Global NAPs points out that the text of § 252(i) does not state

8
Each of the Circuits that has addressed the standard of
review under the TCA has held that where the state agency
determination rests principally on an interpretation of the TCA, de
novo review is applied. See, e.g., Ind. Bell Tel. Co. v. McCarty,
362 F.3d 378, 383 (7th Cir. 2004); MCIMetro Access Transmission
Servs. v. Bellsouth Telecomms., Inc., 352 F.3d 872, 876 (4th Cir.
2003); Coserv. Ltd. Liab. Corp. v. Southwestern Bell Tel. Co., 350
F.3d 482, 486 (5th Cir. 2003); U.S. West Communications, Inc. v.
Sprint Communications Co., 275 F.3d 1241, 1248 (10th Cir. 2002);
AT&T Communications of S. States, Inc. v. BellSouth Telecomm.,
Inc., 268 F.3d 1294, 1296 (11th Cir. 2001); AT&T Communications of
N.J. v. Verizon N.J., Inc., 270 F.3d 162, 169 (3d Cir. 2001); U.S.
West Communications., Inc. v. MFS Intelenet, Inc. 193 F.3d 1112,
1117 (9th Cir. 1999). Further, other Circuits have held that where
no error of law exists, the state agency's other determinations are
reviewed under the arbitrary and capricious standard. See, e.g.,
MCI Telecomms. Corp. v. Ohio Bell Tel. Co., 376 F.3d 539, 548 (6th
Cir. 2004); U.S. West Communications, Inc., 275 F.3d at 1248;
Southwestern Bell Tel. Co. v. Waller Creek Communications, Inc.,
221 F.3d 812, 816 (5th Cir. 2000); MFS Intelenet, 193 F.3d at 1117.

-16-
expressly when and under what circumstances the incumbent must make

interconnection agreements available to other competitors. From

this silence, Global NAPs argues it is free to opt in at any time

it chooses. But § 252(i) does not expressly state what Global NAPs

reads it to mean either. At best, § 252(i) is ambiguous on the

subject, if that section is read alone. The absence of an express

statement in § 252(i) does not end the matter; the section must be

read in light of the structure and intent of the statute.

Global NAPs' broad reading of § 252(i) is incorrect,

because that reading brings § 252(i), under the circumstances of

this case, into direct conflict with, and in important aspects

negates, several other sections of the TCA.

Global NAPs' reading is inconsistent with the basic

arbitral power vested in the state commission. Section 252(b),

entitled "Agreements arrived at through compulsory arbitration,"

allows for either party to an interconnection agreement to petition

a state commission for arbitration of open issues, and grants

powers to the state commission to carry out the arbitration. Id.

§ 252(b).

Global NAPs' reading is also inconsistent with the power

of state commissions to make their arbitral decisions binding on

both parties. Section 252(b)(4)(C) requires the state commission

to "resolve each issue set forth in the petition and the response,

if any, by imposing appropriate conditions as required to implement

-17-
subsection (c) of this section upon the parties to the agreement."

Id. § 252(b)(4)(C). In turn, subsection (c), among other things,

states that "a State commission shall . . . provide a schedule for

implementation of the terms and conditions by the parties to the

agreement." Id. § 252(c). By allowing the commission acting as

arbitrator to place conditions on both parties for the

implementation of interconnection agreements, it is clear that

§ 252(b)(4)(C) intends for arbitration orders to be binding on both

parties.

Global NAPs responds that arbitration orders are not

binding because generally under the TCA, the obligations on CLECs

are not equal to or reciprocal with those on ILECs and so

arbitration decisions are equally asymmetrical in their results.

Global NAPs also makes a broader argument that the FCC's

regulations, and the TCA generally, create asymmetrical rights and

obligations on competitors and incumbents, and those greatly tip

the scale in favor of competitors. It argues that under § 252

incumbents are required to enter into interconnection agreements,

but competitors are not. Thus Global NAPs argues that, to the

extent there is ambiguity as to the scope of § 252(i), it should be

construed broadly in favor of competitors and against the

incumbent, consistent with the asymmetry created by the statute and

regulations as a whole.

-18-
 This argument, however, ignores the important fact that

§ 252(b) is not one of the areas of the TCA that creates

asymmetrical obligations on the parties. Section 252(b)(1) allows

either party to the negotiation to petition for arbitration.

Section 252(b)(4) allows the state commission to impose conditions

on both parties in order to carry out the arbitration. And

§ 252(b)(5) creates a duty for both parties to cooperate with the

arbitration at the risk of breaching the duty both parties have,

under § 252(a), to negotiate in good faith. There is no basis for

Global NAPs' reading § 252(i) as somehow turning the parallel

obligations that run throughout § 252(b) into merely one-way

obligations.

Further, Global NAPs' reading is in conflict with the

statutory duties of good faith and cooperation with the commission

as arbitrator. The TCA, at § 252(b)(5), states:

The refusal of any other party to the
negotiation to participate further in the
negotiations, to cooperate with the State
commission in carrying out its function as an
arbitrator, or to continue to negotiate in
good faith in the presence, or with the
assistance, of the State commission shall be
considered a failure to negotiate in good
faith.

Id. § 252(b)(5). In attempting to void the terms of a valid

arbitration order, it is clear that Global NAPs is refusing to

-19-
cooperate with the DTE, in violation of its duty to negotiate in

good faith.9

Global NAPs responds by asking the court to read an

implicit limitation on the good faith requirement of § 252(b)(5) –-

that CLECs are not bound by the terms of § 252(b)(5) if they

attempt to opt into a previously available contract. Global NAPs

says that this is the effect of § 252(i). But § 252(i) says

nothing of the sort. Rather, it is written in terms of an

obligation on the part of ILECs to make agreements available to

potential CLECs, not as an unconditional right on the part of CLECs

to modify their clear obligations under earlier subsections of

§ 252. We read the sections consistently, and conclude that

§ 252(i) is not an implicit limit on the binding effect of the

arbitration provisions of § 252(b)(5). In this context, there is

nothing ambiguous about the terms of § 252(b)(4)(C) and (b)(5).

Global NAPs' argument is also inconsistent with the

judicial review provisions in the TCA, for determinations made by

a state commission:

9
The record is clear that the DTE did not consider its
order to be a penalty. Rather, the DTE held that § 252(i) could
not be read to allow Global NAPs to void the terms of the binding
arbitration order by opting into an agreement available to them
throughout the entire period of negotiation and arbitration.

-20-
 In any case in which a State commission makes
a determination under this section, any party
aggrieved by such determination may bring an
action in an appropriate Federal district
court to determine whether the agreement or
statement meets the requirements of section
251 of this title and this section.

47 U.S.C. § 252(e)(6). If "any party aggrieved by a determination"

feels the arbitral determination is contrary to the TCA, its remedy

is through judicial review, not self-help.

In addition to our reading of the statutory sections,

there is another source of law to consider: FCC regulations

interpreting the statutory sections at issue, albeit on different

points. The FCC's interpretation is relevant in two senses.

First, under § 252(c)(1), the DTE itself must "ensure that such

resolution and conditions meet the requirements of section 251 of

this title, including the regulations prescribed by the Commission

pursuant to section 251." Id. § 252(c)(1). Second, to the extent

there is ambiguity in the statute, present here in § 252(i) but not

in § 252(b)(4)(C) and (b)(5), deference is due to the FCC's

reasonable interpretation. Chevron, U.S.A., Inc. v. Natural Res.

Def. Council, Inc., 467 U.S. 837, 843 (1984).10

The FCC has not interpreted the statute on the precise

question before us. That is not surprising, since the issue is one

10
The FCC is explicitly granted rulemaking authority under
the TCA, 47 U.S.C. § 201(b), and the Supreme Court has held that
this includes rulemaking power for §§ 251 and 252, without being
limited to interstate and foreign matters. AT&T Corp. v. Iowa
Utils. Bd., 525 U.S. 366, 378 (1999).

-21-
of the power of a state commission. The TCA is an interwoven whole

and the FCC's interpretation of related strands of the weaving is

relevant, at least by analogy.

Both sides cite to the FCC's regulation interpreting

§ 252(i), found at 47 C.F.R. § 51.809, in support of their

interpretation of the statute. The regulation, 47 C.F.R.

§ 51.809(b), provides two express limitations to a CLEC's opt in

rights under § 252(i): an incumbent need not make available the

terms of an interconnection agreement to a particular competitor 1)

if it shows that the costs of providing a service will be greater

to the requesting competitor than it was to the original

negotiating party, or 2) if it shows that the provision of that

service is technically infeasible. 47 C.F.R. § 51.809(b). In

addition, there is a third limitation: 47 C.F.R. § 51.809(c)

states that incumbents must make terms of interconnection

agreements available to other competitors only "for a reasonable

time" after their approval by the state commission.

The FCC regulation 47 C.F.R. § 51.809 itself rejects

Global NAPs' premise that § 252(i) grants an unconditional right to

CLECs to adopt the terms of any interconnection agreement the ILEC

has with another CLEC. The obligation of ILECs to make those

agreements available to other CLECs is itself subject to

conditions: comparable-cost, technical-feasibility, and the

-22-
reasonable-time restrictions are three such conditions contemplated

by the regulation.11

The reasonable-time requirement under 47 C.F.R.

§ 51.809(c) is particularly relevant. Here, after all, the DTE has

said it might have reached a different outcome if, during the

pendency of an arbitration, Global NAPs had sought to withdraw its

request for arbitration in favor of exercising whatever opt in

rights it had. The DTE held only that once it had concluded its

arbitration and issued its order, Global NAPs was not free to enter

into an opt in agreement in lieu of accepting arbitrated terms and

incorporating them into its agreement. The DTE's position is

entirely consistent with the FCC regulation's reasonable-time

requirement.

We also consider the parties' arguments based on the

FCC's Local Competition Order, which embodies the FCC's initial

interpretative rulemaking implementing the TCA after its passage in

1996, as support for its interpretation of the statute. See 11

F.C.C.R. 15499 (1996). Global NAPs attempts to argue that while

FCC arbitrations are binding on both parties, 47 C.F.R.

§ 51.807(h), the Local Competition Order demonstrates that

arbitrations before state agencies under § 252(b) are only binding

11
The reasoning provided for our reading of the statute
above, consistent with the entirety of § 252, adequately dispels
Global NAPs' argument that the limitations on § 252(i) promulgated
by the FCC in § 51.809 are the only permissible limitations that
could apply to that subsection.

-23-
on incumbents. It makes a sort of negative pregnant argument from

the FCC's Local Competition Order ¶ 1293, which states:

Absent mutual agreement to different terms,
the decision reached through arbitration is
binding. We conclude that it would be
inconsistent with the 1996 Act to . . . permit
incumbent LECs to not be bound by an
arbitrated determination. We also believe
that, although competing carriers do not have
an affirmative duty to enter into agreements
under section 252, a requesting carrier might
face penalties if, by refusing to enter into
an arbitrated agreement, that carrier is
deemed to have failed to negotiate in good
faith.

11 F.C.C.R. at 16131. Global NAPs contends that this renders the

arbitration provision a one-way ratchet: incumbents are bound by

the arbitration decision, but competitors are not. We disagree.

The Order does not say that competitors are not required to accept

the terms of an arbitration order. Rather it says that competitors

are not required "to enter into agreements under section 252," and

this is clearly correct. The law mandates that an incumbent must

enter into an interconnection agreement under the requisite

conditions, and the competitor need not enter into an agreement

even if the incumbent so desires. It says nothing about the

obligations of a competitor that is subject to the terms of a

binding arbitration order.

Significantly, the Local Competition Order does not state

that competitors have a right to use § 251(i) to avoid their

obligations under a binding arbitration order. Properly read the

-24-
Order refers to the admitted binding effect in FCC arbitrations,

but says nothing about state arbitrations. Further, the FCC

regulation's explicit statement of the binding effect on both

parties supports the DTE's position. See 47 C.F.R. § 51.807(h).

Global NAPs then makes another argument based on lack of

symmetry as to most favored nation clauses. Global NAPs cites to

Local Competition Order ¶ 1316, as well as the Tenth Circuit's

decision in U.S. West Communications, Inc. v. Sprint Communications

Co., 275 F.3d 1241 (10th Cir. 2002), to support its interpretation

of § 252(i). Neither is helpful to Global NAPs' position.

Paragraph 1316 of the Local Competition Order states:

We further conclude that section 252(i)
entitles all parties with interconnection
agreements to "most favored nation" status
regardless of whether they include "most
favored nation" clauses in their agreements.
Congress's command under section 252(i) . . .
means that any requesting carrier may avail
itself of more advantageous terms and
conditions subsequently negotiated by any
other carrier for the same individual
interconnection, service, or element once the
subsequent agreement is filed with, and
approved by, the state commission.

11 F.C.C.R. at 16139-40 (emphasis added). Paragraph 1316's "most

favored nation" language deals with an issue not presented here:

the ability of a party to an existing interconnection agreement to

adopt the terms of another carrier's agreement that is subsequently

approved by a state commission. The DTE's decision said nothing

-25-
about Global NAPs' § 252(i) rights to adopt terms in subsequently

approved agreements, nor does our decision here do so.

Global NAPs' reliance on U.S. West suffers from a similar

problem. The question that court faced was whether the state

commission acting as arbitrator properly interpreted § 252(i) to

allow a competitor to amend its interconnection agreement to take

advantage of an incumbent's tariffs, as opposed merely to an

element in another competitors' approved interconnection agreement,

that are more favorable than the prices in its agreement. U.S.

West, 275 F.3d at 1249. The case did not say that a CLEC subject

to a binding arbitration order can use § 252(i) to avoid the terms

of that order and adopt completely the terms of a previously

available agreement.

Global NAPs makes a final, policy-based argument that

reading § 252(i) to prevent it from opting into the Sprint

agreement post-arbitration is both anti-competitive and

discriminatory, and thus at odds with the purpose of the TCA. If

what Global NAPs alleges were true, namely that the terms of the

underlying arbitration order are either contrary to law or unduly

burdensome on Global NAPs (or both), the statute provides Global

NAPs with a remedy –- direct review of the terms of the arbitration

order in district court. 47 U.S.C. § 252(e)(6). This is the

remedy Congress provided.

Accordingly, we affirm. Costs are awarded to Verizon.

-26-