Western Radio Services Co. v. Qwest Corp.

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

WESTERN RADIO SERVICES CO., 
Plaintiff-Appellant,
v.
No. 10-35820
QWEST CORPORATION, a Colorado
Corporation; PUBLIC UTILITY  D.C. No.
6:05-cv-00159-AA
COMMISSION of OREGON; LEE
BEYER, Chairman; RAY BAUM, OPINION
Commissioner; JOHN SAVAGE,
Commissioner,
Defendants-Appellees.

Appeal from the United States District Court
for the District of Oregon
Ann L. Aiken, District Judge, Presiding

Argued and Submitted
October 12, 2011—Portland, Oregon

Filed March 15, 2012

Before: David M. Ebel,* Marsha S. Berzon, and
N. Randy Smith, Circuit Judges.

Opinion by Judge Ebel

*The Honorable David M. Ebel, Senior Circuit Judge for the United
States Court of Appeals for the Tenth Circuit, sitting by designation.

3089
 WESTERN RADIO SERVICES v. QWEST CORP. 3093

COUNSEL

Marianne Dugan, Eugene, Oregon, for the plaintiff-appellant.

Gregory Monson, Stoel Rives LLP, Salt Lake City, Utah;
Judy C. Lucas and Michael T. Weirich, Oregon Department
of Justice, Salem, Oregon, for the defendants-appellees.

OPINION

EBEL, Circuit Judge:

This case arises out of a dispute between two telecommuni-
cations carriers over their interconnection agreement
(“ICA”1) under the Telecommunications Act of 1996.
Plaintiff-Appellant Western Radio Services Company
(“Western”) is a commercial mobile radio service (“CMRS”)
provider. Defendant-Appellee Qwest Corporation (“Qwest”)

1
A list of frequently used acronyms is contained in the Appendix at the
end of this opinion.
3094 WESTERN RADIO SERVICES v. QWEST CORP.
is a local exchange carrier (“LEC”). Western appeals two
decisions of the district court: first, its decision dismissing
Western’s claim against Qwest for Qwest’s alleged violation
of its statutory duty to negotiate the ICA in good faith; and
second, its decision affirming the orders of Defendant-
Appellee the Oregon Public Utility Commission (“PUC”),
which adopted the results of the arbitration leading to the ICA
and approved the ICA. This Court has jurisdiction under 28
U.S.C. § 1291.

Regarding the good faith claim, we conclude that Western
has failed to exhaust the prudential requirement that it first
present that claim to the PUC before bringing that claim in
federal court. Accordingly, we AFFIRM the district court’s
decision dismissing that claim.

Regarding the challenge to the approval of the ICA, we
conclude that the ICA’s provisions (1) requiring Western to
interconnect with Qwest’s network via at least one point per
Local Access and Transport Area (“LATA”); and (2) provid-
ing Western with the signaling systems of its choice only
where such systems are available, do not violate the Act.
However, we also conclude that the ICA, as approved, does
violate the Act insofar as it applies access charges, rather than
reciprocal compensation, to calls exchanged between a CMRS
provider and a LEC, originating and terminating in the same
LATA, when those calls are carried by an interexchange car-
rier (“IXC”).2 Accordingly, we REVERSE the district court’s
decision upholding the PUC’s approval of the ICA to that
extent, and REMAND to the PUC for further proceedings not
inconsistent with this opinion.
2
An IXC is a long-distance carrier. See Alma Commc’ns Co. v. Mo. Pub.
Serv. Comm’n., 490 F.3d 619, 621 (8th Cir. 2007).
 WESTERN RADIO SERVICES v. QWEST CORP. 3095
BACKGROUND

I. The regulatory regime

Congress enacted the Telecommunications Act of 1996,
amending the Communications Act of 1934 (collectively, the
“Act”), to promote competition in the provision of telecom-
munications services to consumers—services historically pro-
vided by state-sanctioned monopolies. See AT&T Corp. v.
Iowa Utils. Bd., 525 U.S. 366, 371 (1999). The Act imposes
on incumbent LECs (“ILECs”)—carriers that have histori-
cally held monopolies in an area—the duty to provide inter-
connection with the facilities and equipment of competing
telecommunications carriers, and, upon request, to negotiate
“in good faith” the terms and conditions of agreements gov-
erning such interconnection. Id. at 371-73; 47 U.S.C.
§ 251(a), (c)(1). Where carriers cannot reach an agreement,
they may ask the relevant state public utilities commission to
mediate their differences or to provide binding arbitration. 47
U.S.C. § 252(a)(2), (b)(1).

In arbitrating the dispute, the state commission must ensure
that the resulting ICA meets the requirements of Sections 251
and 252 of the Act, and must establish “just,” “reasonable,”
and “nondiscriminatory” rates for services and a schedule for
implementation. Id. § 252(c)-(d). Following arbitration, the
state commission must then formally approve the resulting
ICA, unless the state commission finds, among other things,
that it violates Section 251 of the Act, or its implementing
regulations, or the pricing standards of Section 252 of the Act.
Id. § 252(e)(1), (e)(2)(B). Any party aggrieved by the state
commission’s action may seek judicial review in an appropri-
ate federal district court “to determine whether the agreement
. . . meets the requirements of section[s 251 and 252 of the
Act].” Id. § 252(e)(6).

In addition, Sections 206 and 207 of the Act provide that
a “common carrier” shall be liable for any damages resulting
3096 WESTERN RADIO SERVICES v. QWEST CORP.
from its violation of the Act, and that such damages may be
recovered either by filing a complaint with the Federal Com-
munications Commission (“FCC”) or by filing suit in a dis-
trict court of competent jurisdiction. See id. §§ 206, 207. A
common carrier is “any person engaged as a common carrier
for hire, in interstate . . . communication by wire or radio.” Id.
§ 153(11). This court has previously observed that the rela-
tionship between the terms “local exchange carrier” and
“common carrier” is not clear, but it appears that a LEC may
also be a common carrier for purposes of Section 207. See W.
Radio Servs. Co. v. Qwest Corp., 530 F.3d 1186, 1204 (9th
Cir. 2008).

II. The parties and prior proceedings

Western is an Oregon-based wireless communications pro-
vider licensed by the FCC to provide CMRS in Oregon. ILEC
Qwest is authorized by the state of Oregon to provide wireline
services in Oregon. Both are “telecommunications carriers”
governed by the Act. See 47 U.S.C. §§ 152(a); 153(51). How-
ever, Western is not licensed to provide wireline services in
Oregon and is thus not a “LEC” within the meaning of the
Act. Western has been doing business with Qwest, or Qwest’s
predecessor, U.S. West Communications, since before the Act
was passed.

The instant dispute arises out of an ICA between Qwest and
Western, arbitrated by the PUC in 2004 and approved by the
PUC in 2005. Western initiated negotiations with Qwest in
October 2003. No ICA ensued, and in March 2004 Western
petitioned the PUC for arbitration. The PUC arbitrator
resolved twelve open issues and filed his decision with the
PUC on September 20, 2004. Western filed objections to the
arbitrator’s decision on October 1, 2004. Rejecting Western’s
objections, the PUC adopted the arbitrator’s decision in its
entirety and ordered Qwest and Western to submit for
approval, within thirty days, an ICA that complied with the
terms of the arbitrator’s decision (“the 2004 PUC order”).
 WESTERN RADIO SERVICES v. QWEST CORP. 3097
Qwest timely submitted a proposed agreement to the PUC.
Western had not at that point reviewed or signed the proposed
agreement, though Qwest had sent Western a copy eight days
earlier. However, Qwest represented to the PUC that it
believed its proposed agreement was “fully compliant with
the Order” and invited the PUC to approve the agreement if
appropriate. SER 227. About two weeks later, Western
reviewed the proposed ICA and found aspects to which it
objected. Western notified Qwest of these problems but did
not file any objections with the PUC.

Instead, in February 2005, after the PUC had adopted the
arbitrator’s findings, but before it had approved Qwest’s pro-
posed ICA, Western sued the PUC, its commissioners in their
official capacities, and Qwest in the District of Oregon, claim-
ing that (1) Qwest had failed to negotiate in good faith as
required by Section 251(c)(1) of the Act, and (2) the PUC had
violated its duties under the Act when it adopted the arbitra-
tor’s decision.3 The district court dismissed both claims in
July 2005 for lack of subject matter jurisdiction, because the
PUC had not yet taken any final action to approve or reject
the ICA, and because Western had not presented its good faith
claim to the PUC for adjudication. Western appealed the dis-
missal of the good faith claim to this Court (“the first
appeal”), which held that the district court would have subject
matter jurisdiction to determine whether a private right of
action existed for a good faith claim under Section 207 of the
Act—but that even if such a private right of action existed, for
prudential reasons “the PUC must address Western’s good
faith claim before that claim may be brought in district court.”
W. Radio Servs. Co., 530 F.3d at 1200. This Court empha-
sized that this requirement was prudential, as opposed to stat-
utory or jurisdictional. Id.
3
In its initial lawsuit, Western also raised claims against the PUC under
42 U.S.C. § 1983, but those claims were dismissed, were not appealed,
and are not at issue here.
3098 WESTERN RADIO SERVICES v. QWEST CORP.
Meanwhile, on October 10, 2005, while the first appeal was
pending, the PUC approved Qwest’s proposed ICA, finding it
complied with the Act’s requirements (“the 2005 PUC
order”). Five days later Western filed a new petition for arbi-
tration, which the PUC eventually dismissed as improper
(“the 2006 PUC order”). Observing that this had transpired,
this Court instructed the district court to consider whether the
2005 PUC order satisfied the prudential “requirement that the
PUC first address [Western’s] . . . good faith claim,” and, if
so, to determine whether a private right of action existed
under the Act for violation of the duty to negotiate in good
faith. W. Radio Servs. Co., 530 F.3d at 1193.

On remand from the first appeal, the district court exam-
ined the 2005 and 2006 PUC orders. W. Radio Servs. Co. v.
Qwest Corp., Civ. No. 05-159-AA, 2009 WL 1312425, at *5-
7 (D. Or. May 5, 2009). The district court determined that nei-
ther order addressed any type of “good faith” claim. Id.
Therefore the district court again dismissed Western’s good
faith claim under Rule 12(b)(6) of the Federal Rules of Civil
Procedure. Id. at *4, *7. In a second proceeding, after addi-
tional briefing on the remaining issue of whether the approved
ICA complied with the Act, the district court affirmed the
PUC’s orders adopting the arbitrator’s decision and approving
the ICA prepared by Qwest. W. Radio Servs. Co. v. Qwest
Corp., 734 F. Supp. 2d 1139 (D. Or. 2010). This appeal fol-
lowed, challenging both of those decisions.

DISCUSSION

I. Standard of Review

This court reviews de novo a dismissal under Rule
12(b)(6). Manzarek v. St. Paul Fire & Marine Ins. Co., 519
F.3d 1025, 1030 (9th Cir. 2008). In doing so, this Court may
“generally consider only allegations contained in the plead-
ings, exhibits attached to the complaint, and matters properly
subject to judicial notice.” Id. at 1030-31 (quoting Outdoor
 WESTERN RADIO SERVICES v. QWEST CORP. 3099
Media Gp., Inc. v. City of Beaumont, 506 F.3d 895, 899 (9th
Cir. 2007) (internal quotation marks omitted)). All well-
pleaded factual allegations are taken as true and viewed in the
light most favorable to the non-moving party. Id. at 1031.

Likewise, we review de novo whether an arbitrated,
approved ICA complies with the requirements of the Act and
its implementing regulations. U.S. W. Commc’ns, Inc. v. Jen-
nings, 304 F.3d 950, 958 (9th Cir. 2002). We review all other
issues, including the state commission’s factual findings,
under an arbitrary and capricious standard. Id. The PUC’s
decision is “arbitrary and capricious if the decision ‘was not
supported by substantial evidence,’ or the commission made
a ‘clear error of judgment.’ ” Verizon Cal., Inc. v. Peevey, 462
F.3d 1142, 1150 (9th Cir. 2006) (quoting Pac. Bell v. Pac-
West Telecomm, Inc., 325 F.3d 1114, 1131 (9th Cir. 2003)).
Importantly for purposes of this appeal, we do not pass upon
the validity of any relevant FCC regulations. See 28 U.S.C.
§§ 2342, 2344 (requiring original petition challenging FCC
final orders to be brought in court of appeals); see also Pac.
Bell Tel. Co. v. Cal. Pub. Utils. Comm’n, 621 F.3d 836, 843
(9th Cir. 2010) (“The parties may not challenge the validity
of any . . . FCC regulations[ ] in this action.”); Jennings, 304
F.3d at 958 n.2 (“Properly promulgated FCC regulations cur-
rently in effect must be presumed valid for the purposes of
this appeal. . . . [N]o question as to their validity can be before
us in this appeal.”).

II. Good Faith Claim

We held in the first appeal that the district court would
have subject matter jurisdiction over a good faith claim
against a private party (assuming such a private right of action
existed under the Act), but that even if such a cause of action
existed, for prudential reasons “the PUC must address West-
ern’s good faith claim before that claim may be brought in
district court.” W. Radio Servs. Co., 530 F.3d at 1200. We
remanded for a determination of whether that prudential
3100 WESTERN RADIO SERVICES v. QWEST CORP.
requirement had been met, and, if so, for a determination of
whether the Act provided a cause of action against a private
party for violation of the duty to negotiate in good faith. Id.
at 1193.

On remand, the district court focused on the PUC’s October
10, 2005 order approving the ICA and the PUC’s January 3,
2006 order dismissing Western’s post-approval petition for
arbitration. The district court first found that the October 2005
order approving the ICA never discussed a good faith claim.
The district court also found that, subsequent to this Court’s
2008 decision and remand, Western had failed to present a
good faith claim to the PUC for adjudication. The district
court further found that the 2006 order dismissing Western’s
post-approval petition for arbitration was also not a “substan-
tive determination of Western’s good faith claim . . . .” W.
Radio Servs. Co., 2009 WL 1312425, at *7. Because the PUC
“neither expressly nor impliedly addressed Western’s good
faith claims,” and Western’s efforts were “insufficient to
comply with the prudential concerns discussed in the Ninth
Circuit’s mandate,” the district court dismissed the good faith
claim. Id. at *5, *7.

In its second appeal, now before us, Western argues that,
although the PUC never addressed its good faith claim, West-
ern “squarely” submitted a good faith claim to the PUC in its
October 2005 petition. Western Opening Br. at 15. The PUC
responds that, even if Western’s October 2005 petition pres-
ented a good faith claim, “the PUC did not have the opportu-
nity to address the claim on its merits . . . because the
approved [ICA] was already in effect.” PUC Br. at 7.

It is clear that the state commission did not expressly rule
on Western’s good faith claim. Similarly, we conclude that
the PUC did not implicitly rule on Western’s good faith claim
when it approved the ICA, because Western’s good faith
claim was never properly put at issue in the proceedings
before the PUC. Therefore, Western has not satisfied the pru-
 WESTERN RADIO SERVICES v. QWEST CORP. 3101
dential requirement established in W. Radio Servs. Co., 530
F.3d at 1200, and may not bring this claim now in federal
court.

A. Statutory requirements for arbitrations

[1] The duty to negotiate in good faith is imposed upon
both parties by Section 251(c)(1) of the Act. A refusal to
negotiate during arbitration, or to cooperate with the arbitra-
tor, is considered a failure to negotiate in good faith. 47
U.S.C. § 252(b)(5). Regulations promulgated by the FCC
identify other failures to negotiate in good faith, including but
not limited to demanding a nondisclosure agreement;
demanding that the other party attest that the ICA complies
with the Act; refusing to include terms permitting future
amendment of the ICA; and intentionally obstructing or
delaying negotiations or resolutions of disputes. See 47 C.F.R.
§ 51.301(c).

If a party’s failure to negotiate in good faith is an “open
issue[ ]” in arbitration proceedings before the state commis-
sion, Section 252(b) of the Act requires the state commission
to rule upon it. See 47 U.S.C. § 252(b)(1) (“[A] party . . . may
petition a State commission to arbitrate any open issues.”); id.
§ 252(b)(2)(A)(i) (“A party that petitions a State commission
. . . shall . . . provide the State commission all relevant docu-
mentation concerning . . . the unresolved issues . . . .”); id.
§ 252(b)(4)(C) (“The State commission shall resolve each
issue set forth in the petition and the response, if any . . . .”).
Further, a commission may reject an arbitrated ICA only if it
finds that the ICA does not comply with Section 251, which
includes the duty to negotiate in good faith, or the pricing
standards of Section 252. Id. § 252(e)(2)(B).

[2] The Act provides a strict window of time for the sub-
mission of a petition for arbitration: “the 135th to the 160th
day (inclusive) after the date on which [a carrier] receives a
request for negotiation under this section. . . .” Id. § 252(b)(1).
3102 WESTERN RADIO SERVICES v. QWEST CORP.
In other words, a carrier may not petition the PUC for arbitra-
tion until 135 days after it has received a qualifying “request
for negotiation.” This is true whether the party seeking arbi-
tration is an ILEC or a competing CMRS. See 47 C.F.R.
§ 20.11(e).

B. Western’s two petitions for arbitration

In this case, Western petitioned the PUC for arbitration
twice. The first petition, on March 11, 2004, properly fol-
lowed Western’s October 2003 request to Qwest to open
negotiations. That first petition led to the arbitration that cul-
minated in the PUC’s October 10, 2005 order approving the
ICA that is before us now. The second petition, filed on or
about October 15, 2005,4 purported to relate to a new “request
for negotiation” that Western claimed to have received from
Qwest in May 2005, yet in substance it raised issues relating
to the just-approved ICA. The PUC summarily dismissed this
second petition for two reasons. First, the PUC concluded that
the existence of the newly approved ICA prevented it from
reaching the merits of any subsequent petition related to that
ICA. Second, the PUC dismissed this second petition as
improper on statutory grounds, finding that Western had
received no new “request for negotiation” sufficient to trigger
a second entitlement to request arbitration.

C. Neither petition sufficed to put the good faith issue
before the PUC

In the first petition and ensuing arbitration, Qwest’s good
faith was never identified as an “open issue[ ]” that required
the PUC’s resolution under 47 U.S.C. § 252. Nor did the PUC
4
The copy of the second petition in the record is dated October 15,
2005. However, the PUC order dismissing the petition states that the peti-
tion was filed on October 14, 2005. This discrepancy is immaterial; the
key fact is that the petition was filed after the PUC’s October 10, 2005
order approving the ICA.
 WESTERN RADIO SERVICES v. QWEST CORP. 3103
“reject” the proposed ICA pursuant to 47 U.S.C.
§ 252(e)(2)(B). Accordingly, there is no basis for concluding
that the PUC implicitly ruled on the issue of Qwest’s good
faith when it approved the ICA.

[3] Before this Court, Western relies solely on its second,
post-approval petition to support its contention that it “sub-
mitted the good faith claim squarely to the PUC.” Western
Opening Br. at 15. Western argues that the PUC refused to
address its claim, thus any further presentations would have
been futile, thus Western should be permitted to sue in district
court. But we conclude that Western may not rely on this sec-
ond petition to support its claim. As is apparent from the
PUC’s two alternative grounds for dismissing the second peti-
tion, it was not clear whether Western sought to reopen arbi-
tration of the already-approved ICA or whether Western
sought to start over again from scratch. If the former, West-
ern’s argument fails because the PUC’s ability to address a
good faith claim ended when it approved the ICA. Any good
faith claim pertaining to those negotiations and not already
raised would be barred because a party’s window for raising
that claim would have closed. If the latter, Western’s argu-
ment fails because Western was statutorily unable to petition
the PUC for arbitration until 135 days after it had received a
qualifying “request for negotiation.” The PUC’s finding that
there had been no new “request for negotiation” was sup-
ported by substantial evidence in the record that Qwest had
not requested another negotiation.5 The PUC’s dismissal of
5
By its terms the second petition purported to relate to a “request for
negotiation” from Qwest, dated May 4, 2005, and received by Western on
May 10, 2005, nearly seven months after the PUC had already adopted the
arbitrator’s recommendations, and nearly six months after Qwest had sub-
mitted a proposed ICA to the PUC for approval. That May 4 letter, how-
ever, was a form letter sent by Qwest to all wireless carriers, relating to
interim tariff measures, in response to a recent ruling of the FCC.
At oral argument, Appellant’s counsel argued that Qwest’s May 4 letter
related to the present dispute. Counsel for Appellees maintained that the
May 4 letter was entirely separate from this dispute, and the Court agrees.
3104 WESTERN RADIO SERVICES v. QWEST CORP.
the second petition in no way represented a ruling on any
good faith claim related to the approved ICA. Accordingly,
Western may not rely on the second petition as evidence that
it presented a good faith claim to the PUC.

Western argues that it “presented its good faith claim to the
PUC as best it could,” id. at 19, and that any procedural
defects “should be overlooked” because Western “appeared
before the [PUC] pro se.” Id. at 18. Before this Court, how-
ever, Western was represented by counsel and it still could
not point to any other place in the record demonstrating that
it adequately presented this claim to the PUC. We will not do
an appellant’s work for it, either by manufacturing its legal
arguments, or by combing the record on its behalf for factual
support. See Guatay Christian Fellowship v. Cnty. of San
Diego, ___ F.3d ___, 2011 WL 6450742, at * 26 (9th Cir.
Dec. 23, 2011) (citing Greenwood v. FAA, 28 F.3d 971, 977
(9th Cir. 1994)) (rejecting assertion unsupported by “argu-
ment or legal authority”); Christian Legal Soc’y v. Wu, 626
F.3d 483, 487-88 (9th Cir. 2010) (refusing to address appel-
lant’s argument, finding it unsupported “even after assidu-
ously digging through [appellant’s] opening brief, and
carefully reviewing” those portions of the record specifically
relied upon by the appellant); Fed. R. App. P. 28(a)(9)(A)
(requiring appellant’s opening brief to contain the “appel-
lant’s contentions and the reasons for them, with citations to
the authorities and parts of the record on which the appellant
relies”); cf. United States v. Graf, 610 F.3d 1148, 1166 (9th
Cir. 2010) (“Arguments made in passing and not supported by
citations to the record or to case authority are generally
deemed waived.”); Alaskan Independence Party v. Alaska,
545 F.3d 1173, 1181 (9th Cir. 2008) (“Because Appellants
have provided no citation to the record or support for their
claim . . . we hold that this argument is waived.”).

[4] Because the issue of Qwest’s good faith was never
properly presented to, nor decided by, the PUC, Western is
precluded from attempting to raise that issue for the first time
 WESTERN RADIO SERVICES v. QWEST CORP. 3105
in the federal courts. The district court correctly dismissed
Western’s good faith claim for this reason, and we affirm.

III. Interconnection Agreement

The arbitration leading to the ICA resolved twelve specific
technical or clerical issues on which Qwest and Western were
unable to agree. The PUC adopted the arbitrator’s decision in
its entirety, and approved the ICA based on the ICA’s compli-
ance with the arbitrator’s order. The district court found that
the ICA as approved complied with the Act and upheld the
PUC order in every respect. W. Radio Servs. Co., 734 F.
Supp. 2d at 1144, 1160. On appeal, Western challenges the
resolution of eleven of the twelve arbitrated issues. On seven
of the eleven issues,6 we agree with the district court that the
ICA complies with the Act, and affirm for substantially the
reasons stated by the district court. See id. at 1149, 1153-60.
Consequently, no further discussion of those issues is needed.
On the issues of inter-tandem transport (Issue 1) and specific
signaling technologies (Issue 3), we agree with the district
court that the ICA complies with the Act, and affirm, but for
slightly expanded or different reasons. On Issues 2 and 6,
relating to the definition of the local calling area for purposes
of reciprocal compensation, however, we find that the ICA
does not comply with the Act. Accordingly, we reverse the
district court’s order upholding the PUC order approving the
ICA in that regard only, and remand to the PUC for further
proceedings.

A. Inter-tandem transport of local calls (“Issue 1”)

This issue involves the question of whether the Act requires
Qwest to permit Western to interconnect with Qwest’s net-
6
These issues are Issues 5, 7, 8, 10, 11, 12, and 15, as numbered in the
Arbitrator’s Decision, and as adopted by the PUC. SER 212-25. The dis-
trict court, in its opinion below, and the parties in their briefing, used these
numbers to identify the issues, and for clarity we do so as well.
3106 WESTERN RADIO SERVICES v. QWEST CORP.
work at a single point in the state of Oregon, and then trans-
port all of Western’s telecommunications traffic from that
single point to any destination statewide. Qwest’s Oregon net-
work encompasses multiple Local Access and Transport
Areas (“LATAs”). Western contends that it should be able to
interconnect in one LATA and reach all of Qwest’s Oregon
end users regardless of the LATA in which they are located.
Qwest and the PUC, on the other hand, argue that Western
must, at a minimum, interconnect via at least one point per
LATA, because its network is designed to transport intra-
LATA calls differently from inter-LATA calls.

We conclude, as did the district court, that the ICA’s
requirement that Western interconnect with Qwest’s network
via at least one point per LATA complies with the Act and its
implementing regulations. Our reasons are twofold: (1) “inter-
connection” is distinct from, and does not include, “transport
and termination,” see 47 C.F.R. § 51.5, and (2) the FCC has
consistently maintained that a LEC satisfies its duty under
§ 251(c)(2)(B) by permitting interconnection at a single point
of interconnection per LATA.

1. Factual background

We find it helpful first to provide some background on
LATAs and their significance. Prior to 1982, local exchange
service and interexchange (i.e., long-distance) service were all
provided by a sanctioned, regulated monopoly, the American
Telephone & Telegraph Company (“AT&T”). In 1982, to set-
tle an anti-trust suit brought by the United States against
AT&T, AT&T and the government entered into a consent
decree divesting AT&T of the business of providing local
exchange service. See United States v. Am. Tel. & Tel. Co.,
552 F. Supp. 131, 226 (D.D.C. 1982). Thus were born the
Bell Operating Companies (“BOCs”). See id. at 232. Also
pursuant to the consent decree, the country was divided into
geographically distinct LATAs, and each BOC was generally
permitted to provide service only within a specific LATA. See
 WESTERN RADIO SERVICES v. QWEST CORP. 3107
United States v. W. Elec. Co., Inc., 569 F. Supp. 990, 993-94
(D.D.C. 1983); id. at 994 (“Most simply, a LATA marks the
boundaries beyond which a Bell Operating Company may not
carry telephone calls.”) (footnote omitted). The BOCs were
later combined to form seven regional BOCs, including
Qwest’s predecessor, U.S. West Communications. See United
States v. W. Elec. Co., Inc., 569 F. Supp. 1057, 1062 n.5
(D.D.C. 1983); see also 47 U.S.C. § 153(5) (defining BOCs).
The regional BOCs were, in essence, the original ILECs.

Congress codified the prohibition on a LEC’s provision of
inter-LATA service in the 1996 amendments to the Act.
Under the Act, the default rule is that a LEC may not provide
inter-LATA service. See 47 U.S.C. § 271(a). However, Sec-
tion 271 of the Act permits a LEC to provide certain in-region
inter-LATA service (i.e., within the state where the LEC was
originally licensed to provide service, see id. § 271(i)(1)), if
the LEC demonstrates to the satisfaction of the FCC that it
has effectively opened its local market to competition, either
by showing that it has entered into ICAs with competing car-
riers under Section 252 of the Act, or by showing that no such
competing carrier has requested interconnection. See id.
§ 271(c).

Qwest has Section 271 authority to provide inter-LATA
service in Oregon. See Application by Qwest Commc’ns, Int’l,
Inc., 18 FCC Rcd. 7325, 7326-27 (2003) (granting Qwest’s
application to provide such service in New Mexico, Oregon,
and South Dakota). Consequently, Qwest’s network in Ore-
gon spans multiple LATAs. Each LATA, in turn, may com-
prise multiple local calling areas. When a Qwest customer
makes a call, the call is routed via one of Qwest’s Local Tan-
dems or Access Tandems, depending on whether the call is
local (i.e., originating and terminating within a single local
calling area) or “local long distance” (i.e., originating and ter-
minating in different local calling areas). Qwest routes local
calls exclusively via Local Tandems, and uses Local Tandems
exclusively to route local calls. Any call that spans local call-
3108 WESTERN RADIO SERVICES v. QWEST CORP.
ing areas is routed via an Access Tandem. Likewise, inter-
LATA calls from one Qwest customer to another are routed
via Access Tandems. According to the uncontroverted testi-
mony before the PUC arbitrator, Qwest does not use Access
Tandems to transport purely local calls.

Because Qwest’s network is thus configured, the ICA as
approved requires Western to “establish at least one (1) physi-
cal point of interconnection” in “each LATA in which West-
ern wants to establish interconnection.” ER 122 (ICA, Section
IV.A.2). The PUC found, and the district court agreed, that
nothing in the Act or its implementing regulations required an
ILEC to transport a competitor’s local exchange traffic
between Access Tandems. Western nevertheless maintains
that 47 U.S.C. § 251(c)(2) permits it to interconnect with
Qwest’s “network”7 at a single, technically feasible point, and
that Qwest must then deliver all of Western’s traffic through-
out Qwest’s network, regardless of whether the destination is
outside the specific LATA in which Western interconnects.

2. Discussion

[5] The Act requires that an ILEC provide a “requesting
telecommunications carrier” with interconnection “at any
technically feasible point within the [ILEC’s] network . . . .”
47 U.S.C. § 251(c)(2)(B). The Act does not define the general
term “network” as used in § 251. Nor does it define “techni-
cally feasible.”
7
As discussed infra, the Act does not define “network” for purposes of
Section 251. The ICA expressly governs the parties’ provision of wireless-
to-wireline and wireline-to-wireless services “within each LATA in which
they both operate within the State of Oregon.” ER 116 (ICA, Section I.A).
Implicit in the ICA and the parties’ arguments is the assertion that Qwest’s
service area in Oregon comprises at least two LATAs. The record is silent
on the number of LATAs in Oregon, or the relationship between the bor-
ders of the relevant Major Trading Area and the relevant LATAs.
 WESTERN RADIO SERVICES v. QWEST CORP. 3109
However, the FCC has provided some guidance in its First
Report and Order and various regulations. See In re Imple-
mentation of the Local Competition Provisions in the Tele-
comms. Act of 1996; Interconnection Between Local
Exchange Carriers and Commercial Mobile Radio Service
Providers, 11 FCC Rcd. 15,499, 15,599, ¶¶ 192-93 (1996)
(“First Report and Order”) (referencing solicitation of com-
ment on the definition of “technically feasible”). In imple-
menting regulations, the FCC provides that interconnection
will be deemed technically feasible “absent technical or oper-
ational concerns that prevent the fulfillment of a request by a
telecommunications carrier . . . .” 47 C.F.R. § 51.5. Purely
“economic . . . concerns,” however, play no role in the deter-
mination of technical feasibility. Id.; see First Report and
Order ¶ 198 (“We conclude that the term ‘technically feasi-
ble’ refers solely to technical or operational concerns, rather
than economic, space, or site considerations.”); First Report
and Order ¶ 199 (“[T]he 1996 Act bars consideration of costs
in determining ‘technically feasible’ points of interconnection
or access.”). At the same time, the FCC has also noted that the
costs of “ ‘technically feasible’ but expensive interconnec-
tion” must be borne by the requesting carrier, First Report and
Order ¶ 199, and the Supreme Court has recently observed
that the FCC has not closed the door on considerations of rea-
sonableness in determining certain aspects of an incumbent
LEC’s interconnection duties, see Talk Am., Inc. v. Mich. Bell.
Tel. Co., 131 S. Ct. 2254, 2262 n.4 (2011) (“The [FCC] sug-
gests here, as it has before, that additional considerations of
cost or reasonableness might be appropriate if a competitive
LEC were to request that an incumbent LEC build new
entrance facilities for interconnection. . . . We express no
view on the matter.”).

a. “Interconnection” does not include “transport and
termination” of calls

[6] The regulations implementing Section 251 specifically
define “interconnection” as “the linking of two networks for
3110 WESTERN RADIO SERVICES v. QWEST CORP.
the mutual exchange of traffic. This term does not include the
transport and termination of traffic.” 47 C.F.R. § 51.5. As the
Supreme Court has noted, “ ‘transport and termination of traf-
fic’ is subject to different regulatory treatment than intercon-
nection.” Talk Am., 131 S. Ct. at 2263. Nothing in the Act
requires the ILEC to transport and terminate a requesting car-
rier’s traffic in any “technically feasible” manner. Thus, to the
extent that this issue involves not the question of how inter-
connection will be established, but rather the question of how,
once interconnection is established, mutually exchanged traf-
fic will be transported and terminated, the “technically feasi-
ble” language of Section 251(c)(2)(B) is not the test. Rather,
the ICA’s resolution of this issue comports with the Act so
long as it comports with the Act’s transport and termination
provisions, i.e., the “duty to establish reciprocal compensation
arrangements for the transport and termination of telecommu-
nications,” 47 U.S.C. § 251(b)(5), and the pricing standards
relevant to such arrangements, see id. § 252(d)(2). Whether
the ICA complies with the Act’s reciprocal compensation pro-
visions for the transport and termination of telecommunica-
tions is addressed infra. As pertinent to the inter-tandem
transport issue, however, the fact that the ICA does not
require Qwest to transport Western’s local traffic across
access tandems, even though it may be “technically feasible”
to do so, does not violate Qwest’s duty to provide intercon-
nection at any “technically feasible” point.

b. Interconnection at “any technically feasible point”
means interconnection “at a single POI per
LATA”

[7] Moreover, the FCC has consistently interpreted Section
251(c)(2)(B) to mean that “competitive LECs have the option
to interconnect at a single POI [point of interconnection] per
LATA.” See In re Connect Am. Fund, 26 FCC Rcd. 4554,
4775, ¶ 682 & n.1088 (2011) (emphasis added) (citing Appli-
cation by SBC Commc’ns Inc., 15 FCC Rcd. 18354, 18390,
¶ 78 (2000)); see also MCIMetro Access Transmission Servs.,
 WESTERN RADIO SERVICES v. QWEST CORP. 3111
Inc. v. BellSouth Telecomm., Inc., 352 F.3d 872, 877 (4th Cir.
2003) (“In exercising its right under § 251(c)(2)(B) to desig-
nate a technically feasible POI, MCI decided to interconnect
with BellSouth’s network at only one point in the North Caro-
lina local access and transport area . . . .”). While these deci-
sions have addressed interconnection between an incumbent
LEC and a competing LEC, as opposed to between an ILEC
and a CMRS provider, both LECs and CMRS providers are
“telecommunications carrier[s]” within the meaning of the
Act, see 47 U.S.C. § 153(51), and we see no reason why,
absent any statute or regulation to the contrary, this general
rule would not also extend to such interconnection.

Admittedly, these decisions are not squarely on point inso-
far as they address whether a competing LEC must intercon-
nect at more than one POI per LATA, and not whether a
CMRS provider must interconnect at least once in each
LATA. We note, however, by analogy, that in the context of
proceedings under Section 271 to determine whether an ILEC
has complied with the competitive interconnection require-
ments of Sections 251(c)(2) and 252 (d)(1) of the Act such
that it may provide inter-LATA service, the FCC expressly
noted that it has never adopted the precise view put forth here
by Western—i.e., that the Act requires an ILEC to provide “a
single point of interconnection for contiguous LATAs in states
or regions where an ILEC has obtained Section 271 authori-
ty.” In re Application by Verizon New England Inc., 17 FCC
Rcd. 7625, 7651, ¶ 47 (2002) (internal quotation marks omit-
ted) (emphasis added). “We note that the Commission has
never articulated such a requirement. Accordingly, it would
be inappropriate . . . to conclude that [the ILEC] does not
comply with [the competitive interconnection requirement]
for failure to provide interconnection on such terms.” Id. Sim-
ilarly, it would be “inappropriate” to conclude that Qwest’s
refusal to transport all of Western’s local traffic from a single
access tandem to any point in Qwest’s multi-LATA network
violates the Act.
3112 WESTERN RADIO SERVICES v. QWEST CORP.
[8] For the foregoing reasons, we conclude that the ICA’s
requirement that Western interconnect to Qwest’s network via
at least one “physical point of interconnection” per LATA—
stated another way, the ICA’s failure to provide for inter-
tandem transport of Western’s local calls—meets the require-
ments of Section 251 of the Act. Accordingly, we affirm the
district court’s order upholding that part of the PUC’s deter-
mination.

B. Dual Tone Multi-Frequency and Dial Pulse signaling
(“Issue 3”)

At issue here is the type of signaling technology that West-
ern is entitled to demand at a given point or points of inter-
connection if it uses Type 1 interconnection.8 Western would
like to use Dual Tone Multi-Frequency (“DTMF”) and Dial
Pulse signaling, which are forms of in-band signaling associ-
ated with older touch-tone and rotary-dial telephones. West-
ern contends that Qwest must offer interconnection using
these older forms of signaling because they are “technically
feasible” and because Qwest still provides them to certain
existing customers. Qwest maintains that these are outmoded
forms of signaling that are being phased out of use in Qwest’s
network, and that the Act does not require Qwest to “recon-
figure its network at substantial expense” to provide such sig-
naling where it is not already available. Qwest Opening Br. at
40.

We agree with the district court that the ICA’s failure to
provide blanket access to DTMF and Dial Pulse signaling
does not violate the Act. We do so for different reasons, how-
ever. We conclude that the forms of signaling technology dis-
8
Type 1 interconnection is interconnection through a switch owned by
Qwest, as opposed to Type 2 interconnection, which would be through a
switch owned by Western as the requesting carrier. Of the thirty wireless
service providers in Oregon with which Qwest has ICAs in place, twenty-
four use Type 2 interconnection.
 WESTERN RADIO SERVICES v. QWEST CORP. 3113
puted here are not a “method of obtaining interconnection,”
within the meaning of the FCC’s regulations. Therefore, an
ILEC is not obligated to provide such signaling technology to
a requesting carrier under Section 251(c)(2) and its imple-
menting regulations, and the ICA as approved does not violate
the Act. Accordingly, we affirm the district court’s upholding
of the PUC orders in this regard.

1. Factual background

Uncontroverted record evidence before the PUC arbitrator
showed that in Type 1 interconnections, Qwest’s default form
of signaling is Multi-Frequency wink-start signaling (“wink-
start MF”); that Qwest provides DTMF and Dial Pulse signal-
ing only to certain longstanding wholesale customers on a
“grandfathered basis,” and it is phasing the technology out “in
favor of newer, more efficient technologies,” SER 155;9 that
Qwest does not “actively offer[ ]” or “actively deploy[ ]”
DTMF or Dial Pulse signaling, SER 155-56; and that “most
if not all” of the CMRS providers in Oregon with which
Qwest has ICAs in place use wink-start MF, and not DTMF
or Dial Pulse, SER 156.

The ICA as approved provides that the default form of sig-
naling used in Type 1 interconnection will be wink-start MF,
but that where DTMF and Dial Pulse are “available,” they
may be requested through a “Special Request Process.” The
Special Request Process, in turn, is a means for Western to
request “non-standard” features and for the parties to negoti-
ate whether and on what terms such features will be made
available. The PUC adopted the arbitrator’s report, which
concluded that the Special Request Process was a reasonable
way for a competitor like Western to request DTMF or Dial
Pulse at “specific locations,” and that Western’s argument
that DTMF and Dial Pulse were “technically feasible” was
9
Western acknowledges that it too is phasing out the use of Dial Pulse
signaling.
3114 WESTERN RADIO SERVICES v. QWEST CORP.
nonresponsive to Qwest’s argument that the technology was
not “available.” The district court upheld the PUC’s order,
finding that “[r]equiring Qwest to provide interconnection
through outdated technologies [would be] contrary to the pur-
pose of the Act because it could stifle competition, result in
lower-quality services, and hinder the development of new
technologies.” W. Radio Servs. Co., 734 F. Supp. 2d at 1152.

2. Discussion

a. ILECs must provide any “technically feasible
method of obtaining interconnection”

[9] The Act obligates ILECs to provide “interconnection”
“for the facilities and equipment” of a requesting carrier “at
any technically feasible point.” 47 U.S.C. § 251(c)(2)(B). The
FCC has interpreted this provision to mean that an ILEC must
provide “any technically feasible method of obtaining inter-
connection . . . .” See 47 C.F.R. § 51.321(a) (emphasis added).
That a method of obtaining interconnection has previously
been successfully established at one point in an ILEC’s net-
work is “substantial evidence that such method” of obtaining
interconnection is “technically feasible in the case of substan-
tially similar network premises or points.” Id. § 51.321(c). An
ILEC that “denies a request for a particular method of obtain-
ing interconnection” bears the burden of proving to the rele-
vant state commission that the requested method “is not
technically feasible.” Id. § 51.321(d). Thus, this issue turns on
whether DTMF or Dial Pulse signaling technology at a given
point of interconnection constitutes a “method of obtaining
interconnection.” If it is a “method of obtaining interconnec-
tion,” then Qwest must provide it where it is technically feasi-
ble to do so. If it is not, then Section 251 of the Act does not
obligate Qwest to provide it, regardless of whether it is tech-
nically feasible.
 WESTERN RADIO SERVICES v. QWEST CORP. 3115
b. “Method of obtaining interconnection” refers to a
physical link between networks

When called upon to interpret a federal statute or the regu-
lations implementing it, “we apply traditional rules of con-
struction and, where required, administrative deference.”
Christopher v. SmithKline Beecham Corp., 635 F.3d 383, 392
(9th Cir. 2011). Where neither the language of the statute nor
that of the regulation speaks “directly” to the question at
issue, we will give appropriate deference to the agency’s
interpretation of its own regulations, unless the interpretation
is plainly erroneous or inconsistent with the regulation, id.
(citing Auer v. Robbins, 519 U.S. 452, 461 (1997)), or there
is reason to suspect that the interpretation does not reflect the
agency’s fair and considered judgment on the matter in ques-
tion, Talk Am., Inc., 131 S. Ct. at 2261 (citing, e.g., Auer, 519
U.S. at 461).

Neither the Act nor the FCC’s regulations directly answer
the question of whether a given signaling system constitutes
a “method of obtaining interconnection.” The non-exhaustive
list of “technically feasible methods” identified by the FCC in
47 C.F.R. § 51.321(b) includes physical or virtual “colloca-
tion” (i.e., the installation of a competitor’s equipment on the
ILEC’s premises and the physical or remote monitoring of
such equipment, see id. § 51.5) and “meet-point interconnec-
tion arrangements” (i.e., where each carrier builds out its own
network to a meet point where the interconnection takes
place, see id.). Such methods also include the leasing of “en-
trance facilities” (i.e., the lines connecting a competitor’s
switch to an ILEC’s switch), see Talk Am. Inc., 131 S. Ct. at
2258; Pac. Bell Tel. Co., 621 F.3d at 841-42.

[10] The FCC has also defined “interconnection” as “the
linking of two networks for the mutual exchange of traffic,”
see 47 C.F.R. § 51.5.10 Interconnection expressly does not
10
The ICA as approved defines “interconnection” as “the connection of
separate pieces of equipment, facilities, or platforms between or within
3116 WESTERN RADIO SERVICES v. QWEST CORP.
include “transport and termination,” see id. When the FCC
initially issued the regulation thus defining “interconnection,”
the FCC concluded that “ ‘interconnection’ under Section
251(c)(2) refers only to the physical linking of two networks
for the mutual exchange of traffic,” First Report and Order
¶ 176 (emphasis added), and noted that Section 251(c)(2)
explicitly refers to “the physical linking of equipment and
facilities,” id. (emphasis added); see also 47 U.S.C.
§ 252(d)(1) (regarding a state commission’s duty to determine
a “just and reasonable rate for the interconnection of facilities
and equipment for purposes of [Section 251(c)(2)]”) (empha-
sis added). The FCC has consistently maintained that inter-
connection refers only to “physical linking,” see In re Verizon
Maryland Inc., 18 FCC Rcd. 5212, 5419-20, ¶ 17 (2003); In
re Verizon New England Inc., 17 FCC Rcd. 7625, 7740-41,
¶ 17 (2002); In re SBC Commc’ns Inc., 16 FCC Rcd. 20,719,
20,853-54, ¶ 17 (2001).

Similarly, courts confronting the scope of “interconnec-
tion” have rejected overly broad readings of the term. In MCI-
Metro Access Transmission Services, the Fourth Circuit
addressed a dispute between LECs over a provision in their
ICA that permitted the ILEC to charge the competing LEC for
certain incremental costs of calls originating on the ILEC’s
own network. 352 F.3d at 874. The competing LEC argued
that this contravened 47 C.F.R. § 51.703(b), the FCC regula-
tion expressly prohibiting a LEC from assessing charges for
traffic that originates on its own network. Id. at 877. The
ILEC argued that because the costs were related to transport-
ing the call from its point of origin to the single point of inter-
connection between the parties’ networks, the costs were
“costs of interconnection” for which the ILEC properly could
be reimbursed. Id. at 878.

networks for the purpose of transmission and routing of Telephone
Exchange Service traffic and Exchange Access traffic.” ER 119 (ICA,
Section III.5).
 WESTERN RADIO SERVICES v. QWEST CORP. 3117
The court rejected the ILEC’s implied argument that “inter-
connection must be interpreted broadly to include not only the
physical act of connecting the networks, but also the ongoing
state of interconnectivity.” Id. That a particular cost was “ne-
cessitated by the ongoing state of interconnectivity at [the
competing LEC’s] chosen POI,” id. at 879 (emphasis added),
did not, in the Fourth Circuit’s opinion, suffice to make it a
cost of interconnection such that the ILEC could shift that
cost to the competing LEC, id. at 881. “[B]ecause the cost of
interconnection is only the one-time cost associated with the
physical act of linking one network to another and not the
recurring cost of transport and termination of traffic, the
charge imposed by [the ILEC] here cannot be characterized as
a ‘cost of interconnection.’ ” Id. at 879.

Moreover, in Competitive Telecommunications Ass’n v.
FCC, the Eighth Circuit addressed a direct challenge to the
FCC’s rule defining “interconnection.” 117 F.3d 1068, 1071
(8th Cir. 1997). There, the petitioner argued that Section
251(c)(2)’s command to provide “interconnection . . . for the
transmission and routing of telephone exchange service and
exchange access” meant that “interconnection” must necessar-
ily include “transmission and routing.” Id. (internal quotation
marks omitted). Rejecting the argument that “interconnec-
tion” meant something more than just physical linkage, the
court concluded that “Congress intended ‘for the transmission
and routing . . .’ only to describe what the interconnection, the
physical link, would be used for,” id. at 1071-72 (emphasis
added). Thus, the FCC’s interpretation of “interconnection as
a physical link, and only a physical link, . . . for the purposes
of § 251(c)(2) . . . ‘is based on a permissible construction of
the statute.’ ” Id. at 1073 (quoting Chevron, U.S.A., Inc. v.
Natural Res. Def. Council, Inc., 467 U.S. 837, 843 (1984)).

c. Signaling technology does not implicate the
physical link

[11] From these authorities we conclude that “interconnec-
tion” within the meaning of Section 251(c)(2) and as inter-
3118 WESTERN RADIO SERVICES v. QWEST CORP.
preted by the FCC means the temporally discrete, “physical
act of linking one network to another,” MCIMetro, 352 F.3d
at 879 (emphasis added), through “facilities and equipment,”
47 U.S.C. § 251(a)(1), (c)(2), thus permitting “the mutual
exchange of traffic,” 47 C.F.R. § 51.5. Interconnection does
not encompass “transport and termination” of traffic, id., or
“recurring” issues relating to how traffic is transported and
terminated, MCIMetro, 352 F.3d at 879. The particular signal-
ing system, by which call-specific information is communi-
cated, does not, in our view, implicate the one-time “physical
linkage” of “facilities and equipment.” Rather, it relates to
how traffic is originated and transported. Signaling, in other
words, relates to the “ongoing state of interconnectivity,” id.
at 879, and is “what the interconnection, the physical link, [is]
used for,” Competitive Telecomm., 117 F.3d at 1071-72.

[12] The conclusion that signaling is separate from “facili-
ties and equipment” is bolstered by 47 C.F.R. § 51.5, the reg-
ulation defining “network element.” There, the FCC defines
“network element” to include discretely both “a facility or
equipment used in the provision of a telecommunications ser-
vice,” and also “features, functions, and capabilities that are
provided by means of such facility or equipment, including
. . . signaling systems.” Id. Thus, a particular signaling system
is a “feature[ ], function[ ], [or] capabilit[y],” and therefore
not encompassed within an ILEC’s “duty to provide [inter-
connection] for the facilities and equipment of any requesting
carrier” under 47 U.S.C. § 251(c)(2).

3. Conclusion

[13] For the foregoing reasons, we hold that DTMF and
Dial Pulse signaling technology do not constitute “method[s]
of achieving interconnection” within the meaning of 47
C.F.R. § 51.321(a) such that an ILEC would be obligated to
provide them if technically feasible under Section 251(c)(2).
In this case, the ICA, which provides that DTMF and Dial
Pulse signaling will be provided where “available,” subject to
 WESTERN RADIO SERVICES v. QWEST CORP. 3119
the mutually negotiated Special Request Process, does not
violate the Act. Accordingly, we affirm the district court’s
order upholding the PUC’s determinations in this regard.11

C. Reciprocal compensation for intra-MTA traffic
(“Issues 2 and 6”)

Two of the issues the parties asked the arbitrator to resolve
involved the “definition of non-local calls” (Issue 2) and the
11
As noted supra, the PUC’s apparent reason for rejecting Western’s
argument that DTMF and Dial Pulse signaling were “technically feasible”
and must be made available was that it was most “reasonable” to require
Qwest to provide such signaling only where available. SER 207-08, 216-
17. The district court’s rationale was that requiring Qwest to provide blan-
ket access to such signaling would be “contrary to the purpose of the Act
because it could stifle competition, result in lower-quality services, and
hinder the development of new technologies.” W. Radio Servs. Co., 734
F. Supp. 2d at 1152.
Thus, neither the PUC nor the district court relied upon our interpreta-
tion of “method of obtaining interconnection” in 47 C.F.R. § 51.321(a) to
determine that Qwest was not required to provide blanket access to DTMF
and Dial Pulse signaling. And it is true that a reviewing court generally
may not affirm the action of an administrative agency on grounds upon
which the agency itself did not expressly rely. See SEC v. Chenery Corp.,
318 U.S. 80, 87 (1943) (“The grounds upon which an administrative order
must be judged are those upon which the record discloses that its action
was based.”). But Chenery involved judicial review of a discretionary
determination of the federal agency charged with interpreting the relevant
federal statute. See id. at 85, 94-95. Such is not the case before us.
The peculiar nature of this statutory scheme calls for federal court
review of the actions of a state agency with a relatively limited role. Under
the Act, a state commission is obligated to ensure that an arbitrated ICA
complies with the Act and its implementing regulations, but the state com-
mission has no discretion or authority actually to interpret the statute or
regulations. See 47 U.S.C. § 252(c)(1), (e)(6). Moreover, the Act contains
no provision for remanding such actions to the FCC—the federal agency
that is charged with interpreting the Act and implementing its provisions
—for its resolution. Consequently, where, as here, review is sought under
Section 252(e)(6) of a state commission’s determination with respect to an
ICA, Chenery does not prevent this Court from interpreting the statute and
regulation in the first instance.
3120 WESTERN RADIO SERVICES v. QWEST CORP.
“proper definition of [local traffic] for purposes of calculating
reciprocal compensation” (Issue 6). On both issues, which
turn on the definition of “non-local traffic,” the arbitrator
adopted Qwest’s position. Consistent with the arbitrator’s
findings, the ICA as approved provides that “local traffic” is
subject to reciprocal compensation arrangements while “non-
local traffic” is subject to access charges under a separate tar-
iff. ER 127 (Section IV.D.1; Section IV.C.4); ER 129 (Sec-
tion IV.H.1). The ICA defines “non-local traffic” to include
“traffic originated by one Party, carried by an IXC, and termi-
nated by the other Party,” and provides that “Reciprocal Com-
pensation does not apply to Non-Local Traffic.” ER 127
(ICA, Section IV.C.4.). Thus, the issue is whether the
involvement of an IXC in traffic that would otherwise be local
converts that traffic into “non-local traffic.”

Western contends that all traffic that originates and termi-
nates within the same Major Trading Area (“MTA”)12 should
be considered “local traffic” subject to reciprocal compensa-
tion. Western maintains its challenge to the provisions of the
ICA that exempt intra-MTA, interexchange traffic from recip-
rocal compensation where an IXC is involved. Qwest and the
PUC do not dispute that intra-MTA traffic exchanged
between Qwest and Western is “local traffic” subject to recip-
rocal compensation. Rather, they contend, and the district
court agreed, that the involvement of an IXC in the transmis-
sion of such traffic trumps the intra-MTA nature of the call,
taking it out of the reciprocal compensation regime.

We conclude that the arbitrator, PUC, and district court
erred in determining that the involvement of an IXC altered
the parties’ obligation to pay reciprocal compensation for tele-
communications traffic that originates and terminates within
the same MTA.
12
An MTA is a unique, geographically defined service area within
which a wireless provider is licensed to provide service. See 47 C.F.R.
§ 24.202(a).
 WESTERN RADIO SERVICES v. QWEST CORP. 3121
[14] The Act requires that reciprocal compensation
arrangements apply to the “transport and termination of tele-
communications” between LECs. 47 U.S.C. § 251(b)(5). The
regulations extend this duty to telecommunications traffic
exchanged between LECs and CMRS providers. 47 C.F.R.
§ 20.11(b), (c). In the regulation addressing the scope of the
transport and termination pricing rules, the FCC distinguishes
between traffic exchanged between a LEC and a CMRS pro-
vider and traffic exchanged between a LEC and a non-CMRS
provider. See 47 C.F.R. § 51.701(b). In the former situation,
reciprocal compensation applies to all traffic exchanged “that,
at the beginning of the call, originates and terminates within
the same Major Trading Area . . . .” Id. § 51.701(b)(2). In the
latter situation, reciprocal compensation applies to all traffic
exchanged except “telecommunications traffic that is inter-
state or intrastate exchange access, information access, or
exchange services for such access . . . .” Id. § 51.701(b)(1).
Traffic carried by an IXC, which is access-based rather than
reciprocal-compensation-based, falls within this regulatory
exception to the reciprocal compensation rules. See In re
Developing a Unified Intercarrier Compensation Regime, 20
FCC Rcd. 4685, 4687-88, ¶ 5 (2005) (“Federal and state
access charge rules govern the payments that [IXCs] and
[CMRS] providers make to local exchange carriers . . . that
originate and terminate long-distance calls, while the recipro-
cal compensation rules established under section 251(b)(5) of
the Act generally govern the compensation between telecom-
munications carriers for the transport and termination of calls
not subject to access charges.”).

Qwest and the PUC, relying on the FCC’s First Report and
Order, argue that the FCC has exempted interexchange traffic
carried by an IXC from the reciprocal compensation regime
even as between LECs and CMRS providers. See First Report
and Order ¶ 1034. Their argument, however, overlooks the
fact that since the 1996 First Report and Order, the FCC
revised the relevant regulation to exempt such traffic from the
reciprocal compensation regime as between LECs and non-
3122 WESTERN RADIO SERVICES v. QWEST CORP.
CMRS providers, yet included no such exemption for the
reciprocal compensation regime as between LECs and CMRS
providers.13

Two of our sister circuits have rejected the argument put
forth here by Qwest and the PUC. In Atlas Telephone Co. v.
Oklahoma Corp. Commission, 400 F.3d 1256 (10th Cir.
2005), the Tenth Circuit addressed this precise question.
There, in a dispute between CMRS providers and rural ILECs
over reciprocal compensation for traffic involving an IXC, the
court evaluated the requirements of 47 U.S.C. § 251(b)(5), as
implemented by 47 C.F.R. §§ 51.701 and 51.703, and held
that the determinative factor was the intra-MTA nature of the
call, and not the involvement of an IXC. Atlas, 400 F.3d at
1264. “[T]he mandate expressed in these provisions is clear,
unambiguous, and on its face admits of no exceptions. . . .
Nothing in the text of these provisions provides support for
the . . . contention that reciprocal compensation requirements
do not apply when traffic is transported on an IXC network.”
Id. Similarly, in Alma Communications Co., 490 F.3d 619, the
Eighth Circuit rejected the LEC’s argument that it was not
obligated to pay reciprocal compensation to a CMRS provider
13
After these 2001 revisions, the regulation provides, in pertinent part:
For purposes of this subpart, telecommunications traffic means:
(1) Telecommunications traffic exchanged between a LEC
and a telecommunications carrier other than a CMRS pro-
vider, except for telecommunications traffic that is interstate
or intrastate exchange access, information access, or
exchange services for such access . . . ; or
(2) Telecommunications traffic exchanged between a LEC
and a CMRS provider that, at the beginning of the call, origi-
nates and terminates within the same Major Trading Area, as
defined in [47 C.F.R.] § 24.202(a) . . . .
Implementation of the Local Competition Provisions in the Telecommuni-
cations Act of 1996; Intercarrier Compensation for ISP-Bound Traffic, 66
Fed. Reg. 26,800, 26,806 (May 15, 2001), codified as amended at 47
C.F.R. § 51.701(b).
 WESTERN RADIO SERVICES v. QWEST CORP. 3123
when calls were routed through an IXC. “[We] reject [the
LEC’s] argument that the involvement of an [IXC] at the orig-
inating end of the call means that the call cannot be subject
to reciprocal compensation. . . . [C]alls from a land line to a
cell phone placed and received within the same major trading
area are local calls, subject to the reciprocal compensation
arrangements ordained by . . . 47 U.S.C. § 251(b)(5).” Id.

Further, we note that the FCC has issued a new report and
order, effective December 29, 2011, that cites this case law
approvingly and clarifies that in the LEC-CMRS context, this
is indeed how the reciprocal compensation rules are to oper-
ate. See Connect America Fund, 76 Fed. Reg. 73,830, 73,838
(Nov. 29, 2011) (“[W]e affirm that all traffic routed to or
from a CMRS provider that, at the beginning of a call, origi-
nates and terminates within the same MTA, is subject to
reciprocal compensation, without exception.”). While the
PUC and the district court obviously did not have this clear
guidance available to them at the time they rendered their
respective decisions below, the FCC’s newly promulgated
interpretation of the statute must yet be given effect. As this
court has previously observed,

[T]he district court’s role under the Act is to deter-
mine whether the agreement . . . meets the require-
ments of [Sections 251 and 252]. The Act gives the
FCC authority to establish regulations implementing
the Act. Accordingly, the FCC’s implementing
regulations—including those . . . newly promulgated
—must be considered part and parcel of the require-
ments of the Act. They must therefore be given
effect in this case, even if the [state commission] did
not err by failing to apply them at the time of its
original arbitration decisions.

Jennings, 304 F.3d at 957 (internal quotation marks and cita-
tions omitted).
3124 WESTERN RADIO SERVICES v. QWEST CORP.
[15] While not critical to our holding, it is also worth not-
ing that with this new report and order, the FCC again revises
47 C.F.R. § 51.701(b) but leaves untouched the aforemen-
tioned distinction between CMRS providers and non-CMRS
providers. See Connect America Fund, 76 Fed. Reg at 73,855
(to be codified at 47 C.F.R. § 51.701(b)). Thus, regardless of
how the FCC may originally have interpreted the significance
of the involvement of an IXC in the transport and termination
of an otherwise local call, the FCC’s subsequent changes to
the relevant regulation, confirmed by its recent report and
order, make plain that the involvement of an IXC has no
effect on the obligations of LECs and CMRS providers to pay
reciprocal compensation for traffic “that, at the beginning of
the call, originates and terminates within the same Major
Trading Area . . . .” 47 C.F.R. § 51.701(b)(2). Accordingly,
like the Tenth and Eighth Circuits, we reject the contention
that such traffic is somehow “transformed into a long-distance
call simply by being routed through a long-distance carrier.”
Alma, 490 F.3d at 625. We hold that the ICA’s provisions (1)
defining “non-local traffic” as including intra-MTA traffic
carried by an IXC, and (2) exempting such “non-local traffic”
from reciprocal compensation, violate the Act. We reverse
that portion of the district court’s opinion to the contrary, and
remand the case to the PUC for further proceedings consistent
with this opinion.

D. Remaining issues (“Issue 5,” “Issue 7,” “Issue 8,”
“Issue 10,” “Issue 11,” “Issue 12,” and “Issue 15”)

On the remaining issues resolved by the arbitrator, we hold
that the ICA complies with the requirements of the Act, for
substantially the reasons stated in the district court’s opinion.
Accordingly, we affirm the district court’s order upholding
the PUC’s approval of the ICA as it relates to those issues.

CONCLUSION

Western Radio Services Co. v. Qwest Corp., Civ. No. 05-
159-AA, 2009 WL 1312425 (D. Or. May 5, 2009), is
 WESTERN RADIO SERVICES v. QWEST CORP. 3125
AFFIRMED. That portion of Western Radio Services Co. v.
Qwest Corp., 734 F.Supp. 2d 1139 (D. Or. 2010), upholding
the PUC’s determinations on Issues 2 and 6 is REVERSED;
all other portions are AFFIRMED. The case is REMANDED
to the PUC for further proceedings not inconsistent with this
opinion. Each side shall bear its own costs on appeal.

AFFIRMED in part, REVERSED in part, and
REMANDED.
3126 WESTERN RADIO SERVICES v. QWEST CORP.
APPENDIX: ACRONYMS USED IN THIS OPINION

BOC Bell Operating Company
CMRS Commercial Mobile Radio Service
DTMF Dual Tone Multi-Frequency signaling
FCC Federal Communications Commission
ICA Interconnection Agreement
ILEC Incumbent Local Exchange Carrier
IXC Interexchange Carrier
LATA Local Access and Transport Area
LEC Local Exchange Carrier
Wink-start MF Wink-start Multi-Frequency Signaling
MTA Major Trading Area
POI Point of Interconnection
PUC Oregon Public Utilities Commission
ER Excerpt of Record, as filed with this
Court by Western
SER Supplemental Excerpt of Record, as
filed with this Court by Qwest