[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
_____________________________ FILED
U.S. COURT OF APPEALS
No. 07-13028 ELEVENTH CIRCUIT
JUNE 18, 2008
_____________________________
THOMAS K. KAHN
CLERK
D. C. Docket No. 06-00308 CV-4-SPM-WCS
NUVOX COMMUNICATIONS, INC.,
XSPEDIUS COMMUNICATIONS, LLC,
Plaintiffs-Appellees,
versus
BELLSOUTH COMMUNICATIONS, INC.,
Defendant-Appellant.
__________________________
Appeal from the United States District Court
for the Northern District of Florida
___________________________
(June 18, 2008)
Before EDMONDSON, Chief Judge, HILL and ALARCÓN,* Circuit Judges.
PER CURIAM:
*
Honorable Arthur L. Alarcón, United States Circuit Judge for the Ninth Circuit, sitting by
designation.
This case arises from a decision of the Florida Public Service Commission
(the “Florida Commission”). The Florida Commission, relying on a Federal
Communications Commission (FCC) decision, concluded that federal law did not
require BellSouth (“Defendants”) to combine (or “commingle”) facilities that must
be provided under 47 U.S.C. § 271 with those that must be provided under 47
U.S.C. § 251. Nuvox Communications, Inc. and Xspedius Communications, LLC
(“Plaintiffs”) challenged the Florida Commission’s decision in federal court, and
the district court ruled that the decision was contrary to federal law. We affirm the
district court decision.
The Telecommunications Act of 1996
The Telecommunications Act of 1996 (the “Telecommunications Act”)
imposes a series of requirements on incumbent local exchange carriers
(“incumbent LECs”)--companies like BellSouth that traditionally have provided
local telephone service in a particular geographic area. See AT&T Corp. v. Iowa
Utils. Bd., 525 U.S. 366, 371 (1999). Before the Telecommunications Act, most
areas were served by a single local exchange carrier. Because these incumbent
LECs were without competition and often were compensated based on how much
2
they spent, incumbent LECs had an incentive to construct inefficient networks.
See MCI Worldcom Commc’ns, Inc. v. Bellsouth Telecomms., Inc., 446 F.3d
1164, 1166–67 (11th Cir. 2006). Congress enacted the Telecommunications Act
to “uproot[] the monopolies that traditional rate-based methods had perpetuated.”
Verizon Commc’ns Inc. v. FCC, 535 U.S. 467, 488 (2002).
One of the affirmative duties imposed on incumbent LECs by the
Telecommunications Act is to allow new competitors--known as competitive local
exchange carriers (“competitive LECs”)--to lease parts of the incumbent LECs’
telephone networks. 47 U.S.C. §§ 153(29), 251(c)(3). Incumbent LECs are
required to make available their “unbundled network elements” (“UNE”s); and the
rates that the incumbent LECs may charge for access to these elements must be
based on cost. Id. § 251(c)(3), 252(d)(1)(A). This practice keeps the prices very
low. Verizon Commc’ns, 122 S. Ct. at 1661.
The duties imposed by section 251 are implemented through
“interconnection agreements” between incumbent LECs and competitive LECs.
The Telecommunications Act requires LECs to negotiate in “good faith” the
“particular terms and conditions of agreements to fulfill the duties described in
[section 251(b) and (c)].” 47 U.S.C. § 251(c)(1). If negotiations are unsuccessful,
either party may ask the state commission to arbitrate open issues that the parties
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have not resolved. In deciding these issues, the state commission must adhere to
the requirements of the statute and the FCC’s implementing regulations. 47 U.S.C.
§ 252(b), (c).
The Telecommunications Act also established a process by which the Bell
operating companies (“BOCs”)1 could obtain authority from the FCC on a state-
by-state basis to provide long-distance service. 47 U.S.C. § 271(d). Under section
271, the FCC is authorized to grant a BOC’s application to provide long-distance
service in a given state if the BOC satisfies certain statutory criteria designed to
confirm that the local market in the state is open to competition. Id. at §
271(d)(3). The BOC must implement a “competitive checklist”--a list of services
and facilities that the BOC must make available to competitive LECs operating in
the state. § 271(c)(2)(B).2 The services and facilities on this checklist include
some of the same network elements that the FCC concluded should be subject to
unbundling under section 251.
In 2003, the FCC ruled that elements that are required to be made available
only under section 271--unlike elements required under section 251--need not be
1
The BOCs are a set of companies, including BellSouth, that formerly were associated with the
Bell system. 47 U.S.C. § 153(4).
2
The FCC has held that the obligations of the section-271 competitive checklist continue even
after the BOC obtains authority to provide long-distance service in a given state.
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provided in combined, prepacked form. See Report and Order and Order on
Remand and Further Notice of Proposed Rulemaking, Review of the Section 251
Unbundling Obligations of Incumbent Local Exchange Carriers, 18 FCC Rcd
16978, 17384–86, ¶¶ 653–55 (2003) (“Triennial Review Order”). Also, a different
pricing scheme applies to facilities that must be made available only under section
271. See id. at 17386, ¶¶ 656–57. The D.C. Circuit affirmed the FCC’s decision,
concluding that these were “important respects” in which section 251 and section
271 differ. U.S. Telecom Ass’n v. FCC, 359 F.3d 554, 589-90 (D.C. Cir. 2004).
The FCC also eliminated its general ban on “commingling, ” defined as
combining loops or loop-transport combinations obtained as unbundled network
services with services obtained at wholesale from an incumbent LEC. See
Triennial Review Order, 188 FCC Rcd at 17342–43, ¶ 579. The FCC’s
commingling requirement contains the statement: “[A]n incumbent LEC shall
permit a requesting telecommunications carrier to commingle an unbundled
network element or a combination of unbundled network elements with wholesale
services obtained from an incumbent LEC.” 47 C.F.R. § 51.309(e).
Procedural History
5
Plaintiffs filed a petition for arbitration with the Florida Commission on 11
February 2004. The Florida Commission concluded that the FCC did not intend
for its commingling requirement to apply to section-271 elements. The Florida
Commission also decided that reading the FCC’s general discussion of
commingling to require combinations of section-251 and section-271 facilities
would be contrary to federal policy. After the parties drafted an interconnection
agreement in conformance with the Arbitration Order, the Florida Commission
approved the final agreement.
Plaintiffs then challenged the Florida Commission’s orders in the United
States District Court for the Northern District of Florida. The district court
reversed the Florida Commission; the district court concluded that the FCC’s
commingling requirements mandated that BellSouth combine facilities provided
under section 271 with those that must be provided under section 251. Defendants
appealed.
Standard of Review
This Court reviews de novo questions of law. AT&T Commc'ns of the S.
States, Inc. v. BellSouth Telecomms., Inc., 268 F.3d 1294, 1296 (11th Cir. 2001).
“Federal courts generally accord no deference to the state commission's
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interpretations of federal law.” MCI Worldcom, 446 F.3d at 1170 (internal
quotation omitted). The state agency’s findings of fact “will not be disturbed
unless they are arbitrary and capricious or not supported by substantial evidence.”
Id.
Discussion
The issue in this case is whether BellSouth--an incumbent LEC--is required
to commingle section-271 elements with section-251 unbundled network
elements. The FCC requires an incumbent LEC to “permit a requesting
telecommunications carrier to commingle an unbundled network element or a
combination of unbundled network elements with wholesale services obtained
from an incumbent LEC.” 47 C.F.R. § 51.309(e) (emphasis added). Because the
district court correctly concluded that section-271 elements are wholesale services,
we affirm the district court’s judgment.
Both Rule 51.309 and the FCC’s Triennial Review Order make clear that
the commingling requirement applies to wholesale facilities and services. Under
Rule 51.309(e),
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[A]n incumbent LEC shall permit a requesting telecommunications
carrier to commingle an unbundled network element or a combination
of unbundled network elements with wholesale services obtained
from an incumbent LEC.
47 C.F.R. § 51.309(e) (emphasis added). Subsection (f) of Rule 51.309 contains
this language:
Upon request, an incumbent LEC shall perform the functions
necessary to commingle an unbundled network element or a
combination of unbundled network elements with one or more
facilities or services that a requesting telecommunications carrier has
obtained at wholesale from an incumbent LEC.
Id. at § 51.309(f) (emphasis added).
The Triennial Review Order defines commingling as “the connecting . . . of
a UNE, or a UNE combination, to one or more facilities or services that a
requesting carrier has obtained at wholesale from an incumbent LEC.” Triennial
Review Order, 18 FCC Rcd at 17342, ¶ 579 (emphasis added). Also stated in
Paragraph 579 of the Triennial Review Order:
[A]n incumbent LEC shall permit a requesting telecommunications
carrier to commingle a UNE or a UNE combination with one or more
facilities or services that a requesting carrier has obtained at
wholesale from an incumbent LEC.
Id. (emphasis added).
The FCC has, on several occasions, made clear that section-271 elements
are “wholesale.” See Petition of Qwest Corp. For Forbearance Pursuant to 47
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U.S.C. § 160(c) in the Omaha Metro. Statistical Area, Memorandum Opinion and
Order, 20 FCC Rcd 19415, 19448-50, 65-68 (2005) (referring repeatedly to
section 271(c) requirements as “wholesale” obligations); Petition of ACS of
Anchorage, Inc. Pursuant to Section 10 of the Communications Act of 1934, as
amended, for Forbearance from Sections 251(c)(3) and 252(d)(1) in the Anchorage
Study Area, Memorandum Opinion and Order, 22 FCC Rcd 1958, 1962-63 (2007)
(describing an earlier order as “rel[ying] on the continued availability of wholesale
access to Qwest’s network under section 271”) (emphasis added). Defendants
have identified no evidence to suggest that section-271 elements are not wholesale
services or facilities. Indeed, Defendants’ own expert testified before the Florida
Commission that section-271 elements are wholesale.
Defendants raise four separate arguments in support of their position that
the commingling requirement does not apply to section-271 elements: (1) the FCC
declined to apply its combination rule to section-271 elements; (2) the
commingling rule only applies to “wholesale services” that are subject to FCC
tariffs; (3) the elimination of language in the Triennial Review Order suggests that
the FCC intended to except section-271 elements from the commingling
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requirement; and (4) the district court’s ruling would revive the anti-competitive
UNE platform.3 We do not find Defendants’ arguments persuasive.
The FCC’s combination rule is not important to the issue here. Defendants
point to footnote 1990 of the Triennial Review Order that states, “We decline to
require BOCs, pursuant to section 271, to combine network elements that no
longer are required to be unbundled under section 251.” 18 FCC Rcd at 17386, ¶
655 n.1990. This footnote addresses combinations of section-271 elements with
other section-271 elements, not the commingling of section-251 elements with
section-271 elements. See USTA II, 359 F.3d at 589-90 (rejecting plaintiff’s
argument that the rule that applies to combinations of section-251 elements with
section-251 elements should also apply to section-271 elements).
We reject Defendants’ argument that Rule 51.309 applies only to those
wholesale services that are tariffed. As the district court correctly noted, that
tariffed services are listed as examples of wholesale services does not indicate that
such lists are exhaustive. Language like “e.g.” and “including” indicates that
tariffed services were being used as examples of services eligible for
3
The set of combined unbundled network elements that provides all of the facilities necessary to
provide telecommunications service is known as the “UNE platform.”
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commingling. Defendants’ interpretation cannot be reconciled with the expansive
language in both Rule 51.309 and in the Triennial Review Order.
We also reject Defendants’ argument that the removal of language in
Paragraph 584 of the Triennial Review Order was a clear decision to exclude
section-271 elements from commingling. The review order originally stated in
Paragraph 584:
[W]e require that incumbent LECs permit commingling of UNEs and
UNE combinations with other wholesale facilities and services,
including elements offered pursuant to section 271 and any services
offered for resale pursuant to section 251(c)(4) of the Act.
18 FCC Rcd at 17347, ¶ 584 (2003). The final version did not contain the
underlined language. Triennial Review Order Errata, 18 FCC Rcd at 19022, ¶ 27.
As amended, Paragraph 584 pertains exclusively to 251(c)(4) resale and
makes clear that services obtained under that statute are included in the
commingling requirement. We agree with the district court that the alteration of
Paragraph 584 reasonably reflects the FCC’s decision to remove language that
could be read as conflating 251(c)(4) resale with section-271(c) checklist
obligations. The elimination of potentially confusing language from Paragraph
584 does not narrow the otherwise broad “wholesale services” language in the
commingling requirement to exclude specifically section-271 elements.
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In addition, we do not find Defendants’ argument about the UNE platform
persuasive. Defendants contend that requiring commingling of section-251 and
section-271 elements would essentially revive the UNE platform—which was
eliminated as anti-competitive because it allowed competitive LECs to obtain all
the necessary elements for a telecommunications network from incumbent LECs at
a lower cost than they would incur if they developed the facilities on their own.
See AT&T, 525 U.S. at 388-91; U. S. Telecom Ass’n v. FCC, 290 F.3d 415 (D.C.
Cir. 2002). We disagree. Incumbent LECs are permitted to charge market rates
for section-271 elements, making them distinguishable from the cost-based
facilities mandated under the original UNE platform.
AFFIRMED.
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