Puerto Rico Telephone Co. v. T-Mobile Puerto Rico LLC

United States Court of Appeals
For the First Circuit

No. 11-1504

PUERTO RICO TELEPHONE COMPANY, INC.,

Plaintiff, Appellee,

v.

T-MOBILE PUERTO RICO LLC,

Defendant, Appellant,

TELECOMMUNICATIONS REGULATORY BOARD OF PUERTO RICO;
NIXYVETTE SANTINI-HERNANDEZ, in her official capacity as member
of the Telecommunications Regulatory Board of Puerto Rico;
VICENTE AGUIRRE-ITURRINO, in his official capacity as member of
the Telecommunications Regulatory Board of Puerto Rico;
SANDRA TORRES-LOPEZ, in her official capacity as President of the
Telecommunications Regulatory Board of Puerto Rico,

Defendants.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO

[Hon. José Antonio Fusté, U.S. District Judge]

Before

Lynch, Chief Judge,
Torruella and Lipez, Circuit Judges.

Jaime E. Toro-Monserrate, with whom Toro, Colón, Mullet,
Rivera & Sifre, P.S.C., Christopher W. Savage, and Davis Wright
Tremaine, LLP were on brief, for appellant.
Eduardo R. Guzmán, with whom Drinker Biddle & Reath LLP was on
brief, for appellee.
May 2, 2012
 LYNCH, Chief Judge. This case arises out of a dispute

regarding the applicable billing rate for T-Mobile Puerto Rico

LLC's use of certain services provided by Puerto Rico Telephone

Company, Inc. (PRTC), an incumbent local exchange carrier (ILEC).

It requires us to address several issues under the

Telecommunications Act of 1996 (TCA), including what is meant by

the term "discrimination."

PRTC and T-Mobile entered into an interconnection

agreement (ICA), pursuant to the TCA, in 1999, and into a second

agreement in 2001. These agreements provided that certain

"intrastate access" services would be billed at a rate contained in

PRTC's federal tariff filed with the Federal Communications

Commission (FCC). T-Mobile was billed at this rate until 2002,

when PRTC announced its view that this billing rate was in error,

the disputed services were not covered under the ICA, and the

applicable billing rate was a higher rate found in PRTC's local

tariff. T-Mobile disagreed. Roughly $2 million is at issue.

T-Mobile filed suit with the Telecommunications

Regulatory Board of Puerto Rico (the Board), which ruled in favor

of T-Mobile as a matter of Puerto Rico contract law, holding that

the FCC tariff rate applied. In response, PRTC filed suit in

federal court against T-Mobile and the Board, raising a variety of

claims as to why the Board's decision was unlawful.

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 The district court granted summary judgment for PRTC and

entered judgment vacating the Board's order, holding that the

Board's decision resulted in the ICA discriminating against

third-party carriers, in violation of federal law. P.R. Tel. Co.

v. Telecomms. Regulatory Bd. of P.R., No. 08-1885, 2011 WL 1097741,

at *9 (D.P.R. Mar. 18, 2011).

We reverse the judgment of the district court, hold that

the agreement was neither discriminatory nor violative of any other

provision of federal law, and remand with instructions for the

district court to reinstate the Board's order and enter judgment in

favor of T-Mobile.

I.

Before the enactment of the Telecommunications Act of

1996, Pub. L. 104-104, 110 Stat. 56, local telephone service was

provided largely by local exchange carriers (LECs), which were

typically local monopolies. Global NAPs, Inc., v. Verizon New

England, Inc., 396 F.3d 16, 18 (1st Cir. 2005). Before the TCA,

LECs owned the physical infrastructure necessary to receive and

deliver phone calls among customers and new local carriers could

not compete with the incumbent without developing their own

separate physical network. Talk Am., Inc. v. Mich. Bell Tel. Co.,

131 S. Ct. 2254, 2257-58 (2011).

This changed with the enactment of the TCA, which

"imposed a number of duties on incumbent providers of local

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telephone service in order to facilitate market entry by

competitors." Id. at 2257. These duties include (1) a requirement

that ILECs provide "interconnection" with the ILEC's network for

"the transmission and routing of telephone exchange service," 47

U.S.C. § 251(c)(2), (2) the duty "to offer for resale at wholesale

rates any services that the carrier provides at retail to

subscribers that are not telecommunications carriers," id.

§ 251(c)(4)(A), and (3) most relevant to this case, an "unbundled

access" requirement that ILECs provide "nondiscriminatory access to

network elements on an unbundled basis at any technically feasible

point on rates, terms, and conditions that are just, reasonable,

and nondiscriminatory," id. § 251(c)(3). Such "unbundled network

elements" are typically referred to as "UNEs."

The ICAs under which such services are provided may

result from either voluntary negotiations or arbitration. AT&T

Corp. v. Iowa Utils. Bd., 525 U.S. 366, 373-74 (1999). If

voluntarily negotiated, the agreement may be made "without regard

to the standards set forth in subsections (b) and (c) of section

251." 47 U.S.C. § 252(a)(1). Such voluntarily negotiated

agreements must be submitted to the relevant state commission for

approval or rejection; the state commission may only reject such

voluntarily negotiated agreements if it finds that (1) "the

agreement (or portion thereof) discriminates against a

telecommunications carrier not a party to the agreement," or (2)

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"the implementation of such agreement or portion is not consistent

with the public interest, convenience, and necessity." Id.

§ 252(e)(2)(A).

The TCA also contains a provision requiring LECs to "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." Id.

§ 252(i).

The TCA does not displace the ability of

telecommunications carriers to agree to purchase services from

ILECs on a tariffed basis, under provisions of the communications

law that pre-date the TCA. See id. § 251(g) (providing that LECs

must provide certain services that they provided under any

"regulation, order, or policy of the Commission," before the TCA

became effective until such obligations are "explicitly superseded"

by FCC regulations); see also In re Unbundled Access to Network

Elements, 20 FCC Rcd. 2533, 2557-58 (2005) ("[W]e note that

incumbent LECs remain subject to the nondiscrimination provisions

of the Act, such as that found in section 202. Thus, where

wireless and long distance carriers seek to use incumbent LEC

facilities on a tariffed basis, they will be entitled to access on

similar terms as other, similarly situated carriers."); In re

Implementation of the Local Competition Provisions in the

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Telecommunications Act of 1996 (Local Competition Order), 11 FCC

Rcd. 15499, 16013 (1996) ("Pursuant to section 251(g), LECs must

continue to offer tariffed interstate access services just as they

did prior to enactment of the 1996 Act.").

II.

The parties agree that PRTC's challenge to the Board's

decision is in the nature of an appeal from an administrative

agency, so we recount the facts as they were presented in the

administrative record before the Board. The same record was before

the district court.

A. Factual Background

In June 1999, PRTC and T-Mobile1 entered into a one-year

voluntary ICA, pursuant to 47 U.S.C. §§ 251-252. This agreement

contained provisions governing the "local interconnection" of the

two entities and provided that the parties would designate points

of interconnection to each other's networks. The 1999 ICA included

an attachment summarizing the rates. At issue in this case is the

"intrastate access services" rate, which provided that the rate

would be "[a]s per applicable portions of P.R.T.A. Intra-island

Switched Access Tariff K-2, Sec. VII." That tariff, in turn,

1
The parties have stipulated that T-Mobile was formerly
known as SunCom Wireless Puerto Rico Operating Company, LLC, and
is, for purposes of this litigation, a successor to (1) Telecorp
Communications, Inc., (2) AT&T Wireless Services, Inc., and (3) AWS
Network Newco, LLC. These predecessors are described as T-Mobile
in this opinion.

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specified that certain rates would be those provided in "Section 17

of PRTC FCC Tariff No. 1."

In 2001, the parties voluntarily agreed on a new ICA,

which had an initial term of two years and contained similar

provisions regarding local interconnection. The 2001 ICA, like the

1999 ICA, provided that the "Intrastate Access" price would be

"[p]er applicable portions of P.R.T.A. Tariff K-2 Section VII."

The 2001 agreement was effectively in place until 2008.

A new agreement was entered into effective January 1,

2008. The parties agree that the provisions of the 1999 and 2001

agreements govern for the purposes of the disputed billing at issue

here, which took place from 1999 to 2007.

PRTC provided T-Mobile with two services whose pricing is

at issue here: (1) high capacity DS-1 and DS-3 circuits that

connect T-Mobile's cell sites to T-Mobile's mobile telephone

switching office (MTSO) and (2) circuits that connect T-Mobile's

MTSO to points of interconnection (POIs) with PRTC.

PRTC's position is that the lower rates under its FCC

tariff do not govern.2 PRTC argues that the governing rate is the

intrastate private line rate, as provided in PRTC's local tariff

2
In fact, there appear to be three lower tariff regimes: (1)
interstate switched access prices, as provided in PRTC's FCC Tariff
No. 1, § 17; (2) interstate special access prices, also provided in
FCC Tariff No. 1, § 17; and (3) intrastate switched access prices,
as provided in PRTC's tariff K-2, § 7. The rates appear to be the
same under each of the three.

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F-7. The rates are substantially higher under the local tariff

F-7. As said, the Board rejected the application of the higher

local tariff.

PRTC billed T-Mobile for the disputed services at the

lower rates contained in the FCC tariff from 1999 to 2002.

However, in December 2002, PRTC informed T-Mobile that these

facilities should have been billed in accordance with the local

tariff F-7 but, "owing to an omission," had been billed at the FCC

Tariff No. 1 rate. Its position was that while T-Mobile could in

theory have "purchase[d] interstate offerings for interstate use"

and paid the interstate FCC tariff rate, it could have done so only

if it complied with the terms and conditions of the FCC tariff, or,

alternatively T-Mobile could instead have purchased "intraisland

offering for intraisland use," and paid the local tariff rate.

PRTC's view was that the FCC tariff would not apply, because

T-Mobile had not certified that more than ten percent of the

traffic is interstate, as is required under the tariff. As a

result, PRTC contended that T-Mobile could only acquire the

services under the local tariff F-7.

T-Mobile disagreed, explaining that it believed that the

disputed services were governed by the ICA's provision for

"intrastate access," which incorporated the rates of the local K-2

tariff and, by extension, the FCC tariff rates, regardless of the

ten-percent provision. T-Mobile's position was that it agreed to

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purchase the service directly under the ICA, which in turn

incorporates the FCC tariff rates, but that it did not agree to

compliance with the ten-percent term and condition of that tariff.

Until December 2002, T-Mobile had been billed at and had paid the

lower rate; thereafter it paid only the amount of its bills that

would be proper if the FCC tariff rate applied. PRTC sent T-Mobile

numerous letters requesting payment of the outstanding balance

based on the local tariff F-7 but continued to provide service.

B. Procedural History

This billing dispute continued until early 2007, with the

parties unable to come to any agreement. In April 2007, PRTC sent

T-Mobile a letter requesting payment of the $1,914,650.08 it

claimed it was due under the local tariff, and threatened to

"terminate the Interconnection Agreement and the services provided

under it" on May 22, 2007, if T-Mobile did not comply. On May 18,

T-Mobile filed suit with the Board, alleging that PRTC had

threatened to discontinue services because of T-Mobile's failure to

pay the amounts PRTC claimed were due under the applicable tariff.

PRTC carried out its threat, disconnecting certain facilities on

May 22. That same day, in response to motions filed by T-Mobile,

the Board ordered PRTC to immediately reconnect all lines it had

disconnected; PRTC complied with the order.

The parties submitted cross motions for summary judgment

to the Board. The crux of PRTC's argument was that T-Mobile was

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attempting to gain the benefit of the FCC tariff rate without

having to satisfy the requirement under that tariff that more than

ten percent of the traffic routed through the facility was

interstate traffic. PRTC also argued that the ICA did not cover

the disputed services, and as a result only the rates in the FCC

tariff or the local tariff could apply. Because the ten-percent

requirement was not met, the FCC rate could not apply, and by

process of elimination the local tariff rate had to apply.

T-Mobile disagreed, arguing that the parties' past actions and the

terms of the ICA made clear that it was entitled to the rate

specified in the FCC tariff, regardless of whether the ten-percent

requirement was met, pursuant to the provisions of the ICA.

On July 2, 2008, the Board decided the matter in favor of

T-Mobile. The Board concluded that "PRTC billed [T-Mobile] under

the FCC 1 Tariff . . . by which then it can not go against its own

acts pretending to modify the charges." The Board examined the

billing codes for the bills issued, and found that PRTC billed the

facilities under the FCC Tariff No. 1, § 17 as a "Special Access

Service." The Board thus found that the ICA obliged PRTC to bill

the services at the rate specified in the FCC tariff.

PRTC filed suit against the Board, the Board members, and

T-Mobile in federal court on August 8, 2008. PRTC's complaint

advanced several theories as to why the Board's decision was

unlawful, including: (1) the services purchased by T-Mobile were

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not UNEs and thus could not have been acquired by T-Mobile under

the ICA, (2) T-Mobile's attempt to gain the benefit of the FCC

tariff without complying with all of its conditions violated 47

U.S.C. § 203 and the filed rate doctrine, (3) requiring PRTC to

offer the services under the rates in the FCC tariff would impose

unreasonable and unjust terms in violation of 47 U.S.C. § 251(c),

(4) requiring PRTC to offer the services under the rates in the FCC

tariff would be discriminatory in violation of 47 U.S.C. § 251(c),

and (5) the Board's decision was arbitrary and capricious.

As relief, PRTC requested that the district court (1)

declare the Board's order unlawful, (2) enjoin all defendants from

seeking to enforce the Board's order, (3) find that, as a matter of

law, the facilities were provided under one of the tariffs, rather

than the ICA, and (4) find that T-Mobile did not comply with FCC

Tariff No. 1 and thus did not acquire the facilities under that

tariff.

On November 12, 2008, T-Mobile moved to dismiss, arguing

that because the Board's decision was based entirely on state law,

no federal question was raised and the district court lacked

jurisdiction. The district court rejected this argument, reasoning

that "the resolution of PRTC's claim turns on whether the Board's

Resolution and Order is: (1) inconsistent with federal law and FCC

regulations; and (2) preempted by the Supremacy Clause," and thus

federal jurisdiction existed. P.R. Tel. Co. v. Telecomms.

-12-
Regulatory Bd. of P.R., No. 08-1885, 2010 WL 1133859, at *3 (D.P.R.

Mar. 22, 2010).

The parties then submitted cross-motions for summary

judgment, after agreeing that this case was "in the nature of an

appeal from an administrative agency's decision," and as a result

"the Court's review is confined to the administrative record before

the Board."

PRTC made several arguments in its motion for summary

judgment: (1) that the Board's order conflicted with the filed rate

doctrine, which requires entities who file tariffs with the FCC to

apply the rates listed therein only if all conditions of the tariff

have been complied with; because T-Mobile did not comply with the

ten-percent interstate requirement of the FCC tariff, it would be

contrary to federal law to allow the rate of that tariff to apply,

(2) that the Board's order established discriminatory and

unreasonable terms and conditions, in violation of 47 U.S.C.

§ 251(c), because it would render T-Mobile the only entity during

the period of time in dispute entitled to purchase the facilities

based on the rates in the FCC tariff without complying with the

tariff's requirements, and (3) that the Board incorrectly

interpreted the ICA as covering the disputed services.

T-Mobile's motion for summary judgment argued that the

Board's decision was neither in conflict with federal law nor

arbitrary and capricious, and should be upheld. T-Mobile argued

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that voluntary ICAs were exempt from the requirements of 47 U.S.C.

§ 251(b) and (c), pursuant to § 252(a)(1), so there was no conflict

between the ICA and federal law. T-Mobile then argued that the

Board correctly applied Puerto Rico contract law in finding that

the ICA governed the disputed facilities at issue, and in finding

that the ICA provided that the relevant rate was that specified in

the FCC tariff.

The district court granted summary judgment for PRTC and

entered judgment vacating the Board's order. P.R. Tel. Co., 2011

WL 1097741, at *9. The court found that because the agreement was

voluntarily negotiated, the provision of 47 U.S.C. § 251(c)(2)(D)

prohibiting discriminatory ICAs did not apply, because the plain

text of 47 U.S.C. § 252(a)(1) allows voluntary agreements to be

made "without regard to the standards set forth in subsections (b)

and (c) of section 251." See P.R. Tel. Co., 2011 WL 1097741, at

*8. However, the court reasoned that there was no such exemption

from the nondiscrimination requirement contained in 47 U.S.C.

§ 252(e)(2), which provides that ICAs must be submitted to the

state commission for approval, and the commission "may only reject

. . . an agreement . . . if it finds that--(i) the agreement (or

portion thereof) discriminates against a telecommunications carrier

not a party to the agreement." P.R. Tel. Co., 2011 WL 1097741, at

*8. The court found the Board's interpretation of the ICA

discriminatory, because it "allows T-Mobile to benefit from the

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rates found in PRTC Tariff FCC No. 1 without having to comply with

the terms and conditions set forth in said tariff," which would be

discriminatory because "T-Mobile would be the only carrier entitled

to receive such benefits." Id. at *9.

T-Mobile moved for reconsideration, which the district

court denied. This appeal followed.

III.

The parties have raised four issues in this appeal: (1)

whether PRTC has standing to raise a claim that the ICA, as

interpreted by the Board, is discriminatory as to other carriers,

(2) whether the ICA is discriminatory, (3) whether enforcement of

the ICA, as interpreted by the Board, violates the filed rate

doctrine, and (4) whether the Board's interpretation of the ICA is

arbitrary and capricious.

The standing argument was raised for the first time on

appeal. We reject the argument and find that PRTC has standing to

raise the discrimination claim. The other three arguments were

presented to the district court, which granted summary judgment in

favor of PRTC solely on the discrimination theory and did not reach

the other two issues. We find that the district court erred in

finding the ICA discriminatory.

This leaves the question of whether to remand for the

district court to decide the remaining issues in the first

instance, or to resolve them on appeal. We reach the issues, as

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they have been adequately briefed and present questions of law. We

reject PRTC's arguments that the Board's decision violates the

filed rate doctrine and is arbitrary and capricious. Finding all

of PRTC's challenges to the Board's order to be without merit, we

remand to the district court to reinstate the Board's order.

A. Standing

This standing issue was not raised before the district

court. The jurisdictional question of whether the standing

requirements of Article III are satisfied may be raised at any

time. See Weaver's Cove Energy, LLC v. R.I. Coastal Res. Mgmt.

Council, 589 F.3d 458, 467 (1st Cir. 2009). We engage in a de novo

analysis of standing. Katz v. Pershing, LLC, 672 F.3d 64, 70 (1st

Cir. 2012).

T-Mobile argues that PRTC lacks standing to present the

particular argument of discrimination because the only entities

harmed by any discrimination would be competing third-party

carriers, not PRTC. Without analyzing whether this is in fact a

non-waivable Article III argument, we reject T-Mobile's argument.3

3
T-Mobile's standing argument does not appear to be that the
court lacks jurisdiction over the entire case or controversy. It
is perfectly clear that PRTC has standing to bring suit, as
enforcement of the agreement as interpreted by the Board will
result in monetary losses to PRTC. T-Mobile's argument, instead,
is that PRTC cannot raise one specific theory -- that the agreement
is discriminatory -- in an otherwise proper suit. Because we
reject T-Mobile's argument on its own terms, we need not address
the question of whether this form of standing argument is
permissible. See generally DaimlerChrysler Corp. v. Cuno, 547 U.S.
332, 352 (2006) (explaining that the Court's "standing cases

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 It is clear that the three requirements for Article III

standing -- injury in fact, redressability, and causation -- are at

least facially met. See Summers v. Earth Island Inst., 555 U.S.

488, 493 (2009); Katz, 672 F.3d at 71-72. PRTC has alleged a clear

injury -- the lower billing rate applied to past transactions --

which would be redressed if the Board's interpretation of the ICA

as applying the federal rate to the disputed services were found by

the court to be discriminatory and therefore unenforceable.

Moreover, if PRTC were a party to a discriminatory ICA that

violated federal law, it could potentially be subject to suits from

other carriers or governmental enforcement actions. T-Mobile

offers no argument as to why either of these two injuries are

insufficient to confer standing. The minimum requirements of

Article III standing are met here.

B. Discrimination

We have not articulated a standard of review for

determining when an ICA is discriminatory in violation of 47 U.S.C.

§§ 251-252. Because the issue which concerns us is a question of

law and not fact, review is de novo. See Global NAPS, 396 F.3d at

23 ("This circuit has not previously articulated precisely the

confirm that a plaintiff must demonstrate standing for each claim
he seeks to press"); Pagán v. Calderón, 448 F.3d 16, 27 (1st Cir.
2006) ("The standing inquiry is both plaintiff-specific and
claim-specific. Thus, a reviewing court must determine whether
each particular plaintiff is entitled to have a federal court
adjudicate each particular claim that he asserts.").

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standard of judicial review of state agency determinations under

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

and we apply that standard to state agency determinations under the

TCA." (citing P.R. Tel Co. v. Telecomms. Regulatory Bd. of P.R.,

189 F.3d 1, 7 (1st Cir. 1999))).

T-Mobile argues that the agreement is not discriminatory

due to the existence of 47 U.S.C. § 252(i), which allows other

entities to opt-in to an ICA, under certain conditions.4 We agree.

In the circumstances of this case, the effect of § 252(i) means

4
T-Mobile never made any argument before the district court
that this section was relevant to any assessment of discrimination
until the motion for reconsideration. Nevertheless, we bypass the
issue of waiver and reach the § 252(i) argument. We have
articulated a non-exhaustive list of six factors to consider when
deciding whether to allow an argument not made before the district
court to be raised on appeal:

(1) whether the litigant's failure to raise
the issue has deprived the court of appeals of
useful factfinding, or whether the issue was
of a purely legal nature; (2) whether the
omitted argument raises an issue of
constitutional magnitude; (3) whether the
argument was highly persuasive and failure to
reach it would threaten a miscarriage of
justice; (4) whether considering the issue
would cause prejudice or inequity to the
adverse party; (5) whether the failure to
raise the issue was inadvertent and provided
no tactical advantage; and (6) whether the
issue implicates 'matters of great public
moment.'

In re Net-Velázquez, 625 F.3d 34, 41 (1st Cir. 2010) (quoting Nat'l
Ass'n of Soc. Workers v. Harwood, 69 F.3d 622, 628 (1st Cir.
1995)). Here, factors one, three, four, and five are met.
Moreover, PRTC makes no claim of waiver on appeal.

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that the agreement is not discriminatory, and requires reversal of

the district court's decision.5

To start, it is not at all clear that there is any

nondiscrimination requirement that applies to voluntarily

negotiated agreements that have been approved by the relevant state

commission. Section 251 does require that interconnection as well

as unbundled network elements be provided on "rates, terms, and

conditions that are just, reasonable, and nondiscriminatory." 47

U.S.C. § 251(c)(2)(D), (c)(3). However, voluntarily negotiated

ICAs are exempt from this requirement: such agreements may be made

"without regard to the standards set forth in subsection (b) and

(c) of section 251." Id. § 252(a)(1); see also AT&T Corp., 525

U.S. at 372-73 (stating that under § 252(a)(1), "the incumbent can

negotiate an agreement without regard to the duties it would

otherwise have under § 251(b) or § 251(c)").

The district court recognized this and based its decision

on the nondiscrimination requirement of a separate section,

§ 252(e). P.R. Tel. Co., 2011 WL 1097741, at *8-9. That

subsection provides that the state commission "may" reject

agreements that, in whole or in part, "discriminate[] against a

5
T-Mobile also asserts that PRTC waived its ability to raise
any claim of discrimination by failing to raise it before the Board
at the time the agreement was negotiated. This argument is raised
for the first time on appeal without citation to any pertinent
authority, so it is both inadequately presented and waived. See
R.I. Hospitality Ass'n v. City of Providence, 667 F.3d 17, 49 n.23
(1st Cir. 2011).

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telecommunications carrier not a party to the agreement." 47

U.S.C. § 252(e)(2). Once the state commission has approved an

agreement, that provision, by its own terms, does not appear to

provide any basis for invalidating an agreement because it is

discriminatory.

However, we do not decide this issue, as even assuming a

nondiscrimination requirement were present here, § 252(i) precludes

a finding of discrimination even under § 252(e) in these

circumstances. As explained below, had another carrier sought to

connect on the same terms as provided under the ICA at issue here,

such connection and terms would have been generally available.6

1. Section 252(i) and Its Implementing Regulations

Section 252(i) provides: "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). The FCC first enacted a regulation

interpreting this provision in 1996, which was revised in 2004,

after litigation. See Bellsouth Telecomms., Inc. v. Se. Tel.,

Inc., 462 F.3d 650, 653-55 (6th Cir. 2006) (explaining the history

of the FCC's implementation of § 252(i)).

6
The record does not show any such carriers in fact sought
such agreements.

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 In 1996, the FCC's first order implementing the TCA

explained:

We conclude that incumbent LECs must permit
third parties to obtain access under section
252(i) to any individual interconnection,
service, or network element arrangement on the
same terms and conditions as those contained
in any agreement approved under section
252. . . . In practical terms, this means
that a carrier may obtain access to individual
elements such as unbundled loops at the same
rates, terms, and conditions as contained in
any approved agreement.

Local Competition Order, 11 FCC Rcd. at 16139. In essence, this

"pick-and-choose" rule7 provided that carriers could choose

individual network elements from a competitor's agreement to be

provided to them under 252(i), rather than having to adopt the

7
As codified, the FCC regulations provided:

An incumbent LEC shall make available without
unreasonable delay to any requesting
telecommunications carrier any individual
interconnection, service, or network element
arrangement contained in any agreement to
which it is a party that is approved by a
state commission pursuant to section 252 of
the Act, upon the same rates, terms, and
conditions as those provided in the agreement.
An incumbent LEC may not limit the
availability of any individual
interconnection, service, or network element
only to those requesting carriers serving a
comparable class of subscribers or providing
the same service (i.e., local, access, or
interexchange) as the original party to the
agreement.

47 C.F.R. § 51.809(a) (1997).

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agreement in full. The Supreme Court upheld this rule in 1999.

AT&T Corp., 525 U.S. at 395-96.

The rule had four exceptions -- ILECs need not provide

such services if the ILEC could prove to the state commission that

(1) "[t]he costs of providing a particular interconnection,

service, or element to the requesting telecommunications carrier

are greater than the costs of providing it to the

telecommunications carrier that originally negotiated the

agreement, or" (2) "[t]he provision of a particular

interconnection, service, or element to the requesting carrier is

not technically feasible." 47 C.F.R. § 51.809(b) (1997). Third,

other carriers could only opt-in to the agreement "for a reasonable

period of time after the approved agreement is available for public

inspection." Id. § 51.809(c). Fourth, the FCC also explained that

"ILECs could 'require a third party [to] agree to certain terms and

conditions' beyond the requested service so long as the ILEC proved

'to the state commission that the terms and conditions were

legitimately related to the purchase of the individual element

being sought.'" Bellsouth Telecomms., 462 F.3d at 654 (alteration

in original) (quoting Local Competition Order, 11 FCC Rcd. at

16139).

In 2004, the FCC adopted a new "all-or-nothing" rule,

currently in effect, under which a carrier would have to adopt the

-22-
agreement in its entirety, rather than being able to adopt portions

of an agreement:

An incumbent LEC shall make available without
unreasonable delay to any requesting
telecommunications carrier any agreement in
its entirety to which the incumbent LEC is a
party that is approved by a state commission
pursuant to section 252 of the Act, upon the
same rates, terms, and conditions as those
provided in the agreement. An incumbent LEC
may not limit the availability of any
agreement only to those requesting carriers
serving a comparable class of subscribers or
providing the same service (i.e., local,
access, or interexchange) as the original
party to the agreement.

47 C.F.R. § 51.809(a) (emphasis added). This revised provision

contains the first three exceptions outlined above. Id.

§ 51.809(b)-(c).

The FCC intended that this provision apply retroactively

to ICAs in force at the time the new rule was promulgated.8 No

challenge to § 252(i) or its implementing regulation is raised

here.

One of the few decisions addressing the scope of § 252(i)

is our decision in Global NAPS, 396 F.3d 16. There, we held that

§ 252(i) does not confer an "unconditional right" on a competing

8
At least one circuit has upheld this determination against
retroactivity challenges. Bellsouth Telecomms., Inc. v. Se. Tel.,
Inc., 462 F.3d 650, 654, 666 (6th Cir. 2006). Another circuit has
held that it was within the statutory authority of the FCC to
change course, and that the FCC did not abuse its discretion in
doing so. New Edge Network, Inc. v. FCC, 461 F.3d 1105, 1112-14
(9th Cir. 2006).

-23-
carrier to opt-in to the terms of a previous ICA, in the sense that

a competing carrier which had gone through binding arbitration

under § 252(b) could not, after a valid arbitration order was

issued, escape from that order by opting in to an agreement under

§ 252(i). Global NAPS, 396 F.3d at 23, 26. We also noted that the

FCC had interpreted the opt-in provision as meaning that a

requesting carrier could "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." Id. at 27-28 (quoting Local Competition Order, 11 FCC

Rcd. at 16139-40) (internal quotation marks omitted).

2. Interplay Between § 252(i) and Discrimination

On its face, § 252(i) operates to prevent discrimination

in ICAs in usual circumstances. If one company adopted an ICA, any

other company which felt it was discriminated against could opt-in

and gain the benefits of the terms of that agreement, negating any

discrimination against that other company.

The FCC has emphasized the importance of that provision

to ensuring nondiscrimination under the TCA. In initially enacting

the pick-and-choose rule, the FCC explained that "the primary

purpose of section 252(i) [is] preventing discrimination." Local

Competition Order, 11 FCC Rcd. at 16139.

-24-
 In switching to the all-or-nothing rule, the FCC

reiterated the important role § 252(i) plays in protecting against

discrimination:

We conclude that under an all-or-nothing rule,
requesting carriers will be protected from
discrimination, as intended by section 252(i).
Specifically, an incumbent LEC will not be
able to reach a discriminatory agreement for
interconnection, services, or network elements
with a particular carrier without making that
agreement in its entirety available to other
requesting carriers. If the agreement
includes terms that materially benefit the
preferred carrier, other requesting carriers
will likely have an incentive to adopt that
agreement to gain the benefit of the incumbent
LEC's discriminatory bargain. Because these
agreements will be available on the same terms
and conditions to requesting carriers, the
all-or-nothing rule should effectively deter
incumbent LECs from engaging in such
discrimination.

In re Section 251 Unbundling Obligations of Incumbent Local

Exchange Carriers, 19 FCC Rcd. 13494, 13505 (2004).

The FCC has also explained that requesting carriers are

able to enforce their rights under § 252(i):

Because of the importance of section 252(i) in
preventing discrimination, however, we
conclude that carriers seeking remedies for
alleged violations of section 252(i) shall be
permitted to obtain expedited relief at the
Commission, including the resolution of
complaints under section 208 of the
Communications Act, in addition to their state
remedies.

Local Competition Order, 11 FCC Rcd. at 16141.

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 In support of its claim that the ICA here nonetheless was

discriminatory, PRTC makes two arguments. First, PRTC claims that

the right to opt-in is not unconditional or automatic, as the FCC

regulations contain certain restrictions on the ability of carriers

to opt-in to agreements. PRTC cites to the first three exceptions

to a carrier's ability to opt-in, discussed above, as instances

when opting-in may not take place.

None of these exceptions constitutes a sufficient

limitation on carriers' opt-in abilities to undermine § 252(i)'s

ability to prevent discrimination, in the circumstances of this

case. As to the exceptions for cost and technical feasibility, the

burden is on the ILEC to prove the exceptions apply. 47 C.F.R.

§ 51.809(b). More importantly, if it is indeed more costly or not

technically feasible to provide such services, it is difficult to

see how not providing them (or providing them at a more expensive

rate) would be "discriminatory" within the meaning of the statute.

The FCC makes this point, explaining that § 252(d)(1) requires

carriers to base interconnection and network element charges on

costs, and as a result "[w]here costs differ, rate differences that

accurately reflect those differences are not discriminatory. This

is consistent with the economic definition of price discrimination

. . . ." Local Competition Order, 11 FCC Rcd. at 15928; see also

id. at 16140 ("We find that section 252(i) permits differential

treatment based on the LEC's cost of serving a carrier."). The FCC

-26-
has concluded that "[s]trict application of the term

'nondiscriminatory' as urged by those commenters who argue that

prices must be uniform would itself be discriminatory according to

the economic definition of price discrimination," which includes as

discriminatory those situations where prices for different

customers are the same even though the costs of supplying those

customers are different. Id. at 15928.

As to the limitation that carriers may only opt-in "for

a reasonable period of time" after the approved agreement is made

available for public inspection, 47 C.F.R. § 51.809(c), PRTC

develops no argument as to why this renders the opt-in provision

unable to prevent discrimination, and we see none. Moreover, this

provision only "limits the amount of time during which negotiated

agreements are open to requests under this section," AT&T Corp.,

525 U.S. at 396, not the amount of time an agreement timely opted

into may remain in force. The FCC has explained this approach:

"pricing and network configuration choices are likely to change

over time. . . . Given this reality, it would not make sense to

permit a subsequent carrier to impose an agreement or term upon an

incumbent LEC if the technical requirements of implementing that

agreement or term have changed." Local Competition Order, 11 FCC

Rcd. at 16140.

PRTC's final argument that § 252(i) is unable to

effectively prevent discrimination is that "not every carrier that

-27-
purchases facilities like the Disputed Facilities is eligible to

opt into an existing interconnection agreement." As an example,

PRTC claims that interexchange carriers which originate or

terminate interexchange traffic are not entitled to such

interconnection.

This argument is misplaced. PRTC's argument is based on

the substantive rules defining the scope of the interconnection

obligations under § 251(c)(2)-(3), which are based on the language

of the statute, not on interpretations of the scope of entities

which can opt-in to agreements under § 252(i). The question of the

substantive obligations created under the TCA vis-à-vis different

types of carriers is a separate, and antecedent, question from

whether there is a limitation on the scope of the opt-in ability

under § 252(i). To the extent that the requirements under the TCA

differ for different carriers under § 251(c), that precludes any

charge of discrimination. The TCA itself (or a reasonable FCC

interpretation of the TCA) provides that obligations only extend to

certain types of carriers.

Indeed, the regulations implementing § 252(i) make clear

that "[a]n incumbent LEC may not limit the availability of any

agreement only to those requesting carriers serving a comparable

class of subscribers or providing the same service (i.e., local,

access, or interexchange) as the original party to the agreement."

47 C.F.R. § 51.809(a). This makes clear that any distinction

-28-
between the types of carriers is based on the substantive

interconnection obligation, not on the scope of the opt-in

provision.

As a result, we hold that in the circumstances of this

case, § 252(i) and its implementing regulations preclude any

finding that the ICA is discriminatory. There may be other

circumstances where § 252(i) is insufficient to protect against

certain forms of discrimination, but PRTC has not explained what

they are or demonstrated that those conditions are present here.

As a result, the district court erred in concluding that the

agreement was discriminatory.

We turn next to the remaining arguments.

C. The Filed Rate Doctrine

PRTC argues that the Board's decision violates the filed

rate doctrine, which provides that, when tariffs are filed by a

common carrier under the Communications Act of 1934, Pub. L. No.

73-416, 48 Stat. 1064 (codified at 47 U.S.C. § 151 et seq.), the

services offered in those tariffs may only be provided (1) upon the

terms and conditions provided in the tariff and (2) if the rates of

the tariff are charged as stated in the tariff. See AT&T Co. v.

Cent. Office Tel., Inc., 524 U.S. 214, 221-24 (1998); see also 47

U.S.C. § 203(a) (tariffs must specify "charges" and "the

classifications, practices, and regulations affecting such

charges").

-29-
 PRTC makes a two-part argument. First, PRTC claims that

the disputed services it provided were not required to be provided

under the TCA, because they were not encompassed within either (1)

the obligation under the TCA for PRTC to provide interconnection

under § 251(c)(2), or (2) its duty to provide access to UNEs under

§ 251(c)(3). Second, PRTC argues that because such services were

not required to be provided under the TCA, they could only be

provided under the tariffs as filed with the FCC, given the filed

rate doctrine. Because the Board's interpretation of the ICA

allows the rate of the federal tariff to apply regardless of

whether T-Mobile certified that at least ten percent of the traffic

is interstate in nature (which is required by the terms of the

federal tariff), PRTC contends that the filed rate doctrine is

violated.

We reject the second part of the argument and so do not

comment on the first. PRTC's argument relies on T-Mobile failing

to certify it has met the ten-percent threshold. However, if the

ten-percent threshold is not met, the facilities are not

"interstate" in nature, as we explain below, and so there could be

no conflict with a federal tariff and no violation of the filed

rate doctrine. Such non-interstate facilities are subject to

state, not federal, jurisdiction for purposes of rate regulation

under the relevant law.

-30-
 The 1934 Act establishes "a system of dual state and

federal regulation over telephone service." La. Pub. Serv. Comm'n

v. FCC, 476 U.S. 355, 360 (1986). Section 203, on which PRTC

relies, applies to "all interstate and foreign communication by

wire or radio." 47 U.S.C. § 152(a) (emphasis added). The Act

"grants to the FCC the authority to regulate 'interstate and

foreign commerce in wire and radio communications.'" Louisiana,

476 U.S. at 360 (quoting 47 U.S.C. § 151). With certain exceptions

not relevant here, nothing in the Act "shall be construed to apply

or to give the Commission jurisdiction with respect to (1) charges,

classifications, practices, services, facilities, or regulations

for or in connection with intrastate communication service by wire

or radio of any carrier." 47 U.S.C. § 152(b) (emphasis added).

This provision contains "express jurisdictional limitations on FCC

power."9 Louisiana, 476 U.S. at 370.

The determination of whether any particular service or

facility is "interstate" or "intrastate" is not always a

straightforward matter; any particular facility or service often

provides some combination of the two. See id. at 360 ("[T]he

realties of technology and economics belie such a clean parceling

9
The TCA contains provisions granting the FCC authority to
regulate certain intrastate matters. See AT&T Corp. v. Iowa Utils.
Bd., 525 U.S. 366, 380 (1999) ("[T]he 1996 amendments . . . clearly
'apply' to intrastate service, and clearly confer 'Commission
jurisdiction' over some matters."). Neither party argues that such
jurisdiction is relevant to the filed rate argument presented here.

-31-
of responsibility. This is so because virtually all telephone

plant that is used to provide intrastate service is also used to

provide interstate service, and is thus conceivably within the

jurisdiction of both state and federal authorities.").

Addressing this issue, the Act "establishes a process

designed to resolve what is known as 'jurisdictional separations'

matters, by which process it may be determined what portion of an

asset is employed to produce or deliver interstate as opposed to

intrastate service." Id. at 375 (quoting 47 U.S.C. §§ 221(c),

410(c)). The Act creates a "Federal-State Joint Board," and

provides that "[t]he Commission shall refer any proceeding

regarding the jurisdictional separation of common carrier property

and expenses between interstate and intrastate operations . . . to

a Federal-State Joint Board." 47 U.S.C. § 410(c). This board is

charged with "prepar[ing] a recommended decision for prompt review

and action by the Commission." Id.

In 1989, the FCC approved an order of the Joint Board

dealing with the jurisdictional treatment of "mixed use special

access lines." In re MTS and WATS Market Structure (1989 Order),

4 FCC Rcd. 5660, 5660 (1989). The Joint Board proposed that state

interests would be best served by allowing states, rather than the

FCC, to "regulate charges" for such lines that contain "small

amounts" of interstate traffic. Id. The Joint Board, for

administrability purposes, proposed that interstate traffic be

-32-
deemed within the jurisdiction of the states, not the FCC, "when it

amounts to ten percent or less of the total traffic on a special

access line." Id. The FCC agreed. Id. This rule remains in

effect today. 47 C.F.R. § 36.154(a) ("State Private Lines" include

"all private lines . . . carrying both state and interstate traffic

if the interstate traffic on the line involved constitutes ten

percent or less of the total traffic on the line," while

"Interstate private lines" include private lines that exceed the

ten-percent threshold for interstate traffic). This ten-percent

threshold is what is specified in PRTC's FCC Tariff No. 1, which is

entitled "special access."10

As a result, even assuming that the ten-percent threshold

is not met, the question of what rates apply to the services

provided is not governed by the federal tariff, nor is the filed

rate doctrine implicated, because the services provided have been

classified as intrastate in nature. Federal law does not prevent

the parties to an ICA from agreeing to provide a service with

reference to the rate provided in the federal tariff where the

special access service is intrastate in nature. The 1989 Order

10
PRTC's argument rests upon the premise that "[t]he rules
that apply to the provisioning and offering of the Disputed
Facilities are those of the federal tariff regime that govern
special access facilities." We assume that this premise is true
for purposes of this argument, as the argument fails even assuming
that this is the case. We do not reach the question of whether the
disputed services were required to be provided as UNEs or under the
interconnection obligation of the TCA.

-33-
explains that states are permitted to "regulate charges for

intrastate private line systems carrying small amounts of

interstate traffic." 1989 Order, 4 FCC Rcd. at 5660. This

regulation by the states includes the question of what rates apply.

See id. ("[T]he Joint Board stated that intrastate assignment (and

consequently intrastate tariffing) of special access lines carrying

de minimis amounts of interstate tariff was appropriate and

sufficient to address existing problems." (emphasis added)).

Indeed, the Joint Board's order mentioned concerns about "tariff

shopping" and designed the ten-percent rule to help make clear

whether federal or state tariffs governed any particular situation.

See In re MTS and WATS Market Structure, 4 FCC Rcd. 1352, 1355-56

(1989) ("Our concern with achieving a proper balance between

federal and state interests also leads us to conclude that the

opportunities for 'tariff shopping' inherent in the current

procedures should be reduced.").

PRTC's filed rate argument depends on the assumption that

less than ten percent of the traffic of the disputed facilities was

interstate. That being so, there could be no conflict with the

filed rate doctrine under federal law, as such facilities were

subject to state regulation by the Board.11

11
We do not hold that simply because a facility falls below
the ten-percent threshold, the FCC has surrendered all jurisdiction
to regulate the facility by virtue of the ten-percent rule. In
Qwest Corp. v. Scott, 380 F.3d 367 (8th Cir. 2004), the Eighth
Circuit addressed this question. It held that the ten-percent rule

-34-
D. Whether the Board's Decision is Arbitrary or Capricious

PRTC's final argument is that the Board's state-law

contractual determination was arbitrary or capricious and must be

reversed. This claim fails.

We review the Board's "findings of facts and applications

of the law in resolving disputes over the terms of an agreement"

under the "arbitrary and capricious standard." Centennial P.R.

License Corp. v. Telecomms. Regulatory Bd. of P.R., 634 F.3d 17, 26

(1st Cir. 2011). "Under this standard, 'an agency's decision will

be upheld unless the agency lacks a rational basis for making the

determination or if the decision was not based on consideration of

the relevant factors.'" P.R. Tel. Co. v. Telecomms. Regulatory Bd.

of P.R., 665 F.3d 309, 319 (1st Cir. 2011) (quoting Centennial P.R.

License, 634 F.3d at 37) (citation and internal quotation marks

omitted). Review under this standard is "narrow," and "if the

agency's decision is supported by a rational basis, we will

affirm." Id. (quoting River St. Donuts, LLC v. Napolitano, 558

F.3d 111, 114 (1st Cir. 2009)).

was not "designed to confer exclusive regulatory power," but
instead the jurisdictional separation process is directed toward
"rate regulation," allocation of costs and expenses, and other
related matters. Id. at 372. We do not reach this issue. The
filed rate doctrine, as its name suggests, is a matter of "rate
regulation." See id. at 375 (explaining that a "purpose of the
filed rate doctrine is to . . . preserve the regulating agency's
authority to determine the reasonableness of rates" (quoting H.J.
Inc. v. Nw. Bell Tel. Co., 954 F.2d 485, 488 (8th Cir. 1992))
(internal quotation marks omitted)).

-35-
 The Board's decision was not arbitrary or capricious, but

is entirely rational based on the evidence before it, including

PRTC's volte face on what the ICA meant. The Board has

considerable expertise in the field of interpreting and assessing

ICAs, and considered the relevant billing records, correspondence

between the parties, two expert reports, and deposition testimony.

PRTC's argument that the Board's decision was arbitrary

or capricious largely relies on PRTC's claim that the Board's

interpretation would result in a violation of federal law under the

filed rate doctrine, an argument which we have rejected. The

remaining portion of PRTC's argument is that the contract is

ambiguous and should be interpreted in favor of PRTC. The Board's

rejection of the argument is neither arbitrary nor capricious.

IV.

The judgment of the district court is reversed. We

remand the case with instructions for the district court to enter

judgment in favor of T-Mobile and affirm the Board's order.

-36-