Appeals Court Upholds FCC Interconnection Decision
A 2-year-old FCC decision to limit CLECs’ ability to opt into interconnection agreements negotiated by other carriers was upheld unanimously Tues. by the 9th U.S. Appeals Court, San Francisco. Finding Sec. 252(i) of the Telecom Act “ambiguous,” the panel said “the FCC’s all-or-nothing interpretation is reasonable,” so the agency didn’t “abuse its discretion.” Sec. 252(i) says carriers must make interconnection agreements available to other carriers but doesn’t say how.
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The FCC in 1996 adopted a “pick & choose” interpretation that let carriers opt into parts of interconnection agreements negotiated by other carriers. It replaced that in 2004 with an “all or nothing” approach under which a carrier must adopt another carrier’s agreement completely or not at all. CLECs challenged the new FCC interpretation in several circuits and the case was combined in the 9th Circuit. Challenges to the FCC decision had been brought by New Edge Networks, CompTel, Xspedius Communications, KMC Telecom, Snip Link, XO Communications, OnFiber Communications and Cox Communications.
The court weighed the case in steps. It looked at whether the Telecom Act gave clear guidance about how CLECs could opt into contracts and, if not, whether the FCC made an adequate interpretation. The answer to the first question was no. “Congress simply has not spoken to the precise question before us,” said the court’s opinion, by Judge Thomas Nelson. “We are not persuaded by the petitioners’ arguments that Sec. 252(i) is unambiguous.” Also on the panel were Judges Pamela Rymer and William Fletcher.
The next step was whether the all-or-nothing rule was “a permissible construction,” and the court decided it was. “The phrase in Sec. 252(i) specifying that an ILEC shall make available ’the same terms and conditions as those provided in the agreement’ can reasonably be read to refer to the terms and conditions of the entire agreement,” said the court. “Accordingly, we conclude that all-or-nothing is a permissible interpretation of Sec. 252(i).” The court also found the FCC’s rule “a reasonable policy choice” because “the FCC explained that its all-or-nothing rule reflected a ‘more holistic’ reading [of the section] and that its initial pick-and-choose rule, in practice, had impeded negotiations,” Nelson wrote.
Although CLECs pointed out “the FCC adopted an interpretation that is opposite of its original interpretation,” the decision wasn’t an “abuse of discretion,” said the court. “Petitioner Cox argues that the FCC ‘relied mainly on speculative, often self-serving statements’ by ILECs,” said the court: “We observe, however, that the petitioners’ evidence is similarly self-serving. Moreover, not all the evidence in support of all-or-nothing is self-serving; several state utility commissions supported the ILECs’ position.”
CompTel Gen. Counsel Jonathan Lee said he was “disappointed that the court chose to uphold what was a pretty radical change” by the FCC. The court gave the FCC a lot of latitude, he said. USTelecom Gen. Counsel James Olson said he expects the decision to “further encourage commercial negotiations.” The pick & choose rule discouraged the give & take of negotiations, he said. USTelecom was an intervenor supporting the FCC.