The Ohio Bell Telephone Co. v. Public Utilities Comm. of Ohio ( 2013 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 13a0079p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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THE OHIO BELL TELEPHONE COMPANY, dba
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AT&T Ohio,
Plaintiff-Appellant, -
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No. 12-3145
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>
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v.
THE PUBLIC UTILITIES COMMISSION OF OHIO; -
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TODD A. SNITCHLER, in his official capacity
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as the Chairman of the Public Utilities
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Commission of Ohio; STEVEN D. LESSER,
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CHERYL ROBERTO, ANDRE T. PORTER, and
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LYNN SLABY, in their official capacities as
Commissioners of the Public Utilities -
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Commission of Ohio; INTRADO
Defendants-Appellees. -
COMMUNICATIONS INC.,
N
Appeal from the United States District Court
for the Southern District of Ohio at Columbus.
No. 2:09-cv-918—Algenon L. Marbley, District Judge.
Argued: November 27, 2012
Decided and Filed: March 28, 2013
Before: NORRIS, GIBBONS, and DONALD, Circuit Judges.
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COUNSEL
ARGUED: J. Tyson Covey, MAYER BROWN LLP, Chicago, Illinois, for Appellant.
Thomas G. Lindgren, OFFICE OF THE OHIO ATTORNEY GENERAL, Columbus,
Ohio, for Commission Appellees. Edward A. Yorkgitis, Jr., KELLEY, DRYE &
WARREN, LLP, Washington, D.C., for Intrado Appellee. ON BRIEF: J. Tyson Covey,
MAYER BROWN LLP, Chicago, Illinois, for Appellant. John H. Jones, OFFICE OF
THE OHIO ATTORNEY GENERAL, Columbus, Ohio, for Commission Appellees.
Edward A. Yorkgitis, Jr., Barbara A. Miller, KELLEY, DRYE & WARREN, LLP,
Washington, D.C., for Intrado Appellee.
1
No. 12-3145 Ohio Bell v. Pub. Utils. Comm’n, et al. Page 2
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OPINION
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ALAN E. NORRIS, Circuit Judge. AT&T Ohio (“AT&T”) and Intrado
Communications, Inc. (“Intrado”), rival telecommunications carriers, submitted to an
arbitration conducted by the Public Utilities Commission of Ohio (“the Commission”)
to determine how to interconnect their networks to service 9-1-1 calls. AT&T insisted
that all points of interconnection be on its network, relying upon Section 251(c)(2) of the
federal Telecommunications Act of 1996 (“the Act”), 47 U.S.C § 251(c), a provision
only applicable to incumbent carriers1 like AT&T. The Commission rejected this
request and, instead relied on the general provisions of Section 251(a), and ordered the
carriers to establish interconnection points on both AT&T’s and Intrado’s networks.
AT&T sought judicial review of the arbitration award, and the district court affirmed.
On appeal, AT&T argues that the Commission exceeded its arbitral authority by
applying Section 251(a) because Intrado had petitioned for interconnection only under
Section 251(c). AT&T also challenges the arbitration award itself, arguing that the
Commission improperly interpreted an incumbent carrier’s interconnection duties under
the Act. Having carefully considered these arguments, we affirm the judgment of the
district court.
I.
Intrado, a telecommunications provider specializing in emergency
communications, hoped to compete with AT&T for servicing Ohio 9-1-1 calls. To that
end, it began negotiations with AT&T to interconnect their networks. Without a
physical interconnection, the carriers could not exchange traffic, and customers of one
carrier would be unable to reach 9-1-1 operators serviced by the other carrier.
1
Under the Act, an incumbent carrier is defined as a carrier that provided telephone service to an
area prior to February 8, 1996. 47 U.S.C. § 251(h)(1).
No. 12-3145 Ohio Bell v. Pub. Utils. Comm’n, et al. Page 3
The two carriers were unable to agree whether and how to interconnect their
networks and Intrado petitioned for an arbitration conducted by the Commission, as
provided for by Section 252(b)(2) of the Act. In its petition, Intrado argued that it was
entitled to “interconnection under Section 251(c) of the Act.” According to Intrado, this
provision requires incumbent carriers, such as AT&T, to provide interconnection with
a requesting telecommunications carrier for the transmission and routing of telephone
exchange services. In other words, an entrenched carrier must allow would-be
competitors to connect to its network.
Intrado also argued that it “has the right to choose the location and number of
points of interconnection on the incumbent’s network.” It urged that, in geographic
areas where Intrado was the primary provider of 9-1-1 emergency services–meaning,
where Intrado serviced the 9-1-1 operator–it would be more efficient and reliable for
AT&T to connect to Intrado’s network. Specifically, Intrado’s petition reads,
[I]n geographic areas in which Intrado has been selected as the primary
provider of 911 services . . . AT&T’s network must interconnect with
Intrado’s 911/E911 network so that customers of AT&T located in that
geographic area can complete emergency calls to the appropriate [9-1-1
operator] (i.e. Intrado’s end user customer).
This arrangement, Intrado claimed, would be consistent with how AT&T and other
incumbent carriers routinely interconnected with each other for purposes of servicing 9-
1-1 calls. In its initial arbitration brief, Intrado argued that Congress adopted the Act to
prevent incumbent carriers from discriminating against less-established carriers.
Therefore, Intrado claimed, it was entitled to the same interconnection arrangement–“the
preferred method of interconnection for completing [9-1-1] calls”–that AT&T had with
other incumbent carriers.
The Commission agreed that, in some instances, AT&T must connect to Intrado’s
network. Specifically, the Commission ordered AT&T to establish a point of
interconnection on Intrado’s network for the delivery of its customers’ 9-1-1 calls in
geographic areas where Intrado was the designated 9-1-1 service provider. Conversely,
Intrado would need to establish a point of interconnection on AT&T’s network in the
No. 12-3145 Ohio Bell v. Pub. Utils. Comm’n, et al. Page 4
areas serviced by AT&T. The Commission later clarified that its decision was based on
Section 251(a) of the Act, which generally “establishes the duty of a telecommunications
carrier to interconnect directly or indirectly with the facilities of other
telecommunications carriers” not on the incumbent carrier-specific provisions of Section
251(c).
AT&T requested a rehearing on this issue, arguing that the Commission
inappropriately applied the general provisions of Section 251(a) when Intrado had
petitioned for interconnection solely under Section 251(c). The Commission denied this
request, noting that,
[T]he record clearly reflects that the proper location of the [point of
connection] when Intrado is the 911 service provider . . . is a primary
issue. Furthermore, AT&T discussed Section 251(a) at length on the
record in arguing against Intrado’s desire to have AT&T establish a POI
on Intrado’s network. Further, it would be inappropriate to apply the
requirements of Section 251(c) in this scenario when the Commission has
already determined that the applicable section of the Act is Section
251(a), regardless of whether or not both parties contend such
arrangements fall under Section 251(c). In sum, AT&T has asserted no
facts or arguments that would give us a basis for varying from the award
issued in this matter . . . .
AT&T then filed a complaint in the Southern District of Ohio challenging the
arbitration award. AT&T again argued that the Commission erred in relying on Section
251(a) where “no party raised any issue for arbitration regarding alleged interconnection
under Section 251(a), and no such ‘open issue’ was presented to the [Commission] for
decision.” AT&T also argued that Section 251(c)(2) alone applied to interconnection
issues involving an incumbent carrier and, under that section, Intrado was entitled only
to interconnection on AT&T’s network.
The district court rejected these arguments and affirmed the Commission’s
arbitration award. The court explained that “the issue of whether Intrado’s arrangement
with AT&T would include compelling AT&T to interconnect on Intrado’s network was
raised, albeit not explicitly pursuant to [the Commission’s] authority under Section
251(a) as opposed to Section 251(c).”
No. 12-3145 Ohio Bell v. Pub. Utils. Comm’n, et al. Page 5
The court recognized that there was “no clear answer” to AT&T’s argument
regarding Section 251(c)(2) and the location of the points of interconnection. It
explained that Section 251 provides a tiered hierarchy of interconnection requirements,
designed to foster competition in telecommunications markets. While Section 251(a)
imposes a general duty for all carriers to provide for interconnection, subsection (c)
provides additional obligations specific to incumbent carriers. These additional
obligations include allowing for interconnection “at any technically feasible point within
the [incumbent] carrier’s network.” The court concluded that, based on this hierarchy,
the Commission could compel AT&T to interconnect on Intrado’s network under 251(a),
regardless of 251(c)(2)’s requirement that AT&T offer a point on its own network: “If
a competitor [non-incumbent carrier] can compel interconnection to another competitor
[non-incumbent carrier] under Section 251(a) . . . it follows that an [incumbent carrier]
can be compelled to interconnect with a competitor [non-incumbent carrier] under
Section 251(a) as well. [Incumbent carriers], after all, have greater obligations to
interconnect than competitor [non-incumbent carriers], not the other way around, as is
well-established under the requirements of Section 251.”
This appeal followed.
II.
Under the Telecommunications Act of 1996, a party may appeal the final
arbitration decision of the state utilities commission to a federal district court. 47 U.S.C.
§ 252(e)(6). On appeal, this Court’s jurisdiction is based upon 28 U.S.C. § 1291. When
reviewing state public service commission orders, we are limited to determining whether
the order is consistent with Sections 251 and 252 of the Act. Mich. Bell Tel. Co. v.
MCIMetro Access Transmission Servs, Inc., 323 F.3d 348, 354 (6th Cir. 2003) (citing
Mich. Bell Tel. Co. v. Strand, 305 F.3d 580, 586 (6th Cir. 2002)). With respect to the
Commission’s findings of fact, we apply the arbitrary and capricious standard, the most
deferential standard of judicial review. Finally, we review de novo the Commission’s
interpretation of the Act. Id.No. 12-3145 Ohio Bell v. Pub. Utils. Comm’n, et al. Page 6
III.
On appeal, AT&T argues that the Commission exceeded its arbitral authority by
applying Section 251(a) when Intrado had petitioned for interconnection under Section
251(c)(2) only. As AT&T explains, the Commission’s statutory authority to arbitrate
an interconnection agreement is confined to the open issues set forth in the petition or
the response. 47 U.S.C. § 252(b)(4)(A). Although this issue is fact-dependant, it is
essentially a question of statutory interpretation–how specifically must an issue be raised
in a petition to be deemed “an open issue” for purposes of arbitration? In answering this
question, we look to Federal Rule of Civil Procedure 15 for guidance. Under this rule,
an issue not properly raised by the pleadings may nonetheless be tried by the parties’
implied consent. Fed.R.Civ.P. 15(b)(2). “Implied consent to the trial of an unpleaded
issue is not established merely because evidence relevant to that issue was introduced
without objection. At least it must appear that the parties understood the evidence to be
aimed at the unpleaded issue.” MBI Motor Co., Inc. v. Lotus/E., Inc., 506 F.2d 709, 711
(6th Cir. 1974).
This situation, although not governed by Rule 15, is analogous. Here, throughout
the arbitration proceedings, AT&T understood and contested Intrado’s request to
establish a point of interconnection on its own network, regardless of whether or not
Intrado had properly raised the issue in its petition. Therefore, this issue–whether
ultimately resolved under Section 251(c) or Section 251(a)–was sufficiently before the
Commission. See MCI Tele. Corp. v. Mich. Bell Tel. Co., 79 F. Supp. 2d 768, 774 (E.D.
Mich. 1999) (ruling that an issue, although not raised in the petition or response, was
properly before the state commission because the parties had discussed the issue
throughout the arbitration proceedings).
IV.
AT&T argues that the Commission erroneously applied the general provisions
of Section 251(a) in determining the points of interconnection because, whenever an
incumbent carrier is involved, the more-specific provisions of Section 251(c) control.
No. 12-3145 Ohio Bell v. Pub. Utils. Comm’n, et al. Page 7
The precedence of specific provisions over general provisions, AT&T argues, is a
“bedrock principle of statutory interpretation.” AT&T also notes that Section 251(c)
explicitly incorporates the requirements of 251(b) and not those of 251(a). This
omission, AT&T argues, evidences that “Section 251(a) simply does not apply” to an
incumbent carrier subject to Section 251(c).
We have explained that Congress passed the Act “in order to end local
telecommunications monopolies and engender competition in local telecommunications
markets.” Verizon N., Inc. v. Strand, 309 F.3d 935, 939 (6th Cir. 2002). The Act was
designed to “minimize the barriers to market entry erected during the period in which
the incumbent provider functioned as a monopoly.” MCI Telecomm. Corp. v. Ohio Bell
Tel. Co., 376 F.3d 539, 542 (6th Cir. 2004).
In order to accomplish this goal, Sections 251(a) through (c) create “a three-
tiered hierarchy of escalating obligations based on the type of carrier involved.” In re
Guam Pub. Util. Comm’n, 12 F.C.C.R. 6925, 6937 (May 19, 1997). First, Section
251(a)2 “imposes relatively limited duties on all telecommunications carriers.” Second,
Section 251(b) imposes more extensive duties on carriers that qualify as “local exchange
carriers.” Third and finally, Section 251(c) imposes the most extensive duties on local
exchange carriers that are also incumbents, such as AT&T.3 Id. The Supreme Court has
2
In relevant part, Section 251(a) reads,
(a) General duty of telecommunications carriers
Each telecommunications carrier has the duty--
(1) to interconnect directly or indirectly with the facilities and
equipment of other telecommunications carriers; and
....
3
In relevant part, Section 251(c) reads,
(c) Additional obligations of incumbent local exchange carriers
In addition to the duties contained in subsection (b) of this section, each incumbent local
exchange carrier has the following duties:
(1) Duty to negotiate
....
(2) Interconnection
The duty to provide, for the facilities and equipment of any requesting
No. 12-3145 Ohio Bell v. Pub. Utils. Comm’n, et al. Page 8
explained that, in the “host of duties” imposed on incumbent carriers by Section 251,
“[f]oremost among these duties is the [incumbent carrier’s] obligation under 47 U.S.C.
§ 251(c) to share its network with competitors.” AT&T Corp. v. Iowa Util. Bd., 525 U.S.
366, 371 (1999) (citations omitted).
AT&T, in support of its argument that Section 251(c) relieves incumbent carriers
of the general interconnection duties set forth under Section 251(a), relies upon language
found in In re Implementation of the Local Competition Provisions in the Telecomm. Act,
11 F.C.C.R. 15499, 15991 (Aug. 1, 1996), vacated by Iowa Util. Bd. v. F.C.C., 219 F.3d
744 (8th Cir. 2000), where the FCC said that “Section 251 is clear in imposing different
obligations on carriers depending upon their classification.” In relying upon this isolated
passage, AT&T mischaracterizes the FCC’s position. In its order, the FCC recognized
that Section 251(a) “applies to all telecommunications carriers,” although it does not
“apply equally to all telecommunication carriers.” In this regard, the agency explained
that Section 251 clearly imposes greater interconnection burdens on incumbent carriers,
citing the additional obligations set forth under Section 251(c) as an example. Id.Admittedly, the text of the Act is not always clear. However, we are persuaded
that the district court’s interpretation, that incumbent carriers are subject to Section
251(a)’s general interconnection duties, is the correct one. Simply stated, it makes little
sense to read the Act in a way that imposes fewer duties on incumbent carriers than on
less-established, nondominant carriers. As we have previously recognized, the Act is
designed to encourage competition by imposing the greatest interconnection duties on
incumbent carriers like AT&T. Here, were AT&T not an incumbent carrier subject to
Section 251(c) and, instead, were a less-established carrier, the issue would be easy: the
Commission clearly would have the authority under Section 251(a) to order
interconnection on Intrado’s network. There is no limiting language in the statute stating
telecommunications carrier, interconnection with the local exchange carrier's
network--
....
(B) at any technically feasible point within the carrier's network;
....
47 U.S.C. § 251(c); see also 47 C.F.R. § 51.305(a).
No. 12-3145 Ohio Bell v. Pub. Utils. Comm’n, et al. Page 9
that interconnection must occur on the incumbent carrier’s network and, based on the
hierarchical structure of the Act, it logically follows that the Commission has the
authority to impose this same duty on an incumbent carrier.
V.
For the foregoing reasons, we affirm the judgment of the district court.