Qwest Corp v. FCC

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 6, 2007 Decided March 23, 2007
No. 05-1450
QWEST CORPORATION,
PETITIONER
V.
FEDERAL COMMUNICATIONS COMMISSION
AND UNITED STATES OF AMERICA,
RESPONDENTS
MCLEODUSA TELECOMMUNICATIONS SERVICES, INC., ET AL.,
INTERVENORS
Consolidated with
05-1469, 06-1014, 06-1039, 06-1043
On Petitions for Review of an Order of the
Federal Communications Commission
L. Andrew Tollin argued the cause for petitioner Qwest
Corporation. With him on the briefs were Michael Deuel
Sullivan and Robert B. McKenna.
David P. Murray and Russell M. Blau argued the cause
for CLEC Petitioners. On the briefs were Thomas Jones,
Randy J. Branitsky, Richard M. Rindler, Patrick J. Donovan,
2
Joshua M. Bobeck, and Mary C. Albert. Jason D. Oxman
entered an appearance.
Joseph R. Palmore, Counsel, Federal Communications
Commission, argued the cause for respondents. With him on
the brief were Thomas O. Barnett, Assistant Attorney General,
U.S. Department of Justice, Catherine G. O’Sullivan and
Nancy C. Garrison, Attorneys, Samuel L. Feder, General
Counsel, Federal Communications Commission, Eric D.
Miller, Deputy General Counsel, John E. Ingle, Deputy
Associate General Counsel, and Nandan M. Joshi, Counsel.
L. Andrew Tollin, Michael Deuel Sullivan, Robert B.
McKenna, Scott H. Angstreich, Michael E. Glover, and
Edward H. Shakin were on the brief for intervenors Qwest
Corporation and the Verizon Companies in support of
respondents.
David E. Mills and J. G. Harrington were on the brief for
intervenor Cox Communications, Inc.
Before: GRIFFITH and KAVANAUGH, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
WILLIAMS.
WILLIAMS, Senior Circuit Judge: Qwest, the incumbent
local exchange carrier (“ILEC”) in Omaha, Nebraska,
petitioned the Federal Communications Commission for
forbearance under § 10(c) of the Communications Act, 47
U.S.C. § 160(c), from some of its obligations under §§ 251(c)
and 271 of the Act, 47 U.S.C. §§ 251, 271, in the Omaha
Metropolitan Statistical Area (“MSA”). The Commission
granted the petition in part, relieving Qwest of the duty to
provide its competitors access to certain unbundled network
3
elements. In re Petition of Qwest Corporation for
Forbearance Pursuant to 47 U.S.C. § 160(c) in the Omaha
Metropolitan Statistical Area, 20 FCC Rcd 19,415 (2005)
(“Order”). Qwest and several competing local exchange
carriers (“CLECs”) now seek review of various aspects of the
Commission’s order.
Qwest asserts that the Commission failed to act on its
forbearance request before a statutory deadline, and that
therefore the petition should have been “deemed granted” in
full. The CLEC petitioners, in turn, challenge the
Commission’s grant of forbearance as to §§ 251(c)(3) and
271(c)(2)(B)(ii), attacking the Commission’s interpretation of
§ 10(d) of the Act as unreasonable and its analysis under
§ 10(a) and (b) as arbitrary and capricious. Qwest’s claim,
however, is barred by the exhaustion requirement of 47 U.S.C.
§ 405(a), a conclusion compelled by In re Core
Communications, Inc., 455 F.3d 267 (D.C. Cir. 2006)
(“Core”). We find the CLECs’ claims ill-founded.
***
Qwest’s petition requested forbearance from many of the
statutory and regulatory obligations to which it is subject as
the incumbent local exchange carrier in the Omaha MSA,
including its obligations under § 251(c) and the “competitive
checklist” requirements of § 271(c)(2)(B)(i)-(vi) and (xiv).
Order, 20 FCC Rcd at 19,416 ¶ 1 n.2. Section 10 of the Act
provides that the Commission “shall forbear from applying
any regulation or any provision” if it determines that: (1) the
enforcement of such a regulation or provision is not necessary
to ensure that rates or services are “just and reasonable and are
not unjustly or unreasonably discriminatory”; (2) enforcement
is “not necessary for the protection of consumers”; and (3)
forbearance from applying such a regulation or provision is
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“consistent with the public interest.” 47 U.S.C. § 160(a)(1)-
(3). In evaluating the public interest, the Commission must
ask whether forbearance “will promote competitive market
conditions.” Id. § 160(b). Section 10(d) provides that no
petition for forbearance may be granted as to the obligations
in §§ 251(c) or 271 until the Commission “determines that
those requirements have been fully implemented.” Id.
§ 160(d).
Any petition for forbearance “shall be deemed granted if
the Commission does not deny the petition . . . within one year
after the Commission receives it,” unless the Commission
extends the deadline “an additional 90 days.” Id. § 160(c).
The Commission timely granted itself a 90-day extension and,
on the last day of the extended period, issued a news release
announcing that it had voted to grant Qwest’s petition in part.
News Release, FCC Grants Qwest Forbearance Relief in
Omaha MSA, Sept. 16, 2005, Joint Appendix at 652. The
release stated that the Commission was relieving Qwest of the
“obligation to provide unbundled network elements (UNEs) to
competitors in 9 of Qwest’s 24 wire center service areas,”
noting “the substantial infrastructure investment made by Cox
Communications, Inc. in its competitive network” in the
Omaha MSA. Id. The release explained, however, that the
Commission was leaving in place the other requirements of
§ 251(c), as well as the obligation under § 271 to provide
wholesale access to local loops, transport, and switching at
just and reasonable prices. Id.
The Commission issued the text of its Order on
December 2, 2005, stating, anomalously, that its “decision
shall be effective on Friday, September 16, 2005.” 20 FCC
Rcd at 19,471 ¶ 112 & n.282. As prefigured in the release,
the Order granted Qwest forbearance from providing
unbundled loops and dedicated transport elements under 47
U.S.C. § 251(c)(3), as well as related obligations in
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§§ 251(c)(6) and 271. The Commission found those sections
to have been “fully implemented” within the meaning of
§ 10(d). 20 FCC Rcd at 19,439 ¶ 51. The “substantial
intermodal competition” provided by Cox’s voice-enabled
cable plant was “sufficient” to merit forbearance, the
Commission held, in light of the continued applicability of
other statutory and regulatory provisions designed to promote
competition, such as the resale and interconnection
requirements under § 251(c)(4), and access to loops,
switching, and transport services under § 271(c)(2)(B)(iv)-
(vi). 20 FCC Rcd at 19,444, 19,446 ¶¶ 59, 62. The
Commission relieved Qwest from the application of certain
“dominant carrier” regulations under 47 U.S.C. § 214 and 47
C.F.R. §§ 61.38 & 61.41-.49 (2006) in mass market switched
access and mass market broadband Internet access services,
but it denied the petition in all other respects. Id. at 19,417
¶ 2, 19,424 ¶¶ 15-16.
* * *
We begin with Qwest’s claim that its petition should have
been “deemed granted” under § 10(c) because the
Commission’s actions (a vote and press release) did not
constitute a “den[ial]” under § 10(c).
47 U.S.C. § 405(a) provides that “[t]he filing of a petition
for reconsideration shall not be a condition precedent to
judicial review of any such order [of the Commission] . . .
except where the party seeking such review . . . relies on
questions of fact or law upon which the Commission . . . has
been afforded no opportunity to pass.” As we noted in Core,
this circuit has “strictly construed” § 405(a), “holding that we
generally lack jurisdiction to review arguments that have not
first been presented to the Commission.” 455 F.3d at 276(internal quotation marks omitted). While the statute does not
6
require that the Commission’s opportunity “be afforded in any
particular manner, or by any particular party,” Coalition for
Noncommercial Media v. FCC, 249 F.3d 1005, 1008 (D.C.
Cir. 2001), the Commission must have somehow been put on
notice of the problem. Time Warner Entertainment Co. v.
FCC, 144 F.3d 75, 79 (D.C. Cir. 1998) (“Time Warner”).
Qwest acknowledges both the fact that it never raised the
issue before the Commission and the principle that failure to
do so isn’t excused merely because the issue arose
unequivocally only at the moment the Commission took
action. That principle is clear. In Core, as here, the
Commission voted to deny a petition for forbearance and
issued a press release within the statutory deadline, publishing
its written order only after the deadline had passed; like
Qwest, Core then argued, without seeking reconsideration,
that its petition should be “deemed granted.” 455 F.3d at 274-
75. Yet, noting our precedents under § 405(a), we held that
“even when a petitioner has no reason to raise an argument
until the FCC issues an order that makes the issue relevant,
the petitioner must file a petition for reconsideration with the
Commission before it may seek judicial review.” Id. at 276-
77 (internal quotation marks omitted).
Qwest tries to distinguish Core by noting a subtle
difference between its claim and Core’s. Whereas Core
argued that the Commission was bound by § 10(c) to issue a
fully fledged explanation of its ruling by the deadline (on pain
of the petition’s being deemed granted), Qwest argues more
modestly that § 10(c) requires simply a “legally effective
public notice” with “enough detail about the rulings to allow
the parties to alter their course of conduct.” Qwest Reply Br.
at 5. This situates Qwest’s claim (it says) under “step one” in
the conventional lexicon of Chevron U.S.A. Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837 (1984), i.e., a
claim to which Congress has spoken “directly.” By contrast,
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Qwest locates Core’s claim under “step two,” pointing to our
statement in Core that we would “ordinarily accord deference
to the Commission’s interpretation of . . . § 160(c)” under
Chevron, and that petitioner’s failure to have raised its claim
before the Commission “create[d] a problem regarding the
extent of deference we owe the FCC’s statutory
interpretation.” Core, 455 F.3d at 276. Exhaustion under
§ 405(a) would serve no purpose here, Qwest contends,
because its claim is that the Commission violated the plain
meaning of § 10(c), a question on which a reviewing court
would owe the Commission no deference.
We think Qwest has misread Core on two levels. First,
we see no evidence that the court judged Core’s claim to fall
within step two. The court never embarks on an exegesis of
§ 10(c), thus exercising a self-restraint wholly in keeping with
one of the functions of exhaustion doctrine—to avoid
premature judicial pronouncements. Moreover, the court’s
statement quoted above—that we would “ordinarily accord
deference to the Commission’s interpretation of . . .
§ 160(c)”—makes complete sense as a simple recognition that
a Commission reading of § 10(c) would fall within the general
bailiwick of Chevron analysis.
Second, even if Core had classified Core’s argument as
belonging to step two, exhaustion is not excused simply
because we might owe an agency no deference. Section
405(a) applies on its face to all “questions of fact or law.” 47
U.S.C. § 405(a). This court has frequently required § 405
exhaustion for questions on which the Commission would
have received no deference. See, e.g., Lutheran Church-
Missouri Synod v. FCC, 141 F.3d 344, 349 & n.6 (D.C. Cir.
1998) (First Amendment claim); Time Warner, 144 F.3d at 80(collecting cases requiring exhaustion for asserted violations
of Administrative Procedure Act). In fact, we have been
“sticklers” in requiring § 405(a) exhaustion where a party
8
“complains of only a technical or procedural mistake, such as
an obvious violation of a specific APA requirement.” Id. at
80-81.
Moreover, although courts have acknowledged the
relationship between administrative exhaustion and deference
to administrative agencies, see McCarthy v. Madigan, 503
U.S. 140, 145 (1992), exhaustion serves other purposes as
well. For instance, “‘[o]ne of the purposes of [section 405] is
to afford the Commission the initial opportunity to correct
errors in its decision or the proceeding leading to decision’”—
a goal equally applicable here. Time Warner, 144 F.3d at 80(quoting Rogers Radio Communication Services v. FCC, 593
F.2d 1225, 1229 (D.C. Cir. 1978)) (alterations in original); see
also McCarthy, 503 U.S. at 145 (exhaustion discourages
disregard of agency procedures); Woodford v. Ngo, 126 S. Ct.
2378, 2385 (2006) (agency proceedings “generally . . .
resolve[] [claims] much more quickly and economically” than
courts and “may produce a useful record for subsequent
judicial consideration”).
Qwest next attempts to distinguish Core by arguing that
the Commission here had already provided its view on the
issue, i.e., it had had an “opportunity to pass” for purposes of
§ 405(a). Qwest relies primarily on the Order’s reference to
§ 10(c) in its effective date paragraph, 20 FCC Rcd at 19,471
¶ 112 & n.282, and a footnote from a report unrelated to the
instant proceedings, In re 2002 Biennial Regulatory Review,
18 FCC Rcd 4726, 4739 ¶ 33 n.70 (2003) (“[F]ailure to act on
[a § 10] forbearance petition within [the] statutory period
causes it to be granted by operation of law.”); see also Petition
of Core Communications, Inc. for Forbearance under 47
U.S.C. § 160(c) from Application of the ISP Remand Order,
19 FCC Rcd 20,179, 20,189 ¶ 28 & n.74 (2004) (noting
§ 10(c)’s requirements and the statutory consequences of
failure to meet the deadline). But while the cited phrases
9
manifest Commission awareness of the statutory deadline,
they cannot be described as dispositions of an (unmade) claim
that a vote and press release on the statutory deadline could
not qualify as a “den[ial]” under § 10(c). See Qwest Br. at 3.
Moreover, Qwest ignores our recent statement in Core—
where the Commission had employed an effective-date
provision virtually identical to the one here—that § 405(a)
barred us from being “the first authority to construe the
meaning” of § 10(c). 455 F.3d at 277.
Finally, Qwest urges us to recognize certain exceptions to
the exhaustion requirement: where agency action is alleged to
be ultra vires, and where seeking an agency’s view would be
futile. In fact, the parties dispute the existence of such
exceptions. Compare Washington Ass’n for Television &
Children v. FCC, 712 F.2d 677, 681-82 (D.C. Cir. 1983)
(“WATCH”) (interpreting § 405 to “permit[] courts some
discretion to waive exhaustion”), and Petroleum
Communications, Inc. v. FCC, 22 F.3d 1164, 1170 (D.C. Cir.
1994) (discussing futility and “patent violation[s] of the
agency’s statutory authority” as “recognized exceptions” to
exhaustion requirement), with Booth v. Churner, 532 U.S.
731, 741 n.6 (2001) (“[W]e will not read futility or other
exceptions into statutory exhaustion requirements where
Congress has provided otherwise.”), and Avocados Plus Inc.
v. Veneman, 370 F.3d 1243, 1247 (D.C. Cir. 2004) (“If the
statute does mandate exhaustion, a court cannot excuse it.”).
We need not, however, resolve this disagreement; even
assuming the availability of such exceptions, Qwest has failed
to show that either applies.
In its ultra vires arguments, Qwest looks to WATCH’s
statement that exhaustion may be excused for challenges to
agency action “‘patently in excess of [the agency’s]
authority.’” 712 F.2d at 682 (quoting Detroit Edison Co. v.
NLRB, 440 U.S. 301, 312 n.10 (1979)) (alteration in original);
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see also Petroleum Communications, 22 F.3d at 1170(implying readiness to except “patent violation[s]” of statutory
authority from § 405(a)). Whatever the exact meaning of
§ 10(c), we can’t say that the Commission’s action here falls
into the outer darkness of a “patent” violation. See also
Mitchell v. Christopher, 996 F.2d 375, 378 (D.C. Cir. 1993)
(ultra vires exception limited to “challenges that concern the
very composition or ‘constitution’ of an agency”); Northwest
Airlines, Inc. v. FAA, 14 F.3d 64, 73 (D.C. Cir. 1994) (failure
to raise an issue “will not be excused merely because the
litigant couches its claim in terms of the agency’s exceeding
its statutorily-defined authority or ‘jurisdiction’”).
As to futility, our decisions entertaining the exception
have demanded a very convincing record. In Omnipoint
Corp. v. FCC, 78 F.3d 620 (D.C. Cir. 1996), for example, we
found futility only where the Commission “was rapidly
expediting the proceeding and appeared ‘wedded to the
procedures that it had employed.’” 78 F.3d at 635 (quoting
City of Brookings Municipal Tel. Co., 822 F.2d 1153, 1163
(D.C. Cir. 1987)). Similarly, in Tribune Co. v. FCC, 133 F.3d
61, 67 (D.C. Cir. 1998), we suggested that futility was
appropriate only where the Commission’s position had
“crystallized” or where the Commission was “firmly
entrenched.” And in Nat’l Science and Technology Network,
Inc. v. FCC, 397 F.3d 1013, 1014 (D.C. Cir. 2005), we said
that futility required a “showing that an adverse decision was
a certainty.”
Here Qwest points to little more than the agency’s
treatment of Core’s petition, where it had taken a similar
approach (vote and press release on the deadline, with
decision to follow). And in this case, it says, the timeliness
arguments advanced in Core put the Commission on notice
about disagreement with its reading of § 10(c). But one
swallow doesn’t make a summer, and Qwest points to no case
11
(and we are aware of none) in which a single adverse decision
by an agency, without more, demonstrated that its position
had “crystallized” or that a future result was “a certainty.”
Qwest adds that the § 10(c) deadline would not bind the
Commission’s consideration of a petition for reconsideration.
True enough, though hardly assurance that the Commission
would drag its feet on such a petition, especially with the
potential of a mandamus action hovering in the background.
Moreover, the Commission’s treatment of the deadline on
Core’s petition occurred in October 2004, see Core, 455 F.3d
at 274, at which point Qwest’s petition had been pending for
four months. Qwest’s failure at that point to file a memo
insisting on its view of § 10(c) undermines its reliance on the
risk of delay inherent in a post-decision petition for
reconsideration.
Thus we reject Qwest’s claim as barred by the exhaustion
requirement of § 405(a).
* * *
We next turn to the CLEC petitioners’ claims, beginning
with their contention that § 251(c) was not “fully
implemented” for the purposes of § 10(d). Our review of an
agency’s interpretation of the statute it administers is
governed by the familiar Chevron framework, under which we
ask first whether Congress has “directly spoken” to the precise
issue before us and, if it has not, whether the agency’s
interpretation is reasonable. 467 U.S. at 842-43; see also
Cellular Telecommunications & Internet Ass’n v. FCC, 330
F.3d 502, 507 (D.C. Cir. 2003).
Section 10(d) of the Act provides that “the Commission
may not forbear from applying the requirements of section
12
251(c) or 271 . . . until it determines that those requirements
have been fully implemented.” 47 U.S.C. § 160(d). In the
Order, the Commission held that § 251(c) had been fully
implemented “because the Commission has issued rules
implementing section 251(c) and those rules have gone into
effect.” 20 FCC Rcd at 19,440 ¶ 53. The Commission
reasoned that “[the FCC itself] is the entity that ‘implements’
section 251(c),” noting that § 251(d)(1) requires the
Commission to “complete all actions necessary to establish
regulations to implement the requirements of [§ 251].” Id.
The CLECs dispute the Commission’s reliance on
§ 251(d), and draw a contrast between that subsection’s
requirement that “the Commission . . . complete all actions
necessary to establish regulations to implement” § 251(c) and
§ 10(d)’s reference to “fully implemented.” 47 U.S.C.
§§ 160(d), 251(d) (emphasis added). The Commission’s
reading of § 10(d), they argue, gives no meaning to the term
“fully,” which in their view must implicate something more
than the rulemaking contemplated by § 251(d). But the
Commission stated that § 251(c) would be fully implemented
only “once the Commission has completed its work of
promulgating rules implementing section 251(c) and those
rules have taken effect.” 20 FCC Rcd at 19,440 ¶ 54 n.135
(emphasis added). We cannot say that such a reading is
unreasonable. The statute does not define “implemented,” an
ambiguity not clearly resolved one way or the other by
reference to § 251(d). The Commission’s interpretation does
give independent meaning, albeit a modest one, to the term
“fully”—i.e., that regulations have both been promulgated and
taken effect. In addition, it might well be thought that
completion of “all actions necessary to establish regulations
to implement” a section would naturally add up to “full[]
implement[ation]” of that section. We also note petitioners’
failure to have offered any workable alternative test. See
CLEC Br. at 41.
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The CLECs further believe that under the plain language
of § 251 the Commission can make a finding of full
implementation of § 251(c) only if it can point to
implementing action by the ILECs. To support this notion
they point to the Commission’s own analysis in the Section
271 Broadband Forbearance Order, In re Petition for
Forbearance of the Verizon Telephone Companies Pursuant
to 47 U.S.C. § 160(c), 19 FCC Rcd 21,496 (2004), where it
rested a finding of implementation of the competitive
checklist requirements of § 271(c) on the Bell Operating
Companies’ having established compliance with those
requirements and having secured entitlement to provide in-
region interLATA service. Id. at 21,503 ¶¶ 15-16; see also
Order, 20 FCC Rcd at 19,440-41 ¶ 54. Even assuming the
CLECs’ reading of § 10(d) is reasonable, the Commission’s is
also: “[T]he BOCs [Bell Operating Companies] have a role in
implementing section 271(c) that incumbent LECs do not
have in implementing section 251(c).” Order, 20 FCC Rcd at
19,441 ¶ 54. In one case, company action subjects a company
to the duties in question; in the other, Commission action does
so. The Commission’s reading of § 10(d) reflects that
distinction.
We are equally unconvinced by petitioners’ argument that
the Commission’s interpretation would allow forbearance
from § 251(c) before the benefits from unbundling were
“significantly realized.” This disregards the independent
requirements of § 10, such as § 10(b)’s mandate to consider
whether forbearance would “promote competitive market
conditions.”
Finally, the CLEC petitioners complain that the
Commission’s interpretation of § 10(d) is inconsistent with a
1996 order, In re Implementation of the Local Competition
Provisions in the Telecommunications Act of 1996, 11 FCC
Rcd 15,499 (1996) (“Local Competition Order”), which they
14
believe contemplates a role for States and service providers in
implementing § 251(c) inconsistent with the Commission’s
application of § 10(d) here. This is distinct from arguments
based on the plain language of § 10(d) or the alleged
inconsistency with the Commission’s analysis of forbearance
from § 271 duties. But the argument is barred under § 405(a)
because the Commission never had an “opportunity to pass”
on it. Indeed, the CLECs appear to concede that the 1996
order was never mentioned in the proceedings below. CLEC
Reply Br. at 14. See Cellco Partnership v. FCC, 357 F.3d 88,
102 (D.C. Cir. 2004) (“[Where petitioner] never argued to the
Commission that its decision [on review] . . . was inconsistent
with its [prior] decision . . . it cannot now argue that the
Commission erred by failing to reconcile these two
decisions.”). Nor was the substance of the inconsistency
claim presented well enough to satisfy § 405(a), especially in
light of our admonition that the Commission “need not sift
pleadings and documents to identify arguments that are not
stated with clarity by a petitioner.” Bartholdi Cable Co. v.
FCC, 114 F.3d 274, 279 (D.C. Cir. 1997) (internal quotation
marks omitted). None of the various record citations to which
the CLECs refer, see CLEC Reply Br. at 14 n.5, is plausibly
read as presenting the argument that the Commission’s
proposed reading of § 10(d) was inconsistent with a prior
Commission order discussing the roles of states and service
providers under § 251(c).
* * *
Last, we reach the CLECs’ challenges to the
Commission’s forbearance analysis under § 10(a) and (b).
Our review here is governed by 5 U.S.C. § 706(2)(A), under
which we set aside agency action that is “arbitrary, capricious,
an abuse of discretion, or otherwise not in accordance with
15
law.” See AT&T Inc. v. FCC, 452 F.3d 830, 837 (D.C. Cir.
2006).
The Order grants Qwest forbearance from the obligation
to provide unbundled loops and transport in “9 of Qwest’s 24
wire centers in the Omaha MSA where competitive
deployment is greatest.” 20 FCC Rcd at 19,444 ¶ 59. The
Commission “tailor[ed] Qwest’s relief” to Cox’s “extensive”
voice-enabled cable network, selecting nine wire centers in
which “sufficient facilities-based competition” existed “to
ensure that the interests of consumers and the goals of the Act
[were] protected under the standards of section 10(a).” Id. at
19,444-46 ¶¶ 59, 61-62. The Commission also relied on
competitors’ continued access to interconnection rights under
§ 251(c) and to Qwest’s loops, switching and transport under
§ 271(c)(2)(b)(iv)-(vi). Id. at 19,446-47 ¶¶ 62, 64.
Although the Commission recognized that Cox’s market
share was larger in the residential than the enterprise market,
it concluded that Cox nonetheless posed a “substantial
competitive threat to Qwest” in both sectors. Id. at 19,448
¶ 66. Cox had proven itself a “very successful[]” competitor
even in the mass market (where revenue potential was
“relatively low” compared to the enterprise market), was
“actively marketing” itself to enterprise customers, had won
over a “large number of significant Omaha businesses,” and
had doubled its enterprise sales in Omaha each year for five
consecutive years. Id. Moreover, Cox had relevant technical
expertise, economies of scale and scope, sunk investments in
network infrastructure (implying that the incremental costs for
continuing and extending service would be relatively modest),
and an established presence and brand in the Omaha MSA.
Id.
In challenging the Commission’s reliance on Cox’s
activities, the CLECs point to the Commission’s discussion in
16
its 2005 unbundling order, in which it declined to find that
cable company competition throughout the country justified
relieving ILECs of their obligation to provide unbundled
network elements, and claim that “nothing” in the record
distinguishes Cox from those facts. See In re Unbundled
Access to Network Elements, Review of the Section 251
Unbundling Obligations of Incumbent Local Exchange
Carriers, 20 FCC Rcd 2533, 2556-57 ¶ 39 (2005) (“Triennial
Review Remand Order,” or “TRRO”). But the TRRO
explicitly noted that these matters varied by geographic
market. Id. Cox’s filings here, in fact, demonstrate its
substantial coverage of the enterprise market, including
provision of DS0 loops to business users. Order, 20 FCC Rcd
at 19,450-51 ¶ 69. And we see nothing unreasonable in the
factors invoked by the Commission—enumerated above—in
forecasting an increase in competition. See id. at 19,448 ¶ 66.
The CLECs also contend the Commission erred in relying
on average network coverage across the nine wire centers,
rather than examining each wire center individually. In theory
the average could conceal substantial variation between
individual centers, including possibly centers where Cox had
no footprint at all. But in light of the Commission’s reliance
on data showing Cox’s aggressive expansion in both the
residential and enterprise markets, we cannot say that the
possibility of wide variance in existing coverage is enough to
undermine the Commission’s conclusions.
Finally, petitioners take issue with the Commission’s
reliance on Qwest’s wholesale offerings (ILEC plant usable
by CLECs independently of the unbundled network element
mandate) in granting forbearance in the enterprise and mass
markets. These include both services Qwest is legally obliged
to make available (under § 271(d)(2)(B)(iv)-(vi) and
§ 251(c)(4)) and ones it has offered voluntarily (such as
Qwest Platform Plus (“QPP”) services, which are
17
commercially negotiated wholesale services integrating loops,
switching and transport into a single package). See Order, 20
FCC Rcd at 19,448-50 ¶¶ 67-68. The CLECs again point to
the TRRO, in which the Commission declined to adopt a
general rule relieving the ILECs of unbundling obligations in
local exchange markets whenever “carriers are potentially
able to compete using special access or other tariffed
alternatives.” See TRRO, 20 FCC Rcd at 2560 ¶ 46.
But the TRRO explicitly recognized that an ILEC’s
tariffed offerings could, in certain circumstances, be an
avenue for competitive entry. See, e.g., TRRO, 20 FCC Rcd
at 2561 ¶ 48 (“[A] carrier could, in theory, use [a] tariffed
offering to enter a market.”). The Commission in fact relied
on carriers’ “successful[] use[] [of] special access to compete”
in the wireless and long-distance markets in concluding that
ILECs need no longer provide access to UNEs in those
markets. Id. at 2554-55 ¶ 36, 2560 ¶ 46. With respect to local
exchange services, the TRRO stated only that “the availability
of a tariffed alternative should not foreclose unbundled
access.” Id. at 2561 ¶ 48 (emphasis added). As the TRRO
explicitly left open the possibility that “sufficient facilities-
based competition” might eventually make UNE relief
appropriate in the local exchange market, either generally or
in geographically specific markets, id. at 2556 ¶¶ 38 & 39
n.116, the Order seems simply to apply that concept: here the
Commission found the combination of tariffed ILEC facilities
and facilities-based competition adequate to assure
competition even if it partially relaxed Qwest’s obligations in
the Omaha market. Compare id. at 2556-57 ¶ 39 with Order,
20 FCC Rcd at 19,447-49 ¶¶ 65 & 67 n.177.
The CLECs offer additional arguments, in part traceable
to the Commission’s language in the TRRO, as to why
Qwest’s wholesale services are not, on their own, a sufficient
substitute for UNEs. For instance, absent other avenues for
18
competition, ILECs could thwart competition by undue hikes
in the price of their wholesale inputs. Similarly, the CLECs
complain that the loop component of the QPP service was
available as a § 251(c)(3) network element, and thus that the
Commission was wrong to rely on the continued availability
of QPP offerings in granting forbearance from unbundling.
But Cox’s independent cable infrastructure greatly mitigates
these potential risks. In addition, the CLECs have provided
no reason to disturb the Commission’s predictive judgment
that “Qwest will not react to [the forbearance] decision . . . by
curtailing wholesale access” to its high-capacity offerings,
especially in light of the Commission’s finding that facilities-
based competition from Cox gives Qwest a strong incentive to
maximize use of its network by setting attractive prices on its
wholesale alternatives. Order, 20 FCC Rcd at 19,448-49 ¶ 67,
19,455 ¶ 79.
In sum, we hold that the Commission reasonably
concluded that § 251(c) was “fully implemented” for the
purpose of § 10(d). Further, we find nothing arbitrary about
granting forbearance in the nine wire centers, given Cox’s
extensive network coverage in the residential market and
growing competitive presence in the enterprise market.
***
Accordingly, Qwest’s petition is dismissed as barred by
47 U.S.C. § 405(a), and the CLECs’ petitions are denied on
the merits.
So ordered.