DAVIS, Circuit Judge:
This appeal arises from a dispute between Appellees Ellerbe Telephone Company, Randolph Telephone Company, and MebTel, Inc., incumbent local exchange carriers that provide telephone service in rural areas of North Carolina (collectively, "RLECs") and Appellants New Cingular Wireless PCS, LLC, d/b/a AT & T Mobility ("AT & T Mobility") and Alltel Communications, LLC, d/b/a Verizon Wireless ("Verizon"),
On March 26, 2009, the CMRS Providers filed a complaint in the U.S. District Court for the Eastern District of North Carolina against the RLECs and the Commissioners of the NCUC in their official capacities (referred to as "NCUC" or "Commissioners"), seeking review of several determinations made by the NCUC and, ultimately, the NCUC's approval of portions of the ICAs. They sought declaratory and injunctive relief and compensation.
On November 16, 2009, the CMRS Providers, the RLECs, and the NCUC filed cross motions for summary judgment. The district court denied the CMRS Providers' motion for summary judgment and granted the RLECs' and the NCUC's motions for summary judgment. See New Cingular Wireless PCS, LLC v. Finley, No. 5:09-CV-123-BR, 2010 WL 3860384 (E.D.N.C. Sept. 30, 2010). The district court also affirmed the NCUC's December 31, 2008 FAO and February 24, 2009 approval order. Id. The CMRS Providers timely appealed. We affirm.
We begin with a description of the statutory and regulatory framework in which the present dispute arises. In so doing, we briefly describe recent revisions to the regulatory regime administered by the FCC, but we further point out, see infra n. 5, that the effective date of some of those revisions, July 1, 2012, renders it unnecessary for us to accommodate those changes.
The Telecommunications Act of 1996 aims "to transition the [telecommunications] industry from regulated monopoly to unregulated competition." 1 Peter W. Huber et al., Federal Telecommunications Law § 1.9 (2d ed. Supp.2011) (hereinafter "Huber"). To achieve this goal, the Act seeks to "clear[] away the obstacles to new entry" for new competitors and requires incumbent Local Exchange Carriers ("ILECs"), specifically, "to assist" new competitors entering the market. Id. Congress recognized "that the provision of
One way ILECs assist new entrants, which is relevant here, is through "interconnection." See 47 U.S.C. § 251(c)(2). While the Act requires all "telecommunications carrier[s]"
Without interconnection, "customers of different LECs in the same local calling area would not be able to call each other."
The Act also requires all LECs "to establish reciprocal compensation arrangements for the transport and termination of telecommunications."
Reciprocal compensation arrangements must "provide for the mutual and reciprocal recovery by each carrier of costs associated with the transport and termination on each carrier's network facilities of calls that originate on the network facilities of the other carrier" with costs being determined "on the basis of a reasonable approximation of the additional costs of terminating such calls." 47 U.S.C. § 252(d)(2)(A)(i)-(ii). The regulations implementing the reciprocal compensation requirement provide that an ILEC's "rates for transport and termination of telecommunications traffic shall be established ... on the basis of [t]he forward-looking economic costs of such offerings, using a cost study pursuant to [47 C.F.R.] §§ 51.505 and 51.111." 47 C.F.R. § 51.705(a)(1). The cost study measures the "total element long-run incremental cost" ("TELRIC") of transport and termination. Id. § 51.505(a)(1). The TELRIC "should be measured based on the use of the most efficient telecommunications technology currently available and the lowest cost network configuration, given the existing location of the incumbent LEC's wire centers." Id. § 51.505(b)(1). The reciprocal compensation rate may also include "[a] reasonable allocation of forward-looking common costs." Id. § 51.505(a)(2).
"The default rule is that rates for transport and termination are symmetrical," that is, an ILEC's transport and termination rates apply to the competitor. Huber § 5.11.2.5; see 47 C.F.R. § 51.711(a) ("[S]ymmetrical rates are rates that a carrier other than an incumbent LEC assesses upon an incumbent LEC for transport and termination of telecommunications traffic equal to those that the incumbent LEC assesses upon the other carrier for the same services."). "[I]f the carrier other
Congress recognized that some ILECs, particularly those in rural areas, were not prepared to assume new duties. Congress thus exempted "certain rural telephone companies" from § 251(c)'s obligations until a state commission determines that a "request for interconnection, services, or network elements" "is not unduly economically burdensome." 47 U.S.C. § 251(f)(1). Congress also provided that a LEC "with fewer than 2 percent of the Nation's subscriber lines installed in the aggregate nationwide may petition a State commission for a suspension or modification of the application of a requirement or requirements of [§ 251](b) or (c)." Id. § 251(f)(2).
The Act also establishes a "procedural framework" through which ILECs and other telecommunications carriers must negotiate and enter into ICAs. MCImetro, 352 F.3d at 875; see 47 U.S.C. § 252(a)(1). To the extent they cannot reach an agreement, either carrier "may petition a State commission to arbitrate any open issues." 47 U.S.C. § 252(b)(1). "In resolving ... any open issues and imposing conditions upon the parties to the agreement," the state commission is required, among other duties, to "ensure that such resolution and conditions meet the requirements of [47 U.S.C. § 251], including the regulations prescribed by the [FCC] pursuant to [47 U.S.C. § 251]." Id. § 252(c)(1). The state commission must also "establish any rates for interconnection, services, or network elements according to [47 U.S.C. § 252(d) ]." Id. § 252(c)(2). The results of the arbitration are then memorialized in an ICA between the carriers that is submitted to the state commission for approval. See id. § 252(e)(1). "[A]ny party aggrieved" may then "bring an action in an appropriate Federal district court to determine whether the [ICA] meets the requirements of [47 U.S.C. §§ 251 and 252]." Id. § 252(e)(6).
We now lay out the background to this appeal. In 2005, the RLECs filed a petition with the NCUC asking to "be relieved of any requirement that they provide [TELRIC] studies to any requesting carrier with respect to reciprocal compensation." J.A. 41. In its modification order, the NCUC determined that the RLECs were not "required to perform TELRIC studies to establish reciprocal compensation rates." J.A. 53. The NCUC modified the TELRIC requirements and set out seven guidelines the RLECs were to follow when performing alternate cost studies to set reciprocal compensation rates. The guidelines are as follows:
J.A. 46. The NCUC later affirmed this decision in the December 31, 2008 FAO. The CMRS Providers never appealed the modification order.
Meanwhile, in September 2006, the RLECs separately filed petitions for arbitration with the NCUC. The NCUC consolidated the petitions and held an evidentiary hearing in April 2007. On December 20, 2007, the NCUC issued a RAO. Most relevant, the NCUC ruled that under § 252(c)(2) there was one point of interconnection ("POI") between the CMRS Providers and the RLECs that was located on the RLECs' networks. After receiving objections to the RAO, the NCUC issued its FAO on December 31, 2008.
The NCUC first reaffirmed its conclusion that there was one POI between the CMRS Providers and the RLECs that was located on the RLECs' networks. However, the NCUC abandoned reliance on § 251(c)(2), finding that specific statutory provision to be not "determinative of the location of the POI." J.A. 207-08. The NCUC found that § 251(c)(2) could be triggered only upon request, and is not applicable when, as here, "an ILEC initiates arbitration." Id. at 208. The only basis for interconnection in this case could be found in § 251(a)(1). The NCUC explained, "Unlike the language of Section 251(c)(2), Section 251(a)(1) does not specify the number of POIs or where the POI or POIs should be located." Id. Thus, the NCUC determined that "the literal language of Section 251(a)(1), in an arbitration in which an RLEC seeks interconnection with a CMRS Provider, would seem to provide the Commission with the discretion to determine how many POIs there should be and where they should be located." Id. The NCUC "proceed[ed] to determine, on the basis of its sound discretion, the number and location of the POIs for purposes of the parties' [ICAs]." Id. at 208-09.
In reaffirming its initial conclusion in the RAO, the NCUC based its decision on certain, in its terms, "equities." Id. at 209-10. These included,
Id. at 210.
The NCUC then concluded that "[t]he RLECs are technically and financially responsible for transporting and delivering their originating traffic to the chosen POI and for paying reciprocal compensation to cover the cost of terminating and completing the call beyond the POI, but they are not responsible for transit charges, based on the CMRS Providers' use of a third party provider's network facilities, beyond the POI." Id. at 220 (internal quotation marks omitted). The NCUC found that "payment of transit charges will be the CMRS Provider's responsibility in the first instance in connection with RLEC-originated calls," but that CMRS Providers could be reimbursed "in the form of reciprocal compensation paid by the RLEC." Id. at 211. Further, "[a]ny genuine financial disadvantage" is "curable by a proceeding to arrive at an asymmetric reciprocal compensation rate." Id.
Finally, the NCUC determined,
Id. at 224.
The parties filed conforming ICAs, which the NCUC approved by order on February 24, 2009.
On March 26, 2009, the CMRS Providers filed suit against the RLECs and the Commissioners of the NCUC in their official capacities in the U.S. District Court for the Eastern District of North Carolina, seeking review of several determinations made by the NCUC and of the NCUC's approval of portions of the ICAs. They sought declaratory and injunctive relief and compensation. The CMRS Providers alleged that (1) "the NCUC's single-POI and transit-charge rulings conflict with federal law"; and (2) "the NCUC lacks authority under Section 251(f)(2) to relieve the RLECs of their obligation to establish reciprocal compensation rates consistent with federal pricing standards set forth in Section 252(d)(2)(A) and FCC regulations or to approve arbitrated rates that do not comply with that provision." CMRS Providers' Br. 7 (citing J.A. 23-30).
On November 16, 2009, the parties filed cross motions for summary judgment. On September 30, 2010, the district court denied the CMRS Providers' motion for summary judgment and granted the NCUC's and the RLECs' motions for summary judgment. The district court affirmed the NCUC's December 31, 2008 FAO and the NCUC's February 24, 2009 approval order.
As an initial matter, the district court agreed with the NCUC that § 251(a)(1) "provides the only basis for the indirect interconnections," and that § 251(a)(2) "is silent regarding the terms and conditions of indirect interconnections." New Cingular Wireless, 2010 WL 3860384, at *5. Regarding the location of the POIs and determination of financial responsibility for transit costs, the district court held that "it was not improper for the NCUC to conclude
The district court concluded that "the Act and its accompanying regulations provide very little guidance regarding the terms of indirect interconnections," "nothing in the Act ... mandates the number or location of the POI(s)," and "the Act does not address the issue of allocation of financial responsibility for interconnection costs." Id. at *11.
On the CMRS Providers' second claim for relief, the district court held that the NCUC possesses authority under § 251(f)(2) to modify TELRIC pricing standards for the RLECs. Id. at *11-14.
The legal issues before us, though complex as a matter of statutory interpretation and application, are nonetheless easily stated: whether the district court erred as a matter of law in concluding that (1) the NCUC's order adopting a single POI approach to indirect interconnection and allocating the responsibility for payment of transit charges for RLEC-originated traffic to the CMRS Providers is consistent with the Act and regulations, and (2) the NCUC has authority under § 251(f)(2) to modify TELRIC pricing standards for the RLECs.
Prior to oral argument, we solicited an amicus brief from the FCC on the issues raised in this appeal.
Because we ultimately agree with the arguments advanced by the RLECs and the NCUC, we affirm the judgment of the district court.
We review de novo the district court's grant of summary judgment and the NCUC's interpretation of the Act and its accompanying federal regulations.
Despite the CMRS Providers' arguments to the contrary, the NCUC's decision is worthy of some deference. Although we review legal issues of a federal nature, the NCUC has "expertise and experience in applying [tenets of] communications law." Id. The NCUC proceedings involved evidence and argument, and the parties prefiled testimony, participated in an evidentiary hearing, and briefed the arguments. The NCUC issued a lengthy RAO and a lengthy FAO, attesting to the comprehensiveness of the proceedings below. Moreover, while the NCUC acknowledged that its decision was "inconsistent" with persuasive federal court authority and decisions by other state commissions, the NCUC analyzed those decisions "closely" and remained convinced of its own reasoning and decision. J.A. 97.
The fact that the NCUC changed its basis for the single POI conclusion between
The NCUC's factual findings are reviewed under the substantial evidence standard. GTE S., 199 F.3d at 745 & n. 5 ("We are aware that in reviewing state commission arbitration decisions under the Act, some other courts, including the district court in this case, have used the `arbitrary and capricious' standard of review. With respect to review of factfindings, there is no meaningful difference between this standard and the substantial evidence standard we apply.") (citations omitted). "In applying the substantial evidence standard, a `court is not free to substitute its judgment for the agency's...; it must uphold a decision that has substantial support in the record as a whole even if it might have decided differently as an original matter." Id. at 746 (quoting AT & T Wireless PCS, Inc. v. City Council of Virginia Beach, 155 F.3d 423, 430 (4th Cir.1998)) (internal quotation marks omitted). To the extent the NCUC relied on findings of fact to determine, in its discretion, the first issue on appeal, these factual findings are subject to substantial evidence review.
The CMRS Providers challenge the district court's affirmance of the NCUC's determination that there should be one POI and that the CMRS Providers should be required to pay transit costs incurred for RLEC-originated traffic on four grounds: (A) § 251 itself requires there to be two POIs when telecommunications carriers are indirectly connected through a transit provider; (B) the NCUC's single POI approach violates FCC regulations by improperly shifting financial responsibility for the RLECs' transit charges to the CMRS Providers; (C) the district court erred by deferring to the NCUC's consideration
Despite the CMRS Providers' various attempts to challenge the NCUC's conclusion, § 251 and the broader statutory scheme do not mandate two POIs when telecommunications carriers are indirectly connected via a third-party transit provider. Moreover, even if we were to accept the CMRS Providers' arguments that there must be two physical POIs, this does not necessarily mean the RLECs are responsible for paying the transit costs for RLEC-originated traffic.
Section 251(a)(1) itself does not compel a two POI approach in the circumstances of this case. Section 251(a)(1) obligates each telecommunications carrier "to interconnect directly or indirectly with the facilities and equipment of other telecommunications carriers." 47 U.S.C. § 251(a)(1). Contrary to the CMRS Providers' contention that Congress's use of "or indirectly" requires there to be two POIs in the case of indirect interconnection, § 251(a)(1) cannot be read so narrowly. Section 251(a)(1) neither defines "indirect" nor indicates the number or location of POIs. The lone mention of the "point" where interconnection must occur is found in § 251(c)(2)(B), which establishes a duty specific to ILECs to interconnect with a "requesting telecommunications carrier" "at any technically feasible point within the [ILEC's] network" and does not apply here.
Nor is the single POI approach inconsistent with the statutory scheme. The CMRS Providers attack the NCUC's conclusion as improperly subjecting them under § 251(a)(1) to the additional obligations of § 251(c)(2)(B). This, they argue, "impermissibly protects the RLECs from the economic consequences of their decision to send traffic to the CMRS providers via a third-party transit provider by shifting responsibility for the transit provider's charges to the CMRS providers." CMRS Providers' Br. 34. In making this argument, they rely heavily on the Tenth Circuit's opinion in Atlas Telephone Co. v. Oklahoma Corp. Commission, 400 F.3d 1256 (10th Cir.2005), and the Eighth Circuit's opinion in WWC License, L.L.C. v. Boyle, 459 F.3d 880 (8th Cir.2006), to argue that other circuits have rejected similar cost-shifting efforts by RLECs as inconsistent with the Act, and that affirming the district court would leave this Circuit with a decision "fundamentally at odds" with the decisions of the Tenth and Eighth Circuits. CMRS Providers' Br. 18-19.
While the CMRS Providers' argument may be appealing on the surface, we are ultimately unpersuaded. Atlas similarly involved a dispute between CMRS Providers and LECs, specifically, rural telephone companies, regarding the way to handle compensation for third-party transferred calls occurring in the same MTA. However,
In Atlas, the district court affirmed various aspects of the state commission's orders, including its determination "that reciprocal compensation obligations apply to all calls originated by an [LEC] and terminated by a wireless provider within the same [MTA], without regard to whether those calls are delivered via an intermediate carrier." Id. at 1261 (internal quotation marks omitted). In reviewing this specific conclusion, the Tenth Circuit analyzed § 251(b)(5) and the FCC's regulations and held that LECs "have a mandatory duty to establish reciprocal compensation agreements with the CMRS providers for calls originating and terminating within the same MTA." Id. at 1264 (citation omitted). The court concluded, "Nothing in the text of these provisions provides support for the [LECs'] contention that reciprocal compensation requirements do not apply when traffic is transported on [the intermediary] network." Id.
The court then rejected the LECs' argument that this holding was inconsistent with § 251(c)(2), which "mandates that the exchange of local traffic occur at specific, technically feasible points within an [LEC's] network, and that this duty is separate and distinct, though no less binding on interconnecting carriers, from the reciprocal compensation arrangements mandated by § 251(b)(5)." Id. at 1265 (footnote omitted). The court explained that § 251(c)(2) only imposes a duty on ILECs, not all telecommunications carriers governed more broadly by § 251(a). Id. Adopting the LECs' interpretation would "contravene[] the express terms of the statute." Id. In the course of rejecting the argument and holding that § 251(c)(2) "does not govern interconnection for the purposes of local exchange traffic," the court also noted that "the [LECs'] argument that CMRS providers must bear the expense of transporting [LEC]-originated traffic on the [intermediary] network must fail." Id. at 1266 n. 11.
As the district court correctly found, the Atlas reasoning and holding are not particularly persuasive here. The RLECs are not arguing that the access regime applies or that reciprocal compensation does not apply to calls they originate. (Indeed, the parties agree with the Atlas holding, i.e., the reciprocal compensation regime applies. See New Cingular Wireless, 2010 WL 3860384, at *6.) Nor are certain findings made by the Tenth Circuit directly relevant or persuasive here.
Likewise, neither is WWC License controlling or persuasive. The language relied upon throughout the CMRS Providers' brief to buttress its cost-shifting argument addresses the duty to provide local dialing parity. The Eighth Circuit discussed "interconnection" in the context of local dialing parity and held that the Act does not permit the state commission "to impose a direct connection requirement as a condition on the receipt of local dialing parity." 459 F.3d at 893. Again, the Eighth Circuit did not address the specific issues before us. Thus, we are unable to find the NCUC's conclusion inconsistent with § 251(c)(2)(B).
Nor is the single POI approach inconsistent with § 251's "specific statutory vehicles," CMRS Providers' Br. 39, that accommodate rural carriers or with § 252's requirement of "mutual and reciprocal" recovery. The single POI approach does not "trump[]" or "expand[]" the provisions of § 251 enacted by Congress for certain RLECs, id., but is the practical result of congressional silence in § 251(a)(1) and a lack of administrative guidance when deciding that RLECs may formally request interconnection with CMRS Providers but providing no additional instructions.
Moreover, to whatever extent the CMRS Providers' interpretation of § 252(d)(2)(A)(i) has merit, we do not find the argument sufficiently persuasive to cast doubt on our analysis up to this point. The CMRS Providers argue that by identifying a single POI and treating the transit network as a virtual part of the CMRS Providers' networks, the NCUC created a situation where the CMRS Provider is always responsible for transit costs (both for originating and terminating traffic); thus, compensation will not be "mutual and reciprocal," as required by 47 U.S.C. § 252(d)(2)(A)(i), or "for the same services," as required by 47 C.F.R. § 51.711(a)(1). CMRS Providers' Br. 40. We disagree.
We first note that it appears no transit charges are currently being assessed by AT & T North Carolina on RLEC-originated traffic, and that AT & T North Carolina has never assessed transit charges in connection with RLEC-originated
Even accepting the CMRS Providers' arguments that § 251 mandates two physical POIs, it does not follow, as the district court explained, that § 251(a)(1) mandates a two POI approach in which the financial POI for reciprocal compensation purposes is located at the POI between the transit carrier and the CMRS Provider. See New Cingular Wireless, 2010 WL 3860384, at *7. Nowhere in the Act or regulations is "point of interconnection" defined. Certainly, the most obvious meaning is the physical point where two carriers' networks meet. Indeed, interconnection, as used in § 251(c)(2), is defined as "the physical linking of two networks for the mutual exchange of traffic." Local Competition Order, 11 FCC Rcd. at 15590 ¶ 176. But this definition specifically does not include the transport and termination of traffic. Id. Transport and termination are instead addressed in the reciprocal compensation arrangements of § 251(b)(5). Thus, while "POI" has taken on "financial connotations," as here, a distinction does in fact exist between the POI as a physical location and the POI as the "billing point." See New Cingular Wireless, 2010 WL 3860384, at *7.
Indeed, the FCC highlighted in its amicus brief that it "previously has observed that the point at which a carrier bears financial responsibility for intercarrier compensation (in this case, the payment of transit charges) may not necessarily be the physical POI between networks." FCC Br. 5. In a 2001 order, the FCC concluded that Verizon did not violate the Act or FCC rules by "distinguish[ing] between the physical POI and the point at which Verizon and an interconnecting competitive LEC are responsible for the cost of interconnection facilities" because the "issue of allocation of financial responsibility for interconnection facilities" was "an open issue" in the agency's intercarrier compensation rulemaking docket. Application of Verizon Pennsylvania, Inc., 16 FCC Rcd. 17419, 17474 ¶ 100, 2001 WL 1097019 (2001), aff'd, Z-Tel Commc'ns, Inc. v. FCC, 333 F.3d 262 (D.C.Cir.2003); see also Application by Verizon Maryland, Inc., 18 FCC Rcd. 5212, 5273 ¶ 103, 2003 WL 1339419 (2003) (finding that Verizon could designate an "interconnection point" that "is different" from "the physical point of interconnection" for the purpose of "determin[ing] financial responsibility for inter-network calls").
Therefore, the NCUC did not err in determining that there was a single POI for the purpose of allocating financial responsibility for transit costs.
The CMRS Providers next argue that the NCUC's determination regarding their responsibility to pay transit costs for RLEC-originated traffic is prohibited by 47 C.F.R. § 51.703(b). The CMRS Providers rely in particular on MCImetro Access Transmission Services, Inc. v. BellSouth Telecommunications, Inc., 352 F.3d 872 (4th Cir.2003). The CMRS Providers essentially argue that carriers must enter arrangements so that each carrier only pays for its originated traffic. Contrary to this argument, however, we agree with the district court that 47 C.F.R. § 51.703(b) is not applicable here, where transit charges are not assessed by the RLECs, but by a third-party carrier. New Cingular Wireless, 2010 WL 3860384, at *8.
47 C.F.R. § 51.703(b) provides, "A LEC may not assess charges on any other telecommunications carrier for telecommunications traffic that originates on the LEC's network." Our conclusion, consistent with the district court's, is not "empty formalism," CMRS Providers' Br. 44, but follows from the plain language of the rule. Indeed, the FCC has explained "transiting" and the payment of transiting charges in a way that supports our conclusion:
Developing a Unified Intercarrier Compensation Regime, 20 FCC Rcd. at 4737-38 ¶ 120 (emphasis added) (footnotes omitted).
Moreover, the CMRS Providers' argument that this strict reading "cannot be squared with the rule's fundamental purpose of ensuring that each carrier bears responsibility for the costs of traffic originating on its network," CMRS Providers' Br. 44, fails to acknowledge that transit costs are ultimately recoverable (if they are ever assessed) through reciprocal compensation. Indeed, the CMRS Providers ignore the possibility of petitioning the NCUC for an asymmetrical compensation rate if they believe the reciprocal compensation arrangement does not adequately reimburse them.
Furthermore, it is hard to square the CMRS Providers' position with the FCC's acknowledgment of the use of the reciprocal compensation mechanism in a slightly different context. As we briefly explained above, in Texcom, Inc. v. BellAtlantic Corp., 17 FCC Rcd. 6275, 2002 WL 459938 (2002), the FCC determined that a third-party transit provider "may charge a terminating carrier for the portion of facilities used to deliver transiting traffic to the terminating carrier," and the terminating carrier "may seek reimbursement of these costs from originating carriers through reciprocal compensation." 17 FCC Rcd. at 6276-77 ¶ 4 (citing TSR Wireless, LLC v. U.S. West Commc'ns, Inc., 15 FCC Rcd. 11166, 11184 ¶ 19 n. 70, 2000 WL 796763 (2000), petitions for review denied, Qwest Corp. v. FCC, 252 F.3d 462 (D.C.Cir.2001)). While Texcom and other orders relied upon by the RLECs are not directly on point (the disputes were between transit providers and terminating carriers where
Moreover, the FCC apparently has recognized that "transit" between carriers is a type of "transport" addressed by reciprocal compensation, further suggesting that in a scenario such as this terminating carriers may recover for transit charges that are assessed by the third-party carrier from the originating carrier through reciprocal compensation:
Local Competition Order, 11 FCC Rcd. at 16015 ¶ 1039 (emphasis added). The CMRS Providers, however, ignore this potential route of recovery.
MCImetro, relied upon by the CMRS Providers, is distinguishable.
Thus, neither 47 C.F.R. § 51.703(b) nor our interpretation of it requires reversal of the NCUC's resolution of the first issue on appeal.
The CMRS Providers next argue that the district court erred by deferring to the NCUC's consideration of the "equities." They first contend that the NCUC exceeded its statutory authority under § 252(c)(1) by deciding the POI issue based on the "equities." They also contend that the district court erred under § 252(e)(6) by failing to ensure that the NCUC's decision met the requirements of §§ 251 and 252. We disagree with both of these propositions.
Fulfilling its duty as arbitrator to resolve "open issues" and "impos[e] conditions" in compliance with § 251 and regulations promulgated pursuant to § 251, the NCUC necessarily undertook the course it did. Section 252(c)(1) provides that "[i]n resolving by arbitration ... any open issues and imposing conditions upon the parties to the agreement, a State commission shall ensure that such resolution and conditions meet the requirements of [§ 251 and its accompanying regulations]." The NCUC did not substitute equitable considerations for legal requirements. Rather, it is apparent from the RAO and the FAO that the NCUC first thoroughly reviewed the Act and persuasive federal authority. The NCUC next concluded that the Act, particularly § 251(a)(1), did not "specify the number of POIs or where the POI or POI(s) should be located."
Finally, the district court did not violate its own statutory obligation to ensure that the NCUC's decision met the requirements of §§ 251 and 252 by deferring to the NCUC's reliance on the "equities." Section 252(e)(6) provides that "any party aggrieved by [a state commission's] determination may bring an action in an appropriate Federal district court to determine whether the agreement or statement meets the requirements of [§§ 251 and 252]." The district court first conducted a thorough de novo review of the Act, the FCC's regulations, and other legal authorities, making its own conclusions about the single POI approach and allocation of financial responsibility. Only then did the district court evaluate the NCUC's consideration of the "equities," appropriately extending some measure of deference under Skidmore. See New Cingular Wireless, 2010 WL 3860384, at *10-11.
Finally, the CMRS Providers argue that the "purported cure" to the NCUC's legally flawed decision is deficient because federal regulations do not permit recovery of these transit charges through reciprocal recovery arrangements. CMRS Providers' Br. 51-52. They further argue that even if the charges could be recovered, any scheme that compels them to use asymmetrical rates and to perform TELRIC cost studies to recover the RLECs' transit costs is inconsistent with federal law.
We are unpersuaded by the CMRS Providers' attempt to use a strict interpretation of 47 C.F.R. § 51.701(e) to undermine the NCUC's conclusion.
We are unpersuaded that the NCUC's findings compel the CMRS Providers to seek reimbursement through asymmetrical compensation rates.
Moreover, no transit charges are currently being assessed by the transit provider on RLEC-originated traffic. It is not clear that at the end of the day costs will actually be nonrecoverable. It might even be the case, as the district court pointed out, that "the economies of scale and resultant lower costs [CMRS Providers]... would enjoy, could reasonably be expected to be considerably more favorable than the costs incurred by the RLECs." Id. (internal quotation marks omitted). Therefore, we are convinced neither that the CMRS Providers may not adequately recover transit costs in the reciprocal compensation rate nor that they are "deprive[d] ... of the right to choose
We also conclude that the district court did not err in holding that the NCUC possesses statutory authority under 47 U.S.C. § 251(f)(2) to modify the TELRIC guidelines.
We begin by setting out the applicable principles of statutory interpretation.
If the language is ambiguous, cf. Hatcher, 560 F.3d at 231 (Shedd, J., dissenting) ("A statute is ambiguous if its language, when read in context, is susceptible to more than one reasonable interpretation.") (citing Newport News Shipbuilding & Dry Dock Co. v. Brown, 376 F.3d 245, 248 (4th Cir.2004)), we then turn to other evidence to interpret the meaning of the provision, such as the rule of in pari materia and the legislative history, Universal Mar. Serv. Corp., 155 F.3d at 318; United States v. Broncheau, 645 F.3d 676, 685 (4th Cir.2011) ("The principle of in pari materia is applicable ... only `where the meaning of a statute is ambiguous or doubtful.'") (quoting N. Pac. Ry. Co. v. United States, 156 F.2d 346, 350 (7th Cir. 1946)). The rule of in pari materia "is but a logical extension of the principle that individual sections of a single statute should be construed together," Erlenbaugh v. United States, 409 U.S. 239, 244, 93 S.Ct. 477, 34 L.Ed.2d 446 (1972), to resolve ambiguities in the language of a statutory provision, United States v. Morison, 844 F.2d 1057, 1064 (4th Cir.1988) ("When a statute is a part of a larger Act ..., the starting point for ascertaining legislative intent is to look to other sections of the Act in pari materia with the statute under review."). We have explicitly "interpreted the principle to mean that `adjacent statutory subsections that refer to the same subject matter' should be read harmoniously." Broncheau, 645 F.3d at 685 (quoting Va. Int'l Terminals, Inc. v. Edwards, 398 F.3d 313, 317 (4th Cir.2005)). That is, "statutes addressing the same subject matter generally should be read `as if they were one law.'" Wachovia Bank v. Schmidt, 546 U.S. 303, 316, 126 S.Ct. 941, 163 L.Ed.2d 797 (2006) (quoting Erlenbaugh, 409 U.S. at 243, 93 S.Ct. 477) (internal quotation marks omitted); see, e.g., Morison, 844 F.2d at 1064-65 (construing §§ 793(d) and 794 of the Espionage Act in pari materia because they were "intended to and did cover separate and distinct offenses, with separate and distinct punishment" and "[i]t is important ... to ascertain the essential element in each section which made it separate and distinct from the other").
We find that the language of § 251(f)(2)
Section 251(f)(2) explicitly authorizes state commissions to suspend or modify the requirement or requirements of § 251(b). Section 251(b)(5), in turn, imposes on all LECs "[t]he duty to establish reciprocal compensation arrangements for the transport and termination of telecommunications." In order for a state commission to modify the requirement(s) of this duty, the state commission must be authorized to modify the requirements of § 252(d), which establishes the pricing standards for reciprocal compensation arrangements. In other words, § 252(d)(2)(A),
Although fatal neither to its ruling nor to our independent analysis, the district court perhaps too quickly relied on the FCC's Local Competition Order in reaching its conclusion. In the Local Competition Order, the FCC noted that "certain... small incumbent LECs may seek relief from their state commissions from our rules under section 251(f)(2)." 11 FCC Rcd. at 16026 ¶ 1059. The district court read this as an "explicit[] recogni[tion]" by the FCC "that the general rule requiring rates to be established based on TELRIC studies is subject to an exception for small and rural LECs." New Cingular Wireless, 2010 WL 3860384, at *14. Thus, the district court concluded that "the Local Competition Order leaves no doubt that the FCC intended state commissions to have the authority to modify the TELRIC pricing requirements for RLECs." Id.
We agree with the FCC that the Local Competition Order does not so clearly support the specific proposition here. Cf. FCC Br. 9 (explaining that it does not read the same text as "clearly interpreting" § 251(f)(2) to allow the NCUC to suspend or modify the TELRIC pricing requirements). The paragraph from which the quoted text is drawn neither mentions § 252(d)(2) nor the TELRIC pricing requirements specifically. Moreover, because the FCC failed specifically to refer to its pricing rules when describing § 251(f)(2), we might conclude that the FCC's reference to § 251(f)(2) was only "a general description of the statutory remedies available to small incumbent LECs, not a specific finding that state commissions may suspend or modify the Act's pricing requirements." Id.; see also Local Competition Order, 11 FCC Rcd. at 16118 ¶ 1263 ("declin[ing] ... to adopt national rules or guidelines" as to the specific implementation of § 251(f) as the FCC "may offer guidance on these matters at a later date, if ... necessary and appropriate").
All that said, we are confident that our construction is consistent with the purpose of the Act. Indeed, we think it manifest that the NCUC's conclusion is consistent with the Act's concerns for small ILECs. Furthermore, we are satisfied that allowing the NCUC to modify the pricing standards of § 252(d)(2)(A) furthers, rather
Thus, we find that the NCUC has authority under § 251(f)(2) to modify the TELRIC guidelines for the RLECs.
For the reasons set forth above, the judgment of the district court is
AFFIRMED.
Since we heard oral argument in this case, the FCC released its decision in Connect America Fund, 2011 WL 5844975 (rel. Nov. 18, 2011) ("Reform Order"), and its sua sponte Order on Reconsideration, Connect America Fund, 2011 WL 6778613 (rel. Dec. 23, 2011) ("Reconsideration Order"). The Reform Order replaces reciprocal compensation with a "default" "bill-and-keep" system for the exchange of wireless telecommunications traffic. 2011 WL 5844975, at *186, *269 ¶¶ 736, 994-95. "Under bill-and-keep arrangements, a carrier generally looks to its end-users—which are the entities and individuals making the choice to subscribe to that network—rather than looking to other carriers and their customers to pay for the costs of its network." Id. at *186 ¶ 737. The FCC found that "the bill-and-keep default should apply immediately" "for traffic to or from a CMRS provider subject to reciprocal compensation under either section 20.11 or the Part 51 rules." Id. at *269 ¶ 995. The FCC set the effective date for the new rules and transition to bill-and-keep for December 29, 2011. Id. at *373 ¶ 1412; 76 Fed.Reg. 73830 (Nov. 29, 2011).
In the Reform Order, the FCC stated, "[W]e emphasize that our reforms do not abrogate existing commercial contracts or interconnection agreements or otherwise require an automatic `fresh look' at these agreements." Id. at *209 ¶ 815; see also id. at *271 ¶ 1000 ("[W]e are not abrogating existing commercial contracts or interconnection agreements or otherwise allowing for a `fresh look' in light of our reforms. Thus, incumbent LECs may have an extended period of time under existing compensation arrangements before needing to renegotiate subject to the new default bill-and-keep methodology.") (footnote omitted). The FCC "decline[d] to require that these existing arrangements be reopened in connection with the reforms in this Order, and leave such issues to any change-of-law provisions in these arrangements and commercial negotiations among the parties." Id. at *209 ¶ 815.
In the Reconsideration Order, the FCC retained the December 29, 2011 effective date for the new rules but modified the bill-and-keep transition period. See 2011 WL 6778613, at *2-3 ¶ 5, 6. The FCC ruled that "inter-carrier compensation for non-access traffic exchanged between LECs and CMRS providers pursuant to an interconnection agreement in effect as of the adoption date of this Order, will be subject to a default bill-and-keep methodology on July 1, 2012 rather than on December 29, 2011." Id. at *3 ¶ 7.
Because the existing ICAs will continue to govern the traffic exchanged here until they default to bill-and-keep on July 1, 2012, we need not consider the effect of the new default bill-and-keep methodology. Given this and to avoid confusion, all citations and quotations to the Code of Federal Regulations do not reflect the most recent amendments, but reference the rules prior to the most recent amendments.
In its Reform Order, the FCC also adopted "an interim default rule allocating responsibility for transport costs applicable to non-access traffic exchanged between CMRS providers and rural, rate-of-return regulated LECs to provide a gradual transition for such carriers." 2011 WL 5844975, at *270 ¶ 998. The interim default rule provides:
47 C.F.R. § 51.709(c). We need not decide whether, as the RLECs contend in supplemental briefing, this interim rule moots the appeal for Ellerbe Telephone and Randolph Telephone. In the Reconsideration Order, the FCC also extended the effective date of this rule to July 1, 2012. 2011 WL 6778613, at *3, *6 ¶ 7 n. 24 ("We similarly adjust the timing of the rural transport rule because the basis for this rule was a gradual transition for these carriers to the default bill-and-keep methodology and therefore the timing for the two rules should be the same.").
We decline the FCC's suggestion to hold this case in abeyance or dismiss the case without prejudice and direct the parties to file a pleading at the FCC requesting an answer to these issues in a declaratory ruling.
We also dispense here with the contention that Verizon may not seek review of the NCUC's determination of the first issue on appeal because Verizon resolved the POI issue through negotiation and stipulation with the RLECs prior to arbitration, not by determination in the NCUC's order. Because we affirm the judgment of the district court, we need not address this issue here. Instead, we assume, without deciding, Verizon may seek review.
J.A. 208. Indeed, the NCUC seemed to recognize the predicament of having to resolve the instant dispute without clear legal instruction: "The Telecommunications Act places the burden on state commissions to arbitrate such matters, subject to review by federal courts." Id. at 209.
The CMRS Providers' construction, which would require the rates of compensation to "comport" with § 252(d)(2)(A) whenever the duty to establish reciprocal compensation under § 251(b)(5) is in effect is unsustainable. CMRS Providers' Br. 58. It would leave the RLECs "with a draconian choice—they could either not enter into reciprocal compensation arrangements with the CMRS Providers, and thus receive no compensation for terminating cell phone traffic on their network, or they could perform expensive and time consuming TELRIC cost studies despite the Act's plain language permitting modification of FCC regulations." NCUC's Br. 55.
