Petition for Writ of Certiorari — Global Naps, Inc. v. Verizon New England, Inc.

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IN THE

Supreme Court of the United States

GLOBAL Naps, INC.,

Petitioner,

Vv.

VERIZON NEw ENGLAND, INC. AND MASSACHUSETTS DEPARTMENT OF

TELECOMMUNICATIONS AND ENERGY, PAut B. VASINGTON, JAMES

CoNNELLY, W. ROBERT KEATING, DiERDRE K. MANNING, AND

EUGENE J. SULLIVAN, IN THEIR CAPACITIES AS COMMISSIONERS,

Respondents.

ON PETITION FOR A Writ OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE First CiRCUIT

—---

PETITION FOR A WRIT OF CERTIORARI

WILLIAM J. ROONEY, JR. Lucy DEBORAH LovRIEN*

JEFFREY C. MELICK 10 Winthrop Square

89 Access Road, Suite B Boston, MA 02110

Norwood, MA 02062 (617) 423-4050

(781) 551-0152

* Counsel of Record

Attorneys for Petitioner

193109 ce

COUNSEL PRESS

(800) 274-3321 + (800) 359-6859

;

QUESTION PRESENTED

Whether a competitive local exchange carrier may adopt

the terms of an interconnection agreement pursuant to

47 U.S.C. § 251(i) after receiving less favorable terms for

an interconnection agreement through arbitration before a

state commission under 47 U.S.C. § 252(a)(2)?

. ii

PARTIES TO THE PROCEEDINGS AND

CORPORATE DISCLOSURE STATEMENT

The parties to this proceeding are Global NAPs, Inc.

(Globa1), Petitioner, Verizon New England Inc. (Verizon),

Respondent, the Massachusetts Department of

Telecommunications and Energy (DTE), Respondent, and

Paul B. Vasington, James Connelly, W. Robert Keating,

Dierdre K. Manning and Eugene J. Sullivan in their capacity

as Commissioners, Respondents.

Pursuant to Rule 29.6 of the Rules of this Court,

Petitioner states that the parent company of Global is Ferrous

Miner Holdings, Ltd., a Delaware corporation, and that no

publicly held corporation has a ten percent or greater

ownership interest in Global.

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iii

TABLE OF CONTENTS

Page

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PARTIES TO THE PROCEEDINGS AND

CORPORATE DISCLOSURE STATEMENT ... ii

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TABLE OF CITED AUTHORITIES ............ Vv

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STATEMENT OF JURISDICTION ............. l

RELEVANT STATUTORY PROVISIONS

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STAIEMENT OF THE CASE ............0000- 3

REASONS FOR GRANTING THE PETITION ... 5

A. The First Circuit’s decision abrogates an

express right granted to CLEC’s in § 252(i)

SORE rr ee 5

B. The First Circuit’s concern about the powers

vested in state commissions was

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Contents

Page

C. The First Circuit’s concern about the binding

nature of arbitral decisions was misplaced.

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D. The First Circuit’s concern about the statutory

duties of good faith and cooperation was

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E. The First Circuit’s concern about the judicial

review provisions of the Act was

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F. The First Circuit’s reliance on FCC

regulations was misplaced. .............. 16

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TABLE OF CITED AUTHORITIES

Page

~ Cases ws

Anderson v. Yungkau, 329 U.S. 482 (1947) ....... 6

Estate of Coward v. Nichos Drilling Co., 505 U.S.

di | PETES ey Perey eye eURT See ree 6

Escoe v. Zerbst, 295 U.S. 490 (1935) ........... 6

Iselin v. United States, 270 U.S. 245 (1926) ...... 7

Keene Corporation v. United States, 508 U.S. 200

(ROG) iid caved sndntedeensendaanseekssaee 7

Lexecon, Inc. v. Milberg Weiss Bershad Hynes &

Lerach, 523 U.S. 26 (1998) ................. 6

Maryland v. Dyson, 527 U.S. 465 (1999) ........ 18

Riva v. Commonwealth of Massachusetts, 61 F.3d

NOGS Chet CHE: TED sco aca vasccaatexarexuss 6

Tcherepnin v. Knight, 389 U.S. 332 (1967) ....... 13

U.S. West v. Sprint Communication, 275 F.3d 1241

Ci CHE DOD 3 sa bndc dv gseswekseasean sas 3, 10

Verizon Maryland v. Public Service Commission of

Maryland, 535 U.S. 635 (2002) .............. 8

Cited Authorities

Page

Decisions of the Federal Communications Commission

First Report and Order, in the Matter of the Local

Competition Provisions in the Telecommun-

ications Act of 1996, Interconnection between

Local Exchange Carriers and Commercial Mobile

Radio Service Providers, 61 FR 45619 (Aug. 8,

* 1996) (“Local Competition Order’) .......... 8

Statutes, Rules and Regulations

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47 U.S.C. 251(ch2MD) .........cceeceeeeeeees 3

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vii

Cited Authorities

Page

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Ste EE as 6 dhdo cerns cewaaurseebanl passim

Ss Gl Oe SUE ceed eciceudecevesssoccdctsecs 18

47 C.F.R. § 51.809 (2000) ............... 2, 10, 11, 12

47 C.F.R. § 51.809(b) (2000) .................. 16

SFC FPR GEED 6 dec ecivececueséan 17

PUREE. Suns ch dcaseauusencreuesavassss 11

Telecommunications Act of 1996, Pub.L. No. 104-

SO a PREUEED Sov cnpcnucndcensntsseses 7-8

Miscellaneous

H.R. Rep. No. 101-204, at 50 (1996) reprinted in

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TABLE OF APPENDICES

Appendix A — Opinion Of The United States Court

Of Appeals For The First Circuit Dated January

Ot Pere TTT Peer Te ee rer eT ree

Appendix B — Opinion Of The United States District

Court For The District Of Massachusetts Dated

pg ee OPE ETT rer er iy Te Cre ee

Appendix C — Order On Verizon New England. Inc.

D/B/A Verizon Massachusetts’ Motion For

Approval Of Final Arbitration Agreement Or, In

The Alternative For Clarification Dated February

erry ere rT Ty PTT Tre Te rere

Appendix D — Relevant Statutes And Regulation

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Page

25a

66a

Petitioner, Global, respectfully requests that this Court

grant its petition for a writ of certiorari to review the decision

of the United States Court of Appeals for the First Circuit.

As noted below, this case is also appropriate for summary

disposition pursuant to Sup. Ct. R. 16.1.

—

OPINIONS BELOW

The opinion of the United States Court of Appeals for

the First Circuit is reported as Global NAPs, Inc. v. Verizon

New England, Inc., 396 F.3d 16 (1st Cir. 2005), and

is reproduced in the Appendix to this Petition (Pet. App.)

at la—24a.

That decision affirmed a ruling by the United States

District Court for the District of Massachusetts entitled

Global NAPs, Inc. v. Verizon New England, Inc., which is

reproduced in full in the Pet. App. at 25a-32a.

The District Court decision, in_turn, affirmed a decision ~

by the DTE, which is reproduced in full in the Pet. App. at

33a—49a.

STATEMENT OF JURISDICTION

The final judgment of the First Circuit decision was

entered on January 19, 2005. This Court has jurisdiction over

this petition under 28 U.S.C. § 1254(1).

RELEVANT STATUTORY PROVISIONS

AND REGULATIONS

Section 251 of the Telecommunications Act, codified at

47 U.S.C. § 251, prescribes rules designed to fundamentally

restructure the local exchange market in order to foster

competition in the delivery of telecommunication services.

The complete text of Section 251 is reproduced at Pet. App.

50a —59a.

Section 252 of the Telecommunications Act, codified at

47 U.S.C. § 252, establishes procedures for the negotiation,

arbitration and approval of interconnection agreements

between local exchange carriers. The complete text of Section

252 is reproduced at Pet. App. 60a —73a.

The Federal Communications Commission (FCC)

promulgated a rule, codified at 47 C.F.R. § 51.809,

concerning the adoption by one party of terms in

interconnection agreements signed by another party.

The complete text of § 51.809 is reproduced at Pet. App.

74a—75a.

INTRODUCTION

This case involves review of the First Circuit’s decision

that Global may not adopt, pursuant to the provisions of

§ 252(1) of the Act, the terms of an interconnection agreement

entered into by Verizon and Sprint Communications

Company, L.P. (Sprint) on the grounds that Global was

seeking to avoid the terms of a previously arbitrated

interconnection agreement with Verizon.

The First Circuit’s ruling is in direct contravention to

the express language of § 252(i) of the Act, and is inconsistent

with a ruling by the Tenth Circuit Court of Appeals in the

case of U.S. West Communications, Inc. v. Sprint

Communications Co., 275 F.3d 1241 (10th Cir. 2002). Worse,

the First Circuit’s interpretation of § 252(i) defeats the

purpose of the section and largely renders it useless, and

places a chilling effect on a competitive local exchange

carrier’s readiness to arbitrate an interconnection agreement

with an incumbent local exchange carrier.

STATEMENT OF THE CASE

The Telecommunications Act of 1996, 47 U.S.C. § 251,

et seq. (Act) requires incumbent local exchange carriers

(ILECs) to permit competitive local exchange carriers

(CLECs) to connect their telecommunications network to

the ILEC’s network “on rates, terms, and conditions that

are just, reasonable, and nondiscriminatory.” 47 U.S.C.

§ 251(c)(2)(D). The terms and conditions of the connection

are contained in interconnection agreements which can be

negotiated, arbitrated before a state commission, and/or

adopted from other such agreements entered into by the ILEC.

47 U.S.C. §§ 252(a)(1), 252(b)(1), 252(i).

This case pertains to the right of a CLEC to adopt the

terms of an interconnection agreement entered into between

an ILEC and another CLEC after it has obtained !ess favorable

terms through arbitration. The facts are not in dispute.

On December 12, 2002, the DTE issued an Arbitration

Order setting forth the terms of an interconnection agreement

between Global and Verizon (Arbitration Order). Global

appealed that Order to the Federal District Court pursuant to

47 U.S.C. § 252(e)(6) on the basis that it violated federal

law in numerous respects, none of which are relevant here

(Original Appeal). See Pet. App. at 6a. Subsequently, however

— in an attempt to resolve the dispute and avoid the

substantial cost and lengthy delay of an appeal — Global

exercised its right under 47 U.S.C. § 252(i) to adopt in its

entirety, for its own use with Verizon, an interconnection

agreement between Verizon and another CLEC, Sprint (Sprint

Agreement). Pet. App. 7a.

However, in an order dated February 19, 2003, the DTE

refused to permit Global to adopt the Sprint Agreement

(February 19, 2003 Order). Pet. App. at 7a. Instead, the DTE

required that Global sign and submit an interconnection

agreement consistent with the Arbitration Order (Arbitrated

Agreement). Pet. App. 9a. This Order compounded the DTE’s

errors of federal law, and Global appealed it to Federal

District Court (Sprint Agreement Appeal).

If Global were permitted to adopt the Sprint Agreement,

then the Original Appeal would be moot because the terms

of the Sprint Agreement would control Global and Verizon’s

relationship. Accordingly, the Original Appeal and the Sprint

Agreement Appeal were consolidated on March 20, 2003.

Pursuant to a scheduling order dated March 20, 2003, the

parties proceeded with a summary judgment motion on the

Sprint Agreement Appeal. The only issues considered were

(1) whether the court had jurisdiction to review the February

19, 2003 Order, and (2) whether the DTE erred in refusing

to permit Global to exercise its adoption rights under § 252(1).

On May 12, 2004, the Federal District Court ruled that

jurisdiction was proper but that Global’s right to opt into the

Sprint Agreement under § 252(i) was abolished by Global's

previous decision to arbitrate (May 12, 2004 Order).

Pet. App. 25a—32a. On May 28, 2004, Global filed its

Notice of Appeal from that Order to the First Circuit.

Pet. App. 10a.

On January 19, 2005, tix First Circuit issued the decision

which is the subject of this appeal, and affirmed the district

court ruling. Pet. App. la—24a.

REASONS FOR GRANTING THE PETITION

A. The First Circuit’s decision abrogates an express right

granted to CLEC’s in § 252(i) of the Act.

Section 252 of the Act sets forth the procedures for the

negotiation, arbitration and approval of interconnection

agreements between ILECs and CLECs. That section

provides three separate methods by which CLECs may obtain

terms under which they may interconnect with an ILEC. They

may obtain those terms through direct negotiation with the

ILEC, § 252(a), arbitration before a state commission,

- § 252(b), and/or by adoption of the same terms agreed to by

the ILEC and another telecommunications carrier, § 252(i).

The First Circuit has now applied a restriction on the rights

afforded by § 252(i) by limiting it to carriers who have not

yet entered arbitration. It was wrong to do so because

interpreting the statute in this way violates the purpose and

provisions of the Act.

In considering the meaning of § 252(i), “the beginning

point must be the language of the statute, and when a statute

speaks with clarity to an issue judicial inquiry into the

statute’s meaning, in all but the most extraordinary

circumstance, is finished.” Riva v. Commonwealth of

Massachusetts, 61 F.3d 1003, 1007 (1st Cir. 1995) (quoting

Estate of Coward v. Nichos Drilling Co., 505 U.S. 469, 475

(1992)) (internal quotation marks omitted). Absent a specific

definition afforded by the statute itself, the words in the

Statute are to be given their ordinary meaning. /d.

Section 252(1) states in full:

A local exchange carrier shall make available any

interconnection, service, or network element

provided under an agreement approved under this

section to which it is a party to any other

requesting telecommunications carrierupon the

same terms and conditions as those provided in

the agreement.

(Emphasis added).

The language of this section is both clear and specific.

It states that ILECs, like Verizon, “shall” make available to

CLECs, like Global, the same interconnection terms it has

with another telecommunications carrier, such as Sprint.

There is no provision permitting Verizon to do so only if it

wants to or if certain conditions are met; the statute says it

“shall” do so. The term “shall” is ordinarily “the language of

command.” Anderson v. Yungkau, 329 U.S. 482, 485 (1947);

Escoe v. Zerbst, 295 U.S. 490 (1935). A statute with the

mandatory term “shall” “normally creates an obligation

impervious to judicial discretion.” Lexecon, Inc. v. Milberg

Weiss Bershad Hynes & Lerach, 523 U.S. 26, 35 (1998).

Since there is no reason not to attribute to the word “shall”

the meaning of an obligation, the meaning of a mandatory

command should have been applied by the First Circuit.

Additionally, this section contains no provision limiting

the CLECs to which Verizon must make those terms

available. It does not provide that Verizon may pick and

choose which CLECs it will permit to adopt those terms,

and does not provide that a state commission has the right to

restrict the CLECs which may do so. Rather, the statute

clearly says Verizon must make them available “to any other

requesting telecommunications carrier.” Global is a

“requesting telecommunications carrier.” Therefore, Global

should have been permitted to adopt the Sprint Agreement.

There is no restriction anywhere else in § 252 or the rest of

the Act preventing CLECs who have already sought

arbitration from exercising their rights under § 252(i).

The First Circuit’s creation of a restriction could only

be based on the assumption that Congress intended to include

a provision limiting the rights afforded by that section and

for some reason did not do so. There is no support for such

_ an omission anywhere in the statute, let alone § 252(i). Thus, —

the imposition of a restriction is not an interpretation of the

statute, but rather “an enlargement of it by the court, so that

what was omitted, presumably by inadvertence, may be

included within its scope.” Iselin v. United States, 270 U.S.

245, 251 (1926). “To supply omissions transcends the judicial

function.” Jd. The Court has a “duty to refrain from reading

a phrase into [a] statute when Congress has left it out.” Keene

Corporation v. United States, 508 U.S. 200, 208 (1993).

Finally, the imposition of a restriction is contrary to the

express intention of the Act. The very purpose of the Act is

“to promote competition and reduce regulation in order to

secure lower prices and higher quality services for American

telecommunications consumers, and encourage the rapid

deployment of new telecommunications technology.”

Telecommunications Act of 1996, Pub.L. No. 104-104, 110

Stat. 56, 56 (1996). It was “designed to foster competition in

local telephone markets.” Verizon Maryland v. Public Service

Commission of Maryland, 535 U.S. 635, 638 (2002).

Congress believed that “more competition, rather than more

regulation, will benefit all [local telephone] consumers.”

H.R. Rep. No. 101-204, at 50 (1996), reprinted in 1996

U.S.C.C.A.N. 10, 13.

Shortly after the passage of the Act, the FCC

characterized § 252(i) as the “primary tool of the 1996 Act

for preventing discrimination under section 251.”

Local Competition Order, 61 FR 45619 (August 8, 1996)

at 91296. The FCC stated:

We further conclude that section 252(i) entitles

all parties with interconnection agreements to

“most favored nation” status regardless of whether

they include “most favored nation” clauses in their

agreements. Congress’s command under section

252(i) was that parties may utilize any individual

interconnection, service, or element in publicly

filed interconnection agreements and incorporate

it into the terms of their interconnection

agreement. This means that any requesting carrier

may avail itself of more advantageous terms and

conditions subsequently negotiated by any other

carrier for the same individual interconnection,

service, or element once the subsequent agreement

is filed with, and approved by, the state

commission. We believe the approach we adopt

will maximize competition by ensuring that

carriers obtain access to terms and elements on a

nondiscriminatory basis.

Id. 4 1316. Although the FCC specifically acknowledged that

“subsequently negotiated” interconnection agreements fall

within the adoption provisions of § 252(i), there is no reason

to believe it intended to limit the scope of that section to

only those agreements. Such an interpretation would mean

that it was excluding from adoption the terms of agreements

reached through arbitration. There is no indication from

anything the FCC said anywhere in that decision that it

wished to preclude CLECs from adopting the terms of

interconnections that had been arbitrated by other carriers.

Since the FCC recognized the purpose of § 252(i) as being

to “maximize competition by ensuring that carriers obtain

access to terms and elements on a nondiscriminatory basis,”

carving out arbitrated agreements would make no sense.

To do so would create the discrimination the Act and the

FCC are seeking to avoid. Similarly, carving out previously

negotiated agreements would be pointless because it is just

as critical to make available the terms of those agreements

to competing carriers. The source of the terms is not

important. Rather, the focus is on the availability of those

terms to all carriers so they can compete with one another on

an equal footing and thereby effectuate the purpose of the

Act.

The Tenth Circuit has also recognized the significance

of § 252(i):

§ 252(i) allows a CLEC to effectively amend its

own interconnection agreement by taking

advantage of more favorable provisions contained

in other CLEC interconnection agreements. As

Sprint argues, the provision, by allowing CLECs

to purchase services at equal prices and on equal

terms, enables a CLEC to remain competitive with

other CLECs in the local market.

U.S. West v. Sprint Communication, 275 F.3d 1241, 1249

(2002). That Court’s recognition of a CLEC’s right to

“effectively amend its own interconnection agreement” is

entirely consistent with Global’s position, and at odds with

the First Circuit’s. The Tenth Circuit’s statement makes sense

in light of the Act’s purpose. By enabling a CLEC to amend

its Own interconnection agreement to take advantage of the

most favorable terms available, § 252(i) assures an equal

playing field for all CLECs. Obviously, a CLEC faced with

an interconnection agreement less favorable than its

competitors’ agreements would not be able to compete in

the marketplace. Both by its terms and by its intended effect,

§ 252(i) assures that regardless of the outcome of any

particular negotiation or arbitration, all CLECs remain on

equal footing.

The FCC has also adopted specific regulations defining

when a CLEC may exercise its rights under § 252(i). FCC

Rule 51.809 provides:

(a) An incumbent LEC shall make available

without unreasonable delay to any requesting

telecommunications carrier any individual

interconnection, service, or network element

arrangement contained in any agreement to

which it is a party that is approved by a state

commission pursuant to section 252 of the Act,

upon the same rates, terms, and conditions as those

provided in the agreement. An incumbent LEC

may not limit the availability of any individual

interconnection, service, or network element only

to those requesting carriers serving a comparable

class of subscribers or providing the same service

(i.e., local, access, or interexchange) as the original

party to the agreement.

(b) The obligations of paragraph (a) of this section

shall not apply where the incumbent LEC proves to

the states commission that:

(1) The costs of providing a particular

interconnection, service, or element to the

requesting telecommunications carrier are

greater than the costs of providing it to

the telecommunications carrier that

originally negotiated the agreement, or

(2) The provision of a particular

interconnection, service, or element to the

requesting carrier is not technically

feasible.

element arrangements shall remain available for use

by telecommunications carriers pursuant to this

section for a reasonable period of time after the

approved agreement is available for public

inspection under section 252(f) of the Acct.

47 C.F.R. § 51.809 (2000) (emphasis added)'. Pet. App. 74a—

75a. Under this regulation, a CLEC has the right to adopt

' This citation reflects the rule as it stood when Global adopted

the Sprint Agreement. The regulation was amended July 22, 2004

and became effective August 23, 2004. 69 FR 43762. However, the

changes are of no consequence to this issue since Global adopted

the Sprint Agreement in its entirety.

“any individual interconnection, service, or network element

arrangement contained in any agreement” unless: (a) the

ILEC proves that “[t]he costs ... are greater than the costs

of providing it to the telecommunications carrier that

originally negotiated the agreement”; (b) the ILEC proves

that “[it] is not technically feasible”; or (c) more than a

“reasonable period of time after the approved agreement is

available” has elapsed. None of these conditions apply here.

Nothing in the DTE’s February 19, 2003 Order states

that Global cannot adopt the Sprint Agreement due to cost,

technical feasibility, or because more than a reasonable period

of time after its approval had passed. In fact, the “Analysis

and Findings” section of the February 19, 2003 Order

contains no mention of the 47 C.F.R. § 51.809 factors at all.

Pet. App. 42a—48a.

Instead, the First Circuit invented a new restriction —

not contained or implied either in the text of § 252(i) or the

FCC’s implementing regulations — to strip Global of its

§ 252(i) right to operate on the same terms and conditions

that apply to any other CLEC in Massachusetts

interconnected with Verizon. It relied on the procedural status

of the arbitration relative to the execution of the Sprint

Agreement. Its sole concern was that Global had first attended

an arbitration and later decided to exercise its adoption rights

under § 252(i). The plain effect of this ruling (whatever its

purpose might have been) is to establish precisely the kind

of discrimination that § 252(i) is intended to avoid. Global

is being forced to operate under the particularly onerous (and

erroneous) terms laid out in the Arbitration Order even though

no other CLEC in Massachusetts is required to do so. Global

submits that it is impossible to square this result with the

Act and applicable FCC regulations.

B. The First Circuit’s concern about the powers vested

in state commissions was misplaced.

Referencing § 252(b), the First Circuit determined that

Global’s position was “inconsistent with the basic arbitral

power vested in the state commission.” Pet. App. 16a.

However, although that section provides state commissions

with the powers to carry out arbitrations, it does not empower

them to disregard the statutory language contained in the Act.

See 47 U.S.C. § 252(e)(6). Pet. App. 69a. The simple fact

that Congress provided a means by which ILECs and CLECs

could arbitrate their disputes does not mean that Congress

intended CLECs to have to choose between arbitration and

adoption. If Congress had intended such a choice, it would

have included language to that effect in the Act. It did not do

so. And since it did not do so, its language should be

interpreted broadly to effectuate its purpose of providing

competition in the local telephone market. See Tcherepnin v.

Knight, 389 U.S. 332, 336 (1967) (“we are guided by the

familiar canon of statutory construction that remedial

legislation should be construed broadly to effectuate its

purpose.”).

C. The First Circuit’s concern about the binding nature

of arbitral decisions was misplaced.

The First Circuit determined that Global’s position

was “inconsistent with the power of state commissions to

make their arbitral decisions binding on both parties.”

Pet. App. 16a. (Emphasis in original). Clearly, the Act

provides for binding as opposed to nonbinding arbitration

as one way for CLECs to obtain interconnection terms with

an ILEC. Global does not suggest that Congress intended

CLECs and ILECs to attend arbitration for the purpose of

obtaining a nonbinding result, with one exception. The

exception is specifically provided in § 252(i). That exception

provides CLECs with the right to adopt the terms of another

CLEC’s interconnection agreement. As stated above, that

section does not contain any limitations whatsoever, nor

should it.

In order to ensure that state commissions provide a level

playing field for CLECs within their jurisdiction, the Act

provides two methods for CEE€s to ensure they did not

obtain inappropriate, nondiscriminatory terms through

arbitration. The CLEC may appeal the arbitration decision

to the Federal District Court pursuant to the provisions of

§ 252(e)(6) of the Act, or simply adopt the terms of another

interconnection agreement through § 252(i), if one exists.

Obviously, given the costly and lengthy nature of the appellate

process, the option of adopting the terms of another

interconnection agreement is an essential right provided

under the Act. This is especially true in light of the changing

and dynamic nature of the telecommunications industry, and

the challenges facing any competitor of a former monopoly.

Congress recognized this by enacting § 252(i) without

providing any restrictions to its use.

D. The First Circuit’s concern about the statutory duties

of good faith and cooperation was misplaced.

Citing § 252(b)(5), the First Circuit found that Global’s

position “is in conflict with the statutory duties of good

faith and cooperation with the commission as arbiter.”

Pet. App. 18a. It reasoned that “[i]n attempting to void the

terms of a valid arbitration order, it is clear that Global NAPs

is refusing to cooperate with the DTE, in violation of its duty

to negotiate in good faith.” Pet. App. 18a. The Court was

wrong for two reasons. First, the Arbitration Order has not

been determined valid; it is under appeal. Second, and more

important, § 252(b)(5) says nothing about preventing a CLEC

from exercising its right to adopt the terms of another

interconnection agreement under § 252(i). Rather, it states:

The refusal of any other party to the negotiation

to participate further in the negotiations, to

cooperate with the State commission in carrying

out its function as an arbitrator, or to continue to

negotiate in good faith in the presence or with the

assistance of the State commission shall be

considered a failure to negotiate in good faith.

As can be seen, the section applies only to negotiations

between the parties and to the commission’s function as

arbitrator. It does not apply to, or negate, the rights afforded

by § 252(i). If this section were truly to be read as broadly as

the First Circuit believes, it also would negate a party’s right

to appeal the arbitration decision to the district court. Clearly,

this section is not fairly read as preventing Global from

adopting the Sprint Agreement.

E. The First Circuit’s concern about the judicial review

provisions of the Act was misplaced.

Citing § 252(e)(6), the First Circuit determined that

Global’s position “is also inconsistent with the judicial review

provisions of the [Act].” Pet. App. 19a. The Court concluded

that “[i]f ‘any party aggrieved by a determination’ feels the

arbitral determination is contrary to the [Act], its remedy is

through judicial review, not self help.” Pet. App. 19a. Section

~ 252(e)(6) states,

In any case in which a State commission makes a

determination under this section, any party

aggrieved by such determination may bring an

action in an appropriate Federal district court to

determine whether the agreement or statement

meets the requirements of section 251 of this title

and this section.

However, nowhere does this section contain any language

that judicial review is the sole remedy for an unfair or

erroneous decision by a State commission. It does not

mention § 252(i), nor restrict a CLEC’s right to adopt the

terms of another interconnection agreement. Instead, it states

that the aggrieved party “may” appeal to the district court; it

does not say that it “must” or that this is its exclusive remedy.

As one commentator noted, litigation is the equivalent

of two people placing their heads in a bucket of water and

daring the other to outlast them. Congress recognized this

when it created § 252(i). It intended that section as a means

for CLEC’s to pull their heads out of the water short of a full

appeal of an arbitrated decision that did not comply with

federal law.

F. The First Circuit’s reliance on FCC regulations was

misplaced.

The First Circuit cited to FCC regulations in support of

its decision, but those regulations do not confirm its

reasoning. The Court correctly observed that 47 C.F.R.

§ 51.809(b) provides two express limitations to a CLEC’s

right to adopt the terms of another interconnection agreement:

“1) if [the ILEC] shows that the costs of providing a service

will be greater to the requesting competitor than it was to

the original negotiating party, or 2) if [the ILEC] shows that

the provision of that service is technically infeasible.”

Pet. App. 20a. However, as stated above, a review of the

DTE order shows that no such showing was made. Therefore,

reliance on this regulation was misplaced.

The First Circuit also cited 47 C.F.R. § 51.809(c) in

support of its decision. Pet. App. 21a. That regulation

provides that interconnection “agreements shall remain

available for use by telecommunications carriers pursuant to

this section for a reasonable time after the approved

agreement is available for pubic inspection under section

252(h) of the Act.” The Court agreed with the DTE’s

interpretation that once the arbitration was concluded, a

reasonable time had expired. Pet. App. 21a. However, this

rationale is not driven by time at all; it is driven simply by

the procedural status of the arbitration. Neither the Court

nor the DTE cited any additional reason justifying their

conclusion that the procedural status of the arbitration

governed, and eliminated, a CLEC’s right to exercise its rights

under § 252(i).

CONCLUSION

For the forgoing reasons, Global submits that this Court

should grant this petition for writ of certiorari. Because the

decision of the First Circuit is in clear and direct conflict

with controlling federal statutes and regulations, Global also

submits that this case is appropriate for summary disposition

pursuant to Sup. Ct. R. 16.1, and requests that the Court

summarily reverse the First Circuit Court’s decision.

See Maryland v. Dyson, 527 U.S. 465, 467 n.1 (1999)

(summary reversal appropriate to correct lower court’s

“demonstrably erroneous application of federal law’).

Respectfully submitted,

WILLIAM J. Rooney, JR. Lucy DEBORAH LovrIEN*

JEFFREY C. MELICK 10 Winthrop Square

89 Access Road, Suite B Boston, MA 02110

Norwood, MA 02062 (617) 423-4050

(781) 551-0152

* Counsel of Record

Attorneys for Petitioner

APPENDIX

APPENDIX A — OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FIRST CIRCUIT

DATED JANUARY 19, 2005

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

No. 04-1711

GLOBAL NAPS, INC.,

Plaintiff, Appellant,

VERIZON NEW ENGLAND, INC.; MASSACHUSETTS

DEPARTMENT OF TELECOMMUNICATIONS AND

ENERGY; PAUL B. VASINGTON, in his capacity as

Commissioner; JAMES CONNELLY, in his capacity as

Commissioner; W. ROBERT KEATING in his capacity as

Commissioner; DIEDRE K. MANNING, in her capacity as

Commissioner; and EUGENE J. SULLIVAN, in his capacity

as Commissioner,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT

COURT FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Rya W. Zobel, U.S. District Juddge]

Before

Lynch, Lipez, and Howard, Circuit Judges.

Appendix A

LYNCH, Circuit Judge. This appeal represents one part

of a larger dispute between Global NAPs, a competitive local

exchange carrier (CLEC), and Verizon New England, Inc.,

an incumbent local exchange carrier (ILEC), in their attempt

to reach an interconnection agreement under the

Telecommunications Act of 1996(TCA), Pub.L. No. 104-104,

110 Stat. 56 (codified as amended in scattered sections of

47 U.S.C.). The TCA sets up detailed procedures for the

creation of interconnection agreements in order to serve the

TCA’s goal of fostering competition in local telephone

markets. Those procedures allow competing carriers to gain

access to the incumbent carrier’s telecommunications

network and facilities and govern the terms and fees of that

access.

Global NAPs appeals from the district court’s judgment

affirming a February 19, 2003 order of the Massachusetts

Department of Telecommunications and Energy (DTE), the

state commission given the power to arbitrate disputes

over interconnection agreements under the TCA. 47 U.S.C.

§ 252(b). The February 19, 2003 administrative order

followed an earlier December 12, 2002 DTE order deciding

the arbitration between Verizon and Global NAPs. That

arbitration had been initiated by Global NAPs after a period

of negotiation with Verizon failed to produce an agreement

on all issues.

The challenged February 19 order allowed a remedial

motion by Verizon to force Global NAPs to sign an

interconnection agreement consistent with the terms of the

DTE’s earlier December 12 arbitration order. Verizon brought

this motion because Global NAPs had balked at the December

Appendix A

12 arbitration order, said it was not bound by the result of

the arbitration, and that it was instead exercising what it

thought was its unconditional right under § 252(1) of the Act

to adopt the terms of an interconnection agreement Verizon

had with Sprint, which preexisted Global NAPs’ arbitration

request.

The merits of the underlying December arbitration order

from the DTE are not before us. The merits issue before us

is whether in its February order the DTE acted in violation

of § 252(i) of the TCA in precluding Global NAPs from

nullifying and avoiding the effect of the arbitration—which

binds Global NAPs and Verizon to an agreement—by instead

opting into the terms of an older agreement Verizon had

signed with Sprint. If Global NAPs were free to so opt in,

that would moot the challenge to the underlying December

arbitration order. We find that the DTE’s February 19 order

was not in violation of the TCA and affirm the district court.

Before the passage of the TCA, local telephone service

was provided mainly by state-regulated monopolies, such as

Verizon. These monopolies, the ILECs, owned all networks

and facilities (including telephone lines, poles, trunks, etc.)

attendant to the provision of local telephone service. See

AT & T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 371 (1999).

A purpose of the TCA was to end the local telephone

monopolies and create a national telecommunications policy

that strongly favored competition in local telephone markets.

See P.R. Tel. Co. v. Telecomm. Regulatory Bd. of P.R., 189

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

Appendix A

Section 251 of the TCA imposes obligations on both

competing carriers and incumbent carriers. Section 251(a)(1)

imposes a duty on all carriers “to interconnect directly or

indirectly with the facilities and equipment of other

telecommunications carriers.” 47 U.S.C. § 251(a)(1). The

TCA imposes on an incumbent carrier more stringent duties,

including “the duty to permit other carriers to interconnect

with its facilities, to provide other carriers with access to

elements of its local network on an ‘unbundled’ basis, to sell

to other carriers at wholesale prices the services that it

provides to its customers, and to negotiate interconnection

agreements in good faith.” P.R. Tel. Co., 189 F.3d at 8; see

47 U.S.C. § 251(c).

Section 252 provides the procedures f*r the creation of

interconnection agreements.' Interconnection agreements

govern the terms and conditions by which CLECs may gain

access to the ILECs’ local telephone network and facilities,

thus allowing the CLECs to provide competing local

telephone service. Incumbents and competitors may negotiate

freely an interconnection agreement, and both parties have a

duty to negotiate in good faith. 47 U.S.C. § 251(c)(1). If the

parties reach an agreement through negotiation, that

agreement need not satisfy the substantive requirements of

§§ 251(b) and (c). Jd. § 252(a)(1). If after a period of

1. In addition to pursuing an interconnection agreement,

a competitor may also seek access to the incumbent’s network

by purchasing local telephone services at wholesale rates for resale

to end users or by leasing elements of the incumbent’s network

on an “ynbundled basis.” 47 U.S.C. § 251(c); U.S. West

Communication, Inc. v. Sprint Communications Co., 275 F.3d 1241,

1244 (10th Cir.2002). .

Appendix A

negotiation the parties are not able to come to an agreement

on some issues, either party may petition a state commission

to decide those open issues in arbitration. Jd. § 252(b)(1).

The commission then has the authority to decide the open

issues between the parties, and to impose conditions on the

parties for the implementation of the terms of arbitration into

an agreement. Jd. § 252(b)(4)(C). In deciding those issues,

the commission must “ensure that such resolution and

conditions meet the requirements of section 251 of this title,

including the regulations prescribed by the [Federal

Communications Commission] pursuant to section 251.” /d.

§ 252(c\(1). Further, either party’s refusal to negotiate or to

cooperate with the state commission acting as arbitrator

constitutes a breach of its duty to negotiate in good faith. /d.

§ 252(b)(5).

In addition, the TCA requires ILECs to allow any

requesting CLEC to adopt the terms and conditions of any

interconnection agreement it has with any other CLEC,

provided that agreement has been approved by the requisite

state telecommunications commission. Jd. § 252(i).

Once a negotiated or arbitrated agreement is completed,

it must be submitted to the state commission for approval.

Id. § 252(e)(1). The commission may reject any negotiated

agreement if it discriminates against a third party carrier or

if its implementation is “not consistent with the public

interest, convenience, and necessity.” /d. § 252(e)(2)(A). The

commission may reject an arbitrated agreement if it fails to

meet the substantive requirements of § 251, including the

FCC’s implementing regulations, or the pricing standards set

forth in § 252(d). Jd. § 252(e)(2)(B). That commission

decision is subject to federal judicial review:

Appendix A

In any case in which a State commission makes a

determination under this section, any party

aggrieved by such determination may bring an

action in an appropriate Federal district court to

determine whether the agreement or statement

meets the requirements of section 251 of this title

and this section.

Id. § 252(e)(6).

Verizon and Global NAPs began the negotiation process

for a new interconnection agreement in early 2002, because

their previous agreement was approaching expiration. On July

30, 2002, Global NAPs filed a petition with the DTE to

arbitrate several issues on which the parties could not agree.

The DTE issued an order on December 12, 2002, resolving

all open issues and ordering the parties to incorporate the

arbitrated terms into an agreement and file that agreement

with the DTE within 21 days, or by January 2, 2003. The

DTE allowed the parties’ joint motion for extension of time

to file the agreement until January 17, 2003.

On December 30, 2002, Global NAPs brought an action

in federal district court challenging the merits of the DTE’s

arbitration determination.2 The merits of that December 12,

2002 DTE order are not before us.

2. The most important contested issue in that arbitration between

the parties relates to the reciprocal compensation requirements

between ILECs and CLECs for toll-free calls placed by the ILEC’s

customers to a CLEC’s internet service provider (ISP) customers.

This issue has prompted much litigation, including issues concerning

the validity of FCC rulings on the issue. See, e.g., WorldCom, Inc. v.

FCC, 288 F.3d 429 (D.C.Cir.2002).

Appendix A

On January 9, 2003, Global NAPs informed Verizon that,

rather than entering into the agreement embodying the DTE’s

arbitration decision, it would seek to adopt the terms of a

preexisting December 19, 2001 agreement Verizon had with

Sprint (“Sprint agreement’). Global NAPs contended that it

has an unconditional right to do so pursuant to 8 U.S.C. §

252(i). Global NAPs said its adoption of the preexisting

Sprint agreement was consistent with the arbitration order,

under which Global NAPs retained its § 252(i) rights.

On January 16, 2003, Global NAPs informed the DTE

of its intention to opt into the Sprint agreement, in place of

the arbitrated agreement. In response, on January 17, 2003,

Verizon filed a motion with the DTE to approve the

arbitration order, seeking, in essence, to force Global NAPs

to execute an agreement consistent with the arbitration order,

or alternatively, should the DTE allow Global NAPs to opt

into the Sprint agreement, to order that the “agreement be

modified to reflect the [DTE!’s legal and policy

determinations set forth in the Arbitration Order.”

On February 19, 2003, the DTE granted the initial portion

of Verizon’s motion and ordered the parties to sign and file

an agreement consistent with the initial arbitration order. That

February 19, 2003 order is the subject of this appeal. All

parties agree that this order left Global NAPs free to challenge

the substance of the December 12, 2002 arbitration order.

In the February 19 order, the DTE rejected Global NAPs’

claim that it retained the unconditional right to opt into the

Sprint Agreement even after the DTE issued its arbitration

order. The DTE first held that a final arbitration order

Appendix A

pursuant to § 252(b) is binding on both parties,’ noting that

it had always required that arbitration be binding on both

parties. It held that its rule that arbitrations be binding on

both parties was consistent with FCC regulation. See 47

C.F.R. § 51.807(h). Further, the DTE noted that the FCC’s

Local Competition Order, which embodies the FCC’s initial

post-enactment interpretation of the statute, stated that the

states may consider the FCC’s rules when implementing their

own standards for arbitration. See Local Competition Order,

11 F.C.C.R. 15499, 16127 (1996).

Further, the DTE held that since the arbitration order

directed the parties to file an agreement containing the

arbitrated terms, and provided no alternatives, Global NAPs’

attempt to opt into the Sprint agreement was in violation of

that earlier order. The DTE held that “[t]he § 252(i) adoption

process permits a CLEC, during the negotiation process, to

opt into another carrier’s contract, not to do so after a decision

has been reached through arbitration.”

3. The DTE also rejected Global NAPs’ claim that when the

FCC stated, in the Local Competition Order { 1293, that “competing

providers do not have an affirmative duty to enter into agreements

under section 252,” the FCC meant that CLECs were not bound by

the results of an state arbitration under § 252(b). Local Competition

Order, 11 F.C.C.R. 15499, 16131 (1996). Rather, the DTE held that

a fuller reading of the TCA and FCC rules shows that this paragraph

stood for the narrower proposition that competing carriers, unlike

incumbents, cannot be forced to enter into an interconnection

agreement, but rather can purchase services directly through the

incumbent’s tariff. The DTE held that it does not mean that CLECs

can avoid the terms of a valid arbitration order.

Appendix A

It also noted that Global NAPs’ interpretation of the TCA

was contrary to public policy, as it would allow carriers to

“game the system” by always attempting to arbitrate, and if

unhappy with the results, merely to opt into an existing

agreement.‘ The DTE ordered the parties to file an agreement

consistent with the initial arbitration order within seven days.

The parties signed and entered an agreement consistent with

the court’s ruling, under Global NAPs’ protest. The DTE did

not, contrary to Global NAPs’ assertion, hold that a party to

an arbitrated agreement can never exercise rights under

§ 252(i). It also did not, contrary to Verizon’s assertion, hold

that a party subject to a valid arbitration order could never,

under § 252(i), take advantage of terms in a previously

available agreement.

On March 6, 2003, Global NAPs filed a second action

in district court, this time challenging the DTE’s February

19 order.

On March 11, 2003, all parties to the second litigation

(Global NAPs, Verizon, and the DTE) filed a joint motion to

consolidate Global NAPs’ two actions. In that motion, the

parties proposed that the district court rule on Global NAPs’

challenge of the DTE’s February 19 order—whether Global

NAPs is permitted to opt into the Sprint Agreement—prior

to ruling on its challenge to the DTE’s underlying arbitration

4. The DTE reasoned that competing carriers would have no

incentive to negotiate and would always seek arbitration, because

the ability to opt into an existing agreement post-arbitration would

mean that such competitors could only benefit and never be made

worse off by arbitration. That would waste the DTE’s limited

resources and be unduly burdensome to incumbents.

10a

Appendix A

order—the merits of the arbitration agreement. The district

court granted the motion and accepted the parties’ briefing

schedule, under which the parties filed cross motions for

summary judgment in the first action on the issue whether §

252(i) would permit Global NAPs to opt into the Sprint

agreement despite the existence of the DTE’s arbitration order

to the contrary. The district court granted Verizon’s and the

DTE’s motions for summary judgment, and denied Global

NAPs’ motion. Global NAPs timely appealed.

Il.

Appellate Jurisdiction

The parties agree the federal courts have subject matter

jurisdiction to review state agency determinations under the

TCA for compliance with federal law, pursuant to 28 U.S.C.

§ 1331. Verizon Md., Inc. v. Public Serv. Comm 'n of Mad.,

535 U.S. 635, 642 (2002). See also, 47 U.S.C. § 252(e)(6).

Verizon initially argues that this court lacks appellate

jurisdiction to hear Global NAPs’ appeal due to (1) the lack

of a final judgment under 28 U.S.C. § 1291 and (2) lack of

standing in Global NAPs. The DTE does not join Verizon in

arguing lack of appellate jurisdiction or lack of standing, but

briefs the case on the merits.

Verizon argues that the district court’s ruling was not a

final judgment because Global NAPs’ two actions were

consolidated, thus rendering them one case, and the grant of

summary judgment disposed of only one of the two

consolidated cases. This argument is without merit. The

lla

Appendix A

disposition of one case in a consolidated action is a final and

appealable judgment unless the cases were consolidated “for

all purposes.” See Bay State HMO Management, Inc. v.

Tingley Sys., Inc., 181 F.3d 174, 178 n. 3 (1st Cir.1999). In

moving to consolidate these cases, the parties expressly

requested that the district court review the February 12, 2003

DTE order before proceeding with its review of the December

12, 2002 order, and the district court agreed to do so.’ Review

of the merits of the December 12, 2002 arbitration order was,

in essence, stayed pending the court’s determination of the

challenge to the second DTE order; the parties proposed

completely separate briefing schedules for the review of the

two consolidated cases. Verizon’s claim that the cases were

consolidated “for all purposes” is wrong and Verizon’s last

minute assertion is inconsistent with how it presented its case

in the trial court.

These circumstances bring the case squarely within the

bounds of Jn re Massachusetts Helicopter Airlines, Inc., 469

F.2d 439 (1st Cir.1972). There, this court determined that

the claims in a consolidated action remained separate, and

therefore a Rule 54(b) determination was not required for

appellate jurisdiction to be proper, because “[e]xcept for the

consolidation of the[ ] cases for the convenience of pre-trial

and trial procedure, the cases maintained their separate

identities throughout the litigation. Separate judgments were

entered in each of the five cases.” Jd. at 441. We found this

to be consistent with the theory behind consolidation, which

5. Further, we note that Verizon did not move to challenge

jurisdiction upon the filing of Global NAPs’ appeal, waiting instead

until the filing of its brief to do so.

12a

Appendix A

was a procedural mechanism meant to serve the purposes of

judicial economy and convenience of the parties, as here,

but not to alter the substantial rights the parties had in the

separate actions.° /d.

Verizon relies on a notation in the district court docket

from the clerk of court that the second complaint, i.e. the

present case, was consolidated “for all future proceedings,”

and that this removes it from the Massachusetts Helicopter

rule. See Bay State HMO Management, Inc., v. Tingley Sys.,

Inc., 181 F.3d 174, 178 n. 3. The reality of the situation is

that the consolidation was for purposes of convenience and

efficiency.

Verizon also urges us to overrule Massachusetts

Helicopter im favor of the Ninth Circuit rule in Huene v.

United States, 743 F.2d 703, 705 (9th Cir. 1984), also followed

in Trinity Broad. Corp. v. Eller, 827 F.2d 673, 675 (10th

Cir.1987) and Spraytex, Inc. v. DJS&T, Homax Corp., 96 F.3d

1377, 1382 (Fed.Cir.1996). The advantage, it says, of the

Ninth Circuit rule is that it provides a bright line—no ruling

in a consolidated case may be appealed until there is an

ultimate final judgment on all matters. That is true. The

disadvantage of the rule is that it may cause injustice on

particular facts, and the rule acts as a disincentive which may

prevent consolidation for purely pragmatic reasons of

convenience and efficiency.

6. Verizon’s attempt to characterize the district court’s order as

a grant of partial summary judgment is in error. There is nothing in

the district court’s memorandum or judgment that suggests it was a

grant of partial summary judgment.

13a

Appendix A

In any event, our adherence to the Massachusetts

Helicopter rule was reaffirmed more recently in Bay State

HMO Management, 181 F.3d at 178 n. 3. As a panel, we are

not free to overrule circuit precedent. The district court’s

grant of summary judgment is a final order within the

meaning of 28 U.S.C. § 1291.

Verizon’s challenge to Global NAPs’ standing to pursue

an appeal is also without merit. Verizon’s claim of lack of

standing seems to be predicated on the notion that, if Global

NAPs is allowed to opt into the Sprint agreement, the DTE

will construe the Sprint agreement in a manner consistent

with the terms of the arbitration order, and thus Global NAPs

will be no better off.

Global NAPs disagrees, and recites injury to itself.

Further, Verizon’s position is contrary to its position below

in several respects. Among them is that Verizon requested

from the DTE that, should the DTE allow Global NAPs to

adopt the Sprint agreement, then the agreement be modified

to adopt legal and policy determinations made in the

arbitration order. If the Sprint agreement were not materially

different from the challenged agreement, such modification

would not be necessary. Indeed, Global NAPs would not be

trying to join the Sprint agreement. Further, the possibility

that the DTE might construe the Sprint agreement

consistently with the December 12 arbitration order, and that

doing so would be upheld against a likely challenge, is

insufficient to render Global NAPs without standing in this

case. We reject the lack of standing argument.

14a

Appendix A

Ill.

Interpretation of the TCA § 252(i)

The precise legal question under review is narrow, though

one of first impression in the circuit courts of appeals: does

a competing carrier have an unconditional right, under

§ 252(i) of the TCA, to avoid the terms of a final arbitration

order from a state telecommunications commission,

adjudicating a dispute between the CLEC and ILEC, by

seeking to opt into the terms of a previous interconnection

agreement that the ILEC has with another CLEC? This is an

issue of federal statutory interpretation of the TCA.’ We agree

with the DTE and the district court that the TCA grants no

such right.

Standard of Review

This circuit has not previously articulated precisely the

standard of judicial review of state agency determinations

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

review, P.R. Tel. Co. v. Telecomm. Regulatory Bd. of P.R.,

189 F.3d 1, 7 (Ist Cir.1999), and we apply that standard to

state agency determinations under the TCA.®

7. Since the FCC, and not the individual state commissions, is

the agency with the power granted by Congress to administer the

TCA, through the formulation of policy, rulemaking, and regulation,

we do not afford deference to the DTE’s interpretation of the statute

under Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467

U.S. 837, 843 (1984).

8. Each of the Circuits that has addressed the standard of review

under the TCA has held that where the state agency determination

(Cont'd)

15a

Appendix A

In interpreting a statute, we begin with the text. BedRoc

Ltd. v. United States, 124 S.Ct. 1587, 1593 (2004). Section

252(i) states:

A local exchange carrier shall make available any

interconnection, service, or network element

provided under an agreement approved under this

section to which it is a party to any other

requesting telecommunications carrier upon the

same terms and conditions as those provided in

the agreement.

47 U.S.C. § 252(i). In urging the court to hold that § 252(i)

gives it an unconditional right to avoid the terms of an

arbitration order and opt into a previously available

(Cont'd)

rests principally on an interpretation of the TCA, de novo review is

applied. See, e.g., Ind. Bell Tel. Co. v. McCarty, 362 F.3d 378, 383

(7th Cir.2004); MCIMetro Access Transmission Servs. v. Bellsouth

Telecomms., Inc., 352 F.3d 872, 876 (4th Cir.2003); Coserv. Ltd.

Liab. Corp. v. Southwestern Bell Tel. Co., 350 F.3d 482, 486 (Sth

Cir.2003); U.S. West Communications, Inc. v. Sprint Communications

Co., 275 F.3d 1241, 1248 (10th Cir.2002); AT & T Communications

of S. States, Inc. v. BellSouth Telecomm., Inc., 268 F.3d 1294, 1296

(11th Cir.2001); AT&T Communications of N.J. v. Verizon N.J., Inc.,

270 F.3d 162, 169 (3d Cir.2001); U.S. West Communications., Inc. v.

MFS Intelenet, Inc. 193 F.3d 1112, 1117 (9th Cir.1999). Further, other

Circuits have held that where no error of law exists, the state agency’s

other determinations are reviewed under the arbitrary and capricious

standard. See, e.g., MCI Telecomms. Corp. v. Ohio Bell Tel. Co., 376

F.3d 539, 548 (6th Cir.2004); U.S. West Communications, Inc., 275

F.3d at 1248; Southwestern Bell Tel. Co. v. Waller Creek

Communications, Inc., 221 F.3d 812, 816 (Sth Cir.2000); MFS

Intelenet, 193 F.3d at 1117.

16a

Appendix A

agreement, Global NAPs points out that the text of § 252(i)

does not state expressly when and under what circumstances

the incumbent must make interconnection agreements ,

available to other competitors. From this silence, Global

NAPs argues it is free to opt in at any time it chooses. But §

252(i) does not expressly state what Global NAPs reads it to

mean either. At best, § 252(i) is ambiguous on the subject, if

that section is read alone. The absence of an express statement

in § 252(i) does not end the matter; the section must be read

in light of the structure and intent of the statute.

Global NAPs’ broad reading of § 252(i) is incorrect,

because that reading brings § 252(i), under the circumstances

of this case, into direct conflict with, and in important aspects

negates, several other sections of the TCA.

Global NAPs’ reading is inconsistent with the basic

arbitral power vested in the state commission. Section 252(b),

entitled “Agreements arrived at through compulsory

arbitration,” allows for either party to an interconnection

agreement to petition a state commission for arbitration of

open issues, and grants powers to the state commission to

carry out the arbitration. Jd. § 252(b).

Global NAPs’ reading is also inconsistent with the power

of state commissions to make their arbitral decisions binding

on both parties. Section 252(b)(4)(C) requires the state

commission to “resulve each issue set forth in the petition

and the response, if any, by imposing appropriate conditions

as required to implement subsectiea (c) of this section upon

the parties to the agreement.” id. § 252(b)(4)(C). In turn,

subsection (c), among other things, states that “a State

commission shall .. . provide a schedule for implementation

17a

Appendix A

of the terms and conditions by the parties to the agreement.”

Id. § 252(c). By allowing the commission acting as arbitrator

to place conditions on both parties for the implementation

of interconnection agreements, it is clear that § 252(b)(4)(C)

intends for arbitration orders to be binding on both parties.

Global NAPs responds that arbitration orders are not

binding because generally under the TCA, the obligations

on CLECs are not equal to or reciprocal with those on ILECs

and so arbitration decisions are equally asymmetrical -in their

results. Global NAPs also makes a broader argument that

the FCC’s regulations, and the TCA generally, create

asymmetrical rights and obligations on competitors and

incumbents, and those greatly tip the scale in favor of

competitors. It argues that under § 252 incumbents are

required to enter into interconnection agreements, but

competitors are not. Thus Global NAPs argues that, to the

extent there is ambiguity as to the scope of § 252(1), it should

be construed broadly in favor of competitors and against the

incumbent, consistent with the asymmetry created by the

statute and regulations as a whole.

This argument, however, ignores the important fact that

§ 252(b) is not one of the areas of the TCA that creates

asymmetrical obligations on the parties. Section 252(b)(1)

allows either party to the negotiation to petition for

arbitration. Section 252(b)(4) allows the state commission

to impose conditions on both parties in order to carry out the

arbitration. And § 252(b)(5) creates a duty for both parties

to cooperate with the arbitration at the risk of breaching the

duty both parties have, under § 252(a), to negotiate in good

faith. There is no basis for Global NAPs’ reading § 252(i) as

18a

Appendix A

somehow turning the parallel obligations that run throughout

§ 252(b) into merely one-way obligations.

Further, Global NAPs’ reading is in conflict with the

statutory duties of good faith and cooperation with the

commission as arbitrator. The TCA, at § 252(b)(5), states:

The refusal of any other party to the negotiation

to participate further in the negotiations, to

cooperate with the State commission in carrying

out its function as an arbitrator, or to continue to

negotiate in good faith in the presence, or with

the assistance, of the State commission shall be

considered a failure to negotiate in good faith.

Id. § 252(b)(5). In attempting to void the terms of a valid

arbitration order, it is clear that Global NAPs is refusing to

cooperate with the DTE, in violation of its duty to negotiate

in good faith.’

Global NAPs responds by asking the court to read an

implicit limitation on the good faith requirement of

§ 252(b)(5)—that CLECs are not bound by the terms of

§ 252(b)(5) if they attempt to opt into a previously available

contract. Global NAPs says that this is the effect of § 252(i).

But § 252(i) says nothing of the sort. Rather, it is written in

terms of an obligation on the part of ILECs to make

9. The record is clear that the DTE did not consider its order to

be a penalty. Rather, the DTE held that § 252(i) could not be read to

allow Global NAPs to void the terms of the binding arbitration order

by opting into an agreement available to them throughout the entire

period of negotiation and arbitration.

19a

Appendix A

agreements available to potential CLECs, not as an

unconditional right on the part of CLECs to modify their

clear obligations under earlier subsections of § 252. We read

the sections consistently, and conclude that § 252(i) is not

an implicit limit on the binding effect of the arbitration

provisions of § 252(b)(5). In this context, there is nothing

ambiguous about the terms of § 252(b)(4)(C) and (b)(5).

Global NAPs’ argument is also inconsistent with the

judicial review provisions in the TCA, for determinations

made by a state commission:

In any case in which a State commission makes a

determination under this section, any party

aggrieved by such determination may bring an

action in an appropriate Federal district court to

determine whether the agreement or statement

meets the requirements of section 251 of this title

and this section.

47 U.S.C. § 252(e)(6). If “any party aggrieved by a

determination” feels the arbitral determination is contrary to

the TCA, its remedy is through judicial review, not self-help.

In addition to our reading of the statutory sections, there

is another source of law to consider: FCC regulations

interpreting the statutory sections at issue, albeit on different

points. The FCC’s interpretation is relevant in two senses.

First, under § 252(c)(1), the DTE itself must “ensure that

such resolution and conditions meet the requirements of

section 251 of this title, including the regulations prescribed

by the Commission pursuant to section 251.” Id. § 252(c)(1).

Second, to the extent there is ambiguity in the statute, present

20a

Appendix A

here in § 252(i) but not in § 252(b)(4)(C) and (b)(5),

deference is due to the FCC’s reasonable interpretation.

Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467

U.S. 837, 843 (1984)."°

The FCC has not interpreted the statute on the precise

question before us. That is not surprising, since the issue is

one of the power of a state commission. The TCA is an

interwoven whole and the FCC’s interpretation of related

strands of the weaving is relevant, at least by analogy.

Both sides cite to the FCC’s regulation interpreting

§ 252(i), found at 47 C.F.R. § 51.809, in support of their

interpretation of the statute. The regulation, 47 C.F.R.

§ 51.809(b), provides two express limitations to a CLEC’s

opt in rights under § 252(i): an incumbent need not make

available the terms of an interconnection agreement to a

particular competitor 1) if it shows that the costs of providing

a service will be greater to the requesting competitor than it

was to the original negotiating party, or 2) if it shows that

the provision of that service is technically infeasible. 47

C.F.R. § 51.809(b). In addition, there is a third limitation:

47 C.F.R. § 51.809(c) states that incumbents must make terms

of interconnection agreements available to other competitors

only “for a reasonable time” after their approval by the state

commission. —

10. The FCC is explicitly granted rulemaking authority under

the TCA, 47 U.S.C. § 201(b), and the Supreme Court has held that

this includes rulemaking power for §§ 251 and 252, without being

limited to interstate and foreign matters. AT & T Corp. v. lowa Utils.

Bd., 525 U.S. 366, 378 (1999).

21a

Appendix A

The FCC regulation 47 C.F.R. § 51.809 itself rejects

Global NAPs’ premise that § 252(i) grants an unconditional

right to CLECs to adopt the terms of any interconnection

agreement the ILEC has with another CLEC. The obligation

of ILECs to make those agreements available to other CLECs

is itself subject to conditions: comparable-cost, technical-

feasibility, and the reasonable-time restrictions are three such

conditions contemplated by the regulation.''

The reasonable-time requirement under 47 C.F.R. §

51.809(c) is particularly relevant. Here, after all, the DTE

has said it might have reached a different outcome if, during

the pendency of an arbitration, Global NAPs had sought to

withdraw its request for arbitration in favor of exercising

whatever opt in rights it had. The DTE held only that once it

had concluded its arbitration and issued its order, Global

NAPs was not free to enter into an opt in agreement in lieu

of accepting arbitrated terms and incorporating them into its

agreement. The DTE’s position is entirely consistent with

the FCC regulation’s reasonable-time requirement.

We also consider the parties’ arguments based on the

FCC’s Local Competition Order, which embodies the FCC’s

initial interpretative rulemaking implementing the TCA after

its passage in 1996, as support for its interpretation of the

statute. See 11 F.C.C.R. 15499 (1996). Global NAPs attempts

to argue that while FCC arbitrations are binding on both

11. The reasoning provided for our reading of the statute above,

consistent with the entirety of § 252, adequately dispels Global NAPs’

argument that the limitations on § 252(i) promulgated by the FCC in

§ 51.809 are the only permissible limitations that could apply to that

subsection.

22a

Appendix A

parties, 47 C.F.R. § 51.807(h), the Local Competition Order

demonstrates that arbitrations before state agencies under

§ 252(b) are only binding on incumbents. It makes a sort of

negative pregnant argument from the FCC’s Local

Competition Order {| 1293, which states:

Absent mutual agreement to different terms, the

decision reached through arbitration is binding.

We conclude that it would be inconsistent with

the 1996 Act to ... permit incumbent LECs to

not be bound by an arbitrated determination. We

also believe that, although competing carriers do

not have an affirmative duty to enter into

agreements under section 252, a requesting carrier

might face penalties if, by refusing to enter into

an arbitrated agreement, that carrier is deemed to

have failed to negotiate in good faith.

11 F.C.C.R. at 16131. Global NAPs contends that this renders

the arbitration provision a one-way ratchet: incumbents are

bound by the arbitration decision, but competitors are not.

We disagree. The Order does not say that competitors are

not required to accept the terms of an arbitration order. Rather

it says that competitors are not required “to enter into

agreements under section 252,” and this is clearly correct.

The law mandates that an incumbent must enter into an

interconnection agreement under the requisite conditions, and

the competitor need not enter into an agreement even if the

incumbent so desires. It says nothing about the obligations

of a competitor that is subject to the terms of a binding

arbitration order.

23a

Appendix A

Significantly, the Local Competition Order does not state

that competitors have a right to use § 251(i) to avoid their

obligations under a binding arbitration order. Properly read

the Order refers to the admitted binding effect in FCC

arbitrations, but says nothing about state arbitrations. Further,

the FCC regulation’s explicit statement of the binding effect

on both parties supports the DTE’s position. See 47 C.F.R.

§ 51.807(h).

Global NAPs then makes another argument based on lack

of symmetry as to most favored nation clauses. Global NAPs

cites to Local Competition Order § 1316, as well as the Tenth

Circuit’s decision in U.S. West Communications, Inc. v. Sprint

Communications Co., 275 F.3d 1241 (10th Cir.2002), to

support its interpretation of § 252(i). Neither is helpful to

Global NAPs’ position. Paragraph 1316 of the Local

Competition Order states:

We further conclude that section 252(1) entitles

all parties with interconnection agreements to

“most favored nation” status regardless of whether

they include “most favored nation” clauses in their

agreements. Congress’s command under section

252(i) ... means that any requesting carrier may

avail itself of more advantageous terms and

conditions subsequently negotiated by any other

carrier for the same individual interconnection,

service, or element once the subsequent agreement

is filed with, and approved by, the state

commission.

11 F.C.C.R. at 16139-40, 1996 WL 452885 (emphasis added).

24a

Appendix A

Paragraph 1316’s “most favored nation” language deals with

an issue not presented here: the ability of a party to an existing

interconnection agreement to adopt the terms of another

carrier’s agreement that is subsequently approved by a state

commission. The DTE’s decision said nothing about Global

NAPs’ § 252(i) rights to adopt terms in subsequently

approved agreements, nor does our decision here do so.

Global NAPs’ reliance on U.S. West suffers from a similar

problem. The question that court faced was whether the state

commission acting as arbitrator properly interpreted § 252(1)

to allow a competitor to amend its interconnection agreement

to take advantage of an incumbent's tariffs, as opposed merely

to an element in another competitors’ approved

interconnection agreement, that are more favorable than the

prices in its agreement. U.S. West, 275 F.3d at 1249. The

case did not say that a CLEC subject to a binding arbitration

order can use § 252(i) to avoid the terms of that order and

adopt completely the terms of a previously available

agreement.

Global NAPs makes a final, policy-based argument that

reading § 252(i) to prevent it from opting into the Sprint

agreement post-arbitration is both anti-competitive and

discriminatory, and thus at odds with the purpose of the TCA.

If what Global NAPs alleges were true, namely that the terms

of the underlying arbitration order are either contrary to law

or unduly burdensome on Global NAPs (or both), the statute

provides Global NAPs with a remedy—direct review of the

terms of the arbitration order in district court. 47 U.S.C.

§ 252(e)(6). This is the remedy Congress provided.

Accordingly, we affirm. Costs are awarded to Verizon.

25a

APPENDIX B — MEMORANDUM OF DECISION OF

THE UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF MASSACHUSETTS

DATED MAY 12, 2004

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

CIVIL ACTION NO. 03-10437-RWZ-11

CONSOLIDATED WITH 02-12489-RWZ-44

GLOBAL NAPS, INC.

VERIZON NEW ENGLAND INC. d/b/a VERIZON

MASSACHUSETTS, et al.

MEMORANDUM OF DECISION

May 12, 2004

ZOBEL, D.J.

Until the Telecommunications Act of 1996 (the “Act’),

47 U.S.C. § 101, et seqg., was passed, local telephone service

was provided by one company throughout a given region.

The Act promotes competition by encouraging and

facilitating the entry of new telecommunications carriers into

local service markets. It requires incumbent local exchange

carriers (““ILECs”) to share their networks with competing

local exchange carriers (“CLECs”) upon request, and to

negotiate interconnection agreements in good faith.

An entering CLEC can choose to opt into an existing

26a

Appendix B

agreement between an ILEC and a CLEC, or it can negotiate

its own agreement with the ILEC. 47 U.S.C. § 252(1),

§ 251(a)(1). Where negotiation is unsuccessful, either party

may request that a state commission arbitrate the disputed

terms. 47 U.S.C. § 252(a)(2) and (b). The negotiated or

arbitrated agreement must then be submitted to the state

commission for approval. 47 U.S.C. § 252(e)(1). The state

commission may reject the agreement only if it fails to satisfy

47 U.S.C. §§ 251 and 252(d). 47 U.S.C. § 252(e)(2).

Global NAPS, Inc. (“Global”), a CLEC, entered into

negotiations with Verizon New England, Inc. (“Verizon”)

concerning the terms of an interconnection agreement. On

July 30, 2002, Global petitioned the Massachusetts

Department of Telecommunications and Energy (“DTE”) for

arbitration of the disputed terms. On December 12, 2002,

DTE ordered the parties to incorporate its findings into a

final interconnection agreement to be filed with DTE within

21 days, or by January 2, 2003. Both parties, thereafter,

moved to extend the time to finalize the language of the

agreement.

On December 30, 2002, Global filed suit in this Court

against Verizon, DTE, and various commissioners, seeking

a declaration that DTE’s December 12, 2002. arbitration order

‘s unlawful and enjoining defendants from enforcing it (Civil

Action No. 02-12489-RWZ). A few weeks later, Global

informed DTE that it would adopt the terms of another

interconnection agreement between Verizon and Sprint

Communications L.P. (“Sprint Agreement”), which existed

before Global entered into the arbitration, instead of

finalizing the arbitrated agreement. The next day, Verizon

27a

Appendix B

filed a Motion for Approval of Final Arbitration Agreement

or, in the Alternative, for Clarification, in the DTE

proceeding. Global opposed.

On February 19, 2003, DTE rejected Global’s proposal

absent Verizon’s consent. DTE determined that 47 U.S.C.

§ 252(i) does not allow a CLEC to avoid an arbitrated

agreement by opting into a more favorable agreement for

the following reasons: (1) DTE’s arbitrated decisions are final

and binding on both parties, and (2) public policy dictates

the arbitrated agreement be upheld to provide incentive for

the CLECs to negotiate in good faith and to conserve

administrative resources. With specific reference to this case, .

it determined that the incorporation of Section 252(1) into

the arbitrated agreement does not allow Global to opt into

another agreement at any time. DTE approved Verizon’s

agreement, which incorporated the terms of the arbitration,

and directed the parties to sign the approved arbitration

agreement within seven days.

Global then filed the present suit on March 6, 2003,

against Verizon, DTE and various commissioners, contesting

DTE’s February 19, 2003, order. More specifically, Global

seeks to set aside the order and opt into the Sprint Agreement.

This action was consolidated with Civil Action No.

02-12489-RWZ. All parties have moved for summary

judgment. Global contends that DTE erred by insisting on

the finality of its arbitration award and in its interpretation

of the Act. Both Verizon and DTE argue that the February

19, 2003 order is entirely consistent with the Act. The parties

agree that jurisdiction is proper under 47 U.S.C. § 252(e)(6)

and 28 U.S.C. § 1331.

28a

Appendix B

Global asserts that under 47 U.S.C. § 252(i), it has a

right to adopt the Sprint Agreement at any time. That section

provides:

A local exchange carrier shall make available any

interconnection, service, or network element

provided under an agreement approved under this

section to which it is a party to any other

requesting telecommunications carrier upon the

same terms and conditions as those provided in

the agreement.

On its face, Section 252(i) says nothing about temporal limits

or the inability of a CLEC to adopt a pre-existing agreement

instead of an arbitrated one. However, 47 C.F.R. §51.809(c)

provides that individual interconnection arrangements shall

remain available to CLECs “for a reasonable period of time

after the approved agreement is available for public

inspection.” Global protests that DTE did not rely on the

passage of a reasonable period of time, and it is not clear

that the time had, in fact, run The argument mixes apples

and oranges. DTE clearly held that Global’s choice was

curtailed not by the expiration of time, but by its decision to

arbitrate:

As Verizon points out, the Sprint Agreement was

available to [Global] for adoption before [Global]

filed its petition for arbitration and, at any point

prior to the issuance of our final Arbitration Order,

[Global] could have chosen to adopt the Sprint

Agreement. But once our final Arbitration Order

was issued, the adoption process under § 252(i)

29a

Appendix B

Ss SS ett

was not a lawful option in order to comply with

the arbitrated decision.

(Global’s Appendix Tab | at 13-14). That is a reasonable

and correct interpretation of the statute. See Southern New

England Telephone Co. v. Conn. Dept. of Public Utility Co.,

285 F. Supp. 2d 252, 254 (D. Conn. 2003) (“An entering

CLEC can either opt into an existing interconnection

agreement between the [incumbent] LEC and another CLEC,

or it can negotiate [and arbitrate] its own interconnection

agreement.”) (emphasis added).

Global further attacks DTE’s strict insistence that a

CLEC’s choice of one process forecloses another one. It

contends that “[bJoth by its terms and its intended effect,

Section 252(i) assures that regardless of the outcome of any

particular negotiation or arbitration, all CLECs remain on

equal footing.” (Global Mem. at 15). Therefore, Global

concludes that under § 252(i), “if an arbitration results in

unfavorable terms for the arbitrating CLEC, it can adopt its

competitor’s terms.” (Global Reply at 9). Global’s

interpretation of the terms and the intended effect of Section

252(i) is far too broad. Section 252(i) does not guarantee

that all CLECs will obtain comparable terms in their

interconnection agreements; that purported goal is

inconsistent with the goal of the Act, which is to promote

competition among the carriers. Section 252(i) merely

provides CLECs with the opportunity to opt into an existing

agreement - an opportunity that Global did not take.

Global next asserts that Section 252(i) allows a CLEC

to amend its interconnection agreement to include the more

30a

Appendix B

favorable terms of another agreement. However, it fails to

note that it is not a party to the other agreement and cannot,

therefore, force an amendment thereto. Instead, Global is

attempting to avoid the agreement it arbitrated by opting into

another one an altogether different proposition, which is not

discussed in the language of Section 252(i).'

Global also states that a CLEC, unlike an ILEC, is not

obligated to accept the arbitrated agreement. In this it is

supported by the asymmetrical nature of the Act which

imposes obligations on the ILECs only. However, both Global

and Verizon cite to the Federal Communications

Commission’s (“FCC”) Local Competition Order, which

states that:

We reject SBC’s suggestion that an arbitrated

agreement is not binding on the parties. Absent

mutual agreement to different terms, the decision

reached through arbitration is binding. . . . We also

believe that, although competing providers do not

have an affirmative duty to enter into agreements

under Section 252, a requesting carrier might face

penalties if, by refusing to enter into an arbitrated

agreement, that carrier is deemed to have failed

to negotiate in good faith. Such penalties should

serve as a disincentive for requesting carriers to

force an incumbent LEC to expand [sic] resources

in arbitration if the requesting carrier does not

intend to abide by the arbitrated decision.

1. Because Global is not a party to the arbitrated agreement,

there is no need to address DTE’s statement concerning Global’s

inability to void an existing contract in favor of a better contract.

Sonn ate ARI RRL PATER M ER A ENE ARTO REGO acta ER ENN NE STR HRA NE

31a

Appendix B

(Global’s Appendix Tab 4 at §] 1293). The FCC clearly states

that the arbitration order is binding on both parties.

Furthermore, under Section 252(b)(5), Global’s refusal to

cooperate with the arbitrator’s order constitutes a failure to

negotiate in good faith. See 47 U.S.C. § 252(b)(5) (“The

refusal of any other party to the negotiation. to cooperate

with the State commission in carrying out its function as an

arbitrator ... shall be considered a failure to negotiate in

good faith.”). Therefore, enforcement of the arbitration order

is an entirely appropriate penalty and serves as a disincentive

for a CLEC to force an ILEC to arbitrate an agreement while

reserving the right to withdraw if it does not like the outcome.

Finally, DTE correctly ruled that permitting Global to

ignore its arbitration decision would waste DTE’s limited

resources and impose an unnecessary burden on Verizon.

Global asserts that resources would be saved by allowing it

to adopt the Sprint Agreement now instead of having to

appeal the arbitration order. However, DTE has already

expended resources with the arbitration. Global’s statement

that “[r]esources are not wasted in arbitration even though

some of the contract terms established through arbitration

may never be used” is completely untenable (Global Reply

at 9). Global’s final argument that “there is no realistic basis

for any concern that CLECs will waste DTE and Verizon

resources with unnecessary arbitrations” is belied by this very

suit. (Global Mem. at 20). Insofar as Global is contending

that the arbitration order is discriminatory, it has a remedy

in the suit concerning the merits of the order.

32a

Appendix B

s Motion for Summary Judgment

Accordingly, Global’

n and DTE are

is DENIED and the motions by Verizo

ALLOWED.

May 12, 2004

s/ Rya W. Zobel

UNITED STATES DISTRICT JUDGE

33a

APPENDIX C — ORDER OF THE COMMONWEALTH

OF MASSACHUSETTS DEPARTMENT OF TELE-

COMMUNICATIONS AND ENERGY ON VERIZON

NEW ENGLAND. INC. D/B/A VERIZON

MASSACHUSETTS’ MOTION FOR APPROVAL

OF FINAL ARBITRATION AGREEMENT OR, IN

THE ALTERNATIVE FOR CLARIFICATION

DATED FEBRUARY 19, 2003

THE COMMONWEALTH OF MASSACHUSETTS

DEPARTMENT OF TELECOMMUNICATIONS

AND ENERGY

D.T.E. 02-45 February 19, 2003

Petition of Global NAPs, Inc., pursuant to Section 252(b) of

the Telecommunications Act of 1996, for arbitration to

establish an interconnection agreement with Verizon

New England, Inc. d/b/a Verizon Massachusetts f/k/a

New England Telephone & Telegraph Co. d/b/a Bell Atlantic-

Massachusetts.

ORDER ON VERIZON NEW ENGLAND, INC.

d/b/a VERIZON MASSACHUSETTS’ MOTION

FOR APPROVAL OF FINAL ARBITRATION

AGREEMENT OR, IN THE ALTERNATIVE,

FOR CLARIFICATION

I. INTRODUCTION

Pursuant to the Telecommunications Act of 1996, 47 U.S.C.

§ 252 (“Act”),' the Department of Telecommunications and

1. Section 252(b) of the Act permits a carrier to petition a state

commission to arbitrate any issues left unresolved after voluntary

negotiations between the carriers have occurred. 47 U.S.C.

§252(b)(1).

34a

Appendix C

Energy (“Department”) issued on December 12, 2002 its

Arbitration Order (“Arbitration Order”) making findings

necessary to finalize an interconnection agreement between

Global NAPS, Inc. (“GNAPs”) and Verizon New England,

Inc. d/b/a Verizon-Massachusetts (“Verizon”) (collectively,

“Parties”). In its Arbitration Order, at 77, the Department

directed the Parties to incorporate its findings into a final

interconnection agreement “setting forth both the negotiated

terms and arbitrated terms and conditions, to be filed with

the Department pursuant to § 252(e)(1) of the Act, within 21

days,” or by January 2, 2003. On December 19, 2002, the

Parties jointly moved the Department to extend the

compliance filing deadline to January 17, 2003. The

Department granted the Parties’ extension request on

December 23, 2002.

On January 16, 2003, GNAPs informed the Department

that, pursuant to § 251(i) of the Act, it intended to opt-into

another contract, namely to adopt the terms of the contract

between Verizon and Sprint Communications Company, L.P

(“Sprint Agreement”). On January 17, 2003, Verizon filed

its Motion for Approval of Final Arbitration Agreement or,

in the Alternative, For Clarification (“Motion”). Attached as

Exhibit A to its Motion, Verizon provides the Department

with, and seeks approval of, contract language that it alleges

conforms to the Arbitration Order. On January 23, 2003,

GNAPs filed its opposition to Verizon’s Motion

(“Opposition”).

2. Section 252(i) of the Act provides that a “local exchange

carrier shal! make available any interconnection, service, or network

element provided under an agreement approved under this section to

which it is a party to any other requesting telecommunications carrier

upon the same terms and conditions as those provided in the

agreement.”

35a

Appendix C

II. POSITIONS OF THE PARTIES

A. VERIZON

Verizon contends that GNAPs first informed Verizon that

it intended to adopt the Sprint Agreement, rather than finalize

the contract language in accordance with the Arbitration

Order, on or about January 8, 2003 (Motion at 3-4). Verizon

states that it informed GNAPs that such adoption was

inappropriate, and forwarded to GNAPs contract language

that, according to Verizon, conforms to the Arbitration Order

(id. at 4).

Verizon maintains that, despite its request to do so,

GNAPs failed to provide any comments on the contract

language; instead, Verizon states, GNAPs forwarded Verizon

a letter, dated January 14, 2003, purportedly seeking

clarification on issues already addressed by the Arbitration

Order (Motion at 4). Thereafter, on January 16, 2003, Verizon

notes, GNAPs informed the Department that it intended to

adopt the Sprint Agreement ¢d.). GNAPs’ conduct; argues

Verizon, clearly demonstrates a refusal to comply with the

Department’s Arbitration Order and to fulfill its obligations

to engage in good faith negotiations (Motion at 4).

Additionally, Verizon alleges that the sole reason GNAPs

seeks to adopt the Sprint Agreement is to avoid the

Department’s rulings in the Arbitration Order, but, argues

Verizon, use of the § 252(i) adoption process for this purpose

is improper (id. at 5). Verizon notes that GNAPs has appealed

the Arbitration Order to both the Supreme Judicial Court and

the United States District Court, and urges the Department

not to permit GNAPs’ additional collateral attack on the

36a

Appendix C

Arbitration Order through adoption of the Sprint Agreement

(id. ).

Verizon also argues that GNAPs’ conduct is inconsistent

with its obligations under the Act (Motion at 5). Verizon

contends that the Federal Communications Commission

(“FCC”) made clear that § 252 arbitration decisions are

binding and that carriers that refuse to enter an arbitrated

agreement may face penalties for violating their obligation

to negotiate in good faith (id. at 5-6, citing Local Competition

Order at 4 1293 and 47 C.F.R. § 51.807(h)).

Verizon notes that the Sprint Agreement was available

for adoption by GNAPs at the time it commenced the

arbitration, but that GNAPs chose to pursue the alternate

course of arbitration (Motion at 6). As a result of GNAPs’

choice, Verizon maintains that the Department and Verizon

expended substantial resources in connection with the

arbitration (id.). Verizon argues that GNAPs’ last minute

attempt to adopt the Sprint Agreement, as well as its refusal

to comply with the Arbitration Order, constitute failure to

negotiate in good faith id., citing § 252(b)(5) of the Act‘).

3. In the Matter of Implementation of the Local Competition

Provisions in theTelecommunications Act of 1996, CC Docket No.

96-98, First Report and Order, FCC 96-325 (August 9, 1996) (“Local

Competition Order’).

4. Verizon’s Motion incorrectly cites to § 252(b)(8), which does

not exist. Section 252(b)(5) states that:

The refusal of any other party to the negotiation to

participate further in the negotiations, to cooperate with

(Cont'd)

37a

Appendix C

Verizon further contends that if the Department allows

GNAPs to ignore its decision and to adopt the Sprint

Agreement, it will establish a precedent that will encourage

future “strategic” arbitrations and the waste of the

Department’s resources, as well as those of Verizon (Motion

at 6). Verizon urges the Department not to permit GNAPs to

game the process in this way ¢d.).

Alternatively, Verizon requests through a motion for

clarification that if the Department permits GNAPs to adopt

another interconnection agreement at this late stage, it should

do so only on the condition that the adopted agreement be

modified to reflect the Department’s legal and policy

determinations set forth in the Arbitration Order (Motion at

6). Finally, Verizon asks the Department to order GNAPs to

reimburse Verizon for its attorneys’ fees and costs incwrred

in connection with the arbitration proceeding (id.).

In sum, Verizon requests that the Department approve

Verizon’s contract language as the final binding agreement

_ between the Parties. In the alternative, if the Department

permits GNAPs to adopt another agreement, Verizon urges

the Department to clarify that the adopted agreement must

be modified to be consistent with the Arbitration Order, and

also to order that GNAPs reimburse Verizon for its attorneys’

(Cont’d)

the State commis: ion in carrying out its function as an

arbitrator, or to « sntinue to negotiate in good faith in

the presence, or with the assistance, of the State

commission shall be considered a failure to negotiate in

good faith.

38a

Appendix C

fees and costs incurred in connection with the arbitration

(Motion at 7).

B. GNAPs

GNAPs contends that the point of Verizon’s Motion iS

that, by arbitrating certain issues with Verizon pursuant to

§ 252(b) of the Act, GNAPs has waived its right to adopt

existing agreements under § 252(i)* of the Act (Opposition

at 1). This proposition, according to GNAPs, is absurd on

the merits because, argues GNAPs, nothing in § 252(i) or

any applicable rule or regulation suggests that a competitive

local exchange carrier (“CLEC”) may not opt into an existing

agreement just because it has arbitrated a new one Gd.) In

fact, GNAPs maintains, the central purpose of § 252(i) is to

prevent discrimination against CLECs by allowing any CLEC

to operate under the same terms and conditions that apply to

any other CLEC Gd. at 2). In the present case, because the

terms in the Sprint Agreement are more appropriate on the

whole than the arbitrated agreement, GNAPs states that it

has chosen to adopt the Sprint Agreement, and, GNAPs

maintains, it is entitled to do so if it so chooses Gd).

More specifically, GNAPs argues that § 252(i) permits any

CLEC to elect to operate under the same terms and conditions

contained in any effective interconnection agreement approved

by the Department (Opposition at 2). GNAPs further states that

5. In its Opposition, GNAPs incorrectly cites to § 251(i) of the

Act. Section 251(i), the Savings Provision, states that “[nJothing in

this section shall be construed to limit or otherwise affect the

Commission’s authority under section 201.”

39a

Appendix C

applicable FCC rules expand this statutory right in various ways

éd., citing 47 C.F.R. § 51.809°).

Additionally, GNAPs asserts that an adoption of an

agreement under § 252(i) takes effect immediately, and is

not subject to state review (id., citing In the Matter of Global

NAPS, Inc. Petition for Preemption of Jurisdiction of the

New Jersey Board of Public Utilities Regarding

Interconnection Dispute with Bell Atlantic-New Jersey, Inc.,

CC Docket No. 99-154, Memorandum Opinion and Order,

FCC 99-199 at n.25 (August 3, 1999)). Furthermore, GNAPs

maintains that Verizon’s contract language in the arbitrated

agreement preserves GNAPs’ right to immediately substitute

the terms of the Sprint Agreement for the terms of the

arbitrated agreement (Opposition at 3, citing Motion, Exhibit

6. Section 51.809 requires incumbent LECs to make available

without unreasonable delay to any requesting telecommunications

carrier any individual interconnection, service, or network element

arrangement contained in any agreement to which it is a party that is

approved by a state commission pursuant to § 252 of the Act, and

also prohibits incumbent LECs from limiting the availability of any

individual interconnection, service, or network element arrangement,

unless the incumbent LEC proves to the state commission that: (1)

the costs of providing a particular interconnection, service, or element

to the requesting telecommunications carrier are greater than the costs

of providing it to the telecommunications carrier that originally

negotiated the agreement; or (2) the provision of a particular

interconnection, service, or element to the requesting

telecommunications carrier is not technically feasible. Section 51.809

further requires that individual interconnection, service, or network

element arrangements remain available for use by telecommunications

carriers for a reasonable period of time after the approved agreement

is available for public inspection under § 252(f) of the Act.

40a

Appendix C

A, § 46.1’). GNAPs therefore argues that Verizon cannot

claim that GNAPs would not be entitled to choose to operate

under the SprirtA greement i@/.).

Moreover, GNAPs notes that there has been some debate

in the past over the extent to which a requesting carrier may

pick and choose from among the provisions of a complete

agreement, and over the expiration date of an agreement;

however, GNAPs maintains, because GNAPs has elected to

adopt the Sprint Agreement in its entirety, and because the

Sprint Agreement does not expire until July 2004, those

debates are irrelevant here (Opposition at 3). GNAPs notes

that Verizon has not raised these or any other ground upon

which GNAPs’ adoption of the Sprint Agreement is

inappropriate (id.).

GNAPs also argues that Verizon’s reliance on the Local

Competition Order is misplaced because the cited material

relates to the FCC’s development of the rules that apply when

the FCC acts as an arbitrator under 47 U.S.C. § 252(e)(5)

(Opposition at 5). GNAPs states that, in developing those

7. Section 46.1 states that “[t]o the extent required by Applicable

Law, each Party shall comply with Section 252(i) of the Act...“

GNAPs also references § 46.2 of the arbitrated agreement as relevant

(see Opposition at 4). Section 46.2 states:

To the extent that the exercise by GNAPS of any rights

it may have under Section 252(i) . . . results in the

rearrangement of Services by Verizon, GNAPs shall be

solely liable for all costs associated therewith, as well

as for any termination charges associated with the

termination of existing Verizon Services.

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Appendix C

rules, the FCC rejected the suggestion that an incumbent LEC

could walk way from the results of an FCC-conducted

athitraticn 4/.). GNAPs further states that the FCC expressly

noted that competing providers do not have an affirmative

duty to enter into agreements under § 252 ¢d., citing Local

Competition Order at ¥ 1293). According to GNAPs, the FCC

noted that there may be circumstances in which a refusal to

enter into an arbitrated agreement constitutes a failure to

negotiate in good faith; however, GNAPs insists that there

is no possible basis for reaching such a conclusion in the

present case(id. at 5-6).

Finally, GNAPs accuses Verizon of wanting to

discriminate against GNAPs as compared to the terms in the

Sprint Agreement by trying to force GNAPs to operate on

terms different from and less favorable than the Sprint

Agreement (Opposition at 6). Such discrimination, GNAPs

argues, is expressly forbidden under § 252(i) and, GNAPs

asserts, any lack of good faith in this matter lies with Verizon

(id.).

In sum, GNAPs argues that Verizon is not entitled to

force GNAPs to waive its § 252(i) rights and operate under a

less favorable agreement than the Sprint Agreement

(Opposition at 6). Even if Verizon assumed that the arbitrated

agreement is binding, GNAPs alleges that § 46 of that

agreement expressly preserves GNAPs’ right to adopt another

agreement, and Verizon therefore has no right to prevent

GNAPs from adopting the Sprint Agreement (id.). GNAPs

urges the Department to affirm GNAPs’ right under § 252(1)

to adopt and operate under the Sprint Agreement for the

remainder of that agreement’s term ¢@d. at 6-7).

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Appendix C

IV. ANALYSIS AND FINDINGS

GNAPs contends that, regardless of the fact that it has

arbitrated a new agreement, nothing prevents it from adopting

another existing agreement (Opposition at 1). In other words,

GNAPs would have us find that competing providers have

an unequivocal right under § 252(i) to adopt a more favorable

agreement. In effect, under GNAPs’ view, § 252(i) grants

GNAPs, and any other CLEC, an unconditional right to avoid

obligations under a statearbitrated agreement and to enter

into another agreement of its choosing instead. For the

reasons discussed below, we determine that such a conclusion

is at odds with Department precedent and policy, and with

the Act.

First, when the Department renders a decision, that

decision has the force of law. Stated differently, the

Department’s decision resolving the arbitrated issues is final

and binding on both the parties to the arbitration. A final

arbitration order may not be simply avoided by a party for

different or more favorable terms, absent mutual agreement

by the parties. In the present case, the Department’s

Arbitration Order, at 77, directed, in no uncertain terms, that

Verizon and GNAPs incorporate the Department’s

determinations into a final agreement. The Department

provided no alternatives to that directive. We find that

GNAPs’ January 16, 2003 letter, informing the Department

of its intent to adopt the Sprint Agreement, fails to meet its

obligations under the Arbitration Order. GNAPs’

characterization in its January 16, 2002 letter, that the

“agreed-upon schedule in this case, (as modified by the Joint

Motion for Extension of Time), requires the parties to file a

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Appendix C

contract governing the terms and conditions of <xchanging

traffic between them on or before January 17, 2003,” grossly

mischaracterizes the clear directive in the Arbitration Order

to file an agreement consistent with our findings therein.

Simply put, GNAPs has failed to comply with the

Department’s Arbitration Order. *®

Second, the Department has recognized on numerous

occasions that the Act and FCC regulations provide for

binding arbitration in the event negotiations cannot be

concluded within a specified time, upon petition to the state

public utility commission by either party to the negotiation.

See, e.g., Consolidated Arbitrations, D.P.U. 96-73/74, 96-75,

86-80/81, 96-83, 96-94 - Phase 1 Order at 1-2 (November 8,

1996); Phase 2 Order at 1-2 (December 3, 1996); Phase 3 |

Order at 1-2 (December 4, 1996);-Phase 4 Order at 1-2

(December 4, 1996). The Department has conducted all

arbitrations under § 252 with the full intent that its decisions

were binding on both parties. While we agree with GNAPs

that the rules set forth in the Local Competition Order apply

specifically to situations where the FCC conducts the

arbitration, we find the FCC’s rules instructive, as well as

consistent with our requirement that arbitrations are binding

on both parties to the arbitration.

8. On December 30, 2002, GNAPs filed, pursuant to § 252(e)(6)

of the Act, a complaint with the United States District Court for review

of the Department’s Arbitration Order. On the same day, GNAPs also

filed, pursuant to G.L. c. 25 § 5, an appeal of the Arbitration Order

to the Supreme Judicial Court. In both its complaint and appeal,

GNAPs alleges that the Arbitration Order violates federal and/or state

law. GNAPs did not seek a stay of the Department’s Arbitration Order

pending its complaint or appeal. Thus, the Arbitration Order remains

in effect.

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Appendix C

We find that GNAPs misreads the FCC’s statement in

the Lucal Competition Order, at 4 1293, that “competing

carriers do not have an affirmative duty to enter in to

agreements under section 252,” as somehow granting GNAPs

the right to refuse to enter into an arbitrated agreement so

long as such refusal does not constitute a failure to negotiate

in good faith see Opposition at 5-6).2 The Department

disagrees with GNAPs’ interpretation. The more appropriate

reading is that § 252 of the Act affords competing carriers

the choice between purchasing services through an

incumbent’s tariff, negotiating an agreement, or arbitrating

an agreement with the incumbent. On the other hand,

incumbent LECs may not force a CLEC to purchase from its

tariff, but must enter into an interconnection agreement if

the CLEC requests to do so, either by negotiating or

arbitration. This reading is more consistent with the Act and

FCC’s rules. GNAPs’ interpretation would allow a carrier to

choose arbitration over negotiation, and then adopt another

carrier’s negotiated agreement if it does not like the results

of the arbitration that its own choice triggered.

Even assuming that § 252 does not impose on CLECs

an affirmative duty to enter into agreements, the FCC has

clearly imposed such an obligation when the FCC conducts

an arbitration proceeding. Specifically, 47 C.F.R. § 51.807(h)

states that “[a]bsent mutual consent of the parties to change

9. The FCC stated that “[w]e also believe that, although

competing providers do not have an affirmative duty to enter into

agreements under 252, a requesting carrier might face penalties if,

by refusing to enter into an arbitrated agreement, that carrier is

deemed to have failed to negotiate in good faith.” Local Competition

Order at § 1293.

45a

Appendix C

any terms and conditions adopted by the arbitrator, the

decision of the arbitrator shall be binding on the parties.” As

noted above, the Department imposes a similar obligation

when it conducts arbitrations pursuant to the Act. In fact, the

FCC recognized a state’s right to impose such an obligation. ~

More precisely, the FCC stated that its rules may “offer

guidance the states may, at their discretion, wish to consider

in implementing their own mediation and arbitration

stancerdis. ‘Local Competition Order at 4 1283.'° Consistent

with FCC rules, the Department has since it began arbitrating

contracts in 1996 and continues to require that its decisions

reached through arbitration are binding on the parties.

Additionally, we find GNAPs’ interpretation of § 46.1

of the arbitrated agreement to be incorrect. GNAPs would

have us conclude that it has the right to void an existing

binding contract and enter into a new, and more favorabie

contract, at any point. Such a conclusion is at odds with the

definition of a contract. A contract binds both parties -- a

contract that permits one party absolute discretion to void

the contract and to enter into another contract of its choosing

is no contract at all. Under GNAPs’ interpretation of § 252(i)

of the Act and §46.1 of the arbitrated agreement, nothing

prevents GNAPs from voiding and adopting a more favorable

contract, and from doing so repeatedly as soon as it discovers

a more favorable agreement to adopt. Such a result is

inconsistent with the Act’s requirement that carriers negotiate

10. Regardless of what the FCC rules state for FCC-conducted

arbitrations, we note that the FCC rules are not binding on the

Department. It is the Department’s own arbitration standards, which

have been applied consistently since the passage of the Act, that are

relevant here.

46a

Appendix C

in good faith. Accordingly, we find GNAPs’ argument to be

without merit.

Similarly, we are not convinced by GNAPs’ claim that

the purpose of § 252(i) -- to prevent discrimination against

CLECs by allowing any CLEC to operate under the same

terms and conditions that apply to any other CLEC --

somehow entitles GNAPs to adopt the Sprint Agreement in

lieu of finalizing the arbitrated agreement. The § 252(1)

adoption process permits a C LEC, during the negotiation

process, to adopt another carrier’s contract, not to do so after

a decision has been reached through arbitration. The § 252(1)

adoption process also allows a CLEC to avoid the costs and

delay associated with negotiating its own contract. In the

present case, we find that GNAPs’ invocation of the § 252(i)

adoption process is merely an attempt to avoid the

Department's rulings in the Arbitration Order, and we agree

with Verizon that such use is improper. The § 252(i) adoption

process is not a loophole to evade the effectiveness of an

arbitrated decision. Accordingly, we reject GNAPs’ attempted

adoption of the Sprint Agreement as somehow satisfying its

obligations under our Arbitration Order.

We are also unpersuaded by GNAPs’ claim of

discrimination. Once again, we reiterate that the decision

reached through arbitration is binding and the directives

contained 1 the Arbitration Order are clear and enforceable.

As such, we will not accept GNAPs’ attempt to adopt the

Sprint Agreement as compliance.

Third, public policy reasons exist which dictate that

decisions reached through arbitration are binding on both

47a

Appendix C

parties. To begin, permitting either party to an arbitration

the ability to ignore our final decision undermines the

arbitration process. We agree with Verizon that if GNAPs is

permitted to ignore the Arbitration Order, it would establish

precedent that encourages “strategic” arbitrations and permits

carriers to game the system. For instance, without binding

arbitrations, a carrier would have no incentive to negotiate

in good faith as required by § 252(b)(5) because, if the carrier

does not obtain the terms it desires through negotiations, the

carrier could arbitrate for its desired result. If the desired

result is not achieved through arbitration, the carrier can

simply adopt another carrier’s agreement that is more

consistent with its desired result and, thus, be no worse off

than at the beginning of the arbitration process. We will not

permit such a result. Finally, the Department invests

significant time, effort, and resources to arbitrate and render

arbitration decisions. Permitting GNAPs to adopt another

agreement in lieu of the decision reached through arbitration

would result in a waste of the Department’s limited resources,

as well as an unnecessary burden on Verizon. That result is

contrary to the public interest.

As noted above, we find that GNAPs’ proffer of the

Sprint Agreement fails to comply with our directives. As

Verizon points out, the Sprint Agreement was available to

GNAPs for adoption before GNAPs filed its petition for

arbitration and, at any point prior to the issuance of our final

Arbitration Order, GNAPs could have chosen to adopt the

Sprint Agreement. But, once our final Arbitration Order was

issued, the adoption process under § 252(i) was not a lawful

option in order to comply with the arbitrated decision.

Verizon, on the other hand, has complied with our directive

48a

Appendix C

to incorporate our determinations into a final agreement. See

Motion, Exhibit A. We have reviewed the agreement

submitted by Verizon and find that it complies with our

directives in the Arbitration Order. Accordingly, we grant

Verizon’s Motion and hereby approve the final arbitration

agreement.'' We direct the parties to sign the approved

arbitration agreement and to submit a copy to the Department

within seven (7) days of this Order.

In conclusion, we remind the Parties that

§ 252(b)(5) of the Act provides that:

The refusal of any other party to the negotiation

to participate further in the negotiations, to

cooperate with the State commission in carrying

out its function as an arbitrator, or to continue to

negotiate in good faith in the presence, or with

the assistance, of the State commission shall be

considered a failure to negotiate in good faith.

We caution GNAPs that GNAPs’ failure to sign the

Department-approved arbitration agreement, as directed

herein, will be deemed a refusal to cooperate with the

Department in carrying out its function as arbitrator, and thus,

shall be considered a failure to negotiate in good faith, as

well as a violation of a lawfully-entered Department order.

See G.L. c. 159, §§ 39, 40.

11. Because we grant Verizon’s Motion for approval of the final

arbitration agreement, we do not reach the merits of Verizon’s request,

in the alternative, for clarification.

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Appendix C

V. ORDER

After due consideration, it is

ORDERED. That the issues under consideration in this

Order be determined as set forth in this Order; and it is

FURTHER ORDERED: That Verizon’s Motion for

Approval of Final Arbitration Agreement or, in the

Alternative, For Clarification, is granted; and it is

FURTHER ORDERED. That the Final Arbitration

Agreement submitted to the Department as Exhibit A in

Verizon’s Motion is hereby approved;

FURTHER ORDERED. That the Parties sign and submit

a copy of the executed Final Arbitration Agreement to the

Department within seven (7) days of the date herein.

By Order of the Department,

/s/

Paul B. Vasington, Chairman

/s/

James Connelly, Commissioner

/s/

W. Robert Keating, Commissioner

/s/

Deirdre K. Manning, Commissioner

50a

APPENDIX D — RELEVANT STATUTES

AND REGULATION

U.S. Code

TITLE 47 — TELEGRAPHS, TELEPHONES, AND

RADIOTELEGRAPHS

CHAPTER 5 — WIRE OR RADIO COMMUNICATION

SUBCHAPTER II] — COMMON CARRIERS

PART Il — DEVELOPMENT OF COMPETITIVE

MARKETS

47 U.S.C. § 251. Interconnection

(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

(2) not to install network features, functions, or

capabilities that do not comply with the guidelines and

standards established pursuant to section 255 or 256 of this

title.

(b) Obligations of all local exchange carriers — Each

local exchange carrier has the following duties:

(1) Resale — The duty not to prohibit, and not to impose

unreasonable or discriminatory conditions or limitations on,

the resale of its telecommunications services.

SE ELT TC EN AT PL AE EE A TT, TN SE EE TE TT TLE TL LT OE TE TR A ES RR EE NN EE ATLL LT Remy ene TT Se Ey mem

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Appendix D

(2) Number portability — The duty to provide, to the

extent technically feasible, number portability in accordance

with requirements prescribed by the Commission.

(3) Dialing parity — The duty to provide dialing parity

to competing providers of telephone exchange service and

telephone toll service, and the duty to permit all such

providers to have nondiscriminatory access to telephone

numbers, operator services, directory assistance, and

directory listing, with no unreasonable dialing delays.

(4) Access to rights-of-way — The duty to afford access

to the poles, ducts, conduits, and rights-of-way of such carrier

to competing providers of telecommunications services on

rates, terms, and conditions that are consistent with section

224 of this title.

(5) Reciprocal compensation — The duty to establish

reciprocal compensation arrangements for the transport and

termination of telecommunications.

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 — The duty to negotiate in good

faith in accordance with section 252 of this title the particular

terms and conditions of agreements to fulfill the duties

described in paragraphs (1) through (5) of subsection (b) of

this section and this subsection. The requesting

telecommunications carrier also has the duty to negotiate in

good faith the terms and conditions of such agreements.

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Appendix D

(2) Interconnection — The duty to provide, for the

facilities and equipment of any requesting

telecommunications carrier, interconnection with the local

exchange carrier’s network —

(A) for the transmission and routing of telephone

exchange service and exchange access; ;

(B) at any technically feasible point within the carrier ’s

network;

the local exchange carrier to itself or to any subsidiary,

affiliate, or any other party to which the carrier provides

interconnection; and

(D) on rates, terms, and conditions that are just,

reasonable, and nondiscriminatory, in accordance with the

terms and conditions of the agreement and the requirements

of this section and section 252 of this title.

(3) Unbundled access — The duty to provide, to any

requesting telecommunications carrier for the provision of a

telecommunications service, nondiscriminatory access to

network elements on an unbundled basis at any technically

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

reasonable, and nondiscriminatory in accordance with the

terms and conditions of the agreement and the requirements

of this section and section 252 of this title. An incumbent

local exchange carrier shall provide such unbundled network

elements in a manner that allows requesting carriers to

combine such elements in order to provide such

telecommunications service.

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Appendix D

(4) Resale — The duty —

(A) to offer for resale at wholesale rates any

telecommunications service that the carrier provides at retail

to subscribers who are not telecommunications carriers; and

(B) not to prohibit, and not to impose unreasonable or

discriminatory conditions or limitations on, the resale of such

telecommunications service, except that a State commission

may, consistent with regulations prescribed by the

Commission under this section, prohibit a reseller that obtains

at wholesale rates a telecommunications service that is

available at retail only to a category of subscribers from

offering such service to a different category of subscribers.

(5) Notice of changes — The duty to provide reasonable

public notice of changes in the information necessary for the

transmission and routing of services using that local exchange

carrier’s facilities or networks, as well as of any other changes

that would affect the interoperability of those facilities and

networks.

(6) Collocation — The duty to provide, on rates, terms,

and conditions that are just, reasonable, and

nondiscriminatory, for physical collocation of equipment

necessary for interconnection or access to unbundled network

elements at the premises of the local exchange carrier, except

that the carrier may provide for virtual collocation if the local

exchange carrier demonstrates to the State commission that

physical collocation is not practical for technical reasons or

because of space limitations.

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Appendix D

(d) Implementation

(1) In general — Within 6 months after February 8, 1996,

the Commission shall complete all actions necessary to

establish regulations to implement the requirements of this

section.

(2) Access standards — In determining what network

elements should be made available for purposes of subsection

_ (c)(3) of this section, the Commission shall consider, at a

minimum, whether —

(A) access to such network elements as are proprietary

in nature is necessary; and

(B) the failure to provide access to such network

elements would impair the ability of the telecommunications

carrier seeking access to provide the services that it seeks to

offer.

(3) Preservation of State access regulations — In

prescribing and enforcing regulations to implement the

requirements of this section, the Commission shall not

preclude the enforcement of any regulation, order, or policy

of a State commission that —

(A) establishes access and interconnection obligations

of local exchange carriers;

(B) is consistent with the requirements of this section;

and

55a

Appendix D

requirements of this section and the purposes of this part.

(e¢) Numbering administration

(1) Commission authority and jurisdiction — The

Commission shall create or designate one or more impartial

entities to administer telecommunications numbering and to

make such numbers available on an equitable basis. The

Commission shall have exclusive jurisdiction over those

portions of the North American Numbering Plan that pertain

to the United States. Nothing in this paragraph shall preclude

the Commission from delegating to State commissions or

other entities all or any portion of such jurisdiction.

(2) Costs — The cost of _ establishing

telecommunications numbering administration arrangements

and number portability shall be borne by ll

telecommunications carriers on a competitively neutral basis

as determined by the Commission.

(3) Universal emergency telephone number — The

Commission and any agency or entity to which the

Commission has delegated authority under this subsection

shall designate 9-1-1 as the universal emergency telephone

number within the United States for reporting an emergency

to appropriate authorities and requesting assistance. The

designation shall apply to both wireline and wireless

telephone service. In making the designation, the

Commission (and any such agency or entity) shall provide

appropriate transition periods for areas in which 9-1-1 is not

in use as an emergency telephone number on October 26,

1999.

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Appendix D

(f) Exemptions, suspensions, and modifications

(1) Exemption for certain rural telephone companies

(A) Exemption — Subsection (c) of this section shall

not apply to a rural telephone company until (i) such company

has received a bona fide request for interconnection, services,

or network elements, and (ii) the State commission

determines (under subparagraph (B)) that such request is not

unduly economically burdensome, is technically feasible, and

is consistent with section 254 of this title (other than

subsections (b)(7) and (c)(1)(D) thereoi).

(B) State termination of exemption and implementation

schedule — The party making a bona fide request of a rural

telephone company for interconnection, services, or network

elements shall submit a notice of its request to the State

commission. The State commission shall conduct an inquiry

for the purpose of determining whether to terminate the

exemption under subparagraph (A). Within 120 days after

the State commission receives notice of the request, the State

commission shall terminate the exemption if the request is

not unduly economically burdensome, is technically feasible,

and is consistent with section 254 of this title (other than

subsections (b)(7) and (c)(!)(D) thereof). Upon termination

of the exemption, a State commission shall establish an

implementation schedule for compliance with the request that

is consistent in time and manner with Commission

regulations.

provided by this paragraph shall not apply with respect to a

57a

Appendix D

request under subsection (c) of this section from a cable

operator providing video programming, and seeking to

provide any telecommunications service, in the area in which

the rural telephone company provides video programming.

The limitation contained in this subparagraph shall not apply

to a rural telephone company that is providing video

programming on February 8, 1996.

(2) Suspensions and modifications for rural carriers —

A local exchange carrier 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 subsection (b) or (c) of this section to

telephone exchange service facilities specified in such

petition. The State commission shall grant such petition to

the extent that, and for such duration as, the State commission

determines that such suspension or modification —

(A) is necessary —

(i) to avoid a significant adverse economic impact on

users of telecommunications services generally;

(il) to avoid imposing a requirement that is unduly

economically burdensome; or

(iii) to avoid imposing a requirement that is technically

infeasible; and

(B) is consistent with the public interest, convenience,

and necessity — The State commission shall act upon any

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Appendix D

petition filed under this paragraph within 180 days after

receiving such petition. Pending such action, the State

commission may suspend enforcement of the requirement

or requirements to which the petition applies with respect to

the petitioning carrier or carriers.

(g) Continued enforcement of exchange access and

interconnection requirements — On and after February 8,

1996, each local exchange carrier, to the extent that it

provides wireline services, shall provide exchange access,

information access, and exchange services for such access

to interexchange carriers and information service providers

in accordance with the same equal access and

nondiscriminatory interconnection restrictions and

obligations (including receipt of compensation) that apply

to such carrier on the date immediately preceding February

8, 1996, under any court order, consent decree, or regulation,

order, or policy of the Commission, until such restrictions

and obligations are explicitly superseded by regulations

prescribed by the Commission after February 8, 1996. During

the period beginning on February 8, 1996, and until such

restrictions and obligations are so superseded, such

restrictions and obligations shall be enforceable in the same

manner as regulations of the Commission.

(h) “Incumbent local exchange carrier” defined

(1) Definition — For purposes of this section, the term

“incumbent local exchange carrier” means, with respect to

an area, the local exchange carrier that —

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Appendix D

(A) on February 8, 1996, provided telephone exchange

service in such area; and

(B)(i) on February 8, 1996, was deemed to be a member

of the exchange carrier association pursuant to section

69.601(b) of the Commission’s regulations (47 C.F.R.

§ 69.601(b)); or

(1) is a person or entity that, on or after February 8,

1996, became a successor or assign of a member described

in clause (1).

(2) Treatment of comparable carriers as incumbents —

The Commission may, by rule, provide for the treatment of a

local exchange carrier (or class or category thereof) as an

incumbent local exchange carrier for purposes of this section

if —

(A) such carrier occupies a position in che market for

telephone exchange service within an area that is comparable

to the position occupied by a carrier described in paragraph

(1);

(B) such carrier has substantially replaced an incumbent

local exchange carrier described in paragraph (1); and

convenience, and necessity and the purposes of this section.

(i) Savings provision — Nothing in this section shall

be construed to limit or otherwise affect the Commission’s

authority under section 201 of this title.

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U.S. Code

TITLE 47 — TELEGRAPHS, TELEPHONES, AND

RADIOTELEGRAPHS

CHAPTER 5 — WIRE OR RADIO COMMUNICATION

SUBCHAPTER II — COMMON CARRIERS

PART Il — DEVELOPMENT OF COMPETITIVE

MARKETS

47 U.S.C. § 252. Procedures for negotiation, arbitration, and

approval of agreements

(a) Agreements arrived at through negotiation

(1) Voluntary negotiations

Upon receiving a request for interconnection,

services, or network elements pursuant to

section 251 of this title, an incumbent local

exchange carrier may negotiate and enter into a

binding agreement with the requesting

telecommunications carrier or carriers without

regard to the standards set forth in subsections

(b) and (c) of section 251 of this title. The

agreement shall include a detailed schedule of

itemized charges for interconnection and each

service or network element included in the

agreement. The agreement, including any

interconnection agreement negotiated before

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February 8, 1996, shall be submitted to the State

commission under subsection (e) of this section.

(2) Mediation

Any party negotiating an agreement under this

section may, at any point in the negotiation, ask a

State commission to participate in the negotiation

and to mediate any differences arising in the

course of the negotiation.

(b) Agreements arrived at through compulsory

arbitration

(1) Arbitration

During the period from the 135th to the 160th

day (inclusive) after the date on which an

incumbent local exchange carrier receives a

request for negotiation under this section, the

carrier or any other party to the negotiation may

petition a State commission to arbitrate any open

issues.

(2) Duty of petitioner

(A) A party that petitions a State commission

under paragraph (1) shall, at the same time as it

submits the petition, provide the State commission

all relevant documentation concerning —

(i) the unresolved issues;

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(ii) the position of each of the parties

with respect to those issues; and

(iii) any other issue discussed and

resolved by the parties.

(B) A party petitioning a State commission

under paragraph (1) shall provide a copy of the

petition and any documentation to the other party

or parties not later than the day on which the State

commission receives the petition.

(3) Opportunity to respond

A non-petitioning party to a negotiation under

this section may respond to the other party’s

petition and provide such additional information

as it wishes within 25 days after the State

commission receives the petition.

(4) Action by State commission

(A) The State commission shall limit its

consideration of any petition under paragraph (1)

(and any response thereto) to the issues set forth

in the petition and in the response, if any, filed

under paragraph (3).

(B) The State commission may require the

petitioning party and the responding party to

provide such information as may be necessary for

the State commission to reach a decision on the

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unresolved issues. If any party refuses or fails

unreasonably to respond on a timely basis to any

reasonable request from the State commission,

then the State commission may proceed on the

basis of the best information available to it from

whatever source derived.

issue set forth in the petition and the response, if

any, by imposing appropriate conditions as

required to implement subsection (c) of this

section upon the parties to the agreement, and shall

conclude the resolution of any unresolved issues

not later than 9 months after the date on which

the local exchange carrier received the request

under this section.

(5) Refusal to negotiate

The refusal of any other party to the

negotiation to participate further in the

negotiations, to cooperate with the State

commission in carrying out its function as an

arbitrator, or to continue to negotiate in good faith

in the presence, or with the assistance, of the State

commission shall be considered a failure to

negotiate in good faith.

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In resolving by arbitration under subsection (b) of this

section any open issues and imposing conditions upon the

parties to the agreement, a State commission shall —

(1) ensure that such resolution and conditions

meet the requirements of section 251 of this title,

including the regulations prescribed by the

Commission pursuant to section 251 of this title;

(2) establish any rates for interconnection,

services, or network elements according to

subsection (d) of this section; and

(3) provide a schedule for implementation of

the terms and conditions by the parties to the

agreement.

(d) Pricing standards

(1) Interconnection and network element charges

Determinations by a State commission of the

just and reasonable rate for the interconnection

of facilities and equipment for purposes of

subsection (c)(2) of section 251 of this title, and

the just and reasonable rate for network elements

for purposes of subsection (c)(3) of such section

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Appendix D

Y (A) shall be —

(i) based on the cost (determined

without reference to a rate-of-return or

other rate-based proceeding) of

providing the interconnection or

network element (whichever is

applicable), and

(11) nondiscriminatory, and

(B) may include a reasonable profit.

(2) Charges for transport and termination of

traffic

(A) In general

For the purposes of compliance by an

incumbent local exchange carrier with section

251(b)(5) of this title, a State commission shall

not consider the terms and conditions for

reciprocal compensation to be just and reasonable

unless —

(i) such terms and conditions

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;

and

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(ii) such terms and conditions

determine such costs on the basis of a

reasonable approximation of the

additional costs of terminating such

calls.

(B) Rules of construction

This paragraph shall not be construed —

(i) to preclude arrangements that

afford the mutual recovery of costs

through the offsetting of reciprocal

obligations, including arrangements that

waive mutual recovery (such as bill-and-

keep arrangements); or

(ii) to. authorize the Commission or any

State commission to engage in any rate

regulation proceeding to establish with

particularity the additional costs of

transporting or terminating calls, or to

require carriers to maintain records with

respect to the additional costs of such

calls.

(3) Wholesale prices for telecommunications

services

For the purposes of section 251(c)(4) of this

title, a State commission shall determine

wholesale rates on the basis of retail rates charged

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Appendix D

to subscribers for the telecommunications service

requested, excluding the portion thereof

attributable to any marketing, billing, collection,

and other costs that will be avoided by the local

exchange carrier.

(e) Approval by State commission

(1) Approval required

Any interconnection agreement adopted by

negotiation or arbitration shall be submitted for

approval to the State commission. A State

commission to which an agreement is submitted

shall approve or reject the agreement, with written

findings as to any deficiencies.

(2) Grounds for rejection

The State commission may only reject —

(A) an agreement (or any portion thereof)

adopted by negotiation under subsection (a) of this

section if it finds that —

(i) the agreement (or portion thereof)

discriminates against a tele-

communications carrier not a party to

the agreement; or

(ii) the implementation of such

agreement or portion is not consistent

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Appendix D

with the public interest, convenience,

and necessity; or

(B) an agreement (or any portion thereof)

adopted by arbitration under subsection (b) of this

section if it finds that the agreement does not meet

the requirements of section 251 of this title,

including the regulations prescribed by the

Commission pursuant to section 251 of this title,

or the standards set forth in subsection (d) of this

section.

(3) Preservation of authority

Notwithstanding paragraph (2), but subject to

section 253 of this title, nothing in this section

shall prohibit a State commission. from

establishing or enforcing other requirements of

State law in its review of an agreement, including

requiring compliance with _ intrastate

telecommunications service quality standards or

requirements.

(4) Schedule for decision

If the State commission does not act to

approve or reject the agreement within 90 days

after submission by the parties of an agreement

adopted by negotiation under subsection (a) of this

section, or within 30 days after submission by the

parties of an agreement adopted by arbitration

under subsection (b) of this section, the agreement

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Appendix D

shall be deemed approved. No State court shall

have jurisdiction to review the action of a State

commission in approving or rejecting an

agreement under this section.

(5) Commission to act if Sate will not act

If a State commission fails to act to carry out

its responsibility under this section in any

proceeding or other matter under this section, then

the Commission shall issue an order preempting

the State commission’s jurisdiction of that

proceeding or matter within 90 days after being

notified (or taking notice) of such failure, and shall

assume the responsibility of the State commission

under this section with respect to the proceeding

or matter and act for the State commission.

(6) Review of State commission actions

In a case in which a State fails to act as

described in paragraph (5), the proceeding by the

Commission under such paragraph and any

judicial review of the Commission’s actions shall

be the exclusive remedies for a State commission’s

failure to act. In any case in which a State

commission makes a determination under this

section, any party aggrieved by such determination

may bring an action in an appropriate Federal

district court to determine whether the agreement

or statement meets the requirements of section 251

of this title and this section.

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Appendix D

(f) Statements of generally avatiable terms

(1) In general

A Bell operating company may prepare and

file with a State commission a statement of the

terms and conditions that such company generally

offers within that State to comply with the

requirements of section 251 of this title and the

regulations thereunder and the standards

applicable under this section.

(2) State commission review

A State commission may not approve such

statement unless such statement complies with

subsection (d) of this section and section 251 of

this title and the regulations thereunder. Except

as provided in section 253 of this title, nothing in

this section shall prohibit a State commission from

establishing or enforcing other requirements of

State law in its review of such statement, including

requiring compliance with intrastate tele-

communications service quality standards or

requirements.

(3) Schedule for review

The State commission to which a statement

is submitted shall, not later than 60 days after the

date of such submission —

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Appendix D

(A) complete the review of such

statement under paragraph (2)

(including any reconsideration thereof),

unless the submitting carrier agrees to

an extension of the period for such

review; or

(B) permit such statement to take effect.

(4) Authority to continue review

Paragraph (3) shall not preclude the State

commission from continuing to review a statement

that has been permitted to take effect under

subparagraph (B) of such paragraph or from

approving or disapproving such statement under

paragraph (2).

(5) Duty to negotiate not affected

The submission or approval of a statement

under this subsection shall not relieve a Bell

operating company of its duty to negotiate the

terms and conditions of an agreement under

section 251 of this title.

(g) Consolidation of State proceedings

Where not inconsistent with the requirements

of this chapter, a State commission may, to the

extent practical, consolidate proceedings under

sections 214(e), 251(f), 253 of this title, and this

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Appendix D

section in order to reduce administrative burdens

on telecommunications carriers, other parties to

the proceedings, and the State commission in

carrying out its responsibilities under this chapter.

(h) Filing required

A State commission shall make a copy of each

agreement approved under subsection (e) of this

section and each statement approved under

subsection (f) of this section available for public

inspection and copying within 10 days after the

agreement or statement is approved. The State

commission may charge a reasonable and

nondiscriminatory fee to the parties to the

agreement or to the party filing the statement to

cover the costs cf approving and filing such

agreement or statement.

(i) Availability to other telecommunications carriers

A local exchange carrier shall make available

any interconnection, service, or network element

provided under an agreement approved under this

section to which it is a party to any other

requesting telecommunications carrier upon the

same terms and conditions as those provided in

the agreement.

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Appendix D

(ij) “Incumbent local exchange carrier” defined

For purposes of this section, the term

“incumbent local exchange carrier” has the

meaning provided in section 251(h) of this title.

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Appendix D

CODE OF FEDERAL REGULATIONS

———

TITLE 47—TELECOMMUNICATION

CHAPTER I—FEDERAL COMMUNICATIONS

COMMISSION

SUBCHAPTER B—COMMON CARRIER SERVICES

PART 51—INTERCONNECTION

SUBPART I—PROCEDURES FOR

IMPLEMENTATION OF SECTION 252 OF THE ACT

Current through August 20, 2004; 69 FR 51753

§ 51.809 Availability of agreements to other tele-

communications carriers under section 252(i) of the Act.

(a) An incumbent LEC shall make available without

unreasonable delay to any requesting telecommunications

carrier any agreement in its entirety to which the incumbent

LEC is a party that is approved by a state commission

pursuant to section 252 of the Act, upon the same rates,

terms, and conditions as those provided in the agreement.

An incumbent LEC may not limit the availability of any

agreement only to those requesting carriers serving a

comparable class of subscribers or providing the same service

(i.e., local, access, or interexchange) as the original party to

the agreement.

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Appendix D

(b) The obligations of paragraph (a) of this section shall

not apply where the incumbent LEC proves to the state

commission that:

(1) The costs of providing a particular agreement to the

requesting telecommunications carrier are greater than the

costs oi providing it to the telecommunications carrier that

originally negotiated the agreement, or

(2) The provision of a particular agreement to the

requesting carrier is not technically feasible.

by telecommunications carriers pursuant to this section for a

reasonable period of time after the approved agreement is

available for public inspection under section 252(h) of the

Act.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.