Opposition Brief — Qwest Corp. v. MCI WORLDCOM Network Services, Inc.

(> Supreme Court, US.

No. 00-214 FILED

IN THE OCT 10 2009

SUPREME COURT OF THE UNITE STATES

: CLERK

QwEsT CORPORATION,

Petitioner,

v.

MCI TELECOMMUNICATIONS CORPORATION,

Respondents.

QWEST CORPORATION,

Petitioner,

Vv.

AT&T COMMUNICATIONS OF THE PACIFIC

NORTHWEST, INC., ef al.,

Respondents.

QWEST CORPORATION,

Petitioner,

Vv.

SPRINT COMMUNICATIONS Co. L.P., et al.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF IN OPPOSITION

CHRISTINE O. GREGOIRE

Attorney General

SHANNON EILEEN SMITH*

Assistant Attorney General

WILLIAM BERGGREN COLLINS

Sr. Assistant Attorney General

P.O. Box 40128

Olympia, WA 98504-0128

(360) 664-1192

Counsel for Washington Utilities and

Transportation Commission

*Counsel of Record

big st ,

i

TABLE OF CONTENTS

Page

Ee I hice hates cence h creiea ci on tananehiciniobaneanempanens 1

ees ctapansedenast ae

A. The Requirement for Interconnection Between

Telecommunications Companies Under the

I Ha caice vicar adienicatiiecicantrd ails simnsiinmwinche 2

B. The FCC’s Local Competition Rules and the

Iowa Utilities Board Litigation Before the

EERE CCE BEE FIR Coc ecssccscnscepesccsseppeeresevoee 5

C. The FCC’s Collocation Rules and Proceedings

SE NE 5 A sa chs er iteicintcet ecient accecantes 7

DE Fe erases rniimatindiiapicninemitierninge 9

1. Negotiations Between the Parties and

Arbitration of Unresolved Issues Before

i citciapcictannies ss telitetaclasantcccodsitencumiene 9

2. Federal Court Review of the WUTC’s

Po | RSE LO 10

REASONS FOR DENYING THE PETITION.................. 11

I. The Court Should Not Grant the Petition Regarding

the Ninth Circuit’s Decision Affirming the

Combination Requirements in the Agreements............. 11

il

A. There Is No Conflict Among Circuit

Courts of Appeal Because the Ninth Circuit’s

Decision Affirming the Combination

Requirements Does Not Implicate the

KORO PN ici cakicsctistint titonnnsesivcsomanenibegp alongs

B. There Is No Conflict Among Circuit Courts

of Appeals In Their Interpretations of the

1996 Act As It Relates to Interconnection

Agreement Provisions That Require an

Incumbent to Combine Network Elements.............

C. In Any Event, State Law Permits the WUTC

to Impose a Requirement that US West

Combine Network Elements At the Request

OE Tine COED saci si psics thcncnnsnisein ietaretanicaapitlapeints

. The Court Should Deny the Petition As to

the Ninth Circuit’s Decision to Affirm the

Provisions in the Agreements That Permit

the Competitors to Collocate Remote Switching

Units on US West’s Premises ...............ssscccssccsssscseseeees

A. There Is No Conflict Among Circuit

Courts of Appeals Because the Ninth

Circuit’s Decision Affirming the

Collocation of Remote Switching Units

Does Not Implicate the Hobbs Act................::cs000

B. The Ninth Circuit’s Decision Regarding

the Collocation of Remote Switching Units

Does Not Conflict With the Decisions of This

Court or Other Circuit Courts of Appeals...............

ill

III. The Ninth Circuit Did Not Expand the Role of

State Commissions Under the 1996 Act, Nor

Did It Disable Federal Court Review of

Agreements Or Threaten The Primacy of

oe. id chnatnuraenagnntannesonqosptnniis 21

A. The WUTC Lawfully Exercised Its

Broad Responsibilities Under the 1996 Act

and The Ninth Circuit Properly Reviewed

and Affirmed the WUTC’s Decision..................+-+. 21

B. The Ninth Circuit Did Not Dismantle the

Federal Courts’ Jurisdiction to Review

Interconnection Agreements Or Unravel the

Primacy of Federal Law...............sscscssecersessensserees 24

CONICIIUSION wisisnssidas sivas scssiccosdivecccccsscecsesnescvecsnecnneescsncess 25

APPENDIX A: Open Meeting Memorandum

prepared by WUTC Staff, March 5, 1997...........seesee la

APPENDIX B: Excerpt from Transcript of

Open Meeting before WUTC to Consider

Approval of Interconnection Agreement

Between US West and AT&T, June 25, 1997 .............. 6a

iv

TABLE OF AUTHORITIES

Cases Page

AT&T Corp. v. Iowa Utils. Bd.,

Sed Shape SN CR aidenccensseaaspinsentarinesineuatippiieinie passim

Colby v. J.C. Penney Co., Inc.,

S11 F.2d LETS CRC, TIT) sesnsccrcnsececcossessoncseses 13

Electric Lightwave, Inc. v. Utilities & Transp.

Comm'n,

123 Wn.2d 530, 869 P.2d 1045 (1994)................. 4

English v. General Elec. Co.,

OG BSB, Fa lark iisccen su tncscsvertnechdincigeiniaian 16

Fox v. Acadia State Bank,

937 F.28 1566 Cl GAs, LGBT) aa cricsnnssesescsvescccscose 13

GTE Serv. Corp. v. FCC,

205 F336 416 GI, Cit. BOG) ccccncescassesssssecvsensssse 8,17

Iowa Utils. Bd. v. Federal Communications

Comm'n,

10D F Sek SLE Te. BIOS vs csrersereciccoviesarcsecgress 6

Iowa Utils. Bd. v. Federal Communications

Comm'n,

120 F.3d 753 (8th Cir. 1997), aff'd in

part and rev'd in part sub nom.

AT&T Corp. v. Iowa Utils. Bd.,

pn BOE RL... ROR EEA Re ener nee ery 6, 10, 14

Iowa Utils. Bd. v. FCC,

219 F356 THA CO Cie, ZOU) ..-nvexescessscesecarsosesneens 7,14

MCI Telecommunications Corp. v.

US West Communications, Inc.,

204 F.3d 1262 (9th Cir. 2000) ...........cccscesseereeeres passim

Southwestern Bell Tel. Co. v. Arkansas Pub.

Serv. Comm'n,

738 F.2d 901 (1984), vacated on other

grounds 476 U.S. 1167 (1986).......seseseeseesereees 14

Southwestern Bell Tel. Co. v. Waller Creek

Communications, Inc.,

Zt Bh GIS 5 Ce. FO) mivtrivciteseeciomp eee 15

US West Communications, Inc. v.

MFS Intelenet, Inc.,

193 F.3d 1112 (9th Cir. 1999), cert. denied

120 S. Ct. 2741 (2000), pet. for reh'g denied

69 U.S.L.W. 3156 (U.S. Aug. 28, 2000)

(No. GO 1GAT) ...0.cccscesersccnsscoessccerenvoveverovensscvovsaeness 12

Statutes and Regulations

47 CBR, & SUBS)... sceccccesessccvcsessvoensyesesonsesesevenes 5

47 C.F.R. 8 SUSUSD) vccvcssvecccvctinsncccesaveesossesbssssepeooenss 6, 10, 11

47 C.F.R. § 51.315(C)-(f) ......eececcsrccrcsrcereesceccscesrsoeeos passim

AFT CBR. §S1.31G ...cccc.csccccerccccssccccessnsvcesooscsecsossoess 8, 18

28 U.S.C. §§ 2341 ef S€q...........cccscrrecceccnorsesssssssosenees 1,11

Vi

Fe en Fee adie ted skarncteninieiauitennaceliseptennmanes 12

EE Toston WE BU EOE, iScsciciiccasersessasegesssanirsionnaians 1

BF Pee be arisen pihnseigeennsinensinenigvens 5

BT Ia Aine SAA hinicss svkgp pristhinianrozevaccanepeiaianibiinines 2

WF OIE Bt Oa iatiassceksneaesivassivstcinbagasonspeninaiiene 20

BF OB FTO voscnisinccekisetessdicbcasiseanins 19

GFT IIRS BG teieiieaiestbaibaue aes passim

OF Ra ees OF Me NI dina Shicaicsn ptscinsccihspicadeiinaniosecuibanitte passim

OE Sine BAPE EEIOED sivcivtssisrsiniesunsisvhelataamrigiaaatiaias 8, 11

BT DLA S28 COPE scbhnssisnbernnesorstigueitcnionsaivns 15, 21

FT ik FD och inieseonsoninisaiessecamenisnacinghnie 21,24

BF UIs: & RS snccsninsuidicincnis anieiaseatetibascnacioel 2,9

OF TF WD eiesnnazvivsisbjentensoveseecevqugiienasauanieainaiin 21

RT EER, © BRO iisnsciesisririncscanaeesinaaibeciapens 21

BF Te WE Desdsnsorsteinsnhnerecennapanpaonmeaiaiaiainibe 3, 9, 21

47 U.S.C. § 252(€)(2M(A) eensesnensene sasnbhhagid onesie 3,5

STU BK. F Za) hisivivvsieanissdandiie asbeoenaliie 3,5

Vii

WTS Ci 3, 15,

22, 24

ATUOBC 5 PEMNM i ce iki ese aS chica 4

ATUSC 3 25200NG) oe Ns oe ee

STORE 020 er es 6

Title 80 Wash. Rev. Code ....scssentnntntntstntntnee 3

Wash. Rev. Code § 80.36.300(5)..ssssssesssesseseenee 3,4

Wash. Rev. Code § 80.36.350..ccssssssssssssccsssssssssesssseee 3

Wash. Rev. Code § 80.36.610(1) .ccccscsssssssssssesssssessene3

Federal and State Agency Materials

In the Matter of Deployment of Wireline Services

Offering Advanced Telecommunications

Capability,

14 FCC Red 4761 (1999), aff'd in part and

rev'd in part and remanded GTE Serv. Corp.

v. FCC, 205 F.3d 416 (D.C. Cir. 2000) ................ 7

In the Matter of Implementation of the Local

Competition Provisions in the Telecommuni-

cations Act of 1996,

EL BOG ROG TS49D CIS IG) icin sis sn scsi inhctiewsseves 5,19

vill

In the Matter of the Petition for Arbitration

of an Interconnection Agreement Between

AT&T Communications of the Pacific

Northwest, Inc. and GTE Northwest

Incorporated Pursuant to 47 U.S.C.

Section 252,

Docket No. UT-960307, 1998 WL 223213

CWUTC Meares 16, PIG a iisissiis ic iccisnccsdiectieateces 16

WUTC v. US West Communications, Inc., et al.,

Consolidated Docket Nos. UT-941464,

-941465, -950146, -950265, 1995 WL 735315

CORTE Bes, Ba arserietehsctasditeinisttoensivecensesnial 4

Legislative Materials

— H.R. Conf. Rep. No. 104-458, 104th Cong.,

rR ka ne LRTI a l

Regulatory Flexibility Act,

Washington Laws of 1985, ch. 450 .........cccsssseeees a

INTRODUCTION

Qwest Corporation’ asks this Court to grant its

Petition for a Writ of Certiorari to review decisions of the

Ninth Circuit Court of Appeals, in which that court affirmed

decisions of the Washington Utilities and Transportation

Commission (“WUTC”) regarding US West’s obligation to

open its local telecommunications network to new

competitors under the Telecommunications Act of 1996, |

47 US.C. §§ 151 et seg. (“1996 Act”). See MCI

Telecommunications Corp. v. US West Communications,

Inc., 204 F.3d 1262 (9th Cir. 2000). US West argues that

there are conflicts between the Ninth Circuit and two circuit

courts of appeals exercising Hobbs Act” review of orders by

the Federal Communications Commission (“FCC”).

US West also argues that the Ninth Circuit misinterpreted

and misapplied the provision in the 1996 Act that authorizes

federal court review of state commission determinations,

47 U.S.C. § 252(e)(6).

This case is not about the Hobbs Act or the

Supremacy of federal law. Rather, this case involves the

WUTC’s | straightforward implementation of the pro-

competitive policies of the 1996 Act. The WUTC is

'US West Communications, Inc., has been renamed Qwest

Corporation as a result of a merger. Like the petitioner, the Commission

will use the name “US West” to be consistent with the name used below.

28 U.S.C. §§ 2341 et seq.

*The 1996 Act is designed to “provide for a pro-competitive, de-

regulatory national policy framework designed to accelerate rapidly

charged by the 1996 Act to effect the obligations of

incumbent companies, such as US West, to interconnect their

facilities with those of competitors in the local market. There

is neither conflict among the circuit courts of appeals nor

inconsistency between the decisions of the Ninth Circuit and

this Court. The Court should deny the Petition.

STATEMENT

A. The Requirement for Interconnection

Between Telecommunications Companies

Under the 1996 Act .

This case arose out of the procedure under the 1996

Act by which incumbent local exchange telecommunications

companies (“incumbent companies”), such as US West, are

required to enter into “interconnection agreements” with their

competitors. Through these agreements, competitors may

acquire access to elements of the incumbents’

telecommunications networks so they can compete with the

incumbents in the local telephone market. 47 U.S.C.

§ 251(c)(3). This case involves three such agreements

entered into between US West and competitors MCI

Telecommunications Corporation (“MCT”), AT&T Com-

munications of the Pacific Northwest, Inc. (“AT&T”), and

Sprint Communications Company, L.P. (“Sprint”),

respectively.

Interconnection agreements must contain the

particular terms and conditions necessary for the incumbents

to fulfill their statutory duties. Jd. § 251(c)(1). Congress

assigned to state public utility commissions, like the WUTC,

the primary role in implementing the interconnection

agreements. For example, although the incumbent company

and the competitors are required to negotiate interconnection

agreements in good faith, id., if the parties are unable to

resolve all issues through negotiation, a party to the

:

3

negotiation may request the state commission to arbitrate the

open issues. Jd. § 252(b)(1).4

In addition to their role as arbitrators under the 1996

Act, state commissions must approve aii interconnection

agreements regardless of whether the agreements are reached

through negotiation or arbitration. Id. § 252(e)(1). However,

the statutory criteria the state commission must apply in its

review of ah agreement differ depending on whether the

agreement, or portion of the agreement, was reached by

n¢gotiation or arbitration. If an agreement was negotiated, a

state commission may reject it, “‘or any portion thereof,” only

if the agreement or provision discriminates against a carrier

not a party to the agreement or if the agreement or provision

is not consistent with the public interest, convenience, or

necessity. Id. § 252(e)(2)(A). On the other hand, if the

agreement or provision was arbitrated, the state commission

has somewhat wider latitude. In that situation, the state

commission may reject the agreement or provision only if “it

finds that the agreement does not meet the requirements of

section 251 [of the 1996 Act], including the regulations

prescribed by the Commission [FCC] pursuant to section

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

section.” Jd. § 252(e)(2)(B). The 1996 Act also preserved

the authority of a state commission to establish or enforce

“other requirements of State law in its review of an

agreement ... .” Id. § 252(e)(3).°

“The WUTC is authorized by the Washington state legislature to

take actions, conduct proceedings, and enter orders as permitted or

contemplated for state commissions under the 1996 Act. Wash. Rev.

Code § 80.36.610(1).

Flexibility Act, Washington Laws of 1985, ch. 450, p. 1976, codified at

several places in Title 80 Wash. Rev. Code, which authorized easy

registration of telecommunications companies seeking to operate in

Washington, and declared the state policy to Promote diversity of supply

The 1996 Act specifically preempted state court

review of a state commission action, id. § 252(e)(4), and

assigned the task of judicial of review of state commission

decisions to the United States District Court. Jd. § 252(e)(6)

(“[A]ny party aggrieved by such [state commission]

determination may bring an action in an appropriate Federal

district court to determine whether the agreement or

statement meets the requirements of section 251 and this

section.”’).

This case is the result of a challenge by US West to

the WUTC’s approval of the interconnection agreements

between US West and MCI, A&T, and Sprint, and the

subsequent review of that approval in the federal courts.

While US West’s initial challenges to the agreements were

broad-based, the issues presented to this Court involve the

relationship and status of certain FCC rules to the agreements

and the lower court decisions affirming the WUTC.

for telecommunications services. See Wash. Rev. Code §§ 80.36.300(5);

.350.

In 1994, the Washington Supreme Court removed a historical

barrier to local telephone competition by rejecting arguments that

exclusive franchise service areas in the telecommunications industry were

the law in Washington. Electric Lightwave, Inc. v. Utilities & Transp.

Comm'n, 123 Wn.2d 530, 869 P.2d 1045 (1994). The court recognized

that granting monopolies would run counter to the state policy promoting

competition. /d. at 538-39 (citing Wash. Rev. Code § 80.36.300(5)).

Foreshadowing the 1996 Act, in order to foster emerging local

competition, the WUTC entered an order: setting forth the terms and

conditions under which competitors for local exchange service will

interconnect their networks with incumbents. WUTC v. US West

Communications, Inc., et al., Consolidated Docket Nos. UT-941464,

-941465, -950146, -950265, 1995 WL 735315 (WUTC Oct. 31, 1995)

(petition for judicial review stayed, King County Superior Court, No.

96-2-08435-2SEA). In that order, the WUTC determined that the

transition to competitive markets would be accomplished largely through

access to unbundled network elements and resale of services. Jd. at *40-

41. Therefore, the WUTC exercises its role to effect the pro-competitive

policies, both under the 1996 Act and under pre-existing state law.

B. The FCC’s Local Competition Rules and

the Jowa Utilities Board Litigation Before

the Eighth Circuit and This Court

In approving an arbitrated agreement or provision, the

state commission must determine if it conforms with FCC

tules. 47 U.S.C. § 252(e)(2)(B).° Following the Passage of

the 1996 Act, the FCC promulgated regulations to implement

the local competition provisions of the Acct, including those

relating to interconnection and access to unbundled network

elements. See Jn the Matter of Implementation of the Local

Competition Provisions in the T, elecommunications Act of

1996, 11 FCC Red 15499 (1996) (“Local Competition

Order”). These regulations specified which tele-

communications “network elements” an incumbent must

make available to its competitors. A network element is a

facility or equipment used in the provision of a

telecommunications service. 47 U.S.C. § 153(29). For

example, a “switch” routes the call and is connected to the

local “loop,” which runs from a customer’s place of use to

the switch.’

In these rules, the FCC imposed at least three separate

provisioning requirements for unbundled network elements.

First, it required incumbents to provide unbundled network

elements in a manner that would allow competitors to

"However, with regard to agreements, or portions of agreements,

that are adopted by negotiation, the state commission need not apply the

FCC rules. Rather, in such Cases, the state commission may reject the

agreement, or portion thereof, only if it determines that it is not consistent

with the public interest or discriminates against a carrier not a party to the

agreement. 47 U.S.C. § 252(e)(2)(A).

"Simply speaking, a “switch” is “a mechanical, electrical or

electronic device which Opens or closes circuits, completes or breaks an

electrical path, or selects paths or circuits.” NEWTON’Ss TELECOM

DICTIONARY, 757 (15th ed. 1999). The “local loop” is the physical

connection from the customer’s premises the local exchange

company’s central office. /d. at 465.

combine the elements in order to provide a finished service,

47 C.F.R. § 51.315(a) (“finished service rule”). Second, it

prohibited incumbents from separating already-combined

network elements, unless otherwise requested by

competitors. Jd. § 51.315(b) (“no separation rule”). Finally,

the FCC required incumbents to combine network elements

at the request of competitors.

Id. § 51.315(c)-(f) (‘mandatory combination rule”). The

mandatory combination rule is a focal point of US West’s

Petition.

Numerous parties, including US West, petitioned for

judicial review of the Local Competition Order. These cases

were consolidated in the Eighth Circuit Court of Appeals.

The Eighth Circuit temporarily stayed the entire body of the

FCC’s rules, Jowa Utils. Bd. v. Federal Communications

Comm'n, 109 F.3d 418, 421 (8th Cir. 1996), and ultimately,

the Eighth Circuit stayed only selected rules but left the

finished service, no separation, and mandatory combination

rules intact. Jd. at 427 & n.8.°

In its review of the FCC’s rules, the Eighth Circuit

vacated the mandatory combination mule, 47 C.F.R. §

51.315(c)-(f). Jowa Utils. Bd. v. Federal Communications

Comm'n, 120 F.3d 753, 813 (8th Cir. 1997), aff'd in part and

rev'd in part sub nom. AT&T Corp. v. Iowa Utils. Bd., 525

U.S. 366 (1999). On rehearing, the Eighth Circuit also

vacated Rule 315(b), the no separation rule. Jd.

On January 25, 1999, this Court affirmed in part and

reversed in part the Eighth Circuit’s decision. AT&T Corp. v.

Iowa Utils. Bd., 525 U.S. 366 (1999). With respect to the

FCC’s no separation rule, the Supreme Court reversed the

Eighth Circuit’s decision that Rule 315(b) violates the Act

and reinstated that rule. AT&T Corp., 525 U.S. at 393-95.

*The Eighth Circuit stayed the FCC’s rules establishing pricing

guidelines for state commissions and the so-called “pick and choose”

rules implementing 47 U.S.C. § 252(i). Jowa Utils. Bd., 109 F.3d at 421.

The Court rejected the argument that the Act requires

competitors to combine network elements for themselves.

The Court remanded the case to the Eighth Circuit for

“proceedings consistent with” the opinion. Jd. at 397. This

Court did not rule on the mandatory combination provision in

AT&T Corporation.

On remand, the Eighth Circuit decided that the

mandatory combination rule violates the Act and vacated

Rules 315(c)-(f). Jowa Utils. Bd. vy. FCC, 219 F.3d 744, 758-

59 (8th Cir. 2000) (“Jowa Utils. Bd. IT’). Therefore, there is

no FCC requirement that incumbent companies must

combine network elements at the request of their

competitors.

. The FCC’s Collocation Rules and

Proceedings Before the D.C. Circuit

In addition to the requirements for interconnection

and access to unbundled network elements, the 1996 Act

requires incumbents to permit competitors to collocate

“equipment necessary for interconnection or access to

unbundled network elements” on the incumbents’ premises.

47 U.S.C. § 251(c\(6).° In its mules implementing the

collocation requirement, the FCC determined that

commission that physical collocation is not practical for technical reasons

or because of limited space. See 47 U.S.C. § 251(c)(6).

“necessary” equipment was equipment that is “used or

useful” for interconnection or access to unbundled network

elements. Jn the Matter of Deployment of Wireline Services

Offering Advanced Telecommunications Capability, 14 FCC

Red 4761, 4776-77, J 28 (1999) (“Collocation Order’).

Incumbent companies petitioned for review of the

Collocation Order in the United States Court of Appeals for

the District of Columbia Circuit. GTE Serv. Corp. v. FCC,

205 F.3d 416 (D.C. Cir. 2000). In its review of the

Collocation Order, the D.C. Circuit reversed the FCC’s

definition of “necessary” as “used and useful,” holding it was

overly broad for purposes of the collocation requirement set

forth in the 47 U.S.C. § 251(c)(6). Jd. at 422. The FCC’s

definition, the D.C. Circuit held, would require an incumbent

to collocate almost any piece of equipment owned by a

competitor. Jd. at 424.

The D.C. Circuit relied in part on this Court’s

decision to vacate the FCC’s definition of “necessary” for

purposes of access to unbundled network elements. Jd. at

423-24 (citing AT&T Corp., 525 U.S. at 389-90). In AT&T

Corporation, this Court determined that. the FCC, by

interpreting the word “necessary” in terms of any increase in

cost or degradation of service quality, gave competitors

essentially “blanket access” to the incumbents’ networks,

which was not what Congress had intended. AT&T Corp.,

525 U.S. at 389-90. Therefore, the Court vacated the FCC’s

unbundling rule, 47 C.F.R. § 51.319, and remanded the rule

for a more limited definition of “necessary” to be applied

when the FCC or state commissions decide which unbundled

network elements an incumbent must provide under

47 U.S.C. § 251(c)(3). Jd. at 390, 397; see also 47 U.S.C.

§ 251(d)(2).

D. Proceedings Below

1. Negotiations Between the Parties

and Arbitration of Unresolved

Issues Before the WUTC

MCI, AT&T, and Sprint each requested negotiations

with US West for interconnection under the 1996 Act. In no

case were the parties able to negotiate an entire agreement,

therefore, each competitor requested that the WUTC arbitrate

the unresolved issues pursuant to 47 U.S.C. § 252(b)(1).

To best fulfill its duty to arbitrate agreements under

the 1996 Act, the WUTC adopted “final offer” arbitration,

whereby the arbitrators resolved the disputed issues between

US West and its competitors by selecting between the

parties’ last proposals as to each unresolved issue, selecting

the proposal that was the most consistent with the

requirements of the 1996 Act, state law, and WUTC policy.

See, e.g., Pet. App. 118a. Under this approach, the parties

have the incentive to approach a middle ground. If neither

party to an agreement submitted a final offer that complied

with applicable law or policy, the arbitrator would resolve the

disputed issue in a manner to assure such compliance. Only

the disputed issues were before the arbitrators for decision.

Negotiated issues were not subject to arbitration, but were

subject to WUTC approval. 47 U.S.C. § 252(e)(1).

In each of the three agreements at issue, the WUTC

required US West to combine network elements for the

competitors.’ At the conclusion of their respective

" The interconnection agreement between US West and MCI

provides that “US West shall offer each Network Element individually

and in combination with any other Network Element or Network

Elements in order to permit [MCI] to provide Telecommunications

Services to its subscribers.” Pet. App. 28a n.3. The agreement between

US West and AT&T provides that “AT&T may purchase unbundled

network Elements individually or in Combinations without restrictions as

to how those elements may be rebundled” and that “AT&T may order and

US West shall provision unbundled network elements either individually

10

arbitrations, the companies had the opportunity to restate any

objections to the arbitrators’ decisions in oral argument

before the commissioners of the WUTC. See, e.g., Pet. App.

99a. The WUTC approved the agreements, but modified the

MCI and AT&T agreements to include a provision requiring

US West to allow MCI and AT&T to collocate remote

switching units'' on US West’s premises. Jd. at 89a-90a;

94a-9Sa.

ra Federal Court Review of the

WUTC’s Arbitration Decisions

Pursuant to 47 U.S.C. § 252 (e)(6), US West

challenged the WUTC’s decision approving the

interconnection agreement in the district court, and disputed

a whole host of provisions in the agreement. See Pet. App.

24a-86a. After the WUTC had issued its decisions approving

the agreements, but before the district court issued its orders,

the Eighth Circuit vacated the FCC’s mandatory combination

or in combination on a single order. Network Elements ordered as

combined shall be provisioned as combined.” /d. at 59a n.3. Finally, the

US West/Sprint agreement contains the following provision:

“US West agrees to perform and Sprint agrees to pay

for the TELRIC costs of the functions necessary to

combine requested elements in any technically feasible

’ manner either with other elements from US West’s

network, or with elements possessed or arranged for by

Sprint. However, US West need not combine network

elements in any manner requested if not technically

feasible, but must combine elements ordinarily

combined in its network in the manner they are

typically combined.” Jd. at 81a-82a n.3.

"ly remote switching unit, or module, is a small end office

switch that depends on a larger host switch for most of its features and

functions. The remote switching unit usually is located in another

building from the host switch.

11

tule and the no separation rule. See Jowa Utils. Bd., 120 F.3d

at 813; see also 47 C.F.R. § 51.315(b)-(f). Relying on the

Eighth Circuit’s decision, the district court overturned the

WUTC’s decisions approving the language in the agreements

that required US West to combine network elements. See

Pet. App. 27a-29a; 58a-60a; 81a-83a.

The district court affirmed the WUTC’s decisions

requiring US West to allow collocation of remote switching

units. The court held that the WUTC’s decision to require

such collocation was not arbitrary and capricious because

without it the MCI and AT&T would be at a technical and

economic disadvantage. See Pet. App. 33a-34a; 65a-66a.

All parties appealed the district court’s decisions to

the Ninth Circuit. US West appealed, among other issues,

the district court’s decisions regarding the collocation of

remote switching units. The WUTC and the competitors

appealed the district court’s decisions regarding the

combination of network elements. While these Cases were

pending before that court, this Court issued its opinion in

AT&T Corporation. In that decision, this Court overturned

_ the Eighth Circuit’s invalidation of 47 C.F.R. § 51.315(b).

AT&T Corp., 525 U.S. at 393-95. The Court also vacated the

FCC’s definition of “necessary” as that term is used in 47

U.S.C. § 251(d)(2). 525 U.S. at 387-92.

REASONS FOR DENYING THE PETITION

I. The Court Should Not Grant the Petition

Regarding the Ninth Circuit’s Decision Affirming

the Combination Requirements in the Agreements.

US West urges this Court to grant its Petition with

respect to the requirement that US West combine network

elements at the competitors’ request. US West alleges that

the Ninth Circuit improperly invaded the jurisdiction of the

Eighth Circuit to review the FCC’s network element rules,

thereby circumventing the policy behind the Hobbs Act,

28 U.S.C. §§ 2341 et seg. Pet. at 11-12. US West also

12

alleges there is a conflict between the circuits regarding the

obligations of incumbents to combine network elements at

the request of competitors. Jd. at 11-12. US West asks this

Court to grant its Petition even though the Court recently

denied US West’s Petition for Certiorari to review a similar

decision of the Ninth Circuit on nearly identical grounds. US

West Communications, Inc. v. MFS Intelenet, Inc., 193 F.3d

1112 (9th Cir. 1999), cert. denied 120 S. Ct. 2741 (2000),

pet. for reh'g denied 69 U.S.L.W. 3156 (U.S. Aug. 28, 2000)

(No. 99-1641).

A. There Is No Conflict Among Circuit Courts

of Appeal Because the Ninth Circuit’s

Decision Affirming the Combination

Requirements Does Not Implicate the

Hobbs Act.

Here, as in the MFS Intelenet case, the Hobbs Act is

not implicated at all. Contrary to the argument of US West,

the Ninth Circuit did not engage in judicial review of the

FCC’s mandatory combination rules set forth at 47 C.F.R.

§ 51.315(c)-(f}. | Under the Hobbs Act, only the Eighth

Circuit has jurisdiction “to enjoin, set aside, suspend . . . or to

determine the validity of’ that rule. 28 U.S.C. § 2342.

Consistent with the Hobbs Act, the Ninth Circuit did none of

those. In fact, the Ninth Circuit’s decision is premised on the

fact that Rules 315(c)-(f) are invalid. MCI

Telecommunications Corp., 204 F.3d at 1268; Pet. App. 9a.

The Eighth Circuit’s invalidation of Rules 315(c)-(f) simply

left no rule in place requiring incumbent carriers to combine

elements. Jd. Because there was no affirmative FCC

requirement that incumbents must combine elements for

competitors, the question before the Ninth Circuit became:

Did the 1996 Act, in the absence of such rule, prohibit state

commissions from requiring an incumbent to combine

network elements at the request of its competitors? The Ninth

Circuit held that it did not. Jd Because the FCC’s

combination rules were not before the Ninth Circuit for either

13

interpretation or enforcement, that court did not usurp the

Eighth Circuit’s authority to review the rules. Rather, the

Ninth Circuit interpreted the 1996 Act, as guided by this

Court’s decision in AT&T Corporation, and determined that

the combination provisions do not violate the Act. The

Eighth Circuit’s recent reaffirmation of its prior decision to

vacate Rules 315(c)-(f) does not affect the status quo.

US West’s argument boils down to nothing more than

its erroneous assertion that the Eighth Circuit, by virtue of its

review of the FCC rules, is the only court with jurisdiction to

interpret the 1996 Act. This argument is wrong for two

reasons,

First, the Ninth Circuit’s decision represents exactly

what Congress intended when it provided for federal court

review over state commission arbitration decisions, See

47 U.S.C. § 252(e)(6). Congress did not Structure the 1996

Act to provide for review of state commission decisions in a

single federal district court. Rather, Congress permitted

parties aggrieved by state commission determinations to

bring an action in the “appropriate” federal district court. Jd.

Therefore, Congress contemplated that several district courts

would review interconnection agreements to determine

whether the agreements meet the requirements of Sections

251 and 252 of the Act. Jd.

Second, while uniformity of federal law is an

important consideration, federal district courts are not bound

by the decisions issued by other district courts. See, e.g., Fox

v. Acadia State Bank, 937 F.2d 1566, 1570 (11th Cir. 1991)

(district court is not bound by another district court’s

decision, or even an opinion by another judge of the same

district); Colby v. J.C. Penney Co., Inc., 811 F.2d 1119, 1123

(7th Cir. 1987) (“[NJeither this court nor the district courts of

this circuit give the decisions of other courts of appeals

automatic deference; we recognize that, within reason, the

parties to cases before us are entitled to our independent _

judgment.”). Congress was well aware that district courts are

V4

not bound by the decisions of other district courts when it

provided for review of state commission decisions in the

several federal district courts.

It is undisputed that one of the policies behind the

Hobbs Act is to ensure that judicial review of federal agency

action is conducted by a single circuit court, rather than by

many district courts. See Southwestern Bell Tel. Co. v.

Arkansas Pub. Serv. Comm'n, 738 F.2d 901, 906-07 (1984),

vacated on other grounds

476 U.S. 1167 (1986). However, this policy of uniform

judicial review of federal rules does not mean that federal

courts must blindly adhere to a sister court’s interpretation of

federal statutes. The Hobbs Act does not require the Ninth

Circuit to defer automatically to the Eighth Circuit’s

interpretation of the 1996 Act. US West’s argument that the

Hobbs Act empowers the Eighth Circuit with exclusive

authority to interpret the 1996 Act is wrong, and does not

warrant review by this Court.

B. There Is No Conflict Among Circuit Courts

of Appeals In Their Interpretations of the

1996 Act As It Relates to Interconnection

Agreement Provisions That Require an

Incumbent to Combine Network Elements.

US West also argues that there is a conflict between

the decision of the Ninth Circuit and the Eighth Circuit

regarding an incumbent’s obligation to combine unbundled

network elements. Pet. at 11-14. However, no such conflict

exists. The Eighth Circuit, in reviewing the FCC’s rules,

held that the 1996 Act does not require an incumbent to

combine elements at the request of a competitor. Jowa Utils.

Bd. II, 219 F.3d at 759 (citing Jowa Utils. Bd., 120 F.3d at

813). The Ninth Circuit did not say that the 1996 Act

requires an incumbent to combine network elements. Rather,

the Ninth Circuit, in its review of interconnection

agreements, held that the 1996 Act does not prohibit a

- requirement that incumbents combine network elements at

15

the request of competitors. MCI Telecommunications Corp.,

204 F.3d at 1268; Pet. App. 9a.

The United States Court of Appeals for the Fifth

Circuit also has held that the 1996 Act does not prohibit the

inclusion in an interconnection agreement of a provision

requiring an incumbent to combine elements. Southwestern

Bell Tel. Co. v. Waller Creek Communications, Inc., 221 F.3d

812, 821 (Sth Cir. 2000). Following the Eighth Circuit’s

decision in Jowa Utilities Board I, the Fifth Circuit rejected

Southwestern Bell’s argument that the Eighth Circuit’s

decision made such a requirement “illegal” or “unlawful.”

Southwestern Bell, 221 F.3d at 820-21. The Fifth Circuit

held:

“[T]here is nothing ‘illegal’ about the

provision requiring [Southwestern Bell] to

combine network elements for [competitive

providers]. Nothing in the Telecommuni-

cations Act forbids such combinations. Even

if the Eighth Circuit’s decision on this issue is

correct - - which we do not decide today - - it

does not hold that such arrangements are

prohibited; it only holds that they are not

required by law.” Southwestern Bell, 221

F.3d at 821.

Thus, there is no conflict among the circuits regarding

whether a provision in an interconnection agreement

requiring US West to combine network elements at the

request of a competitive provider is prohibited by the 1996

Act. The Court should deny US West’s Petition.

c. In Any Event, State Law Permits the

WUTC to Impose a Requirement that

US West Combine Network Elements At

the Request of the Competitors.

The combination provisions also may be affirmed on

the ground that the provisions may be imposed as a matter of

16

state law. The 1996 Act contemplates that state commissions

may impose requirements that are a function of state law in

their review and approval of interconnection agreements.

See 47 U.S.C. §§ 251(d)(3); 252(e)(3). A state commission’s

decision to order an incumbent to combine network elements

for a competitor would not be preempted by the 1996 Act

because such a decision would not conflict with the pro-

competitive policies of the Act or any if its provisions. See

English v. General Elec. Co., 496 U.S. 72, 78-79 (1990). In

addition, by granting states the authority to apply and enforce

state law in their approval of agreements, Congress clearly

did not preempt the field of local telecommunications

regulation. /d. at 79.

The WUTC has imposed a combination requirement

on incumbent companies as a matter of state law in

arbitrating an interconnection agreement in other cases, as

well.'? The fact that state commissions may impose such a

requirement under state law is a basis for this Court to deny

the Petition.

Il. The Court Should Deny the Petition As to the

Ninth Circuit’s Decision to Affirm the Provisions

in the Agreements That Permit the Competitors to

Collocate Remote Switching Units on US West’s

Premises.

US West asks this Court to grant its Petition as to the

requirement that it permit competitors MCI and AT&T to

collocate remote switching units on its premises. US West

argues that the Ninth Circuit, by affirming this requirement,

circumvented the Hobbs Act authority of the D.C. Circuit,

created conflict among the circuit courts of appeals, and

"See, e.g., In the Matter of the Petition for Arbitration of an

Interconnection Agreement Between AT&T Communications of the

Pacific Northwest, Inc. and GTE Northwest Incorporated Pursuant to

47 U.S.C. Section 252, Docket No. UT-960307, 1998 WL 223213.

(WUTC March 16, 1998).

Ne

17

ignored this Court’s construction of the 1996 Act. However,

the Ninth Circuit’s decision to affirm the provisions is

consistent with the decisions of this Court and the purpose of

the 1996 Act.

A. There Is No Conflict Among Circuit Courts

of Appeals Because the Ninth Circuit’s

Decision Affirming the Collocation of

Remote Switching Units Does Not Implicate

the Hobbs Act.

US West argues that the Ninth Circuit erred by

applying the FCC’s definition of “necessary” -- a definition

that was vacated by the D.C. Circuit -- when it affirmed the

collocation provisions in the agreements. Pet. at 17; see also

GTE Serv. Corp. 205 F.3d at 422-424. This argument fails

for reasons similar to those set forth above concerning

US West’s claims regarding combination provisions,

As argued above, the Ninth Circuit is not bound by

the D.C. Circuit’s interpretation of the Act. Nor must the

Ninth Circuit defer to the D.C. Circuit because that court was

reviewing the FCC’s collocation rules pursuant to the Hobbs

Act. As was the case when the Eighth Circuit vacated the

FCC’s mandatory combination rules, the D.C. Circuit’s

decision to vacate the FCC’s definition of “necessary” simply

leaves no FCC definition of what equipment competitors may

collocate on incumbents’ premises.

In the absence of a binding FCC decision regarding

collocation, the Ninth Circuit properly reviewed the

collocation provisions of the arbitrated agreements to

determine whether they “meet the requirements of” the 1996

Act. See MCI Telecommunications Corp., 204 F.3d at 1268

(quoting 47 U.S.C. § 252(€)(6)); Pet. App. lla. The Ninth

Circuit considered the collocation provisions and determined

that such provisions do not violate the 1996 Act. Jd.

18

B. The Ninth Circuit’s Decision Regarding the

Collocation of Remote Switching Units

Does Not Conflict With the Decisions of -

This Court or Other Circuit Courts of

Appeals.

Contrary to the arguments of US West, the Ninth

Circuit’s decision to affirm the provisions in the agreements

that permit MCI and AT&T to collocate remote switching

units on US West’s premises does not ignore this Court’s

decision in AT&T Corporation vacating the FCC’s

interpretation of “necessary” as that word is used in 47

U.S.C. 251(c)(3). In that decision, this Court held that the

FCC failed to interpret the word “necessary” in a way that

would impose some limitations on the unbundled network

elements incumbents must provide to competitors. AT&T

Corp., 525 U.S. at 388-92. The Court further held that

Congress did not intend to require incumbents to provide

competitors with “blanket access” to their networks. Jd. at

390. Therefore, the Court vacated the FCC’s specific

unbundling requirements. /d. at 392. See also 47 C.F.R.

§ 51.319.

The collocation provisions affirmed by the Ninth

- Circuit do not provide competitors with carte blanche to

collocate any equipment on US West’s premises that they

believe will be useful to them: Rather, the agreement

provisions ordered by the WUTC allow the competitors to

collocate discrete pieces of equipment for the limited purpose

of effecting interconnection and access to unbundled network

elements. See discussion infra pp. 19-20. Therefore, the

Ninth Circuit’s decision does not result in an overly broad

definition of the word “necessary.” The concerns about

unbridled access to the incumbents’ networks that prompted

this Court and the D.C. Circuit to vacate the FCC’s rules

simply are not present in the collocation provision approved

by the Ninth Circuit.

19

The Act requires incumbents, like US West, to

provide for physical collocation of competitors’ equipment

that is necessary for interconnection or access to unbundled

network elements at the incumbents’ premises. 47 U.S.C.

§ 251(c)(6). The WUTC ordered US West to permit both

MCI and AT&T to collocate remote switching units on its

premises. Incumbents must provide interconnection" to their

competitors that is “at least equal in quality” to the

interconnection the incumbent provides. to itself or its

affiliates or subsidiaries. Jd. at § 251(c)(2)(C). By requiring

the collocation of remote switching units, the WUTC

properly implemented the “equal quality” interconnection

requirement of the 1996 Act.

US West incorrectly states that the WUTC allowed

competitors to collocate remote ‘switching units on its

premises because such equipment is “used” for collocation or

access to unbundled network elements. Pet. at 16-17.

Although the “useful” standard was in effect when it issued

its decisions, the WUTC’s reasons for requiring such

collocation extended beyond the “used and useful” definition.

At the conclusion of the arbitration proceedings, the

WUTC decided that US West must permit MCI and AT&T

to collocate remote switching units on US West’s premises.

The WUTC based its decision on the recommendation of its

staff that failure to allow for such collocation would result in

inferior quality interconnection for the competitors. See App.

at la-Sa.

In order to provide local service to their subscribers,

competitive local companies must interconnect their

networks with the incumbents’ networks. Because of their

ubiquitous networks, much of this interconnection must be

“Interconnection” is the physical linking of two networks for

the mutual exchange of traffic. Local Competition Order, 11 FCC Red at

15590, 4 176,

oy 20

done on the incumbents’ premises. If a competitor cannot

place remote switching units in the incumbent’s central

office, then the competitor must extend its loops to its own

central office. One option is to add copper cable between the

incumbent’s and competitor’s central offices, but this would

degrade the service quality. The other option would be to use

back-to-back electronic arrangements. However, this also

would degrade the quality of service to the customer. See id.

at 4a, 8a. The WUTC’s decision to require collocation of

remote switching units assures that MCI and AT&T will

receive interconnection that is at least equal in quality to the

interconnection US West provides to itself. This reasoning is

consistent with the requirements of 47 U.S.C. §§ 251(c)(2)

and (c)(6), as well as the pro-competitive policy of the 1996

Act. App. at 3a-4a.

The WUTC’s orders do not permit the competitors to

collocate remote switching units in order to perform

functions that are not necessary to achieve equal quality

interconnection or access to unbundled network elements.

See, e.g., Pet. App. 94a-95a. The WUTC also expressly

stated that the competitors would not be allowed to use the

remote switching units to avoid paying carrier access charges

to US West. /d. In fact, during a hearing before the WUTC

commissioners in the AT&T proceeding, counsel for

US West said the company would concur in the WUTC

staff's recommendation to require collocation of remote

switching units so long as AT&T would not use the

equipment to avoid paying access charges. App. at 10a. By

limiting the collocation of remote switching units to

functions necessary for interconnection or access to

unbundled network elements, the WUTC _ correctly

implemented the requirements of 47 U.S.C. §§ 251(c)(2) and

(c)(6). |

When a state commission includes a collocation

provision in an interconnection agreement that permits

competitors to obtain “equal quality” interconnection, that

21

provision “meets the requirements of’ 47 U.S.C. § 251(c)(6).

See 47 U.S.C. § 252(e)(6). Therefore, the Ninth Circuit

properly decided that the 1996 Act does not prohibit such a

provision, and this Court should decline to review that

decision.

III. The Ninth Circuit Did Not Expand the Role of

State Commissions Under the 1996 Act, Nor Did It

Disable Federal Court Review of Agreements Or

Threaten The Primacy of Federal Law.

In its petition, US West argues that the Ninth Circuit,

by affirming provisions of interconnection agreements

beeause they do not violate the 1996 Act, has surrendered

‘federal court review over state commission determinations,

and has otherwise upset the primacy of federal law. Pet. at

20-21. This argument has no merit.

A. The WUTC Lawfully Exercised Its Broad

Responsibilities Under the 1996 Act and

The Ninth Circuit Properly Reviewed and

Affirmed the WUTC’s Decisions.

Contrary to US West’s arguments, Congress created a

considerable role for state commissions in implementing the

local competition provisions of the 1996 Act. For example,

state commissions are authorized to arbitrate open issues that

parties to an interconnection agreement cannot successfully

negotiate. 47 U.S.C. § 252(b). With respect to these

disputed issues, state commissions must set the particular

terms, conditions, and prices in a way that meets the

requirements of the 1996 Act. Jd. §§ 252(c) and (d). All

interconnection agreements, whether they are reached

through arbitration, negotiation, or both, must be approved

by the state commission. /d. § 252(e)(1).

In addition, the 1996 Act contemplates that state

commissions may impose requirements that are a function of

State law in their review and_approval of interconnection

agreements. See 47 U.S.C. § 251(d)(3) (state commissions

22

may enforce state policies that establish access and

interconnection obligations of — telecommunications

companies that are consistent with the requirements of

Section 251 and do _ not substantially prevent the

implementation of Section 251 and the purposes of the Act);

47 U.S.C. § 252(e)(3) (state commissions may establish or

enforce state law requirements when __ reviewing

interconnection agreements). In passing the 1996 Act,

Congress did not assign to state commissions the token role

US West urges this Court to adopt. Rather, Congress

established a scheme under which state commissions would

have the primary role in implementing the interconnection

agreements in which the incumbents’ specific obligations are

embodiéd.

The 1996 Act requires US West to make unbundled

network elements available to competitors and also requires

US West to allow competitors to collocate on its premises

equipment necessary for interconnection or access to

unbundled network elements. 47 U.S.C. §§ 251(c)(3); (6).

Currently, there are no binding FCC rules requiring.

incumbents to combine network elements or to allow

collocation of remote switching units. Therefore, US West

argues that the WUTC, by imposing these requirements in

the agreements, has created “new regulatory obligations out -

of whole cloth,” and faults the Ninth Circuit for what it calls

a “hands off approach” in reviewing the agreement. Pet. at

22-23. This argument is not supported by the record or the

Ninth Circuit’s decision and should be rejected.

The combination provisions in the agreements are

consistent with the 1996 Act and with this Court’s decision in

AT&T Corporation. ‘At the time the WUTC imposed the

combination provision, incumbents were required by the

FCC to combine elements, see 47 C.F.R. § 51.315(c)-(f), but

the Eighth Circuit ultimately vacated the FCC requirement.

Therefore, the Ninth Circuit’s task was to decide whether, in

the absence of an FCC rule mandating combination, a

23

provision requiring US West to combine elements violates

the Act. MCI Telecommunications Corp., 204 F.3d at 1268;

Pet. App. 9a. The Ninth Circuit decided that such provisions

do not violate the Act based on this Court’s interpretation of

47 U.S.C. § 251(c)(3) in AT&T Corporation. Id. See AT&T

Corp., 525 U.S. at 394. The Ninth Circuit’s decision to

affirm the combination provisions in the interconnection

agreements hardly results in the creation of a federal

obligation “out of whole cloth.”

Likewise, US West’s argument that the WUTC

disregarded federal law by requiring US West to collocate

remote switching units fails. The WUTC imposed the

requirement in order to facilitate equal quality

interconnection for MCI and AT&T. The fact that the D.C.

Circuit vacated the FCC’s definition of “necessary” does not

change the nature of the WUTC’s collocation requirement.

The WUTC’s decision that collocation of remote switching

units is necessary for equal quality interconnection is based

on 47 U.S.C. § 251(c)(6) as well as on the pro-competitive

policy of the Act.

In providing for federal court review of state

commission determinations, Congress sought to ensure that

arbitrated provisions in interconnection agreements comply

with the 1996 Act. 47 U.S.C. § 252(e)(6). The very fact of

US West’s petition belies its claim that the Ninth Circuit has

disabled federal court review over agreements. The Ninth

Circuit reviewed the agreements and determined that they

meet the requirements of the 1996 Act, which is exactly what

Congress had envisioned.

In affirming the collocation provisions, the Ninth

Circuit was cognizant of the implications of the FCC’s overly

broad definition of “necessary.” MCI Telecommunications

Corp., 204 F.3d at 1269; Pet. App. 10a. However. the court

also recognized that, unlike the D.C. Circuit, it was not

reviewing a rule that could impose unfettered obligations on

incumbents. /d. Rather, the Ninth Circuit reviewed the

24

decision of a state commission to impose a very limited

collocation requirement on US West. Finding that the

provision does not violate the Act, the Ninth Circuit correctly

affirmed it. This Court should deny US West’s Petition.

B. The Ninth Circuit Did Not Dismantle the

Federal Courts’ Jurisdiction to Review

Interconnection Agreements Or Unravel

the Primacy of Federal Law.

The Ninth Circuit’s decisions to affirm the two

requirements at issue do not upset the primacy and

uniformity of federal law. US West complains that the

decisions will result in obligations that “vary from state to

state.” Pet. at 24. However, the 1996 Act does not

contemplate a single, national interconnection agreement to

which all incumbents and competitors must adhere. Instead,

the 1996 Act provides for the arbitration of issues by

individual state commissions. 47 U.S.C. § 252(b). The 1996

Act further authorizes state commissions to impose state law

obligations on parties to interconnection agreements. Jd. at

§ 252(e)(3). Review of interconnection agreements will be

undertaken by many federal district courts, which are not

bound by the decisions of other federal courts. See id.

§ 252(e)(6). In addition, when an agreement (or provision) is

reached entirely through negotiation, it need not meet the

requirements of the 1996 Act at all. In short, the 1996 Act

does not contemplate that interconnection agreements

necessarily will be uniform.

The Ninth Circuit reviewed the interconnection

agreements to determine whether they “meet the

requirements” of the 1996 Act. This is exactly what the 1996

Act requires. In its review, the Ninth Circuit did nothing to

upset the federal judiciary’s authority to review

interconnection agreements for consistency with federal

laws. The Ninth Circuit did not negate the primacy of federal

law. In sum, certiorari by this Court is unnecessary.

. 2

25

CONCLUSION

For the foregoing reasons, the WUTC requests that

this Court deny US West’s Petition for a Writ of Certiorari.

October 10, 2000

CHRISTINE O. GREGOIRE

Attorney General

SHANNON E. SMITH*

Assistant Attorney General

WILLIAM BERGGREN COLLINS

Sr. Assistant Attorney General

P.O. Box 40128 :

Olympia, WA 98504-0128

(360) 664-1192

*Counsel of Record

la

APPENDIX A

[Open Meeting Memorandum prepared by WUTC Staff,

March 5, 1997.]

Agenda: March 5, 1997

Item: 4A

Docket: UT-930309

Companies: AT&T Communications, Inc.

and US WEST Communications, Inc.

Staff: Jing Roth, Regulatory Consultant

Glenn Blackmon, Assistant Director -

Telecommunications

Dave Griffith, Telecommunications

Engineer

Larry Berg, Review Judge

‘Recommendation:

1. Grant in part and deny in part AT&T

Communications, Inc.’s request _ for

modification.

“4 Deny US WEST Communications Inc.’s

request for partial rejection and modification.

3. Reject the agreements as filed and order the

parties to refile in compliance with staff's

recommendations within 60 days.

2a

Discussion

On March 1, 1996, AT&T Communications of the Pacific

Northwest, Inc. (“AT&T”) requested negotiations with

US WEST Communications, Inc. (“USWC”) | for

interconnection under the terms of the Telecommunications

Act of 1996 (“the Act” or “1996 Act”). On July 25, 1996,

AT&T filed with the Commission and served on USWC a

request for arbitration pursuant to the 47 USC § 252(b)(1).

The Commission designated the petition as Docket No.

UT-960309 and appointed Simon J. ffitch to arbitrate the

disputed issues in this case. Hearings were held on October

21 and 22, 1996, evidence was considered, and on November

27, 1996, the arbitrator issued the Arbitrator’s Report and

Decision (“Report”) relating to this docket. On February 4,

1997, the Arbitrator issued a supplemental Report clarifying

the Report and Decision in regard to two issues: payphone

resale and customer transfer charges. David Griffith, Glenn

lackmon and Jing Roth of the commission’s

telecommunications section staff participated in the

arbitration hearings and advised the arbitrator in preparing

the Report.

Under the terms of the Commission’s /nterpretive and Policy

Statement Regarding Negotiation, Mediation, Arbitration,

and Approval of Agreements, under the Telecommunications

Act of 1996 (“Interpretive Statement”), issued in Docket

UT-960269, the companies submitted interconnection

agreements on February 11, 1997. Agreements containing

both arbitrated and negotiated provisions are subject to a 30

day deadline specified in the Act, which in this case is

March 13, 1997. The Commission may either approve or

reject the agreements, with written findings as to any

deficiencies.

AT&T’s R for ification

In its memorandum requesting approval, AT&T asks that the

Arbitrator’s Report and Decision be modified in two areas:

(a) avoided cost discount rate, and (2) collocation of remote

3a

switching units (“RSU”). It is worth noting that on

‘December 6, 1996, AT&T also filed a petition for partial

reconsideration of the same issues it has raised here. In the

supplemental order, the arbitrator reconsidered two of the

issues relating to payphone and customer transfer changes.

Staff believes that the arbitrator has correctly decided these

two issues in the supplemental order.

T f coll ipment — switching

During the arbitration, AT&T requested the ability to place

Remote Switching Units (“RSU”) in collocated space.

USWC stated that switching equipment is not required to be

collocated because it does not meet the “necessary”

requirement in the FCC’s First Order and Report, CC 96-98,

August 8, 1996 (“Order”). The arbitrator adopted USWC’s

position given that the record established that the RSU would

primarily be used for switching function rather than

interconnection.

Staff feels that arguments in favor of having RSUs collocated

in an ILECs central office extend beyond just the legal

interpretations of the FCC Order and the Act. First, the Act

clearly intends to promote competition, and seeks to do so by

encouraging collocation of carriers’ facilities at “technically

feasible” points, and in an efficient manner. In denying

collocation of RSUs, the Commission requires that CLECs

must accept some or all unbundled loop elements at the voice

frequency level in one of the ILEC’s central offices for

transport to an CLEC’s office for switching. The CLEC

would be compelled to find an adequate switching equipment

location near the C.O. This requirement puts the CLECs at a

competitive disadvantage from both a cost and technical

performance standpoint.

4a

Technical standards are based on having a specific set of

cable gauges (thickness of the copper) designed for each

office, depending on the distance the customers are located

from the central office. Thus loop lengths are specifically

designed to conform to the requirements associated with the

location of the central office and switch that they currently

serve. An unbundled loop will remain within the service

standards expected for local telephony as long as that loop

terminates on a switch located in the same central office.

Requiring CLECs to extend loops to another location will

degrade service for that customer to some extent. Whether a

customer notices this change will depend largely on what is

needed to extend the loop to another location, be it more

copper, additional loop electronics, etc., with the most

significant factor being the length of the new loop. In

addition, to the potential for noticeable service degradation,

each extension will have an associated cost, therefore,

making this service less competitive relative to the incumbent

LEC.

The only desirable technical solution is to allow a CLEC the

option to collocate a remote switching unit along with its

other collocatable equipment in the ILECs central office.

Allowance for collocation of RSUs in the incumbent’s

central oftices will at least give CLECs the opportunity to

avoid extending loops if it is not feasible for them to find a

adequate switching equipment location in the same area as an

incumbent’s central office. Limiting the option to RSUs,

means CLECs will have to maintain their large class 5

machines on their own premises. With the RSU alternative

CLECs may substitute switching devices in ILEC’s central

offices in place of extra, possibly inefficient, electronics

equipment needed for back to back arrangements. The use of

RSUs should also reduce the need for extensive back hauling

in the trunking network to reach the CLECs class 5 switch.

To the extent possible, CLECs are encouraged to use RSU

types that are capable of using direct trunking arrangements

to nearby switch locations of the incumbents in order to

lessen usage of the incumbent company’s interoffice trunking

network and local tandem switches for transporting calls.

Sa

Therefore, staff recommends that the arbitrator’s decision be

modified to allow collocation of AT&T’s RSUs in USWC’s

end offices. As part of this modification staff also stipulates

that contract language be modified such that AT&T will not

be permitted to collocate fully equipped switching equipment

(host class 5 switches), and may not use collocated RSUs to

avoid payment of access charges. AT&T and USWC are

encouraged to establish procedures, including an audit

mechanism, that will guarantee that AT&T is not using RSUs

for the purpose of bypassing access charges.

6a

APPENDIX B

[Excerpt from Transcript of June 25, 1997 Open Meeting

before WUTC to consider approval of interconnection

agreement between US West Communications, Inc. and

AT&T Communications of the Pacific Northwest, Inc. ]

1112

BEFORE THE WASHINGTON UTILITIES AND

TRANSPORTATION COMMISSION

In the Matter of the Petition for

Arbitration of an Interconnection

Agreement Between

DOCKET NO.

AT&T COMMUNICATIONS UT-960309

OF THE PACIFIC NORTHWEST, ) VOLUME VIII

INC., and U.S. WEST

COMMUNICATIONS, INC.

PAGES 1112-1171

Pursuant to 47 USC Section 252

Ne ee ee i ee ee ee ee”

A hearing in the above matter was held on June 25,

1997, at 1:30 p.m. at 1300 South Evergreen Park Drive

Southwest _ before The Washington Utilities and

Transportation Commission.

The parties were present as follows:

AT&T COMMUNICATIONS OF THE PACIFIC

NORTHWEST, by DAN WAGGONER, Attorney at Law,

1501 Fourth Avenue, Suite 2600, Seattle, Washington 98101.

7a

U.S. WEST COMMUNICATIONS, INC., by

LARRY BROTHERSON, 7800 East Orchard Road,

Suite 390, Englewood, Colorado 80111.

WASHINGTON UTILITIES AND

TRANSPORTATION COMMISSION STAFF, by JING

ROTH, GLENN BLACKMON, and JEFF GOLTZ,

1300 South Evergreen Park Drive Southwest, Olympia,

Washington 98504.

1114

(COLLOQUY)

PROCEEDINGS

CHAIRMAN NELSON: This is a continuation of

this morning’s open meeting, we will resume order. We are

here on the matter of the interconnection agreement between

AT&T and U.S. West. ...

MR. WAGGONER:

1121

So those are the areas we would like to ask you to modify the

contract and the arbitrator’s recommendation. Let me start

8a

with remote switching units, I think that can be relatively

quick because that’s an issue you have heard about quite a bit

before and which has been extensively addressed in the

Staff's earlier memo. We believe that remote switching units

properly are co-located in U.S. West premises subject to the

recommendations of Staff, that they be of limited size, and

that they not be employed to avoid carrier access charges.

The record in this case demonstrates that they increase

efficiency in the sense that they avoid unnecessary use of

trunking in some situations, and they also enhance the

reliability of the network because if you are able to co-locate

a remote switching unit, if the trunking between the

1122

remote switching unit and the main switching unit breaks

down, the remote switching unit can provide some limited

essentially intra-office type switching.

So it is both more efficient in the sense of avoiding

over-use of inter-office trunking and it also enhances

9a

reliability. And those are the two main points which I

believe have caused Staff to recommend, _ their

recommendation, and we are quite content with the

limitations contained in Staff's recommendation. So that’s

that issue.

1131

MR. BROTHERSON: I believe, as Mr.

Waggoner laid out, the procedure I’m going to respond at

this time to the issues he has raised, then bring up others

secondarily on our motion to reconsider. I would also second

Mr. Waggoner’s statement that we also have raised a lot of

detail in our brief, both sides have briefed these issues

heavily, so I thik while we want to touch on these

expediently for the hearing today, we would certainly

encourage that the additional argument set forth be taken into

consideration. Based on a lot of dispute around RSU has

dealt with it’s ability to bypass access and our concerns

10a

around that area based on AT&T’s representations today that

they concur with the Staff's, I think it was March Sth memo,

and the language in there about not being available for access

bypass. I think we too could concur with the Staffs

memorandum on that, so I don’t think that’s an issue.