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


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