Fitch v. Public Utility Commission , 261 F. App'x 788 ( 2008 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
January 16, 2008
No. 07-50088 Charles R. Fulbruge III
Clerk
F. CARY FITCH, doing business as Affordable Telecom,
Plaintiff-Appellant,
v.
PUBLIC UTILITY COMMISSION OF TEXAS; SOUTHWESTERN BELL
TELEPHONE COMPANY, doing business as AT&T Texas,
Defendants-Appellees.
F. CARY FITCH, doing business as Affordable Telecom,
Plaintiff-Appellant,
v.
PAUL HUDSON, in his individual and official capacity; JULIE
CARRUTHERS PARSLEY, in her individual and official capacity; BARRY
SMITHERMAN, in his individual and official capacity; TEXAS PUBLIC
UTILITY COMMISSION,
Defendants-Appellees.
Appeal from the United States District Court
for the Western District of Texas
USDC No. 1:06-CV-176
Before REAVLEY, STEWART, and OWEN, Circuit Judges.
No. 07-50088
PER CURIAM:*
Affordable Telecom (“Affordable”) appeals from the district court’s order
affirming the Texas Public Utility Commission’s (“PUCT”) approval of an
arbitrated interconnection agreement between Affordable and Southwestern Bell
Telephone Company (hereinafter “AT&T Texas”). We affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
In 2002, Affordable, a small telecommunications company that provides
paging service and Internet access, received commercial mobile radio service
(“CMRS”) licenses from the Federal Communications Commission (“FCC”) to
provide interconnected common carrier paging services to the public in Corpus
Christi and Victoria, Texas. In order to effectuate the services provided by the
licenses, Affordable had to enter into an interconnection agreement with AT&T
Texas. The Telecommunications Act of 1996 (“FTA”), Pub. L. No. 104-104, 110
Stat. 56 (1996), codified at 47 U.S.C. § 151 et seq., which was adopted to
encourage the entry of new telecommunications carriers into local service
markets, allows competing local exchange carriers (“CLECs”) to negotiate
interconnection agreements with incumbent local exchange carriers (“ILECs”).
However, the FCC has also stipulated that ILECs cannot charge for the use of
interconnection facilities for services that do not originate traffic, such as one-
way paging. Since Affordable’s licenses were for paging services which do not
originate any traffic, it was not obligated to provide AT&T Texas any
compensation under the terms of the licenses.
The case below began in 2004 as a compulsory arbitration before the
PUCT, see 47 U.S.C. § 252, when Affordable and AT&T failed to reach a
voluntary agreement on all terms. The central issue in contention before the
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
2
No. 07-50088
PUCT arbitrators was whether Affordable was legally authorized to avoid
payment for the business lines and equipment it had access to through its
interconnection agreement with AT&T Texas even though Affordable had used
its interconnection agreement to provide dial-up Internet access to its customers.
In rendering their decision, the PUCT arbitrators made a number of
factual findings. The PUCT arbitrators determined that Affordable had
approximately 5,000 dial-up Internet access customers (through the trade name
USAWIDE.net), 200-300 resold numeric paging customers, and 15 Superpaging1
customers, and they concluded that although Affordable’s licenses only allowed
it to provide paging services, the majority of the traffic carried over its existing
interconnection arrangements was dial-up internet service provider (“ISP”)
traffic.2 Relying on the FCC rule laid out in 47 C.F.R. § 51.100(b),3 the PUCT
1
Superpaging employs the paging spectrum to transmit “pages” to subscribers’ wireless
receivers. The page can consist of any type of data that can be sent to a computer (not just
phone numbers as with traditional paging). Additionally, the calling party can, if it subscribes
to such function, use the Internet to gather information for transmission in the Superpage.
In fact, the PUCT arbitrators found that Affordable’s dial-up Internet access service
subscribers could access the Internet by calling the same platform used to initiate Superpages.
2
According to AT&T Texas, 99% of Affordable’s traffic was dial-up ISP traffic.
3
47 C.F.R. § 51.100(b) states:
A telecommunications carrier that has interconnected or gained
access under Sections 251(a)(1), 251(c)(2), 251(c)(3) of the Act,
may offer information services through the same arrangement, so
long as it is offering telecommunications services through the
same arrangement as well.
Telecommunications service means “the offering of telecommunications for a fee directly to the
public, or to such classes of users as to be effectively available directly to the public, regardless
of the facilities used.” 47 U.S.C. § 153(46). Telecommunications is defined as “the
transmission, between or among points specified by the user, of information of the user’s
choosing, without change in the form or content of the information as sent and received.” 47
U.S.C. § 153(43). An information service offers the capability for “generating, acquiring,
storing, transforming, processing, retrieving, utilizing, or making available information via
telecommunications,” but does not include providing telecommunications itself. 47 U.S.C. §
153(20).
3
No. 07-50088
arbitrators held that Affordable could not use the interconnection facilities to
carry Internet access traffic because Affordable does not offer
telecommunications service “through” interconnection facilities; rather, it merely
transmits radio signals to activate its pagers. The PUCT arbitrators explained
that “47 C.F.R. § 51.100(b) allows the offering of information service through an
interconnection facility, but only as an incident to the telecommunications
service for which the carrier obtained the interconnection facility.” The PUCT
arbitrators concluded that Affordable is only authorized to provide paging
services, and “consequently [it] may not receive any traffic other than paging
traffic through the interconnection facility.”4
On June 29, 2005, the parties filed exceptions to the PUCT arbitrators’
award proposal. The PUCT approved the arbitration award, making only one
modification.5
Affordable filed suit in state court, challenging the PUCT’s award and its
conclusion that Affordable is not entitled to continue providing internet services
through its interconnection agreement with AT&T.6 The case was removed to
federal district court by the PUCT Defendants and AT&T Texas (collectively
“Defendants”), on the grounds that the case involved federal questions. The
district court denied Affordable’s motion to remand and ordered Affordable to
4
The arbitrators, in their award, also restricted the services Affordable could provide
under its Superpaging services. Additionally, they made findings regarding the compensation
rates between Affordable and AT&T Texas under the interconnection agreement.
5
The PUCT decided that long-distance calls (calls routed through an interexchange
carrier) were not subject to the same reciprocal compensation rates as calls not routed through
third party interexchange carriers.
6
Affordable also challenged the PUCT’s imposition of sanctions arising out of a
discovery dispute. Affordable initially sued the individual PUCT Commissioners for imposing
sanctions, but amended its complaint to target the PUCT and the Commissioners in their
official capacities.
4
No. 07-50088
amend its complaints to address the claims under the FTA.7 The parties briefed
all issues, except Affordable’s damages claims against AT&T Texas. On
December 12, 2006, the district court entered an order affirming the PUCT order
in all respects and ordered that Affordable’s damages claim against AT&T be
dismissed with prejudice. Affordable timely filed its notice of appeal.
II. STANDARD OF REVIEW
We review state commission rulings that interpret federal law de novo.
Southwestern Bell Tel. Co. v. Pub. Util. Comm’n, 208 F.3d 475, 482 (5th Cir.
2000). Factual findings and state law determinations by state commissions are
reviewed “under the more deferential arbitrary and capricious standard.” Id.We have previously recognized that there is no meaningful difference between
the arbitrary and capricious standard and the “substantial evidence” standard.
Id. at 482 n.8 (citing GTE South Inc. v. Morrison, 199 F.3d 733, 745 n.5 (4th Cir.
1999)).
III. DISCUSSION
First, Affordable contends that the PUCT erred when it refused to
arbitrate Affordable’s claims under 47 U.S.C. §§ 201, 332(c)(1)(B) and 47 C.F.R.
§ 20.11. It also asserts that the district court erroneously concluded that § 332
is “outside the scope of an arbitration under § 252.” In making this claim,
Affordable recognizes that the FCC prefers that LEC-CMRS disputes are
handled through the negotiation/arbitration process that was adopted in §§
251/252 of the 1996 amendments, but Affordable nevertheless asserts that the
FCC has also “taken great care to ensure that where § 332 or FCC wireless
precedent requires a different substantive result than would the 1996
amendments standing alone, then its CMRS rules prevail.”
7
Affordable initially filed two suits in state court—the first one after the PUCT order
approving the award with changes and again after the interconnection agreement was filed.
The two cases were consolidated and certain state law issues were remanded to state court.
5
No. 07-50088
Affordable’s argument must fail. The FCC has clearly directed state
commissions to arbitrate LEC-CMRS interconnection agreements under §§ 251
and 252, concluding that state commission arbitration proceedings would
achieve “just, reasonable, and fair” agreements, which is the “common goal” of
§§ 201, 332, 251, and 252. In the Matter of Implementation of the Local
Competition Provisions of the Telecommunications Act of 1996, Interconnection
Between Local Exchange Carriers and Commercial Mobile Radio Service
Providers, First Report and Order, 11 F.C.C.R. 15499, 16005 ¶ 1023 (Aug. 8,
1996).
Second, Affordable argues that the PUCT erroneously held that paging
carriers (as contrasted with LECs and cellular carriers) are not allowed to
provide both telecommunications and information services under their
interconnection agreements with ILECs. Affordable asserts that the FCC has
recognized that paging carriers can provide information services, and that the
PUCT interpreted 47 C.F.R. § 51.100(b) too narrowly. According to Affordable,
the PUCT interpreted the word “through” to mean “in one side and out the
opposite,” when in the context of § 51.100(b) the word actually means “by the
means and agency of.” When the proper definition of through is applied,
Affordable contends that § 51.100(b) allows it to offer information services
through the interconnection agreement it has with AT&T Texas for one-way
paging. On the other hand, AT&T Texas and the PUCT Defendants urge this
Court to affirm the PUCT award and the district court’s determination. They
argue that under the proper reading of § 51.100(b), Affordable’s licenses permit
it to interconnect with AT&T and use AT&T facilities for a limited purpose—to
provide one-way paging service—and since § 51.100(b) only permits
telecommunications carriers to offer information services “through the same
arrangement,” Affordable cannot, under its existing one-way paging
6
No. 07-50088
interconnection agreement (which just involves receiving information) provide
information services (which involves sending and receiving information).
This issue is the heart of this dispute. Affordable believes that the rights
it has under its licenses should be interpreted broadly so it can offer a wide
range of services via its interconnection agreement with AT&T Texas. AT&T, the
PUCT, and the district court all believe that Affordable’s licenses only permit it
to provide one-way paging. For the following reasons, we hold that the
interpretation suggested by Affordable is incorrect.
As the district court recognized, one-way paging is not a service provided
“through” an interconnection facility, because the facility is merely relaying a
call from the person initiating a page to the paging service provider. The district
court cites from the PUCT arbitrators award, where they explain:
[§ 51.100(b)] does not just require that communications occur
through the arrangement. If this were the standard, then all
carriers would be able to offer information services through
interconnection agreements, since the very purpose of an
interconnection agreement is to transit communications. Rather,
the carrier must offer telecommunication services through the
arrangement.
Affordable argues that the PUCT and the district court unreasonably
discriminated by acknowledging differences between CMRS providers (i.e., those
that provide telephone exchange service versus those that provide
telecommunications services), but Affordable is unable to establish how the
PUCT or the district court’s interpretations are inconsistent with any FCC
decisions or orders issued since the 1996 amendments. Not only is Affordable’s
argument at odds with the plain language of § 251, but it also goes against the
FCC precedent that has recognized the distinctions between different CMRS
providers.
7
No. 07-50088
Further, common sense demands that we reject Affordable’s argument.
If its interpretation of § 51.100(b) is correct, it would be able to provide
information services without having to pay AT&T Texas anything for using its
facilities. This is clearly contrary to FCC precedent, as the FCC has recognized
that ISPs are end users of telecommunications services that are required to
purchase LEC business lines. In the Matter of Implementation of the Local
Competition Provisions in the Telecommunications Act of 1996, 14 F.C.C.R. 3689,
3690 ¶ 4 (1999), vacated on other grounds, Bell Atl. Tel. Co. v. FCC, 204 F.3d 1(D.C. Cir. 2000).
Third, Affordable asserts that the PUCT erroneously concluded that it was
not authorized to provide services to laptop computers and mobile signs through
its Superpaging service.8 The PUCT’s determination about which Superpaging
services are permitted under Affordable’s interconnection agreement is a factual
finding. We agree with the PUCT that many of the services Affordable provided
under the umbrella of Superpaging, such as information storage and retrieval
and access to the Internet, are not CMRS services, and therefore Affordable is
not permitted, under § 51.100(b), to provide those services through its
interconnection with AT&T Texas. Accordingly, we cannot hold that the PUCT’s
determination was arbitrary and capricious.
Fourth, Affordable Telecom challenges two of the PUCT rulings regarding
intercarrier compensation.9 First, it asserts that the PUCT violated the FTA
8
Specifically, the PUCT arbitrators found that: “Superpaging only qualifies as CMRS
to the extent that it meets the previously outlined definition of paging. Accordingly, the
arbitrators conclude that Superpaging qualifies as CMRS only when the end user’s wireless
receiver meets the FCC’s definition of a pager. Among the possible applications cited by Fitch
Affordable Telecom, only the Pocket PC fits the definition of pager.”
9
When a call originating from one carrier’s customer is made to a customer of another
interconnected carrier, the originating carrier must pay the terminating carrier for the costs
of transporting and terminating the call. 47 U.S.C. § 251; 47 C.F.R. § 51.701(e). The FCC has
established rules that govern these “reciprocal compensation” payments. 47 C.F.R. § 51.701(e);
see also 47 C.F.R. § 51.701-.717. In pertinent part, these rules state that CMRS providers may
8
No. 07-50088
and FCC rules by failing to establish a rate to be paid for termination of AT&T
originated calls. Affordable asserts that under § 251(b)(5), it is entitled to
reciprocal compensation for paging, citing to FCC decisions that held that ILECs
are required to at least offer to exchange both § 251(b)(5) traffic and ISP-bound
traffic at the rate of $0.0007 per minute of use. See Petition of Core
Communications, Inc. for Forbearance Under 47 U.S.C. § 160(C) from
Application of the ISP Remand Order, 19 F.C.C.R. 20179, 20181 ¶ 6 (2004); see
also T-Mobile Order, 20 F.C.C.R. at 4862 ¶ 12; see generally In the Matter of
Implementation of the Local Competition Provisions in the Telecommunications
Act of 1996: Intercarrier compensation for ISP-Bound Traffic, 16 F.C.C.R. 9151
(1999). Affordable argues that since AT&T failed to offer a rate during the
arbitration before the PUCT, the arbitrators should have prescribed the FCC’s
$0.0007 compensation rate. However, a review of the record indicates that
AT&T Texas inadvertently omitted its pricing index during the PUCT
arbitration. When AT&T attempted, by motion, to correct its omission and to
provide a reciprocal compensation rate of $0.0013 per minute, Affordable
objected, and as a result, AT&T withdrew its motion. AT&T Texas now argues
that this classifies as invited error, and assert that because of that, this Court
should not reverse the PUCT’s determination. See Hidden Oaks Ltd. v. City of
Austin, 138 F.3d 1036, 1051 (5th Cir. 1998) (“Having made such a choice at trial,
Hidden Oakes hardly can request now that we reverse and remand in order for
it to reassess its earlier strategy.”). We agree, and as a result, this issue cannot
be compensated for terminating calls that originate from customers of the interconnected
telecommunications carriers. 47 C.F.R. § 51.701(c) & (e); 47 C.F.R. § 51.701(e). The rules also
stipulate that carriers that only provide one-way paging service do not owe reciprocal
compensation to LECs.
9
No. 07-50088
be raised on appeal. See Flores v. Cameron County, 92 F.3d 258, 270 (5th Cir.
1996) (explaining that “the invited error doctrine . . . preclude[s] our review”).10
Affordable next argues that the PUCT order adopting the award
erroneously concluded that any reciprocal compensation paid by AT&T Texas to
Affordable should be limited to those calls originating within AT&T and
terminating directly with Affordable, and in which (i) the originating caller and
the recipient are in the same Metropolitan Traffic Area (“MTA”) and (ii) no
intervening interexchange carrier is involved (i.e., the call is not a long-distance
call requiring “1+” dialing.) Affordable Telecom argues that the PUCT’s holding
in this regard is at odds with the manner in which federal courts have
interpreted this issue. See e.g., Iowa Network Servs. v. Qwest Corp., 466 F.3d
1091 (8th Cir. 2006); Atlas Tel. Co. v. Oklahoma Corp. Comm’n, 400 F.3d 1256(10th Cir. 2005). However, this argument is flawed as well. As the PUCT
Defendants observe in their brief: “It would be entirely incongruous to require
AT&T to pay Affordable for a long-distance page originated by a customer using
interexchange service, especially considering that AT&T had nothing to do with
the termination of the call.” We agree, and the case law cited by Affordable is
inapplicable to this case.
Finally, Affordable sued AT&T Texas for damages under 47 U.S.C. §§ 206& 207,11 arguing that AT&T violated the FTA by refusing to interconnect with
10
Even if we were to refrain from classifying it as invited error, we need not reverse
the PUCT order on this ground because the PUCT included language in the interconnection
agreement that will allow the parties to prospectively include a rate which could be
retroactively implemented. And because AT&T’s rate in its withdrawn filing ($0.0013) is
higher than the rate Affordable Telecom alleges should have been adopted ($0.0007), the
parties should be able to reach an agreement on a appropriate rate for reciprocal compensation
without intervention from this Court or the PUCT.
11
47 U.S.C. § 206 provides that if common carriers violate any provisions of the TCA
they shall be liable for damages sustained in consequences of that violation, along with
reasonable attorney’s fees. 47 U.S.C. § 207 similarly authorizes any person who claims to be
damaged by a common carrier to either file a complaint with the FCC or to bring a lawsuit in
federal district court to recover damages.
10
No. 07-50088
Affordable and for refusing to negotiate in good faith. Affordable argues that the
district court’s dismissal of these claims was in err, especially since the court
never specifically addressed all of Affordable’s allegations. Affordable’s
argument is without merit. There is no evidence that AT&T Texas violated any
provision of the TCA, damaged Affordable in any way, or even acted in bad faith.
Therefore, Affordable is not entitled to damages under §§ 206 or 207.
IV. CONCLUSION
For the foregoing reasons, we AFFIRM the judgment of the district court.
11