New Edge Network v. FCC , 461 F.3d 1105 ( 2006 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
NEW EDGE NETWORK, INC., dba 
New Edge Networks; ONEEIGHTY
COMMUNICATIONS, INC.; PAC-WEST
TELECOMM, INC.,
Petitioners,
COMPTEL/ASCENT,
Intervenor-Petitioner, No. 04-73800
FCC Nos.

v.
04-164
FEDERAL COMMUNICATIONS 01-138
COMMISSION,
Respondent,
AT&T CORPORATION; BELLSOUTH
CORPORATION AND BELLSOUTH
TELECOMMUNICATIONS, INC.,
Applicants-Intervenors.

XSPEDIUS COMMUNICATIONS, LLC, 
Petitioner, No. 04-74401
v.
 FCC No.
04-164
FEDERAL COMMUNICATIONS
COMMISSION,
Respondent.

10409
10410 NEW EDGE NETWORK, INC. v. FCC
KMC TELECOM HOLDINGS, INC., 
Petitioner, No. 04-74408
v.
 FCC No.
04-164
FEDERAL COMMUNICATIONS
COMMISSION,
Respondent.

SNIP LINK, LCC, 
Petitioner, No. 04-74410
v.
 FCC No.
04-164
FEDERAL COMMUNICATIONS
COMMISSION,
Respondent.

COX COMMUNICATIONS, INC.; 
COMPTEL/ASCENT,
No. 04-74720
Petitioners,
v.  FCC No.
04-164
FEDERAL COMMUNICATIONS
COMMISSION,
Respondent.

NEW EDGE NETWORK, INC. v. FCC 10411
XO COMMUNICATIONS INC., 
Petitioner-Appellant, No. 04-74724
v.
 FCC No.
04-164
FEDERAL COMMUNICATIONS
COMMISSION,
Respondent-Appellee.

COX COMMUNICATIONS, INC., 
Petitioner, No. 04-75445
v.
 FCC No.
04-164
FEDERAL COMMUNICATIONS
COMMISSION,
Respondent.

ONFIBER COMMUNICATIONS 
COMMISSION,
No. 04-76136
Petitioner,
v.  FCC No.
04-164
FEDERAL COMMUNICATIONS
OPINION
COMMISSION,
Respondent.

On Petition for Review of an Order of the
Federal Communications Commission
Argued and Submitted
June 12, 2006—San Francisco, California
Filed August 29, 2006
10412 NEW EDGE NETWORK, INC. v. FCC
Before: Pamela Ann Rymer, Thomas G. Nelson, and
William A. Fletcher, Circuit Judges.
Opinion by Judge Thomas G. Nelson
10414 NEW EDGE NETWORK, INC. v. FCC
COUNSEL
Russell M. Blau, Swidler Berlin Shereff Friedman, LLP,
Washington, D.C., for petitioner New Edge Network, Inc.
Stephanie Joyce, Kelley Drye & Warren LLP, Washington,
D.C., for petitioners CompTel/ASCENT Alliance, KMC Tele-
com Holdings, Inc., OnFiber Communications, Inc., SniP
LiNK, LLC, XO Communications, Inc., and Xspedius Com-
munications, LLC.
David E. Mills, Dow, Lohnes & Albertson, PLLC, Washing-
ton, D.C., for petitioner Cox Communications, Inc.
James M. Carr, Counsel, and Austin C. Schlick, Acting Gen-
eral Counsel, Washington, D.C., for the respondents .
Collin S. Stretch, Kellogg, Huber, Hansen, Todd, Evans, &
Figel, P.L.L.C., Washington, D.C., for the intervenors.
OPINION
T. G. NELSON, Circuit Judge:
I. Introduction
These petitions arise from the Federal Communications
Commission’s (“FCC”) report and order changing its interpre-
tation of a provision of the Telecommunications Act of 1996,
Pub. L. 104-104, 110 Stat. 56. In 2004, the FCC adopted a
new rule replacing its so-called “pick-and-choose” interpreta-
tion of 47 U.S.C. § 252(i) with an “all-or-nothing” interpreta-
NEW EDGE NETWORK, INC. v. FCC 10415
tion. Petitioners in various circuits challenged the new rule,
and the Judicial Panel on Multidistrict Litigation consolidated
the petitions in this court.1 We have jurisdiction pursuant to
28 U.S.C. § 2342(1) and 47 U.S.C. § 402(a). We conclude
that § 252(i) is ambiguous and that the FCC’s all-or-nothing
interpretation is reasonable. We also conclude that the FCC
did not abuse its discretion by adopting the new rule. Accord-
ingly, we deny the petitions for review.
II. Background
In passing the Telecommunications Act of 1996, Congress
fundamentally restructured local telephone markets to pro-
mote competition.2 States can “no longer enforce laws that
impede competition,” and incumbent local exchange carriers
(“ILECs”),3 which had been state-sanctioned monopolies, are
“subject to a host of duties intended to facilitate market entry.”4
ILECs must make their networks available to new entrants to
the market, referred to as competitive local exchange carriers
(“CLECs”). ILECs must also attempt in good faith to negoti-
ate interconnection agreements with the CLECs.5
Title 47 U.S.C. § 252 provides procedures for negotiation,
arbitration, and approval of interconnection agreements
between ILECs and CLECs. Section 252(i) provides:
A local exchange carrier shall make available any
interconnection, service, or network element[6 ] pro-
1
See 28 U.S.C. § 2112(a)(3).
2
See AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 371 (1999).
3
ILECs typically own “the local loops (wires connecting telephones to
switches), the switches (equipment directing calls to their destinations),
and the transport trunks (wires carrying calls between switches) that con-
stitute a local exchange network.” AT&T, 525 U.S. at 371.
4
Id.5
See id.; 47 U.S.C. § 251(c)(1).
6
Section 252(i) refers to three different items ILECs must make avail-
able: (1) interconnections, (2) services, and (3) network elements. This
10416 NEW EDGE NETWORK, INC. v. FCC
vided under an agreement approved under this sec-
tion to which it is a party to any other requesting
telecommunications carrier upon the same terms and
conditions as those provided in the agreement.
The meaning of this provision lies at the heart of this dispute.
A. Pick-and-Choose
In August 1996, the FCC first interpreted § 252(i), adopting
the pick-and-choose rule.7 Under pick-and-choose, a request-
ing CLEC could adopt individual provisions from any
approved interconnection agreement to which the ILEC was
already a party.8
CLECs’ ability to pick and choose individual provisions
from existing interconnection agreements was not unre-
stricted. ILECs were only required to make individual provi-
sions of an agreement available to CLECs “for a reasonable
means a CLEC “can obtain access to an [ILEC]’s network in three ways:
It can purchase local telephone services at wholesale rates for resale to end
users; it can lease elements of the [ILEC]’s network ‘on an unbundled
basis’; and it can interconnect its own facilities with the incumbent’s net-
work.” AT&T, 525 U.S. at 371 (emphases added).
7
See In re Implementation of the Local Competition Provisions in the
Telecomms. Act of 1996, First Report and Order, 11 F.C.C.R. 15499
(1996) (“Local Competition Order”), codified at 47 C.F.R. § 51.809(1996) (replaced in 2004 by all-or-nothing).
8
Former 47 C.F.R. § 51.809(a) (emphasis added) provided, in part: “An
incumbent LEC shall make available without unreasonable delay to any
requesting telecommunications carrier any individual interconnection, ser-
vice, or network element arrangement contained in any agreement to
which it is a party that is approved by a state commission pursuant to sec-
tion 252 of the Act, upon the same rates, terms, and conditions as those
provided in the agreement.” “In practical terms, this mean[t] that a [CLEC
could] obtain access to individual elements such as unbundled loops at the
same rates, terms, and conditions as contained in any approved agree-
ment.” Local Competition Order ¶ 1314.
NEW EDGE NETWORK, INC. v. FCC 10417
period of time,” and ILECs could avoid the rule where hard-
ship would result.9 In addition, ILECs could require a request-
ing CLEC to agree to terms and conditions that were
“legitimately related” to the service or element requested.10
Soon after the FCC released the Local Competition Order,
many ILECs and some state utility commissions filed peti-
tions challenging various aspects of the order; these cases
were consolidated in the Eighth Circuit.11 The petitioners
argued, among other things, that the pick-and-choose rule was
an unreasonable interpretation of § 252(i).12 The Eighth Cir-
cuit agreed with the petitioners, held that the text of § 252(i)
was ambiguous,13 and concluded that pick-and-choose was an
9
See 47 C.F.R. § 51.809 (1996).
10
See Local Competition Order ¶ 1315 (“[W]e conclude that the ‘same
terms and conditions’ that an incumbent LEC may insist upon shall relate
solely to the individual interconnection, service, or element being
requested under section 252(i). For instance, where an incumbent LEC and
a new entrant have agreed upon a rate contained in a five-year agreement,
section 252(i) does not necessarily entitle a third party to receive the same
rate for a three-year commitment. Similarly, that one carrier has negotiated
a volume discount on loops does not automatically entitle a third party to
obtain the same rate for a smaller amount of loops. . . . [W]e require
incumbent LECs seeking to require a third party agree to certain terms and
conditions to exercise its rights under section 252(i) to prove to the state
commission that the terms and conditions were legitimately related to the
purchase of the individual element being sought.”) (emphasis added).
11
See Iowa Utils. Bd. v. FCC, 120 F.3d 753, 792 (8th Cir. 1997) (as
amended), rev’d sub nom. AT&T Corp., 525 U.S. 366.
12
See id. at 800.
13
See id. at 800 & n.22 (acknowledging that § 252(i) could be read to
support pick-and-choose, but observing that the words of § 252(i) “do not
foreclose the possibility that an entrant’s selection of an individual provi-
sion of a prior agreement would require it to accept the terms of the entire
agreement. In this context, the . . . words [‘any interconnection, service,
or network element’] could simply indicate that an incumbent LEC would
not be able to shield an individual aspect of a prior agreement from the
reach of a subsequent entrant who is willing to accept the terms of the
entire agreement”).
10418 NEW EDGE NETWORK, INC. v. FCC
unreasonable interpretation.14
The Supreme Court reversed. The Court held that the
FCC’s interpretation was not only “reasonable” but “the most
readily apparent.” It also observed that whether pick-and-
choose would in practice impede or promote voluntary negoti-
ations between ILECs and CLECs was a matter eminently
within the FCC’s expertise.15
B. All-or-Nothing
After using pick-and-choose for seven years, the FCC
decided to revisit the rule. In 2003, it sought “comment on
whether the Commission should alter its interpretation of sec-
tion 252(i) to promote more meaningful commercial negotia-
tions.”16 In response, many CLECs, some state utility
commissions, and a consumer advocacy association submitted
statements in favor of pick-and-choose. ILECs, other state
utility commissions, and two CLECs submitted statements in
favor of eliminating pick-and-choose.
On July 13, 2004, the FCC adopted the new all-or-nothing
rule.17 Under all-or-nothing, if a requesting CLEC is interested
in a service or network element provided by an ILEC, it may
14
See id. at 801. The court reasoned that the Act demonstrates “the Con-
gress’s preference for voluntarily negotiated interconnection agreements
between incumbent LECs and their competitors over arbitrated agree-
ments,” and pick-and-choose was unreasonable because it “would thwart
the negotiation process and preclude the attainment of binding negotiated
agreements.” Id.
15
See AT&T Corp., 525 U.S. at 396.
16
See In re Review of the Section 251 Unbundling Obligations of Incum-
bent Local Exchange Carriers, Report and Order and Order on Remand
and Further Notice of Proposed Rulemaking ¶ 713, 18 F.C.C.R. 16978
(2003).
17
See In re Review of the Section 251 Unbundling Obligations of Incum-
bent Local Exchange Carriers, Second Report and Order, 19 F.C.C.R.
13494 (2004) (“Second Report and Order”).
NEW EDGE NETWORK, INC. v. FCC 10419
adopt in its entirety any approved agreement that includes that
service or element to which the ILEC is already a party.18
As a threshold matter, the FCC determined that it had the
authority to reinterpret § 252(i) “because the plain meaning of
the section’s text gives rise to two different, reasonable inter-
pretations, and because the Supreme Court expressly recog-
nized that the Commission has leeway to reinterpret section
252(i).”19 In particular, Congress’s use of the phrase “upon the
same terms and conditions” created ambiguity regarding
whether CLECs could adopt individual provisions of existing
approved agreements, or whether they had to adopt the entire
agreement.20 An agency has discretion to change its interpre-
tation of an ambiguous statute and is not subject to estoppel
for changing its view, the FCC noted.21
As to why it believed reinterpretation of § 252(i) was nec-
essary, the FCC observed that, when it first adopted the pick-
and-choose rule, it “had no practical experience with the
actual mechanics of interconnection agreements” and had
“made inaccurate presumptions.”22 However, after “[e]ight
years of experience” with the pick-and-choose rule, it was
clear to the FCC that the rule impeded negotiations and
resulted in “the adoption of largely standardized agreements
with little creative bargaining to meet the needs of both the
[I]LEC[s] and the [CLECs].”23 ILECs seldom made signifi-
cant concessions in negotiations “for fear that third parties
[would] obtain equivalent benefits without making any trade-
off at all,” the FCC explained.24 Furthermore, CLECs often
18
Id. ¶ 1.
19
Id. ¶ 6.
20
Id. ¶ 7.
21
Id. ¶ 8.
22
Id. ¶ 9.
23
Id. ¶ 12.
24
Id. ¶ 13.
10420 NEW EDGE NETWORK, INC. v. FCC
chose to adopt existing approved agreements in their entirety,
in contrast to the FCC’s initial prediction.25 Finally, the FCC
found that the provision under pick-and-choose allowing an
ILEC to require inclusion of “legitimately related” agreement
terms “ha[d] become an obstacle to give-and-take negotia-
tions rather than an incentive.”26
The FCC concluded that, unlike the pick-and-choose rule,
“an all-or-nothing rule would better serve the goals of sec-
tions 251 and 252 . . . because it would encourage [I]LECs to
make trade-offs in negotiations that they [we]re reluctant to
accept under the [pick-and-choose] rule.”27 The FCC codified
the all-or-nothing rule at 47 C.F.R. § 51.809.28III. Discussion
We review the FCC’s adoption of the all-or-nothing rule
under the two-step framework established in Chevron U.S.A.,
Inc. v. Natural Resources Defense Council, Inc.29 First, we
must determine “whether Congress has directly spoken to the
precise question at issue. If the intent of Congress is clear,”
then we “must give effect to the unambiguously expressed
intent of Congress.”30 Second, “if the statute is silent or
25
Id. ¶ 18.
26
Id. ¶ 17. In particular, the FCC found that “[I]LECs [were] reluctant
to engage in give-and-take negotiations even where terms might be legiti-
mately related for fear of having to defend against unreasonable pick-and-
choose requests, and requesting carriers [were] denied the benefits of indi-
vidualized agreements that meet their business needs.” Id.
27
Id. ¶ 12.
28
47 C.F.R. § 51.809(a) provides, in part: “An [I]LEC shall make avail-
able without unreasonable delay to any requesting telecommunications
carrier any agreement in its entirety to which the [I]LEC is a party that is
approved by a state commission pursuant to section 252 of the Act, upon
the same rates, terms, and conditions as those provided in the agreement.”
29
467 U.S. 837, 842-43 (1984).
30
Id. We review the first step of the Chevron analysis de novo. See id.at 843 n. 9 (“The judiciary is the final authority on issues of statutory con-
NEW EDGE NETWORK, INC. v. FCC 10421
ambiguous with respect to the specific issue, the question for
the court is whether the agency’s answer is based on a permis-
sible construction of the statute.”31
We also review the FCC’s adoption of the all-or-nothing
rule for an abuse of discretion under the Administrative Pro-
cedure Act (“APA”).32
A. Chevron Step One: Section 252(i) is Ambiguous
In the first step of the Chevron analysis, we determine
whether § 252(i) is ambiguous;33 that is, “whether Congress
has directly spoken to the precise question at issue.”34 The
issue in this case is whether § 252(i) requires the pick-and-
choose rule; that is whether it requires ILECs to make individ-
struction and must reject administrative constructions which are contrary
to clear congressional intent.”); Bank of Am., N.A. v. FDIC, 244 F.3d
1309, 1320 (11th Cir. 2001) (observing that, under Chevron, “it is ulti-
mately the function of the judiciary, not the administrative agency, to
decide whether Congress spoke directly to the issue in question”).
31
Chevron, 467 U.S. at 843.
32
5 U.S.C. § 706(2)(A) (providing that the reviewing court shall set
aside agency action that is “arbitrary, capricious, an abuse of discretion,
or otherwise not in accordance with law”); see, e.g., Nat’l Cable & Tele-
comms. Ass’n v. Brand X Internet Servs., ___ U.S. ___, ___, 125 S. Ct.
2688, 2710 (2005) (reviewing an FCC rule under the APA abuse of discre-
tion standard).
33
We note that the Supreme Court has not spoken on this issue. We
reject the contention, made by some petitioners, that the Supreme Court
has already held that § 252(i) is unambiguous and requires the pick-and-
choose interpretation. Petitioners rely on the Supreme Court’s observation
in AT&T Corp., that the pick-and-choose interpretation was “the most
readily apparent.” 525 U.S. at 396. Had the Court meant that § 252(i) was
unambiguous as the petitioners contend, it would have concluded that
pick-and-choose was the only apparent interpretation, not merely the
“most readily apparent.” Moreover, the Court would not have gone on to
discuss the reasonableness of the FCC’s approach. See id. Thus, AT&T
Corp. did not hold that the language of § 252(i) is unambiguous.
34
Chevron, 467 U.S. at 842.
10422 NEW EDGE NETWORK, INC. v. FCC
ual provisions of their existing, approved interconnection
agreements available to CLECs. We conclude that the statute
does not require the rule, it only permits it. Congress simply
has not spoken to the precise question before us.
[1] Nothing in § 252(i) unambiguously requires an ILEC to
make available to CLECs individual agreement provisions.
With the disputed phrases in italics, here, again, is the text of
§ 252(i):
A local exchange carrier shall make available any
interconnection, service, or network element pro-
vided under an agreement approved under this sec-
tion to which it is a party to any other requesting
telecommunications carrier upon the same terms and
conditions as those provided in the agreement.
The phrase “any interconnection, service, or network ele-
ment” indicates that Congress intended to require ILECs to
make their services and network elements available to CLECs
on an individual, “unbundled” basis.35 It does not unambigu-
ously require that ILEC make individual provisions of exist-
ing agreements available to CLECs. The phrase “upon the
same terms and conditions as those provided in the agree-
ment” expresses Congress’s intent to require ILECs to deal
with CLECs on a nondiscriminatory basis,36 but, again, this
phrase does not unambiguously require that ILECs make indi-
vidual provisions of existing agreements available to CLECs.
It could mean that, once an ILEC negotiates an interconnec-
tion agreement with a CLEC, the ILEC cannot deny another
CLEC access to services and network elements under all of
the same terms and conditions.
35
See 47 U.S.C. § 251(c)(3) (requiring ILECs to provide to any request-
ing CLEC “access to network elements on an unbundled basis at any tech-
nically feasible point”) (emphasis added).
36
See id. (requiring ILECs to provide to any requesting CLEC “nondis-
criminatory access to network elements”) (emphasis added).
NEW EDGE NETWORK, INC. v. FCC 10423
We are not persuaded by the petitioners’ arguments that
§ 252(i) is unambiguous. The petitioners note that § 252(i)
requires ILECs to “make available any interconnection, ser-
vice, or network element provided under an agreement”
(emphases added). They contend that this phrase can only
mean that a requesting CLEC can select individual services or
network elements in an approved agreement without adopting
the entire agreement. But, as we have observed, such a read-
ing is not necessary. An ILEC cannot refuse to provide a
CLEC individual services and network elements that it has
already agreed to provide in an existing interconnection agree-
ment.37 However, § 252(i) does not unambiguously specify
the terms and conditions under which the ILEC must provide
services and network elements. Section 252(i) merely requires
ILECs to provide services and network elements “upon the
same terms and conditions as those provided in the agree-
ment.” The “same terms and conditions as those provided in
the agreement” could refer to (1) particular terms and condi-
tions in the agreement relating to the service or element
requested or (2) the terms and conditions of the entire agree-
ment.38 The all-or-nothing rule rests on the second interpreta-
tion.
Petitioners’ argument proves too much. Even under pick-
and-choose, CLECs did not have an unlimited ability to pick
provisions from existing interconnection agreements. ILECs
37
See Iowa Utils. Bd., 120 F.3d at 800 n.22 (observing that the phrase
“any interconnection, service, or network element” “could simply indicate
that an incumbent LEC would not be able to shield an individual aspect
of a prior agreement from the reach of a subsequent entrant who is willing
to accept the terms of the entire agreement”).
38
Thus, we also reject petitioner New Edge Network’s contention that
the phrase “same terms and conditions as those provided in the agree-
ment” must refer to discrete terms and conditions contained in an intercon-
nection agreement, not to the entire agreement. We do not read § 252(i)
to require such an interpretation. The “same terms and conditions as those
provided in the agreement” could refer to all the terms and conditions in
the agreement.
10424 NEW EDGE NETWORK, INC. v. FCC
could invoke hardship exemptions and time limits39 and
impose terms that were “legitimately related” to the service or
network element requested.40 No petitioner argues that the
unambiguous language of § 252(i) precludes the “legitimately
related” requirement. Once the petitioners concede that the
language of § 252(i) does not require unrestricted picking and
choosing by CLECs, their argument that the statute’s lan-
guage is unambiguous loses force.
B. Chevron Step Two: All-or-Nothing is a Permissible
Construction of § 252(i)
In the second step of the Chevron analysis, we ask
“whether the agency’s [interpretation] is based on a permissi-
ble construction of the statute.”41 “If a statute is ambiguous,
and if the implementing agency’s construction is reasonable,
Chevron requires a federal court to accept the agency’s con-
struction of the statute, even if the agency’s reading differs
from what the court believes is the best statutory interpreta-
tion.”42
[2] The phrase in § 252(i) specifying that an ILEC shall
make available “the same terms and conditions as those pro-
vided in the agreement” can reasonably be read to refer to the
terms and conditions of the entire agreement. Accordingly,
we conclude that all-or-nothing is a permissible interpretation
of § 252(i).
[3] The FCC’s construction was also “a reasonable policy
choice.”43 The FCC explained that its all-or-nothing rule
reflected a “more holistic”44 reading of § 252(i) and that its
39
47 C.F.R. § 51.809(b) and (c) (1996).
40
See Local Competition Order ¶ 1315.
41
Chevron, 467 U.S. at 843.
42
Brand X Internet Servs., 125 S. Ct. at 2699.
43
Chevron, 467 U.S. at 845.
44
Second Report and Order ¶ 7.
NEW EDGE NETWORK, INC. v. FCC 10425
initial pick-and-choose rule, in practice, had impeded negotia-
tions.45 The FCC’s explanation satisfies the second step of
Chevron.46
The petitioners’ policy arguments to the contrary “create
the impression that [they] are now waging in a judicial forum
a specific policy battle which they ultimately lost in the
agency . . . .”47 Accordingly, we decline to consider them.
“Such policy arguments are more properly addressed to legis-
lators or administrators, not to judges.”48
C. The FCC’s Adoption of the All-or-Nothing Rule Was
Not an Abuse of Discretion
All the petitioners note that, in this case, the FCC has
adopted an interpretation that is the opposite of its original
interpretation. They cite a pre-Chevron case for the proposi-
tion that “an agency changing its course by rescinding a rule
is obligated to supply a reasoned analysis for the change
beyond that which may be required when an agency does not
act in the first instance.”49 Later Supreme Court cases have
recognized, however, that Chevron deference still applies to
an agency’s reversal of position, and we review for abuse of
discretion under the APA.50 We conclude that the record sup-
45
Id. ¶¶ 11-12.
46
See Chevron, 467 U.S. at 863.
47
Id. at 864.
48
Id.49
Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins.
Co., 463 U.S. 29, 42 (1983).
50
See Brand X Internet Servs., 125 S. Ct. at 2699 (“Agency inconsis-
tency is not a basis for declining to analyze the agency’s interpretation
under the Chevron framework.”); Smiley v. Citibank (S.D.), N.A., 517 U.S.
735, 742 (1996) (An agency’s “change [in interpretation] is not invalidat-
ing, since the whole point of Chevron is to leave the discretion provided
by the ambiguities of a statute with the implementing agency.”). See also
Motor Vehicle Mfrs. Ass’n, 463 U.S. at 42 (“[Regulatory] agencies do not
establish rules of conduct to last forever” and “an agency must be given
ample latitude to adapt [its] rules and policies to the demands of changing
circumstances.”) (citations and quotation marks omitted) (first alternation
in original).
10426 NEW EDGE NETWORK, INC. v. FCC
ports the FCC’s adoption of the all-or-nothing rule and that
the agency did not abuse its discretion.
[4] ILECs and some state utility commissions submitted
comments and affidavits supporting the elimination of pick-
and-choose. For example, ILEC BellSouth stated that the
pick-and-choose rule was inefficient and impeded negotiation.
The Florida Public Service Commission stated that, in its
experience arbitrating between ILECs and CLECs, “the nego-
tiation of interconnection agreements has been and is severely
hindered by a well-intentioned but outdated regulatory
requirement — the ‘pick-and-choose’ rule.” Another ILEC
observed that CLECs had “been quite willing to accept entire
agreements that others have negotiated.” Thus, record evi-
dence supported the FCC’s findings that the old pick-and-
choose rule impeded negotiations, that invoking pick-and-
choose did not lead to efficient interconnection agreement for-
mation, and that, contrary to the FCC’s earlier prediction,
CLECs were willing to adopt entire agreements.
The petitioners’ contention that the FCC did not reasonably
exercise its discretion is not persuasive. Petitioner Cox argues
that the FCC “relied mainly on speculative, often self-serving
statements” by ILECs. We observe, however, that the peti-
tioners’ evidence is similarly self-serving. Moreover, not all
the evidence in support of all-or-nothing is self-serving; sev-
eral state utility commissions supported the ILECs’ position.
Finally, two CLECs supported the ILECs’ position; while
their statements may well have been self-serving (one would
be surprised if they were not), their support of the ILECs’
position shows that the FCC’s new rule does not simply favor
ILECs over CLECs.
Citing Association of Communications Enterprises v. FCC
(“ASCENT”)51 petitioner CompTel argues that the FCC’s
adoption of all-or-nothing amounts to an improper forbear-
51
235 F.3d 662 (D.C. Cir. 2001).
NEW EDGE NETWORK, INC. v. FCC 10427
ance of pick-and-choose without following the requirements
of 47 U.S.C. § 160(a).52 ASCENT does not apply to this case.
Here, the FCC is not allowing anyone to avoid a statute or
regulation; it has changed its interpretation of a statute and
changed the implementing regulation. Pick-and-choose is no
longer a statutory requirement. “[Section] 160, prescribing
when the Commission may forbear from applying statutory
requirements, obviously comes into play only for require-
ments that exist; it says nothing as to what the statutory
requirements are.”53 Accordingly, CompTel’s forbearance
argument fails.
[5] Finally, petitioner Cox’s contention that judicial estop-
pel prevents the FCC from changing its position is unavailing.
The doctrine of judicial estoppel prevents a party who has
taken a certain position in a legal proceeding, and succeeded
in maintaining that position, from taking a contrary position
simply because his interests have changed.54 Courts apply the
doctrine where a party’s “later inconsistent position” presents
a “risk of inconsistent court determinations.”55 In this case,
there is no such risk. Although the FCC argued in AT & T
Corp. that the language of § 252(i) was unambiguous, the
Supreme Court did not adopt that position.56 Thus, the FCC’s
current position that § 252(i) is ambiguous “introduces no risk
of inconsistent court determinations.”57 Further, as the FCC
52
47 U.S.C. § 160(a) allows the FCC regulatory flexibility to forbear
“from applying any regulation or any provision of this chapter to a tele-
communications carrier or telecommunications service, or class of tele-
communications carriers or telecommunications services” where the FCC
determines that enforcement is not necessary to protect consumers or serve
the public interest.
53
U.S. Telecom Ass’n v. FCC, 359 F.3d 554, 579 (D.C. Cir. 2004)
(rejecting CLECs’ argument that FCC’s interpretation of the Act
amounted to forbearance and distinguishing ASCENT).
54
New Hampshire v. Maine, 532 U.S. 742, 749 (2001).
55
Id. at 751 (internal quotation marks omitted).
56
See AT&T Corp., 525 U.S. at 396.
57
New Hampshire, 532 U.S. at 751 (internal quotation marks omitted).
10428 NEW EDGE NETWORK, INC. v. FCC
notes, public policy considerations allow the government to
change its position in ways that might be inappropriate if
merely a matter of private interest.58 Accordingly, judicial
estoppel does not preclude the FCC from changing its inter-
pretation of § 252(i).
IV. Conclusion
[6] Section 252(i) is ambiguous. Thus, the FCC had author-
ity to reinterpret it. The agency permissibly construed the pro-
vision’s language in light of its experience when it adopted
the all-or-nothing rule. Accordingly we deny the petitions for
review.
PETITIONS DENIED.
58
Id. at 755.