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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
Summary of this case from Ohio Bell Tel. Co. v. Pub. Utils. Comm'n of OhioOpinion
No. 97-74362.
September 29, 1999. Opinion Granting in Part Motion to Amend and Denying Reconsideration December 22, 1999.
Robert J. Franzinger, Dykema Gossett, Detroit, MI, Albert Ernst, Dykema Gossett, Lansing, MI, for MCI Telecommunications Corporation, MCImetro Access Transmission.
Theodore C. Hirt, U.S. Department of Justice, Civil Division, Washington, DC, for United States of America, Federal Communications Commission.
Michael G. Vartanian, Jeffery v. Stuckey, John M. Dempsey, Dickinson, Wright, Lansing, MI, Bruce R. Byrd, Dickinson, Wright, Detroit, MI, Michael A. Holmes, Ameritech, Detroit, MI, for Michigan Bell Telephone Company.
Don L. Keskey, David A. Voges, Sharon Feldman, Michigan Department of Attorney General, Public Service Division, Lansing, MI, for Michigan Public Service Commission, John G. Strand, John C. Shea, David A. Svanda.
OPINION AND ORDER AFFIRMING IN PART AND REVERSING IN PART DECISIONS BY THE MICHIGAN PUBLIC SERVICE COMMISSION
This case came before the Court at a hearing on September 8, 1999, on the parties' cross appeals of rulings by the Michigan Public Service Commission (MPSC). The parties claim that the Interconnection Agreement between them, as arbitrated and approved by the MPSC, is inconsistent with the Telecommunications Act of 1996 and the FCC's implementing regulations.
As explained below, the decisions of the MPSC are AFFIRMED in part and REVERSED in part.
I. Facts
Plaintiffs, MCI Telecommunications Corporation and MCImetro Access Transmission Services, Inc. (collectively "MCI") and Michigan Bell Telephone Company d/b/a Ameritech Michigan, Inc ("Ameritech") have appealed MPSC Case No. U-11168, each claiming that certain terms of their Interconnection Agreement violate the Telecommunications Act of 1996.
The Telecommunications Act of 1996, Pub, L. No. 104-104, 110 Stat. 56 (1996) is codified in scattered sections of the United States Code, Title 47.
Historically, local phone service was provided by a monopoly and was regulated by the states. States usually gave an exclusive franchise to one carrier, which owned the entire local exchange network, including local loops (the cables that connect telephones to switches), the switches (computers that direct calls to their destination), and transport facilities (equipment that directs calls between switches). In 1996, Congress sought to end monopolization of local phone service by enacting the Telecommunications Act, which fundamentally restructures local telecommunications markets. The purpose of the Act is to shift monopoly local telephone markets to competition as quickly as possible. H. Rep. No. 104-204, at 89 (1995), reprinted in 1996 U.S.C.C.A.N. 10 (JA 44).
References to "JA" are references to the parties' six volume joint appendix.
In essence, the Act requires an incumbent local exchange carrier (ILEC), like Ameritech, to share its network with competing local exchange carriers (CLEC's). Under section 251, the Act imposes substantive requirements on incumbents and under section 252, the Act sets forth a procedure for implementing those requirements in an interconnection agreement. Section 251 provides that a requesting carrier can obtain access to the incumbent's network in three ways: 1) it can interconnect its facilities with the incumbent's facilities; 2) it can purchase the incumbent's services at wholesale prices and resell the services to customers; or 3) it can lease elements of the incumbent's network on an "unbundled basis." 47 U.S.C. § 251. In each case, the incumbent must charge rates that are just, reasonable, and nondiscriminatory. Id. Under section 252 of the Act, incumbent local exchange carriers are required to negotiate in good faith over the terms of interconnection, resale, and access to network elements, and to enter into interconnection agreements with competitors. Id. §§ 251(c)(1) 252(a)(1). When the parties cannot arrive at a complete agreement through negotiations, the parties are subject to compulsory arbitration via administrative proceedings before the local public service commission. Id. § 252(b) 252(e)(5). The state commissions must apply the substantive federal requirements set forth in section 251 and the FCC's implementing regulations. 47 U.S.C. § 252 (c)(1). After the proposed interconnection agreement is finally negotiated and/or arbitrated, it is submitted to the state public service commission for final approval. Id. § 252(e)(1). The parties then may bring suit in federal district court challenging the terms of the final agreement on the ground that the terms are inconsistent with the Act or with the FCC regulations. 47 U.S.C. § 252 (e)(6). This suit falls under section 252(e)(6).
The Act also preempts state laws and regulations that impede competition. 47 U.S.C. § 253 (c); AT T v. Iowa Utilities Board, 525 U.S. 366, 119 S.Ct. 721, 726, 142 L.Ed.2d 835 (1999).
Section 252(e)(6) provides:
In any case in which a State commission makes a determination under this section [252], any party aggrieved by such determination may bring an action in an appropriate Federal district court to determine whether the agreement . . . meets the requirements of section 251 of this title and this section [252].
In this case, MCI and Ameritech entered into an Interconnection Agreement. The parties negotiated and then arbitrated certain disputed issues before an Arbitration Panel. Arbitration Decision (JA 17). Both parties objected to the Arbitration Decision, and on December 20, 1996, the MPSC issued an order resolving the objections and approving the Agreement. First Approval Order (JA 20). In this First Approval Order, the Commission ordered the parties to file a completed agreement within ten days. The parties disputed additional issues, including Ameritech's proposed limitation of liability provisions. The Commission ordered MCI to accept Ameritech's proposed limitation of liability provisions. Commission Order, June 5, 1997 (JA 27) Then, the Commission again approved the Agreement. Commission Order, July 31, 1997 (JA 28).
MCI and Ameritech challenge certain terms of their Interconnection Agreement in this consolidated lawsuit. Ameritech in its Complaint alleges that the Agreement, as approved by the Commission in its various orders, violates the Act as follows:
Ameritech's Complaint also named Michigan Public Service Commissioners John Strand, John Shea, and David Svanda as defendants in this case. The MPSC did not file a brief nor did it participate in oral argument on this matter.
1. The Agreement includes performance benchmarks and penalties proposed by MCI (Ameritech's Complaint Counts I-IX);
2. The Agreement provides a two-hour conversion window and a five minute conversion interval for cutover of unbundled loops (Ameritech's Complaint Count XIII);
3. The Agreement imposes unreasonable time periods for the bona fide request process (Ameritech Complaint Count XI).
4. The Agreement improperly defines "rights-of-way" (Ameritech's Complaint Count XII); and
5. The Agreement requires Ameritech to offer dark fiber as an unbundled network element (Ameritech's Complaint Count X);
MCI's Amended Complaint alleges that the Agreement violates the Act as follows:
1. The Agreement fails to require Ameritech to provide immediate and nondiscriminatory unbundled access to loop distribution (Count III);
2. The Agreement imposes non-cost-based prices for local switching when it is purchased in conjunction with common transport (Count VI);
3. The Agreement fails to require Ameritech to pay MCI the tandem interconnection rate as compensation for the transport and termination of local telecommunications traffic (Count I);
4. The Agreement fails to require Ameritech to provide MCI with access to Ameritech's yellow pages (Count IV); and
5. The Agreement improperly limits Ameritech's liability for misconduct (Count II).
Note that MCI has elected not to pursue its claim under Count V of the Amended Complaint, which alleged that the Agreement improperly priced common transport. MCI indicated it plans to move to voluntarily dismiss Count V, without prejudice. MCI Brief, p. 2 n. 3.
II. Standard of Review
In reviewing a 252(e)(6) action, district courts must review questions of law de novo, and issues of fact under an arbitrary and capricious standard. U.S. West Communications, Inc. v. Hix, 986 F. Supp. 13, 19 (D.Colo. 1997). The arbitrary and capricious standard requires that a district court give deference to the state commission's decisions; the agency's action will be presumed valid if a reasonable basis exists for its decision. Id. at 18. This court should not "sit as a surrogate public utilities commission to second-guess the decisions made by the state agency to which Congress has committed primary responsibility for implementing the Act." U.S. West Communications, Inc. v. Jennings, 46 F. Supp.2d 1004, 1008 (D.Ariz. 1999) (Supplemental Authority, June 22, 1999, Ex. 4).In determining whether a decision is arbitrary and capricious, a court must consider whether the decision was based on the relevant factors and whether there was a clear error of judgment. Hix, 986 F. Supp. at 18.
Generally, an agency decision will be considered arbitrary and capricious if the agency had relied on factors which Congress had not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. The Court is not empowered to substitute its judgment for that of the agency.Id. (citing Friends of the Bow v. Thompson, 124 F.3d 1210, 1215 (10th Cir. 1997) (citations omitted)). A court can uphold the state commission's decision only on the grounds set forth in the decision. MCI Telecomm. Co. v. Bell Atlantic-Virginia, Inc., No. 3:97CV629, 1988 U.S. Dist. LEXIS 17558, at *17 (E.D, Va. July 1, 1998) (JA 56).
To apply this standard of review, a court must examine the Commission's decision and the record underlying the decisions. The Commission's decision is inextricably intertwined with the Interconnection Agreement because the Commission's decisions resulted in certain provisions of the Agreement. GTE South Inc. v. Morrison, 957 F. Supp. 800, 804 (E.D.Va. 1997).
III. Analysis
A. Benchmarks and Penalties
Ameritech appeals the MPSC decision adopting certain performance benchmarks and penalties, which were proposed by MCI and incorporated into the Agreement by the MPSC. The performance benchmarks limit the time within which Ameritech must fill MCI orders for interconnection, access to network elements, and wholesale services. The penalties require Ameritech to pay "delay credits," "performance failure credits," and "subscriber usage credits" to MCI when Ameritech fails to meet the performance benchmarks. For example, with regard to subscriber-specific services, if Ameritech does not fill an order for network elements within the allotted time, Ameritech must waive the provisioning fee and must pay MCI a delay credit equal to the monthly charge for the service. With regard to non-subscriber specific services (i.e. services for multiple customers), the delay credit is equal to $25,000 per day. Agreement, Sch. 3.8.10-3 (JA 1).
1. MPSC Had Jurisdiction to Adopt Benchmarks and Penalties
Ameritech first claims that the MPSC lacked jurisdiction to impose MCI's proposed benchmarks and penalties because they were not raised in the petition or the response. MCI proposed specific benchmarks and penalties for the first time one week before the arbitration hearing. The Act provides that the State commission shall limit its consideration to the issues set forth in the petition and the response. 47 U.S.C. § 252 (b)(4)(A).
Ameritech's claim that the issue of benchmarks and penalties was not sufficiently raised and was not raised soon enough is disingenuous. While MCI's Petition for Arbitration did not include specific proposed performance benchmarks and penalties, it did raise the issue of quality of service. MCI's Petition at 7-8 (JA 2); see also MCI's "white papers" filed in support of the Petition, Operation Support Systems and Quality of Service Implementation Requirements at 1 (JA 5). Ameritech's Response included Ameritech's proposed standards, benchmarks, and procedures to ensure quality of service. Response at 6 (JA 7). The MPSC appointed an Arbitration Panel and the Panel ordered the parties to file a joint status report designating the issues for arbitration. Issues 31 and 34 in the status report identified the issues of service parity and target installation intervals, i.e. benchmarks. Status Report at 47-48 52-53.
On October 16, 1996, MCI filed its proposed arbitration decision, which set forth the specific benchmarks and penalties which were ultimately adopted by the arbitrators and the Commission. MCI PDAP at 15-16 (JA 9). Ameritech filed its proposed arbitration decision which included its own performance measures. The arbitration hearing was held on October 24 and 25. The parties presented testimony directed to their competing performance standard proposals. Thus, the issue of performance benchmarks and penalties was raised before the Arbitration Panel and the parties had the opportunity to be heard on this issue, The MPSC, therefore, had jurisdiction and authority to decide the issue.
2. MPSC's Adoption of Benchmarks and Penalties was not Arbitrary and Capricious
Ameritech contends that the MPSC's adoption of the benchmarks and penalties was arbitrary and capricious because it was not based on evidence in the record showing that the benchmarks and penalties promote non-discrimination or "parity." The Act prohibits discrimination in a number of ways. It requires that incumbents provide interconnection that is at least equal in quality to that provided by the local exchange carrier to itself or others and on rates, terms, and conditions that are nondiscriminatory. 47 U.S.C. § 251 (c)(2). An incumbent also must provide nondiscriminatory access to network elements, Id. § 251(c)(3), and must provide services at wholesale prices without imposing discriminatory conditions. Id. § 251(c)(4)(B).
Ameritech contends that the essence of nondiscrimination is a comparison of what Ameritech provides to itself and others to what Ameritech provides to MCI. Ameritech complains that MCI's benchmarks are unreasonable because they are not based on such a comparison. Ameritech reasons that the MPSC decision was arbitrary because it failed to cite specific evidence supporting the adoption of MCI's benchmarks and penalties.
The Arbitration Panel adopted MCI's proposal regarding benchmarks and penalties instead of Ameritech's proposal. Arbitration Decision at 43-45 (JA 17). The arbitration procedures provided that issues would be resolved through "final offer" or "baseball" arbitration. Under that process, prior to the arbitration hearing, the parties submitted their final, best offers on the disputed issues. The Panel was to select one of those offers, except when the "results would be clearly unreasonable or contrary to the public interest." Arbitration Decision at 6 (JA 17).
In adopting MCI's proposed benchmarks and penalties, the Panel explained that MCI's proposal would ensure service parity and that Ameritech's proposal lacked the necessary details for enforcement of such parity.
The Panel was given the choice of two sets of contract language to verify compliance [with the Act's parity requirements]. MCI's performance measurements are intended to provide the parity required. While Ameritech claims that with regard to installation and provisioning it will provide MCI Metro with "service parity," Ameritech's proposal is devoid of details of how such claims will be verified or enforced.Id. at 44. The Panel goes on to note that timely provision is critical to enable MCI to compete and that it is reasonable to expect Ameritech to install items for MCI in the same time within which it would install the items for itself. Id. The MPSC adopted the decision of the Arbitration Panel. First Approval Order at 2-3 (JA 20).
The essence of Ameritech's argument is that the Panel did not make factual findings regarding the basis for the proposed benchmarks and penalties, nor did it offer a sufficient explanation for its decision. Applying the arbitrary and capricious standard, the Court finds that there was a reasonable basis for the Arbitration Panel's decision. The Panel explained that service parity and enforcement of service parity are essential under the Act. MCI's proposed benchmarks and penalties provide the parity required, and Ameritech's proposal lacked the necessary details to effectively verify or enforce parity. There was no clear error of judgment.
MCI's proposal was supported by the testimony of Carl Geisy. He stated that MCI had been able to determine, based on its limited experience with resale and interconnection, that interconnection trunks should be set up within ten days and that unbundled loops should be established within two days where there are already facilities present. Tr. of Oct. 24, 1996 Hearing at 98-99 1010 (JA 14).
Ameritech also contends that the Commission's decision was arbitrary because it did not explain why its decision deviated from its decision in the Ameritech/AT T arbitration and from the decisions by other State commissions which rejected MCI's benchmarks and penalties. This Court has previously held that extra record evidence is not admissible in this proceeding, absent extraordinary circumstances. Tr. Nov. 10, 1998 Hearing at 10. Thus, the Court will not review the records in other cases. However, the Court may look to decisions of other panels and other state commissions as persuasive precedent to the extent that the decisions deal with similar facts and circumstances. The state commissions in Illinois, Ohio, and Wisconsin all rejected MCI's proposed benchmarks because MCI failed to bring forth evidence showing that its benchmarks were reasonable. MCI's Arbitration with Illinois Bell, No. 96 AB-006 at 62 (Arbitration Decision Dec. 17, 1996) (JA 84) ("support for MCI's benchmarks is unclear"); MCI's Arbitration with Ameritech Ohio, No. 96-888-TP-ARB at 66 (Arbitration Decision) (JA 86) ("MCI's statement that its proposal is based on its best judgment was never further explained"); MCI's Arbitration with Wisconsin Bell, No. 3255-MA-101 at 49 (Arbitration Decision) (JA 87) ("MCI's proposed benchmarks are not supported by analysis of Ameritech's actual procedures and performance, or even any explanation as to why it believed its standards were reasonable or relevant"). In contrast, here there was evidence to support MCI's proposed benchmarks and Ameritech's proposal was devoid of the necessary details.
3. Benchmarks and Penalties Did Not Violate the Act
Ameritech further argues that the benchmarks and penalties violate the nondiscrimination provisions of the Act because they require Ameritech to provide "superior" service to MCI. Ameritech does not have standing to bring a claim of discrimination under the Act on behalf of other competitors. MCI Telecomm. Corp. v. Pacific Bell, No. C97-0670SI, 1998 U.S. Dist. Lexis 17556, at *105 (N.D.Calif. Sept. 29, 1998) (JA 57). Moreover, the Act's nondiscrimination provisions are aimed at preventing incumbents like Ameritech from discriminating in their own favor. The Act does not require that all interconnection agreements be identical. Id. Furthermore, the benchmarks and penalties do not violate the Act; they are helpful in implementing the nondiscrimination provisions of the Act. Benchmarks and penalties verify and enforce quality of service and nondiscrimination.
This is not to say that benchmarks and penalties are required under the Act. See U.S. West Comm., Inc. v. Hix, . 57 F. Supp.2d 1112, 1121-1122 (D.Colo. 1999) (Supplemental Authority, Sept. 2, 1999, Ex. 3) (Act does not require detailed performance standards, only requires meaningful opportunity to compete).
Ameritech also contends that the benchmarks and penalties will necessarily increase its costs and that the pricing provisions do not include this increased cost. Ameritech argues that because the prices are not based on actual costs, the prices violate the Act. There is no evidence in the record to support Ameritech's claim that the benchmarks and penalties will increase its costs.
4. Penalties Are Reasonable and Enforceable
Finally, Ameritech contends that the penalties adopted by the Commission are not enforceable because they are unreasonable and punitive. Under Michigan law, liquidated damages are enforceable only if they are reasonable and not punitive, because the purpose of damages for breach of contract is to compensate, not to punish. Curran v. Williams, 352 Mich. 278, 89 N.W.2d 602, 604 (1958). The issue of whether liquidated damages are reasonable is a question of law for the court. In re Constr. Diversification, Inc., 36 B.R. 434, 436 (E.D.Mich. 1983).
Ameritech claims that despite the fact that the Agreement states that the delay credits are "not intended to be liquidated damages." Agreement, Schedule 3.8.10 § 1.2 (JA 1), the credits are in fact liquidated damages because they are an attempt by parties to a contract to fix the amount of damages in advance. This Court presumes that the penalties in the Agreement are liquidated damages.
The performance credits and other penalties are enforceable because they are reasonable. With the exception of the $25,000 penalty, the credits reflect the installation and monthly fees for the interconnection, network elements, or resale service at issue; they are patently reasonable. The $25,000 penalty is also reasonable, as it applies only when Ameritech violates the benchmark for a service requested by MCI to serve multiple customers. The Minnesota commission recently held that an identical $25,000 credit was reasonable:
AT T's proposed credits provide a reasonable estimate of the damages associated with failure to meet the quality standards in the contract. The credits included, for example, a $25,000 per day charge for an impermissible delay not specific to an individual customer. This amount pales next to U.S. West's daily intrastate revenues of approximately $2.5 million. Yet the impact of such a delay on the [competing carrier] could be substantial, steering its current or potential customers away form the [competing carrier] and creating long-standing harm to its reputation.Consolidated Petitions of AT T, No. P- 442, slip op. at 57 (Minn. Pub. Util. Comm'n Dec. 2, 1996) (JA 80). See U.S. West Comm., Inc. v. Hix, 57 F. Supp.2d 1112, 1120-22 (D.Colo. 1999) (Supplemental Authority, Sept. 2, 1999, Ex. 3) (commission had authority under Act to adopt penalties in order to provide opportunity to compete).
In sum, the MPSC had jurisdiction to adopt MCI's proposed benchmarks and penalties and did not act arbitrarily in doing so. Further, the benchmarks and penalties do not violate the Act and they are enforceable. Accordingly, the MPSC's decision to incorporate MCI's proposed benchmarks and penalties in the Interconnection Agreement is AFFIRMED.
B. Two Hour Conversion Window and Five Minute Conversion Interval for Cutover of Unbundled Loops
Ameritech contends that the time frames adopted by the Commission for providing unbundled loops to MCI are not technically feasible and that the Commission acted arbitrarily and capriciously. Under the Interconnection Agreement, MCI may obtain access to unbundled loops, the physical connections (usually wires) between the premises of a customer and the rest of the network. The Agreement, as approved by the MPSC, requires Ameritech to provide MCI access to local loops by performing loop cutovers within a two hour conversion window and a five minute conversion interval. The conversion window is the time within which Ameritech will install the loop. The conversion interval is the time period between disconnecting the local service and connecting a loop to the MCI interface point, that is, the time frame within which a customer's phone service may be disconnected in order to switch to MCI's service.
During arbitration, Ameritech opposed MCI's two hour conversion window and a five minute conversion interval and instead proposed that it be required to perform loop cutovers within a twelve hour conversion window and a sixty minute conversion interval. The Panel adopted MCI's proposal, finding that coordinated cutovers are not difficult engineering tasks, that coordinated cutovers are necessary to ensure use of unbundled loops without significant disruption, and that Ameritech's proposed conversion times would impair MCI's ability to offer service. Arbitration Decision at 33-34 (JA 17). The Commission adopted the Panel's decision without comment. First Approval Order at 2-3 (JA 20).
Incumbent LEC's are required to provide access and unbundled elements that are at least equal in quality to what the incumbent provides to itself, unless it is not technically feasible to do so. First Report and Order ¶ 313 (JA 45). Ameritech contends that MCI's cutover time frames are not technically feasible. Ameritech had the burden of proof on this issue. Id.; 47 C.F.R. § 51.311 (b). "An incumbent LEC that claims that it cannot satisfy such request [for access to unbundled elements] because of adverse network reliability impacts must prove to the state commission by clear and convincing evidence that such interconnection, access, or methods would result in specific and significant adverse network reliability impacts." 47 C.F.R. § 51.5 (definition of "technically feasible"). A determination of technical feasibility must not include consideration of economic or site concerns. Id.
MCI presented evidence to the Panel that the cutover was a simple engineering task. MCI's witness, Mr. Geisy, testified that to actually hook up an unbundled loop to the cabling in MCI's collocated space is simple-it merely requires a technician to go to the main distribution frame and install a jumper wire. Tr. of Geisy testimony at 280-81 (JA 15). "When MCI gains an existing ILEC customer and needs that unbundled local loop to serve that customer, then that local loop will need to be `cut over' from the ILEC to MCI. Mechanically, this is not a complex task; it only involves the movement of jumper wires on the MDF [main distribution frame]." MCI's Network Implementation Requirements at 24 (JA 4).
Ameritech claims that performing a "live" or "hot" cutover is more complicated than merely moving jumper wires. After the Arbitration Decision was rendered, Ameritech contended that cutover requires the following additional tasks: 1) coordination by phone between the Ameritech unbundling center and the technician in the central office; 2) coordination with the MCI representative in the office; 3) verifying that the loop is connected to the line that MCI requested; and 4) when number porting is requested, verifying that the additional paths are installed correctly. Ameritech's Objections to Arbitration Decision at 32-33 (JA 18). Ameritech pointed to no evidence in the record in support of these allegations. Moreover, these additional tasks do not appear to be complex.
In addition to arguing that cutover is a complex process, Ameritech contends that it is costly to complete a cutover within MCI's time frames. Ameritech's witness, Scott Alexander, testified that MCI's short cutover time frames were not reasonable:
It would drastically increase the resources required to handle peak demand and make it virtually impossible to ensure seamless cutovers. While Ameritech makes every reasonable effort to coordinate "live" cutovers within a reasonable interval, the realities of service order volumes, order complexity, and the need to retain flexibility to accommodate CLEC-requested changes make it impossible to commit to this requirement. Furthermore, Ameritech cannot agree to limit potential service disruptions to five minutes or less. This would require inefficient use of resources as multiple technicians would be required to have their hands on the same order at the same time to make the conversion so rapidly.
Testimony of Scott Alexander at 21-22 (JA 10). In essence, Alexander testified that rapid cutovers were not feasible because they require the use of more than one technician and thus they are costly. This evidence does not demonstrate technical infeasibility because a determination of technical feasibility must not include a consideration of increased costs. 47 C.F.R. § 51.5.
Alexander went on to state, "The practical considerations such as central office location, frame configurations, and physical access to the hardware and the operations support systems required to execute the cutover will not support the proposed 5 minute limitation." This statement was not supported by any evidence whatsoever.
In applying the arbitrary and capricious standard, the Court must give deference to the Commission's decision. The decision will be presumed valid if a reasonable basis exists for its decision, if the Commission's decision was based on a consideration of the relevant factors, and if there was no clear error of judgment. Hix, 986 F. Supp. at 18. Here the Commission did not err. Its decision was based on a consideration of the complexity and feasibility of the cutover time frames. Further, Ameritech had the burden of proving technical infeasibility. Because Ameritech did not submit evidence sufficient to meet its burden, the Commission's adoption of MCI's proposed cutover time frames is AFFIRMED.
Ameritech also argues that the FCC has already rejected a five minute loop cutover interval, and thus, Ameritech implies, the five minute time frame must be technically infeasible. The FCC did decline to adopt a requirement that all loop cutover intervals be limited to five minutes. First Report and Order ¶ 373 387 (JA 45). However, the FCC did so without comment. The FCC did not opine as to the technical feasibility of such a time interval; it merely indicated that other rules regarding nondiscrimination "adequately address" the concern. Id. ¶ 387 (JA 45).
C. Time Period for Bona Fide Request Process
Ameritech also appeals the Commission's adoption of MCI's proposed time period for processing of Bona Fide Requests (BFRs). Ameritech and MCI agreed that their Interconnection Agreement must contain a BFR process by which MCI could request new products or services not already provided by Ameritech as covered in the Agreement. The Act requires that incumbents provide network elements to competitors on the same terms as it provides those elements to itself. 47 C.F.R. § 51.313 (b). The parties disputed the time period within which Ameritech should be required to process BFRs. Again, using the final offer arbitration method, the Panel adopted MCI's shorter time frame. Arbitration Decision at 31 (JA 17). The Commission adopted the Panel's Decision. First Approval Order at 2-3 (JA 20).
Ameritech proposed a 120 day time frame for processing of Bona Fide Requests as follows: Within the first thirty days, Ameritech would determine whether it is required to provide the requested product or service by the Telecommunications Act, whether it is technically feasible, and what the projected price would be. Then, if MCI directed Ameritech to continue to develop the product or service, Ameritech would have an additional ninety days to develop a final BFR Quote, including a product description, proposed rates, ordering intervals and procedures, and a statement of Ameritech's development costs. In contrast to Ameritech's 120- day proposal, MCI proposed a thirty-five day time frame as follows: MCI originally proposed that Ameritech respond to BFR's within ten days. Later, MCI amended its position and proposed that Ameritech complete its initial determination within fifteen days, and that Ameritech develop its final BFR quote within an additional twenty days.
Ameritech agreed to process "certain less complicated" requests within thirty days.
Ameritech contends that the Arbitration Panel's adoption of MCI's proposal was arbitrary and capricious because it was without record support and without adequate reasoning. MCI's evidence before the Panel consisted of a statement in its White Paper that an expedited BFR time frame was essential to competition and that a short time frame was adequate given that the BFR process requires MCI to provide identifying information and the major issue is technical feasibility. MCI's White Paper even supported MCI's initial proposal of a ten day BFR process.
Networks are dynamic structures. ILEC's are — hopefully-constantly improving them, adding new features and functions. In addition, . . . MCI may find uses for other network functions that currently exist, but for which MCI has not specifically asked to be unbundled now. . . . Consequently, after this particular arbitration is completed, MCI will need to be able to request and gain access to network elements other than what will be specifically unbundled as a result of this process.
. . . Significant delays in making unbundled network elements available may delay the advent of effective competition or may put new entrants at a significant competitive disadvantage in relation to the ILEC. . . . [A]s demonstrated by past practice in many cases, ILECs will take every opportunity to delay the availability of unbundled elements, given that they have no incentive to make available the unbundled elements that new entrants need
Consequently, a process must be established for further unbundling and that process must be expedited The ILEC should have ten days to respond to this request. This relatively short period is sufficient given that the bona fide request process requires MCI to provide identifying information and that the major issue with regard to network elements is whether it is technically feasible to unbundle the element. Ancillary Arrangements and Services Requirements (MCI White Paper) at 28-29 (JA 3).
Ameritech's evidence on this issue consisted of the verified statement of Gregory Dunny, Vice President of Marketing and Sales for the network providers segment of Ameritech Information Industry Services:
Q. Is it reasonable to expect Ameritech to consistently produce time and cost estimates within ten days of receiving any BFR?
A. I do not think so. Ameritech has no way of controlling the number or complexity of BFRs it will receive at any one time. The determination of reasonable cost and availability dates may require substantial research, and should not be driven by unduly short deadlines. Further, Ameritech (sic) ability to respond to a BFR will also depend on the quality of the information submitted by the requestor, which Ameritech cannot control. By contrast, Ameritech's proposed BFR timetable allows for development of the technical feasibility analysis within 30 days and a complete response within a reasonable period (120 days). Moreover, if speed is essential to a requesting party, it can always seek to negotiate a different development schedule, provided it is willing to pay expedited development costs.
Dunny Statement at 85 (JA 12). While Dunny stated that MCI's originally proposed ten day period was not reasonable, he did not address MCI's later proposed thirty-five day period. Ameritech submitted no evidence regarding the thirty-five day period.
The Arbitration Panel adopted MCI's proposed time period, finding that Ameritech's proposal would interject unnecessary delay into a straightforward process and would hinder competition. Arbitration Decision at 31-32 (JA 17). Ameritech contends that this finding lacked evidentiary support and explanation and thus was arbitrary.
The Panel mistakenly stated that it was adopting the ten day time period initially proposed by MCI. In fact, the Panel adopted a thirty-five day period pursuant to MCI's amended proposal.
Ameritech also argued that the Commission should have adopted the 120-day time frame because, in the context of its Open Network Architecture ("ONA") Orders which were intended to spur competition among enhanced service providers, the FCC approved the use of a 120-day time frame for local carriers to process requests for new basic service arrangements, basic service elements, and complementary network service. In the Matter of Filing and Review of Open Network Architecture Plans, 4 FCC Rcd. 1, 205-06 ¶ 6397 (Dec. 22, 1985). The ONA proceeding is not relevant here. Further, Congress's goal of bringing competition to the local exchange market as reflected in the Telecommunications Act is more far-reaching than the FCC's goal for ONA of preserving competition and promoting network efficiency. In the matter of Computer III Further Remand Proceedings: BOC Provision of Enhanced Services, Further Notice of Proposed Rulemaking, 13 FCC Rcd at 21 ¶ 31 (1998) (JA 49).
The Court must give deference to the Commission's decision under the arbitrary and capricious standard. Thus, the Court will presume that the Commission's decision was valid if a reasonable basis existed for it. Hix, 986 F. Supp. at 18. Here the Commission did not err. The Commission weighed the evidence and found that the BFR process is not complex. Because the BFR process is straightforward, because MCI is required to provide identifying information, and because the purpose of the Act is to establish and promote competition, the Commission adopted MCI's shorter time frame. This decision is AFFIRMED.
Ameritech also argues that MCI's BFR time frame was rejected by the State commissions in the other four states served by Ameritech because MCI's time frames were not supported by evidence. See JA 79. See also MCI Telecomm. Corp. v. Illinois Bell Telephone Co., No. 97C2225, slip op. at 25-26 (ND. Ill. June 22, 1999) (Supplemental Authority, Sept. 2, 1999, Ex. 2) (court held that commission decision adopting longer BFR process was not arbitrary based on facts presented to commission in that case). These decisions are not persuasive here because they are based on their unique records. This Court must review only the record before it, and here the Commission acted reasonably when it adopted MCI's shorter time frames.
D. Rights-of-Way
Ameritech appeals the MPSC decision defining "rights-of-way" as used in the Telecommunications Act. Ameritech contends that the MPSC erred as a matter of law by broadly construing the term rights-of-way as including all rights in real property, so long as the property is used for distribution facilities. Ameritech contends that the term should be interpreted to mean only an easement or license and not a fee simple or leasehold interest in land. In other words, Ameritech contends that it is not required to provide MCI access to land which it owns or leases.
Section 251(b)(4) of the Telecommunications Act requires ILEC's to "afford access to the poles, ducts, conduits, and rights-of-way . . . to competing providers of telecommunications services on rates, terms, and conditions that are consistent with Section 224 of this Title." Section 224 governs the rates, terms and conditions under which access must be provided. Specifically, section 224(f)(1) requires that "a utility shall provide . . . nondiscriminatory access to any pole, duct, conduit or right-of-way owned or controlled by it." The FCC has explained that the access obligation of 224(f)(1) applies "when, as a matter of state law, the utility owns or controls the right-of-way to the extent necessary to permit such access." First Report and Order 6 1179 (JA 45).
The Arbitration Panel applied Michigan law and held that "rights-of-way includes property owned, leased or otherwise controlled by Ameritech, not just real estate owned by third parties." Arbitration Decision at 54 (JA 17). The Panel relied on Westman v. Kiell, 183 Mich. App. 489, 493- 495, 455 N.W.2d 45, 47 (1990), quoting its holding as follows:
A railroad may acquire in a strip of real property for use as a right-of-way, as in any real property, a fee simple absolute, a determinable fee, an easement, a lease, or a license, as may any other corporate entity or individual. The character of the interest acquired is determined by the language of the conveyance.
The Panel reasoned that Congress did not intend a competitor's access to incumbent's rights-of-way to be dependent upon the type of real property interest that the incumbent holds in the real estate over which the right of way passes. "The purpose of § 224(f)(1) is to ensure that no party can use its control of the enumerated facilities and property to impede, inadvertently or otherwise, installation and maintenance of telecommunication and cable equipment by those seeking to compete in these fields." Arbitration Decision at 55 (JA 17). The MPSC adopted the Panel's decision and clarified that rights-of-way refers only to property that is used for distribution facilities:
[T]he definition of rights-of-way should be revised to clarify that Ameritech Michigan is not obligated to create new rights-of-way across its own property. Accordingly, "rights-of-way" should include easements, licenses, or any other right, whether based upon grant, reservation, contract, law, or otherwise, to use property if the property is used for distribution facilities.
First Approval Order at 8 (JA 20).
Ameritech argues that this interpretation is overly broad and that the FCC specifically stated that an overly broad interpretation of the term rights-of-way should be avoided. First Report and Order ¶ 1185 (JA 45). The FCC went on to explain that the purpose of allowing access to rights-of-way is to permit competitors to "piggyback" along distribution networks, not to require unrestricted access to an ILEC's land or facilities. Id.
Upon reviewing this issue de novo, the Court finds that the MPSC's definition of "rights-of-way" is not overly broad. The MPSC did not require Ameritech to provide unrestricted access to its land and equipment. It only required Ameritech to permit MCI to piggyback on its distribution facilities by mandating that Ameritech provide MCI access to rights-of-way if the property is used for distribution facilities-regardless of whether Ameritech's property interest is by easement, lease, or fee simple ownership. It simply does not make sense to argue that Congress intended access to rights-of-way to be dependent upon the specific type of real estate interest held by the incumbent.
Ameritech also argues that the Arbitration Panel erred by relying on and misinterpreting Westman v. Kiell, 183 Mich. App. 489, 455 N.W.2d 45 (1990). Ameritech contends that the Court should apply the plain meaning of the term "rights-of-way," the term means only an easement, and the broader definition set forth in Westman applies only to railroad cases. To the contrary, Westman expressly recognized that any party, not just a railroad, may acquire an interest in real property for use as a right-of-way via a variety of different legal interests. "A railroad may acquire in a strip of real property for use as a right of way . . ., a fee simple . . ., an easement, a lease, or a license, as may any other corporate entity or individual." Westman, 183 Mich.App. at 493, 455 N.W.2d at 47, (emphasis added) Under Michigan law, the term rights-of-way refers both to the right to use the property of others as well as to the property that an entity owns or leases for distribution facilities. Quinn v. Pere Marquette Ry. Co., 256 Mich. 143, 150, 239 N.W. 376, 379 (1931) (rights-of-way has two meanings, the strip of land on which railroad track is laid as well as the legal right to use the strip). Accordingly, the MPSC's interpretation of the term "rights-of-way" is consistent with the Act and the regulations and is AFFIRMED.
E. Dark Fiber
Ameritech also appeals the MPSC's decision requiring Ameritech to provide "dark fiber" to MCI as an unbundled network element. Dark fiber is an unequipped fiber optic strand without any electrical or optical transmission equipment attached at either end. The fiber is called "dark" because it lacks the equipment that illuminates the fiber. In other words, dark fiber is fiber optic transmission cable that has been installed for future use and is not currently being used.
Section 251(c)(3) of the Act requires incumbents to provide competitors with Unbundled access to the elements of their networks. The Act defines "network element" as "a facility or equipment used in the provision of a telecommunications service. Such term also includes features, functions, and capabilities that are provided by means of such facility or equipment or used in the transmission, routing, or other provision of telecommunications service." 47 U.S.C. § 153 (29) (emphasis added); First Report and Order ¶ 261 (JA 45).
The Act directs the FCC to carry out the Act's provisions by issuing regulations. 47 U.S.C. § 251 (d). The FCC required that incumbents lease on an unbundled basis seven different network elements. 47 C.F.R. § 51.319 (c) (d); First Report and Order ¶ 27 (JA 45). In determining which network elements must be unbundled, the FCC interpreted the "necessary and impair" provision of the Act:
In determining what network elements should be made available for purposes of subsection (c)(3), the [FCC] shall consider, at a minimum, whether —
(A) access to such network elements as are proprietary in nature is necessary; and
(B) the failure to provide access to such network elements would impair the ability of the telecommunications carrier seeking access to provide the services that it seeks to offer.47 U.S.C. § 251 (d)(2) (emphasis added).
Rule 319, the list of seven elements that must be unbundled, did not include dark fiber. Dark fiber was not included because the FCC determined that it lacked sufficient information to decide whether dark fiber was a network element. Id. at ¶ 450.
Even though the FCC did not list dark fiber as a standard element that must be provided on an unbundled basis, pursuant to FCC Rule 317, a State commission may require any network element to be provided on an unbundled basis, including dark fiber, by applying the "necessary and impair" provision of the Act. 47 C.F.R. § 51.317.
Here, the Arbitration Panel concluded that Ameritech must provide MCI access to its dark fiber, holding as follows:
Under FCC Order ¶ 281, there is a presumption in favor of unbundling if it is technically feasible. MCI desires access to "dark fiber" and there is no technical obstacle to unbundling "dark fiber." Section 3 (29) of the Act defines the term "`network element' to include "a facility or equipment used in the provision of a telecommunications service" (FCC Order ¶ 249). The Panel notes that the FCC's Order, ¶ 262, concludes that the definition of the term "network element" broadly includes all "facilities or equipment used in the provision of a telecommunications service." Even though the FCC in its Order at ¶ 450 declined at the time to address the unbundling of an ILEC's dark fiber, the Panel finds that Ameritech's dark fiber should be available to MCI. The Panel believes this interpretation is proper noting that not all fiber is dark. To decline MCI the use of dark fiber, in the Panel's opinion, would be like asking to deny MCI the use of an unused unbundled loop simply because that specific loop is not being used.
Arbitration Dec. at 27-28 (JA 17), adopted by the MPSC without comment, First Approval Order at 2-3 (JA 20).
Count X of Ameritech's Complaint before this Court alleges that the MPSC improperly required Ameritech to offer dark fiber as an unbundled network element. Ameritech contends that 1) dark fiber is not a "network element" and 2) the MPSC erred by failing to apply the impairment test in determining that dark fiber must be unbundled.
District Courts and State commissions are split on the issue of whether dark fiber is a "network element." Ameritech relies on the minority view that dark fiber is not a network element because, by its very nature, it is not currently being used to provide services. of the federal district courts that have decided the issue, only one has found that dark fiber is not a network element. In MCI Telecommunications Corp. v. Pacific Bell, No. C 97- 0670 SI, 1988 U.S. Dist. Lexis 17556 (N.D.Cal. Sept. 29, 1998) (JA 57), the court held that dark fiber was not a network element because it could not be "used" until the requisite equipment was attached to the ends. Dark fiber was in the nature of unused inventory which the Act did not require incumbents to provide to competitors. Id. at *75 "While MCI is correct that `used' is not the same as `currently used,' it does not follow that `used' necessarily means `will be used.'" Id. Six State commissions have similarly held that dark fiber is not a network element because it is not currently being used to provide telecommunications service. See Orders of State commissions from Cal., Fla., La., N.Y., Pa., and Ind. excerpts at JA 76.
In contrast, the majority view is that dark fiber is a network element. US West Comm., Inc. v. Jennings, No. CV 97-26-PHX-RGS-OMP, 1999 WL 284888, at *15 (D.Ariz. May 4, 1999) (Supplemental Authority, June 22, 1999, Ex. 4); US West Communications Inc. v. AT T Communications of the Pacific Northwest, Inc., 46 F. Supp.2d 1068, 1080-1081 (D.Or. 1999) (Supplemental Authority, June 22, 1999, Ex. 5), reaffirming earlier decision in, U.S. West Communications, Inc. v. AT T Communications of Pacific Northwest, Inc., 31 F. Supp.2d 839, 854 (D.Or. 1998); US West Comm., Inc. v. Garvey, No. 97- 913, at *26 (D.Minn. Mar. 30, 1999) (JA 69); MCI Telecomm. Corp. v. BellSouth Telecomm., Inc., 40 F. Supp.2d 416, 428-429 (E.D.Ky. 1999) (JA 58); MCI v. Bell-Atlantic, 36 F. Supp.2d 419, 423 (D.D.C. 1999) (JA 55) (reversing Matter of AT T, Arb. Dec. (D.C. Pub. Serv. Comm'n Dec. 2, 1996) (excerpt at JA 76)); US West v. Thoms, 1997 WL 880744 No. 4-97-CV- 70082, at *40 (S.D.Iowa Jan. 25, 1999) (JA 73); US West Comm., Inc. v. AT T Corp., No. A1-97-085, at *15-16 (D.N.D. Jan. 8, 1999) (JA 68); Southwestern Bell Telephone Co. v. AT T Comm. of the Southwest, Inc., No. 97CA132SS, 1998 WL 657717, at *6 (W.D.Tex. Aug. 31, 1998) (JA 66); US West v. AT T, No. C97-1320R, at *14-16 (W.D.Wash. July 21, 1998) (JA 67); MCI Telecomm. Corp. v. U.S. West Comm., Inc., No. C97-1508R, at *14-15 (W.D.Wash. July 21, 1998) (JA 61); MCI Metro Access Trans. Sew's., Inc. v. GTE Northwest, Inc., No. C-97-742WD, 1009 U.S. Dist. Lexis 11335, at *13-14 (W.D.Wash. July 7, 1998); MCI Telecommunications Corp. v. BellSouth Telecommunications, Inc., 7 F. Supp.2d 674, 680 (E.D.N.C. 1998); MCI v. Bell Atlantic-Virginia, Inc., No. 3:97CV629, 1998 U.S. Dist. Lexis 17558, at *20-21 (E.D.Va. July 1, 1998) (JA 56). Twelve State commissions have also held that dark fiber is a network element. See Orders of State commissions from Tenn., Ohio, Ga., Tx., Minn., Iowa, Ill., Or. (2), Ariz., Ky., and Wash, excerpts at JA 77.
The majority view is better reasoned. These courts that hold that dark fiber is a network element find that dark fiber is more a part of the network than it is a part of inventory. "This court agrees with MCI that dark fiber is completely different from the rolls of copper wire and stacks of switches alluded to by BellSouth, because dark fiber is already in the ground. . . . In some cases, . . . it is wound around `lit' fiber inside the same sheathing." MCI v. BellSouth, 7 F. Supp.2d at 679; accord MCI v. Bell-Atlantic, 36 F. Supp.2d at 424. In addition, the FCC held that, under the predecessor to the 1996 Telecommunications Act, dark fiber was a "wire communication." Because the FCC considers it a wire communication, dark fiber should also be considered a network element, which is defined as equipment used to provide telecommunications services. MCI v. BellSouth, 7 F. Supp.2d at 679-80; accord MCI v. BellSouth, 40 F. Supp.2d 416, 424 (E.D.Ky. 1999) (JA 58). Further, the Supreme Court in AT T Corp. v. Iowa Utilities Board, 525 U.S. 366, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999), recently recognized the breadth of the definition of "network element." MCI v. Bell-Atlantic, 36 F. Supp.2d at 424 (citing IUB, 119 S.Ct. at 734 (definition is broad and includes more than physical facilities)). Moreover, the definition of "network element" must be broad to be consistent with the Act.
A limiting definition of network element, such as the one offered by U.S. West, would allow an ILEC to avoid making equipment available to CLECs merely because the equipment is not currently in use. For example, a local loop servicing a particular residence, which is in all other respects a network element, would not be available to CLEC if the house was temporarily vacant and not subscribing to telephone service. This result is inconsistent with the scope of the language of the Act as interpreted by the FCC. See 47 C.F.R. § Sl.319(a) (providing that an ILEC must provide nondiscriminatory access to local loops on an unbundled basis).US West v. Thoms, No. 4-97-CV-70082, at *40 (S.D.Iowa Jan. 25, 1999) (JA 73). In sum, the majority view that dark fiber is a network element rests on firmer ground.
While the MPSC correctly determined that dark fiber was a network element, the Commission erred by applying only the technical feasibility test. The MPSC simply determined that it was technically feasible to unbundle dark fiber and then concluded that it must be unbundled. Arbitration Dec. at 27-28 (JA 17). The Supreme Court recently rejected the idea that an element must be unbundled simply because it is feasible to do so. AT T Corp. v. Iowa Utilities Board, 525 U.S. 366, 119 S.Ct. 721, 736, 142 L.Ed.2d 835 (1999) (IUB). The Act requires that incumbent carriers like Ameritech provide access to network elements on an unbundled basis at any technically feasible point. 47 U.S.C. § 251 (c)(3). The Supreme Court explained that the FCC misinterpreted section 252(c)(3) to mean that ILECs must provide access to network elements whenever it is technically feasible to do so. Section 251(c)(3) indicates where unbundled access must occur, not which elements must be unbundled. IUB, 119 S.Ct. at 736.
The Commission also erred by failing to apply the necessary and impair test as required by Rule 317. Section 251(d)(2)(B) provides that "the commission shall consider, at a minimum, whether . . . the failure to provide access to such network elements would impair the ability of the telecommunications carrier seeking access to provide the service it seeks to offer" (emphasis added). Section 251(d)(2)(B), which is directed toward the FCC, applies equally to the State commissions via Rule 317. Rule 317 provides that a State commission may require unbundling beyond the seven elements identified in Rule 319 if, after applying the FCC's interpretation of the necessary and impair section, it determines that unbundling is required. Consideration of the impairment test is mandatory, as the statute uses the word "shall." Thus, the MPSC erred by failing to apply the impairment test.
Having found that dark fiber is a network element and the MPSC erred by failing to apply the necessary and impair rule, Rule 317, the Court must then determine whether to reverse, stay, or remand the issue of whether Ameritech is required to provide unbundled access to dark fiber in light of the Supreme Court's ruling in IUB.
In IUB, the Supreme Court held that the FCC's interpretation of the necessary and impair rule was too broad and did not impose proper limits on the Act's unbundled access requirements. Id. at 735-36. The Court vacated FCC Rule 319, which specified which elements must be unbundled, because it was based on an erroneous interpretation of the necessary and impair rule. The Court remanded the ease for the FCC to establish a new interpretation, and to determine which network elements must be unbundled based on that new interpretation. Id. at 736.
In IUB, the Supreme Court also impliedly vacated FCC Rule 317. MCI v. Bell-Atlantic, 36 F. Supp.2d 419, 424 n. 4 (D.D.C. 1999) (although Iub did not reach issue of validity of Rule 317, IUB holding is equally applicable to Rule 317) (JA 55). "Although IUB did not expressly vacate Rule 317, the rule purports to allow state commissions to apply the same erroneous standard that was fatal to Rule 319. Therefore, the reasoning of IUB applies with equal force to Rule 317." MCI Telecomm. Corp. v. Illinois Bell Telephone Co., No. 97C2225, slip op. at 35 (N.D.Ill. June 22, 1999) (Supplemental Authority, Sept. 2, 1999, Ex. 2). Because the FCC's interpretation of the necessary and impair section was erroneous, the application of the FCC interpretation by any State commission was erroneous.
The issue of the "continuing validity and potential disposition" of Rule 317 is being briefed in the Eighth Circuit, and is scheduled for oral argument. Iowa Utilities Board v. FCC, Case No. 96-3321 *2 (8th Cir. June 10, 1999) (IUB on remand), MCI's Notice of Supplemental Authority Ex. 3.
On September 15, 1999, the FCC announced that it has promulgated new regulations. FCC, Report No. CC 99-41, FCC Promotes Local Telecommunications Competition: Adopts Rules on Unbundling Network Elements (Sept. 15, 1999) [hereinafter FCC's Sept. 15, 1999 Announcement] (Supplemental Authority, Sept. 20, 1999, Ex. 1). The text of these regulations is currently unavailable. However, the FCC's announcement included a summary of these rules. The new rules require incumbents to provide unbundled access to dark fiber. Id. at 3. The FCC also announced that it has adopted "a standard for determining whether incumbents must unbundle a network element." Id. at 1 4.
Ameritech argues that the MPSC's ruling on dark fiber should be reversed because there was no rule in existence at the time which required Ameritech to provide dark fiber on an unbundled basis. See MCI Telecomm. Corp. it Illinois Bell Telephone Co., No. 97C2225, slip op. at 35 (N.D.Ill. June 22, 1999) (Supplemental Authority, Sept. 2, 1999, Ex. 2) (because state commission did not apply necessary and impair test then in effect, district court reversed decision requiring incumbent to provide unbundled access to dark fiber). The Interconnection Agreement provides that when there are changes in the law, the parties must renegotiate the affected terms and conditions in good faith. Agreement § 29.3 (JA 1). Ameritech argued that if the FCC changed the law, the parties would then have to renegotiate. The FCC now has changed the law, as the September 15 announcement indicates that the new regulations require incumbents to provide dark fiber on an unbundled basis.
Instead of reversing, MCI contends that the Court should stay its decision under the doctrine of primary jurisdiction, and rule when the text of the new unbundling regulations is available. The doctrine of primary jurisdiction provides that a court may stay its decision on a claim when "enforcement of [a] claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body." United States v. Western Pacific R.R., 352 U.S. 59, 63-64, 77 S.Ct. 161, 1 L.Ed.2d 126 (1956). While there is no precise formula for applying the doctrine, it is proper to defer to the expertise of an agency when the issue is specialized or technical and when deference would ensure national uniformity. Here, Congress delegated to the FCC the task of promulgating regulations interpreting the Telecommunications Act. Further, "[t]he advisability of invoking primary jurisdiction is greatest when the issue is already before the agency." Mississippi Power Light Co. v. United Gas Pipe Line Co., 532 F.2d 412, 420 (5th Cir. 1976).
This Court rejects both Ameritech's request that it reverse the MPSC and MCI's request that it stay its decision. Instead, the Court finds that the better course is to remand this issue to the MPSC. Most courts faced with this issue have declined to issue a stay and instead have remanded the issue of which elements must be unbundled to the State commission for consideration in light of the FCC's new regulations. See e.g., U.S. West Communications, Inc. v. AT T Communications of the Pacific Northwest, Inc, 46 F. Supp.2d 1068, 1080-1081 (D.Or. 1999) (Supplemental Authority, June 22, 1999, Ex. 5); US West Comm., Inc. v. Garvey, No. 97-913, at * 28 (D.Minn. Mar. 30, 1999) (JA 69); US West Comm., Inc. v. Minnesota Public Utilities Comm'n, 55 F. Supp.2d 968, 983-984 (D.Minn. 1999) (JA 72). It is the state commission that should apply a new regulation in the first instance. US West Comm., Inc. v. AT T Comm. of Pacific Northwest, Inc., 46 F. Supp.2d 1068, 1081-1082 (D.Or. 1999) (Supplemental Authority, June 22, 1999, Ex. 5).
In US West Comm., Inc. v. Thoms, No. 4-97-70082 (S.D.Iowa Apr. 19, 1999) (JA 74), the Iowa district court remanded the issue of whether the incumbent carrier must provide unbundled access to dark fiber. In Thoms, the court denied MCI's request for a stay under the doctrine of primary jurisdiction, noting "[i]t is extremely unlikely that the FCC's new regulations would allow this court, as MCI suggests, to adjudicate the dark fiber issue on the record as it exists. Rather, this court would eventually have to remand the issue to the Board for a determination, in the first instance, of whether the provision of dark fiber satisfies the new standard." Id. slip op. at 7. The court reasoned that the state commission was better equipped to handle such a determination because of its specialization, insight gained by experience, and more flexible procedures. "On