Qwest Corp. v. Colorado Public Utilities Commission

Citations: 656 F.3d 1093; 53 Communications Reg. (P&F) 1176; 2011 U.S. App. LEXIS 17842; 2011 WL 3773342Docket: 10-1187, 10-1212

Court: Court of Appeals for the Tenth Circuit; August 26, 2011; Federal Appellate Court

Original Court Document: View Document

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Qwest Corporation (Qwest) is appealing a decision from the United States District Court for the District of Colorado regarding the interpretation of 47 C.F.R. 51.5, which governs local telephone service providers. The Colorado Public Utilities Commission (CPUC), its commissioners, and Cbeyond Communications, LLC (Cbeyond) are cross-appealing. The regulation requires incumbent local exchange carriers (ILECs) like Qwest to lease parts of their networks to competitive local exchange carriers (CLECs) unless certain thresholds are met. Specifically, if the number of 'business lines' in a local exchange surpasses a defined threshold, ILECs can forgo this obligation, as it indicates that CLECs can invest in their infrastructure. The parties dispute what constitutes a 'business line' and how to count them, particularly regarding unbundled network elements (UNE loops). The district court ruled that UNE loops serving non-business customers are included in the business line count, while non-switched UNE loops are excluded. The Tenth Circuit, exercising jurisdiction under 28 U.S.C. 1291, affirmed this ruling in part and reversed it in part. The background highlights significant deregulation of local telephone markets initiated by the Telecommunications Act of 1996, which aimed to facilitate competition by imposing obligations on monopolist local exchange carriers.

Unbundling allows Competitive Local Exchange Carriers (CLECs) to lease network elements from Incumbent Local Exchange Carriers (ILECs) rather than duplicating existing infrastructure. This regulatory framework is necessary because it may be economically unfeasible for CLECs to replicate the ILECs' already established switches, trunks, and loops. Congress has empowered the FCC to determine the conditions under which ILECs must provide these network elements as Unbundled Network Elements (UNEs), specifically assessing whether access is essential for CLECs to offer services without impairment. The FCC's previous attempts to establish a necessity/impairment test were struck down by the Supreme Court and the D.C. Circuit. In 2005, the FCC issued the Triennial Review Remand Order (TRRO), introducing an impairment standard based on business line density. The FCC concluded that if there is sufficient revenue potential, CLECs can feasibly invest in their own facilities and thus are not "impaired" without access to UNEs. This assessment focuses on the number of business lines and fiber-based collocators in a wire center, establishing specific thresholds that dictate when ILECs must provide high-capacity loops and transport as UNEs. Business lines are defined as ILEC-owned switched access lines serving business customers, including those leased to competitive LECs, and are calculated based on both ILEC lines and UNE loops in a wire center.

Business line counts must adhere to specific criteria: they should only include access lines connecting end-user customers to incumbent Local Exchange Carrier (LEC) end-offices for switched services, excluding non-switched special access lines. Each ISDN or digital access line is counted as one line based on a 64 kbps-equivalent measure. Disputes exist regarding which Unbundled Network Element (UNE) loops are considered in this count. Qwest claims all UNE loops connected to a wire center are included, while defendants argue only those serving business customers and connected to switches should count. 

In 2008, the California Public Utilities Commission (CPUC) determined that Qwest's wire centers in Colorado exceeded impairment thresholds, concluding that the business line count includes only UNE loops serving business customers connected to switches. This led to a finding of impairment for high-capacity loops and transport, prompting Qwest to file a complaint in federal court. The district court partially upheld the CPUC's decision, ruling that non-business UNE loops are included in the count but non-switched loops are not, leading both parties to appeal. The FCC submitted an amicus brief supporting the inclusion of both non-business and non-switched UNE loops in the count.

The standard of review for interpretations of the 1996 Act and its regulations is de novo, with deference given to the FCC's interpretations, even those in amicus briefs, unless they are plainly erroneous or inconsistent. The definition of a business line encompasses all incumbent LEC-owned switched access lines serving business customers, inclusive of UNE loops connected to the wire center, regardless of provisioning with other unbundled elements.

Defendants claim that the definition of "business line" limits the phrase "all UNE loops connected to that wire center," suggesting that only UNE loops serving business customers should be counted. However, the court, alongside Qwest, the district court, and the FCC, disagrees, asserting that all UNE loops, regardless of their customer type, are included in the business line count. The court emphasizes the regulation's clear language and states that if a regulation is clear, it should be applied as written. The analysis acknowledges that if ambiguity arises, one must consider regulatory intent and statutory interpretation. Here, the regulation (47 C.F.R. 51.5) explicitly states that the business line count equals the total of all incumbent Local Exchange Carrier (LEC) business switched access lines plus all UNE loops, highlighting that some UNE loops may serve residential customers and may not fit the definition of a business line. Despite this potential over-inclusiveness, the methodology for counting business lines remains valid. The court reinforces the principle that if a term is included in one part of a regulation but not in another, it should not be assumed to apply to the latter. The second sentence of the regulation, which refers to UNE loops without a "business" modifier, supports the conclusion that these loops are part of the business line count, indicating that the FCC intentionally chose to delineate the two categories. The defendants’ argument that the definition restricts the second sentence is rejected, reinforcing that the FCC's language reflects its intent to count all UNE loops connected to a wire center.

Defendants interpret the definition of a business line to include any ILEC switched access line serving a business customer, regardless of whether it is used by the ILEC or is a UNE loop. However, the text clarifies that a UNE loop or leased line qualifies as a business line, but counting business lines in a wire center is specifically defined. The number is determined by counting incumbent LEC business switched access lines and UNE loops connected to that wire center, not merely lines fitting the initial definition. The regulation explicitly states that all UNE loops are included in the business line count, irrespective of their usage for business or non-business customers.

The analysis references the TRRO, noting that while it supports the inclusion of UNE loops in the business line count, it does not contradict the regulation's clarity. Although defendants cite the TRRO's mention of business UNE-P to argue for a limited interpretation, the regulation does not refer to UNE-P and is deemed more authoritative. The definition specifies that business lines consist of access lines connecting end-user customers to ILEC end-offices for switched services, excluding non-switched special access lines. It also includes digital access lines by converting them to 64 kbps-equivalents. The regulation's ambiguity regarding whether the third sentence's limitations apply to all access lines is acknowledged. Ultimately, the FCC's interpretation, which includes non-switched UNE loops in the business line count, is upheld as reasonable and consistent with the regulation.

Deference is given to the FCC's interpretation of its regulations concerning the counting of business lines, particularly in relation to UNE loops. The FCC argues that the third sentence of the business line rule does not contradict the directive in the second sentence, which requires all UNE loops to be included in the count. The interpretation suggests that the first two subsections of the third sentence pertain solely to the incumbent LEC's business switched access lines, not altering the fundamental requirement to include all UNE loops. The defendants’ contention that the third sentence's limitations apply to both ILEC lines and UNEs is rejected; the term "business line tallies" can refer generally to business line counts, indicating that the third sentence modifies the count established in the second sentence. The defendants also challenge the FCC's interpretation regarding the term "all," but the court finds that it retains the same meaning throughout the regulation, ensuring all ILEC business switched access lines and UNE loops are counted, with certain lines excluded by the third sentence. The FCC's methodology, grounded in existing regulatory data reporting requirements, is deemed consistent and administratively practical, while the defendants' interpretation would require additional data not typically available. Consequently, the court affirms the district court's ruling that the business line count includes non-business UNE loops and reverses the ruling regarding non-switched UNE loops.