20050427Initial brief.pdf

Mary S. Hobson (ISB No. 2142)
STOEL RIVES LLP
101 South Capitol Blvd., Suite 1900
Boise, Idaho 83702
Telephone: [phone]
Facsimile: [phone]
mshobson~stoel.com
CE1VED
! ! .-
-'..J
"'"
"nnr; !H)n
,."""""/'
..11- fi t(-
. ,. ..
ill!; i,i....
;\.,
VI ILl j Ie::;; L;Uf'1 iSSION
Adam L. Sherr
QWEST CORPORATION
1600 Seventh Avenue, Room 3206
Seattle, Washington 98191
Telephone: [phone]
Facsimile: [phone]
John M. Devaney
PERKINS corn LLP
607 Fourteenth St., N., Suite 800
Washington, D.C. 20005
Telephone: [phone]
Facsimile: [phone]
devaney~perkinscoie. com
Attorneys for Qwest Corporation
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF
IECA COMMUNI CA TI 0 NS, INC. d/b/a
COY AD COMMUNICATIONS COMPANY
FOR ARBITRATION OF AN
INTERCONNECTION AGREEMENT
WITH QWEST CORPORATION
Case No. CVD- T -05-
QWEST CORPORATION'S INITIAL
BRIEF
INTRODUCTION
Qwest Corporation ("Qwest") submits this initial brief on the merits in this
interconnection arbitration between Qwest and Covad Communications Company ("Covad"
under the Telecommunications Act of 1996 (the "Act"
QWEST CORPORATION'S INITIAL BRIEF - Page 1
Boise-183585.1 0029164-00108
This arbitration demonstrates that the negotiation/arbitration process set forth in Sections
251 and 252 can work fairly and efficiently. Through their good faith negotiations, Qwest and
Covad were able to agree upon almost all of the contractual provisions in the multi-hundred page
interconnection agreement ("ICA") that is the subject of this arbitration. As a result, the parties
have submitted only one disputed issue to the Idaho Public Utilities Commission
Commission ) for resolution.
While Qwest appreciates Covad's good faith conduct in the negotiations, the one
unresolved issue is attributable to Covad's attempt to impose network unbundling obligations on
Qwest that conflict with rulings by the FCC and that are inconsistent with the Act. Covad'
proposed ICA language regarding the definition of unbundled network elements ("UNEs ) would
require Qwest to provide almost unlimited access to the elements in Qwest's Idaho
telecommunications network. This proposal ignores the FCC's findings in the Triennial Review
Order1 ("TRO"and the Triennial Review Remand Order ("TRRO"that CLECs are not
impaired without access to many network elements and that ILECs are therefore not required to
unbundle them. As the FCC described in the TRRO the FCC's new
, "
more targeted" unbundling
standard "imposes unbundling obligations only in those situations where we find that carriers
genuinely are impaired without access to particular network elements and where unbundling does
Report and Order and Order on Remand and Further Notice of Proposed Rulemaking, In the Matter of Review
of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers; Implementation of the Local
Competition Provisions of the Telecommunications Act of 1996; Deployment of Wireline Services Offering
Advanced Telecommunications Capability, CC Dkt. Nos. 01-338, 96-, 98-147, FCC 03-36 (FCC reI. Aug. 21
2003) Triennial Review Order or TRO"), vacated in part, remanded in part, Us. Telecom Ass 'v. FCC 359
F.3d 554 (D.C. Cir. 2004) USTA 11').
Order on Remand In the Matter of Review of Unbundled Access to Network Elements, Review of Section 251
Unbundling Obligations of Incumbent Local Exchange Carriers CC Docket No. 01-338, WC Docket No. 04-313
(FCC reI. February 4 2005) Triennial Review Remand Order
QWEST CORPORATION'S INITIAL BRIEF - Page 2
Boise-183585.10029164-001O8
not frustrate sustainable, facilities-based competition."3 The almost limitless unbundling that
Covad proposes ignores this standard entirely.
Covad's broad unbundling demands also violate the rulings of the United States Supreme
Court and the United States Court of Appeals for the District of Columbia Circuit in which those
courts struck down FCC unbundling requirements while confirming in the most forceful terms
that the Act imposes real and substantial limitations on ILEC unbundling obligations.
addition, Covad's proposed unbundling language assumes incorrectly that state commissions
have authority to require Bell Operating Companies ("BOCs ) to provide network elements
pursuant to Section 271 , to determine pricing for those elements, and to include them in Section
252 ICAs.
The flawed nature of Covad' s arguments is confirmed by the recent decisions in the
CovadlQwest arbitrations in Minnesota, Washington, and Utah. Each of these commissions has
rejected Covad's position and proposed ICA language.4 The consistency among these decision-
makers is not a coincidence - Covad's proposal is without legal support. The infirmities
Covad's arguments are further demonstrated by Covad's willingness to voluntarily accept
Id. ~2.
See In the Matter of the Petition of DIECA Communications, Inc., d/b/a Covad Communications Company forArbitration to Resolve Issues Relating to an Interconnection Agreement with Qwest Corporation Minnesota
Commission Docket No. P-5692, 421/IC-04-549, Arbitrator s Report (Minn. Commission Dec. 15 2004)
Minnesota ALJ Order aff'd in part In the Matter of the Petition ofCovad Communications Company for
Arbitration of an Interconnection Agreement with Qwest Corporation Pursuant to 47 US.252(b), Docket No P-
5692, 421/IC-04-549, Order Resolving Arbitration Issues and Requiring Filed Interconnection Agreement (Minn.
Commission March 14, 2005) ("Minnesota Arbitration Order
);
In the Matter of the Petition for Arbitration
Covad Communications Company with Qwest Corporation Washington Commission Docket No. UT -043045
Order No. 06, Final Order Affmning in Part, Arbitrator s Report and Decision; Granting, In Part, Covad's Petition
for Review; Requiring Filing of Conforming Interconnection Agreement (Wash. Commission Feb. 9, 2005)
Washington Arbitration Order
);
In the Matter of the Petition of DIECA Communications, Inc., d/b/a Covad
Communications Company, for Arbitration to Resolve Issues Relating to an Interconnection Agreement with Qwest
Corporation Utah Commission Docket No. 04-2277-, Arbitration Report and Order (Utah Commission Feb. 8
2005) ("Utah Arbitration Order
QWEST CORPORATION'S INITIAL BRIEF - Page 3
Boise-183585.10029164-00108
Qwest's language in the Colorado CovadlQwest arbitration. In that proceeding, Covad elected to
not raise the unbundling issue it now disputes here.
In contrast to Covad's demands, Qwest's ICA proposal is specifically based upon the
FCC's rulings in the TRO and other governing law. To ensure that the ICA complies with
governing law and the policies underlYing the Act, the Commission should adopt Qwest'
proposed ICA language for the disputed issue.
II.ARGUMENT
Issue 1: Section 4 Definition of "Unbundled Network Element" and Sections 9.1.1;
1.1.6; 9.1.1.7; 9.1.1.8; 9.1.5; 9.1.3; 9.1.4; 9.1.1; 9.1.2; 9.2; 9.1; 9.
1.5.1 (and related 9.1.5); 9.1.6.1 (and related 9.1.6); and 9.21.2.
The Act requires ILECs to provide UNEs to other telecommunications carriers and gives
the FCC the authority to determine which elements the ILECs must provide. In making these
network unbundling determinations, the FCC must consider whether the failure to provide access
to an element "would impair the ability of the telecommunications carrier seeking access to
provide the services that it seeks to offer."5 This "impairment" standard imposes important
limitations on ILECs' unbundling obligations, as has been forcefully demonstrated by the
Supreme Court's decision in AT&T Corp. v. Iowa Utilities Boarcf and the D.C. Circuit's
decisions in USTA I and USTA II invalidating three of the FCC's attempts at establishing lawful
unbundling rules.
The disputed issue arises because of Covad' s insistence upon ICA language that would
require Qwest to provide almost unlimited access to network elements in violation of the
47 U.C. 9251(d)(2).
525 U.S. 366 (1998) Iowa Utilities Board"
USTA II, supra; United States Telecom Ass 'v. FCC 290 F.3d 415 427-28 (D.C. Cir. 2002) USTA 1').
QWEST CORPORATION'S INITIAL BRIEF - Page 4
Boise-183585.10029164-00108
unbundling limitations established by these decisions, the Act, the TRO, and the TRRO. Covad'
clear objective is to obtain access to all elements of Qwest's network that Covad may desire at
the lowest rates possible. Not surprisingly, the commissions in Minnesota, Utah, and
Washington have rejected Covad's unbundling language, finding that it is plainly unlawfu1.8
Each of these commissions determined correctly that it would be improper to include in a
Section 251/252 ICA terms and conditions relating to network elements that Qwest provides
under Section 271, as Covad proposes. As the Washington Commission stated:
(TJhis Commission has no authority under Section 251 or Section 271 of
the Act to require Qwest to include Section 271 elements in an
interconnection agreement. . . (andJ any unbundling requirement based on
state law would likely be preempted as inconsistent with federal law
regardless of the method the state used to require the element.9
Likewise, the Utah Commission held:
(WJe differ with Covad in its belief that we should therefore impose
Section 271 and state law requirements in the context of a Section 252
arbitration. Section 252 was clearly intended to provide mechanisms for
the parties to arrive at interconnection agreements governing access to the
network elements required under Section 251. Neither Section 251 nor
252 refers in any way to Section 271 or state law requirements, and
certainly neither section anticipates the addition of new Section 251
obligations via incorporation by reference to access obligations under
Section 271 or state law.
Consistent with this statement, in a decision adopted by the Minnesota Commission, the
Minnesota ALJ ruled that "there is no legal authority in the Act, the TRO or in state law that
would require the inclusion of section 271 terms in the interconnection agreement, over Qwest'
Because Covad accepted Qwest's language relating to unbundled network elements in the Colorado arbitration
the Colorado Commission did not address Covad's proposed unbundling language.
Washington Arbitration Order ~ 37.10 Utah Arbitration Order at 19-20.
QWEST CORPORATION'S INITIAL BRIEF - Page 5
Boise-183585.10029164-001O8
objection."l1 She explained further that "
both the Act and the TRO make it clear that state
commissions are charged with the arbitration of Section 251 obligations, whereas the FCC has
retained authority to determine the scope of access obligations pursuant to Section 271."12
These rulings, which address the same Covad unbundling language at issue here, confirm
the unlawfulness of Co va d's proposals. As is discussed further below, neither the Act nor the
TRO permits including Section 271 unbundling obligations in a Section 251/252 ICA. Further
just as it failed to do in the prior arbitrations, Covad is not providing any evidence of impairment
in this case to support its demands for unbundling under state law. There is thus no factual
foundation for the impairment analysis that is required under Section 251 and therefore no basis
for imposing unbundling obligations under state law.
Accordingly, for the reasons articulated by the other commissions that have considered
this same issue, the Commission should resolve this issue in Qwest's favor and reject Covad'
unbundling language.
Summary of Qwest's And Covad's Conflicting Unbundling Proposals.
In contrast to Covad's unbundling demands, Qwest's ICA language ensures that Covad
will have access to the network elements that ILECs must unbundle under Section 251 while also
establishing that Qwest is not required to provide elements for which there is no Section 251
obligation. Thus, in Section 4.0 of the ICA, Qwest defines the UNEs available under the
agreement as:
Minnesota ALJ Order ~ 46; Minnesota Arbitration Order at 5.12 Minnesota ALJ Order ~ 46. In an arbitration pending in another state, Covad recently asserted that Qwest has
mischaracterized the Minnesota ALJ decision, and that the Minnesota ALJ rejected both Covad's and Qwest's language relating
to the issue oflCA language for network unbundling. However, it is Covad's description of the decision, not Qwest that is
inaccurate. While the Minnesota ALJ specifically rejected all of Co va d's proposed language relating to this issue, she accepted
Qwest's definition of "UNE" and eight other unbundling provisions that Qwest proposed. Minnesota ALJ Order at ~ 47.
Covad's statement that the ALJ rejected all of Qwest's language is thus entirely inaccurate.
QWEST CORPORATION'S INITIAL BRIEF - Page 6
Boise-183585.10029164-00108
A J Network Element that has been defined by the FCC or the
Commission as a Network Element to which Qwest is obligated under
Section 251(c)(3) of the Act to provide unbundled access or for which
unbundled access is provided under this Agreement. Unbundled Network
Elements do not include those Network Elements Qwest is obligated to
provide only pursuant to Section 271 of the Act.
Qwest's language also incorporates the unbundling limitations established by the Act, the
courts, and the FCC by listing specific network elements that, per court and FCC rulings, ILECs
are not required to unbundled under Section 251. For example, Qwest's proposed Section
6 lists 18 network elements that the FCC specifically found in the TRO do not meet the
impairment" standard and do not have to be unbundled under Section 251.
While Qwest's ICA language properly recognizes the limitations on unbundling, its
exclusion of certain network elements does not mean that those elements are unavailable to
Covad and other CLECs. As the Commission is aware, Qwest is offering access to non-251
elements through commercial agreements and tariffs, including, for example, its line sharing
agreement with Covad.
Covad's sweeping unbundling proposals are built around its proposed definition of
Unbundled Network Element " which Covad defines as "a Network Element to which Qwest is
obligated under Section 251(c)(3) of the Act to provide unbundled access for which unbundled
access is required under section 271 of the Act or applicable state law.
. . .
" (emphasis added).
Consistent with this definition, Covad's language for Section 9.1.1 would require Qwest to
provide "any and all UNEs required by the Telecommunications Act of 1996 (including, but not
limited to Sections 251(b), (c), 252(a) and 271), FCC Rules, FCC Orders, and/or applicable state
rules or orders. .
. .
QWEST CORPORATION'S INITIAL BRIEF - Page 7
Boise-183585.1 0029164-00108
Its proposal leaves no question that Covad is seeking to require Qwest to provide access
to network elements for which the FCC has specifically refused to require unbundling and for
which unbundling is no longer required as a result of the D.C. Circuit vacatur of unbundling
requirements in USTA II. In Section 9., for example, Covad proposes language that would
render irrelevant the FCC's non-impairment findings in the TRO and the D.C. Circuit's vacatur
of certain unbundling rules:
On the Effective Date of this Agreement, Qwest is no longer obligated to
provide to CLEC certain Network Elements pursuant to Section 251 of the
Act. Qwest will continue providing access to certain network elements as
required by Section 271 or state law, regardless of whether access to such
UNEs is required by Section 251 of the Act. This Agreement sets forth the
terms and conditions by which network elements not subject to Section
251 unbundling obligations are offered to CLEC.
Under this proposal, Covad could contend, for example, that it can obtain unbundled
access to OCn loops, feeder subloops, signaling and other elements despite the FCC's fact-based
findings in the TRO that CLECs are not impaired without access to these elements.
In addition to these demands, in its proposed Section 9., Covad is seeking TELRIC
total element long run incremental cost") pricing for the network elements it claims Qwest
must provide under Section 271.14 While its proposed language suggests that Covad is seeking
TELRIC pricing only on a temporary basis, Covad's filings in this proceeding and in other states
13
In the following paragraphs of the TRO the FCC ruled that ILECs are not required to unbundle these and other
elements under section 251: ~ 315 (OCn loops); ~ 253 (feeder subloops); ~ 324 (DS3 loops); ~ 365 (extended
dedicated interoffice transport and extended dark fiber); ~~ 388-89 (OCn and DS3 dedicated interoffice transport);
~~ 344-45 (signaling); ~ 551 (call-related databases); ~ 537 (packet switching); ~ 273 (fiber to the home loops); ~ 560
(operator service and directory assistance), and ~ 451 (unbundled switching at a DSI capacity).14 In its Petition for Arbitration, Covad advocates the use of the TSLRIC methodology which, like TELRIC, is a
forward-looking costing methodology. Covad's Petition for Arbitration at 8-9. For all practicable purposes
however, the TSLRIC methodology, as Covad apparently would apply it, would be almost indistinguishable from
TELRIC. To be consistent with its advocacy in Covad arbitrations in other states, Qwest will continue to referencethe TELRIC methodology.
QWEST CORPORATION'S INITIAL BRIEF - Page 8
Boise-183585.10029164-001O8
reveal that Covad is actually requesting that the permanent prices to be set under Sections 201
and 202 for Section 271 elements be based on TELRIC.
The Act Does Not Permit The Commission To Create Under State Law
Unbundling Requirements That The FCC Rejected In The TRO And The
Triennial Review Remand Order Or That The D.C. Circuit Vacated In USTA
II.
Under Section 251 , there is no unbundling obligation absent an FCC requirement to
unbundle and a lawful FCC impairment finding. As the Supreme Court made clear in the Iowa
Utilities Board case, the Act does not authorize "blanket access to incumbents' networks."16
Rather, Section 251(c)(3) authorizes unbundling only "in accordance with. . . the requirements
of this section (251J."17 Section 251(d)(2), in turn, provides that unbundling may be required
only if the FCC determines (A) that "access to such network elements as are proprietary in nature
is necessary" and (B) that the failure to provide access to network elements "would impair the
ability of the telecommunications carrier seeking access to provide the services that it seeks to
offer."18 The Supreme Court and D.C. Circuit have held that the Section 251(d)(2) requirements
reflect Congress s decision to place a real upper bound on the level of unbundling regulators may
order.
Congress explicitly assigned the task of applYing the Section 251 (d)(2) impairment test
and "determining what network elements should be made available for purposes of subsection
15 See Covad's Petition for Arbitration at 8-9 (advocating the use of "forward-looking, long-run incremental cost
methodologies" for Section 271 elements and arguing that the FCC does not "forbid" TELRIC pricing for these
elements).
16 Iowa Utilities Board 525 U.S. at 390.
47 U.C. 9251(c)(3).
47 U.C. 9251(d)(2).
19 See Iowa Utilities Board 525 U.S. at 390 ("We cannot avoid the conclusion that if Congress had wanted to
give blanket access to incumbents' networks on a basis as unrestricted as the scheme the (FCC) has come up with , it
would not have included 9251(d)(2) in the statute at all.
);
USTA 290 F.3d at 427-28 (quoting Iowa Utilities
QWEST CORPORATION'S INITIAL BRIEF - Page 9
Boise-183585.l 0029164-00108
(251)(c)(3)" to the FCC.2O The Supreme Court confirmed that as a precondition to unbundling,
Section 251(d)(2) "requires the (Federal Communications) Commission to determine on a
rational basis which network elements must be made available, taking into account the objectives
of the Act and giving some substance to the 'necessary' and 'impair' requirements."21 And the
C. Circuit confirmed in USTA II that Congress did not allow the FCC to have state
commissions perform this work on its b ehalf. 22 UST A IF s clear holding is that the FCC, not state
commissions, must make the impairment determination called for by Section 251(d)(3)(B) of the
Act.
Iowa Utilities Board makes clear that the essential prerequisite for unbundling any given
element under Section 251 is a formal finding by the FCC that the Section 251 (d)(2)
impairment" test is satisfied for that element. Simply put, if there has been no such FCC
finding, the Act does not permit any regulator, federal or state, to require unbundling under
Section 251. In the TRO the FCC reaffirmed this:
Based on the plain language of the statute, we conclude that the state
authority preserved by section 251 (d)(3) is limited to state unbundling
actions that are consistent with the requirements of section 251 and do not
substantially prevent" the implementation of the federal regulatory
regIme.
***
If a decision pursuant to state law were to require unbundling of a network
element for which the Commission has either found no impairment-and
thus has found that unbundling that element would conflict with the limits
of section 251(d)(2))-or otherwise declined to require unbundling on a
Board'fmdings regarding congressional intent and section 251(d)(2) requirements, and holding that unbundling
rules must be limited given their costs in terms of discouraging investment and innovation).20 47 U.C. 9251(d)(2).
21 Iowa Utilities Board 525 U.S. at 391-92.
22 See USTA II 359 F.3d at 568.
QWEST CORPORATION'S INITIAL BRIEF - Page 10
Boise-183585.10029164-00108
national basis, we believe it unlikely that such a decision would fail to
conflict with and "substantially prevent" implementation of the federal
regime, in violation of section 251(d)(3)(c).
Federal courts interpreting the Act have reached the same conclusion.24 Indeed, in a
recent decision, the United States DistrictCourt of Michigan observed that in USTA II the D.
Circuit "rejected the argument that the 1996 Act does not give the FCC the exclusive authority to
make unbundling determinations."25 The court emphasized that while the Act permits states to
adopt some "procompetition requirements " they cannot adopt any requirements that are
inconsistent with the statute and FCC regulations. Specifically, the court held, a state
commission "cannot act in a manner inconsistent with federal law and then claim its conduct is
authorized under state law. "26
Consistent with these rulings, in an order issued just a few weeks ago, the FCC ruled that
state commissions are generally without authority to require ILECs to unbundle network
elements that the FCC has declined to require ILECs to unbundle.27 In its BellSouth Declaratory
Order the FCC addressed orders from four different state commissions that required BellSouth
to provide DSL service over unbundled loops that CLECs were using to provide voice service.
This requirement, the FCC determined, effectively obligated BellSouth to unbundle the low
23 TRO ~~ 193, 195.
24 See Indiana Bell Tel. Co. v. McCarty, 362 F.3d 378 395 (7th Cir. 2004) (citing the above-quoted discussion in
the TRO and stating that "we cannot now imagine" how a state could require unbundling of an element consistently
with the Act where the FCC has not found the statutory impairment test to be satisfied).
25 Michigan Bell Tel. Co. v. Lark Case no. 04-60128, slip op. at 13 (E.D. Mich. Jan. 6 2005).
26 Id.27 Memorandum Opinion and Order and Notice of Inquiry, In the Matter ofBellSouth Telecommunications, Inc.
Request for Declaratory Ruling that State Commissions May Not Regulate Broadband Internet Access Services by
Requiring BellSouth to Provide Wholesale or Retail Broadband Services to Competitive LEC UNE Voice
Customers WC Docket No. 03-251 , FCC 05- 78 ~~ 25-30 (FCC reI. March 25 2005) BellSouth Declaratory
Order
28 Id. ~~ 9-15.
QWEST CORPORATION'S INITIAL BRIEF - Page 11
Boise-183585.10029164-00108
frequency portion of the loop ("LFPL") which the FCC had specifically refused to require ILECs
to unbundle in the Triennial Review Order.
In striking down the orders, the FCC emphasized the preeminence of its regulations under
the Act over state laws and regulations: "except in limited cases, the (FCC's) prerogatives with
regard to local competition supersede state jurisdiction over these matters."30 State authority is
preserved under the Act, the FCC stated, only to the extent state regulations are not inconsistent
with the requirements of Section 251 and do not "substantially prevent implementation of the
requirements of section 251 or the purposes ofs~ctions 251 through 261 of the Act."31 Because it
had refused to require ILECs to unbundle the LFPL in the TRO the FCC held that the four state
orders requiring such unbundling "directly conflict and are inconsistent with the Commission
Rules and Policies implementing section 251."32 It explained further that "(s)tate requirements
that impose on BellSouth a requirement to unbundle the LFPL do exactly what the Commission
expressly determined was not required by the Act and thus exceed the reservation of authority
under section 251(d)(3)(B)."33
Covad's broad proposals for unbundling under state law reflect its erroneous view that
the Commission has plenary authority under state law to order whatever unbundling it chooses.
What Covad ignores and what the FCC has reaffirmed in its BellSouth Declaratory Order is that
the Act's savings clauses preserve independent state authority only to the extent that the exercise
of that authority is consistent with the Act including Section 251(d)(2)'s substantive limitations
Id. ~~ 25-26.
Id. ~ 22.
Id. ~ 23.
Id. ~ 26.
Id. ~ 27.
QWEST CORPORATION'S INITIAL BRIEF - Page 12
Boise-183585,l 0029164-00108
on the level of unbundling that may be authorized. Section 251 (d)(3), for example, protects only
those state enactments that are "consistent with the requirements of this section which a state
law unbundling order ignoring the Act's limits would clearly not be. Likewise , Sections 261 (b)
and (c) both protect only those state regulations that "are not inconsistent with the provisions of
this part" of the Act, which includes Section 251(d)(2). Nor does Section 252(e)(3) help Covad;
that simply says that "nothing in this section that is, Section 252 prohibits a state from
enforcing its own law, 47 U.C. 9 252(e)(3) (emphasis added), but the relevant limitations on
the scope of permissible unbundling that are at issue are found in Section 251.34
Thus, these savings clauses do not preserve the authority of state commissions to adopt or
enforce under state law unbundling requirements that have been rej ected by the FCC or vacated
in UST A II. Indeed, the Supreme Court has "decline ( d) to give broad effect to savings clauses
where doing so would upset the careful regulatory scheme established by federallaw."35
Congress has mandated the application of limiting principles in the determination of unbundling
requirements that reflect a balance of "the competing values at stake."36 That balance would
plainly be upset if a state commission could impose under state law unbundling requirements that
have been found by the FCC to be inconsistent with the Act.
The limitations on state unbundling authority were recently recognized by the Oregon
Commission in response to substantially the same arguments that Covad is presenting here.
that commission correctly concluded, a state commission "may not lawfully enter a blanket order
requiring continuation of unbundling obligations that have been eliminated by the TRO or UST A
See 47 U.C. 9251(d)(2).
United States v. Locke 120 S. Ct. 1135, 1147 (2000).
Id. See also Iowa Utils. Bd.535 U.S. at 388.
QWEST CORPORATION'S INITIAL BRIEF - Page 13
Boise-183585.10029164-001O8
1/,"37 Yet, that is precisely what Covad is requesting this Commission to do through its proposed
unbundling language. As the Oregon Commission concluded, any unbundling a state
commission requires must be based upon a fact-specific impairment analysis required by Section
251 (d). Here, Covad is requesting that the Commission require blanket unbundling without an
impairment analysis and without providing any evidence that it would be impaired without the
multitude of network elements it is seeking.
Moreover, contrary to Covad's assertion, Idaho law does not provide the Commission
with independent authority to order the unbundling of network elements. In its arbitration
petition, Covad cites Idaho Code 99 61-513 61-514 and asserts that "the Idaho Code contains
specific requirements that public utilities provide for the joint use of their plant and equipment
and allow physical connections with other telephone corporations."39 The sections cited by
Covad, however, do not bestow on the Commission plenary power to order unbundling. Section
61-513 allows the Commission to order telephone companies to make physical connections
between their lines. This provision only addresses the issue of "connection." It does not
authorize the Commission to order one telephone company to lease its network elements to
another telephone company. Similarly, Section 61-514 requires telephone companies to allow
37 In the Matter of the Investigation to Determine Whether Impairment Exists in Particular Markets if Local
Circuit Switching is no longer available Oregon Docket UM-II00, Order Denying CLEC Motion at 6 (Oregon
C. June 11 2004). The Oregon Commission adopted the order issued by an Oregon administrative law judge.38 The clash between Covad's state law unbundling demands and the federal unbundling scheme is
demonstrated sharply by Covad's language in section 9.3.1 that would require Qwest to unbundle feeder subloops.
In the TRO the FCC refused to give CLECs unbundled access to this network element, rIDding that such access
would undermine the objective of Section 706 of the Act "to spur deployment of advanced telecommunications
capability. . ..TRO ~ 253. A state-imposed requirement to unbundle feeder subloops would plainly conflict with
this FCC determination and would undermine the FCC's attempt to achieve a fundamental objective of the Act-
promoting investment in advanced telecommunications facilities. This conflict would of course not be limited to
feeder subloops, since Covad contends that its unbundling language reaches other network elements for which the
FCC specifically rejected CLEC unbundling requests.
Petition at 10.
QWEST CORPORATION'S INITIAL BRIEF - Page 14
Boise-183585.10029164-00108
other public utilities to use their "conduits, subways, tracks, wires, poles, pipes or other
equipment, or any part thereof, on, over or under any street or highway." This provision certainly
does not constitute broad authority to order the unbundling of network elements and is more
limited than Covad implies. Furthermore, Covad's reliance on Idaho Code Section 62-602
which expresses the Idaho legislature s desire to encourage the development of open competition
in the telecommunications industry, is misplaced. This provision is the legislature s findings and
does not constitute a statutory grant of power. Accordingly, Idaho law does authorize the
Commission, independent of the federal Act, to order the unbundling of network elements.
Finally, with the limited exception noted above involving feeder subloops, Covad'
proposed ICA language fails to identify the specific network elements that would be unbundled
under state law. With no identification of these elements, it is of course impossible to conduct
the element-specific impairment analysis required under Section 251. In this sense, Covad'
proposal lacks the "concrete meaning" that, in the words of the D.C. Circuit, is necessary to make
an impairment standard "readily justiciable.
In sum, the relevant question is not, as Covad presumes, whether sweeping unbundling
obligations can be cobbled together out of state law, but rather whether any such obligations
would be consistent with Congress substantive limitations on the permissible level of
unbundling, as authoritatively construed by the Supreme Court, the D.C. Circuit, and the FCC.
Covad's proposals for broad unbundling under state law ignore these limitations and the
permissible authority of state commissions to require unbundling.
QWEST CORPORATION'S INITIAL BRIEF - Page 15
Boise-183585.10029164-00108
The Commission Does Not Have Authority To Require Unbundling Under
Section 271.
Covad's unbundling proposals also assume incorrectly that state commissions have
authority to impose binding unbundling obligations under Section 271. Section 271 (d)(3)
expressly confers upon the FCC, not state commissions, the authority to determine whether
BOCs have complied with the substantive provisions of Section 271 , including the "checklist"
provisions upon which Covad purports to base its requests.4o State commissions have only a non-
substantive
, "
consulting" role in that determination.41 As one court has explained, a state
commission has a fundamentally different role in implementing Section 271 than it does in
implementing Sections 251 and 252:
Sections 251 and 252 contemplate state commissions may take affirmative
action towards the goals of those Sections while Section 271 does not
contemplate substantive conduct on the part of state commissions. Thus, a
savings clause" is not necessary for Section 271 because the state
commissions' role is investigatory and consulting, not substantive , in
nature.
Sections 201 and 202, which govern the rates, terms and conditions applicable to the
unbundling requirements imposed by Section 271 43 likewise provide no role for state
commissions. That authority has been conferred by Congress upon the FCC and federal courtS.
The FCC has thus confirmed that "(w)hether a particular (Section 271) checklist element's rate
40 47 U.C. 271(d)(3).41 47 U.c. 271(d)(2)(B).
42 Indiana Bell Tel. Co. v. Indiana Utility Regulatory Commission 2003 WL 1903363 at 13 (S.D. Ind. 2003)
(state commission not authorized by section 271 to impose binding obligations), aff'359 F.3d 493 (7th Cir. 2004)
(emphasis added).
43
TRO ~~ 656, 662.
44
See Id; 47 U.C. 201(b) (authorizing the FCC to prescribe rules and regulations to carry out the Act's
provisions); 205 (authorizing FCC investigation of rates for services, etc. required by the Act); 207 (authorizing FCC
and federal courts to adjudicate complaints seeking damages for violations of the Act); 208(a) (authorizing FCC to
adjudicate complaints alleging violations of the Act).
QWEST CORPORATION'S INITIAL BRIEF - Page 16
Boise-183585.10029164-00108
satisfies the just and reasonable pricing standard is a fact specific inquiry that the Commission
(i.the FCC) will undertake in the context ofaBOC's application for Section 271 authority or
in an enforcement proceeding brought pursuant to Section 271 (d)(6)."45
The absence of any state commission decision-making authority under Section 271 also is
confirmed by the fundamental principle that a state administrative agency has no role in the
administration of federal law, absent express authorization by Congress. That is so even if the
federal agency charged by Congress with the law s administration attempts to delegate its
responsibility to the state agency.46 A fortiori where (as here) there has been no delegation by the
federal agency, a state agency has no authority to issue binding orders pursuant to federallaw.
Additionally, the process mandated by Section 252, the provision pursuant to which
Covad filed its petition for arbitration, is concerned with implementation of an ILEC'
obligations under Section 251 , not Section 271. In an arbitration conducted under Section 252
therefore, state commissions only have authority to impose terms and conditions relating to
Section 251 obligations, as demonstrated by the following provisions of the Act.
(a)By its terms, the "duty" of an ILEC "to negotiate in good faith in
accordance with Section 252 the particular terms and conditions of (interconnection)
agreements" is limited to implementation of "the duties described in paragraphs (1) though (5) of
(Section 251(b)) and (Section 251(c)J."48
45 TRO ~ 664.
46 USTA II 359 F.3d at 565-68.
47 See Indiana Bell Tel. Co. v. Indiana Utility Regulatory Commission 2003 WL 1903363 at 13 (state
commission not authorized by Section 271 to impose binding obligations). See also TRO ~~ 186-87 ("states do not
have plenary authority under federal law to create, modify or eliminate unbundling obligations48 47 U.C. 251(c)(1).
QWEST CORPORATION'S INITIAL BRIEF - Page 17
Boise-183585.10029164-00108
(b)Section 252(a) likewise makes clear that the negotiations it requires are
limited to "request( s) for interconnection, services or network elements pursuant to Section
251."49
(c)Section 252(b), which provides for state commission arbitration of
unresolved issues, incorporates those same limitations through its reference to the "negotiations
under this Section (252(a))."50
(d)The grounds upon which a state commission may approve or rej ect an
arbitrated interconnection agreement are limited to non-compliance with Section 251 and Section
252(d).
(e)The final step of the Section 252 process, federal judicial review of
decisions by state commissions approving or rejecting interconnection agreements (including the
arbitration decisions they incorporate), is likewise limited to "whether the agreement. . . meets
the requirements of Section 251 and this Section (252)."52
It is thus clear that state commission arbitration of disputes over the duties imposed by
federal law is limited to those imposed by Section 251 , and excludes the conditions imposed by
Section 271.
Covad's Proposal To Use TELRIC Rates For Section 271 Elements IsUnlawful.
Under Covad's proposed Section 9.7 of the ICA, existing TELRIC rates would apply
to network elements that Qwest provides pursuant to Section 271 until new rates are established
47 U.C. 252(a)(emphasis added).
See 47 U.C. 252(b)(1).
See 47 U.c.252(e)(2)(b).
47 U.C. 252(e)(6).
QWEST CORPORATION'S INITIAL BRIEF - Page 18
Boise-183585.1 0029164-00108
in accordance with "Sections 201 and 202 of the Act or applicable state law." In addition, it is
clear from Covad's arbitration petition and its filings in other states that Covad is ultimately
seeking permanent TELRIC-based prices for Section 271 elements.
The absence of state decision-making authority under Sections 201 , 202, and 271
establishes that state commissions are without authority to determine the prices that apply to
network elements provided under Section 271. Thus, as noted above, the FCC ruled in the TRO
that it will determine the lawfulness of rates that BOCs charge for Section 271 elements in
connection with applications and enforcement proceedings brought under that section.
Significantly, the FCC recently rejected the argument that the pricing authority granted to
state commissions by Section 252( )(2) to set rates for UNEs provided under Section 251 gives
commissions authority to set rates for Section 271 elements. In its opposition to the petitions for
writ of certiorari filed with the Supreme Court in connection with UST A II the FCC addressed
the contention that Section 252 gives state commissions exclusive authority to set rates for
network elements. It stated that the contention "rests on a flawed legal premise "54 explaining
that Section 252 limits the pricing authority of state commissions to network elements provided
under Section 251 (c )(3):
Section 252( c )(2) directs state commissions to "establish any rates for
* * * network elements according to subsection (d).47 U.C. 252(c)(2)
(emphasis added).
See Covad's Petition for Arbitration at 8-54 Brief for the Federal Respondents in Opposition to Petitions for a Writ of Certiorari National Association of
Regulatory Utility Commissioners v. United States Telecom Association Supreme Court Nos. 04-, 04-, and 04-
, at 23 (filed September 2004).
QWEST CORPORATION'S INITIAL BRIEF - Page 19
Boise-183585.10029164-00108
Section 252( d) specifies that States set "the just and reasonable rate for
network elements only for purposes of (47 D.C. 251(c)(3))." 47
252(d)(1).
Accordingly, the FCC emphasized
, "
( t )he statute makes no mention of a state role in
setting rates for facilities or services that are provided by Bell companies to comply with Section
271 and are not governed by Section 251(c)(3)."56
In requesting that the Commission adopt its rate proposal, Covad is therefore asking the
Commission to exercise authority it does not have and that rests exclusively with the FCC.
addition, Covad's demand for even the temporary application of TELRIC pricing to Section 271
elements violates the FCC's ruling in the TRO that TELRIC pricing does not apply to these
elements. The FCC ruled unequivocally that any elements an ILEC unbundles pursuant to
Section 271 are to be priced based on the Section 201-02 standard that rates must not be unjust
unreasonable, or unreasonably discriminatory. 57 In so ruling, the FCC confirmed, consistent with
its prior rulings in Section 271 orders, that TELRIC pricing does not apply to these network
elements.58 In USTA II the D.C. Circuit reached the same conclusion, rejecting the CLECs
claim that it was "unreasonable for the Commission to apply a different pricing standard under
Section 271" and instead stating that "we see nothing unreasonable in the Commission s decision
to confine TELRIC pricing to instances where it has found impairment. "59
55
Id. (emphasis in original).
56
Id. (emphasis in original). In the same brief, the FCC commented that the TRO does not express an opinion as
to the precise role of states in connection with section 271 pricing. Id.
57 TRO ~~ 656-64.
58 Id.
USTA II 359 F.3d at 589; see generally Id. at 588-90.
QWEST CORPORATION'S INITIAL BRIEF - Page 20
Boise-183585.10029164-00108
III.CONCLUSION
For the reasons stated above, Qwest urges the Commission to enter an order adopting
Qwest's proposed language for the interconnection agreement between Qwest and Covad.
Respectfully submitted this 27th day of April, 2005.
Mary S. son (ISB No. 2142)
STOEL RIVES LLP
Adam L. Sherr
QWEST CORPORATION
John M. Devaney
PERKINS corn LLP
Attorneys for Qwest Corporation
QWEST CORPORATION'S INITIAL BRIEF - Page 21
Boise-183585.10029164-00108
CERTIFICATE OF SERVICE
I hereby certify that on this 27th day of April, 2005 , I served the foregoing QWEST
CORPORATION'S INITIAL BRIEF upon all parties of record in this matter as follows:
Jean Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
O. Box 83720
Boise, Idaho 83720-0074
i i ewell~puc.state.id. us
John Devaney
Mary Rose Hughes
Perkins Coie LLP
607 Fourteenth Street NW - Suite 800
Washington, DC 20005-2011
Telephone: [phone]
Facsimile: [phone]
Co-Counsel for Qwest
Gregory Diamond
Covad Communications Company
7901 Lowry Boulevard
Denver, CO 80230
Telephone: [phone]
Facsimile: [phone]
Counsel for Covad
Dean J. (Joe) Miller
McDevitt & Miller LLP
420 West Bannock Street
Boise, ill 83702
Telephone: [phone]
Facsimile: [phone]
oe~mcdevitt-miller .com
Counsel for Covad
Andrew R. Newell (CSB #31121)
Krys Boyle P.
600 Seventeenth Street - Suite 2700 South
Denver, CO 80202
Telephone: [phone]
Facsimile: [phone]
anewell~krysboy le.com
QWEST CORPORATION'S INITIAL BRIEF - Page 22
Boise-183585.10029164-001O8
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
cJk~
Brandi L. Gearhart, PLS
Legal Secretary to Mary S. Hobson
Stoel Rives LLP