20050427Opening brief.pdf

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Dean J. a oe) Miller
McDevitt
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Miller LLP
420 West Bannock Street
Boise, ID 83702
(208) 343/7500
(208) 336/6912 Fax
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Gregory Diamond
Senior Counsel
Covad Communications Company
7901 Lowry Boulevard
Denver, CO 80230
(720) 670/1069
(720) 670/3350 Fax
gdiamond(g)covad. com
Attorneys for DIECA Communications, Inc.
d/b/a Covad Communications Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF DIECA
COMMUNICATIONS, INC. D/B/A COY AD
COMMUNICATIONS COMPANY FOR
ARBITRATION OF AN INTERCONNECTION
AGREEMENT WITH QWEST CORPORATION
Case No. CVD/ T /05/01
COY AD'S OPENING BRIEF
DIECA Communications, Inc., d/b/a Covad Communications Company ("Covad"
through its undersigned counsel, presents this opening brief in support of its petition for
arbitration:
INTRODUCTION
This proceeding presents for the Idaho Public Utilities Commission (the "Commission
resolution of two issues of law: (1) whether the Commission has authority pursuant to section
271 of the Telecommunications Act of 1996 (the "Act") to order Qwest Corporation ("Qwest ) to
unbundle certain network elements as part of the arbitration of an interconnection agreement;
and (2) whether pursuant to Idaho law the Commission can order Qwest to unbundle certain
network elements in this arbitration. The answer to both of these questions is unequivocally
yes.
The Commission has jurisdiction pursuant to Qwest s ongoing obligations under section
271 of the Act to order the unbundling of section 271 checklist items. Specifically and of
particular interest to Covad, the Commission has authority to order unbundling of checklist
items #4 and #5 of the section 271 checklist:
(iv)Local loop transmission from the central office to the customer s premises
unbundled from local switching or other services.
Local transport from the trunk side of a wireline local exchange carrier
switch unbundled from switching or other services.
(v)
47 U.C. sec. 271( c)(2)(B)(iv) &:; (v)
In addition, the Commission has the unfettered right in this proceeding to follow
existing state law requirements to order Qwest to provide Covad with access to unbundled
loops (including high capacity loops, line splitting arrangements and subloop elements) and
dedicated transport. Moreover, despite what this Commission may hear from Qwest, the
Commission has no authority to conclude whether state law is preempted by the Act or any
other federal law. Even if the Commission concludes it has such authority, as a matter of
substantive law, the Act does not pre/empt Idaho unbundling requirements applicable to
Qwest.
For these reasons, the reasons set forth in its petition (which is incorporated herein by
reference) and the reasons set forth below, Covad respectfully requests the Commission adopt
its proposed interconnection agreement language regarding access to and the pricing of
unbundled network elements.
ARGUMENT
THE COMMISSION HAS JURISDICTION IN THIS PROCEEDING TO ORDER
QWEST TO PROVIDE UNBUNDLED ACCESS TO NETWORK ELEMENTS
PURSUANT TO SECTION 271 OF THE ACT
Section 271 Unbundling.
This Commission may properly, and should, use its authority to enforce the unbundling
requirements of section 271 of the Act. The Federal Communications Commission ("FCC") held
in its seminal Triennial Review Order that Section 271 creates independent access obligations for
the Regional Bell Operating Companies ("RBOC" or "RBOCs ). Qwest is an RBOC. The FCC
concluded:
(WJe continue to believe that the requirements of Section
271(c)(2)(B) establish an independent obligation for BOCs to
provide access to loops, switching, transport, and signaling
~ardless of any unbundling analysis under section 251.
TRO, CJJ 653 (emphasis added).
Section 271 was written for the very purpose of establishing
specific conditions of entry into the long distance that are unique
to the BOCs. As such, BOC obligations under Section 271 are not
necessarily relieved based on any determination we make under
the Section 251 unbundling analysis.
TRO, CJJ 655 (emphasis added).
Thus, there is no question that, regardless of the FCC'analysis of competitor
impairment and corresponding unbundling obligations under Section 251 for incumbent local
exchange carriers ("ILECs ), as an RBOC Qwest retains an independent statutory obligation
under Section 271 of the Act to provide competitors with unbundled access to the network
elements listed in the Section 271 checklist.2 Moreover, there is no question that these
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, Report and Order and Order on Remand
and Further Notice of Proposed Rulemaking TRO
See 47 V.C. ~ 271(c)(2)(B).
obligations include the provision of unbundled access to loops and dedicated transport under
checklist item #4:
Checklist items 4, 5, 6, and 10 separately impose access
requirements regarding !QQp, transport, switching, and signaling,
without mentioning section 251.
TRO, CJJ 654 (emphasis added).
Qwest does not attack this premise directly, but instead argues that this Commission
does not have the authority to order the adoption of terms in an interconnection agreement that
address compliance with Section 271. This position ignores the requirements of Section 271, as
well as common sense. Recently, the Maine Public Utilities Commission rejected this argument
and found that:
...
(SJtate commissions have the authority to arbitrate and approve
interconnection agreements pursuant to section 252 of the T elAct.
Section 271(c)(2)(A)(ii) requires that ILECs provide access and
interconnection which meet the requirements of the 271 competitive
checkhst, i.e. includes the ILEC's 271 unbundling obligations. Thus,
state commissions have the authority to arbitrate section 271 pricing in
the context of section 252 arbitrations.
Maine PUC Docket No. 2002/682 Verizon/Maine Proposed Schedules, Terms, Conditions and Rates for
Unbundled Network Elements and Interconnection (PUC 20) and Resold Services (PUC 21), Order - Part
, p. 19 (September 3, 2004) Maine Unbundling Order (emphasis added). A copy of this order is
attached hereto as Attachment
Furthermore, there can be no argument that the Commission s enforcement of Qwest
Section 271 checklist obligations would substantially prevent the implementation of any
provision of the Act. Indeed, where state enforcement activities do not impair federal regulatory
interests, concurrent state enforcement activity is clearly authorized. Florida Avocado Growers
Paul 373 U.S. 132 142, 83 S. Ct. 1210, 1217, 10 LEd.2d 248 (1963). As described in greater detail
in section D. of this brief, courts have long held that federal regulation of a particular field is not
presumed to preempt state enforcement activity "in the absence of persuasive reasons - either
that the nature of the regulated subject matter permits no other conclusion, or that the Congress
has unmistakably so ordained." De Canas v. Bica 424 U.S. 351 356 96 S. Ct. 933 936 47 LEd.
43 (1976) (quoting Florida Avocado Growers 373 U.S. at 142 83 S. Ct. at 1217). The Act, however
hardly evinces an unmistakable indication of Congressional intent to preclude state enforcement
of federal 271 obligations. Far from doing so, the Act expressly preserves a state role in the
review of a RBOC's compliance with its Section 271 checklist obligations, and requires the FCC
to consult with state commissions in reviewing a RBOC's Section 271 compliance.
The FCC has confirmed state commissions' enforcement role with respect to Section 271:
We are confident that cooperative state and federal oversight and
enforcement can address any backsliding that may arise with
respect to Qwest s entry into the long distance market in Arizona.
In the Matter of Application by ~west Communications International, Inc. for Authorization To Provide In/
Region, InterLATA Services in Arizona WC Docket No. 03/194, Memorandum Opinion and Order
FCC 03/309 (Re!. Dec. 3 , 2003), 961
A hearing examiner for the Maine Public Utilities Commission agreed:
Indeed, it makes both procedural and substantive sense to allow
state commissions which are much more familiar with the
individual parties, the wholesale offerings, and the issues of
dispute between the parties, to monitor ILEC compliance with
section 271 by applying the standards prescribed by the FCC, i.e.
ensuring that Verizon meets its Checklist Items No., 5, 6, and 9
obligations.
Maine PUC Docket No. 2002/682 Verizon/Maine Proposed Schedules, Terms, Conditions and Rates for
Unbundled Network Elements and Interconnection (PUC 20) and Resold Services (PUC 21), Examiner
Report Quly 23, 2004), affirmed by the Maine Public Utilities Commission in the Maine 271 Unbundling
Order. A copy of this order is attached hereto as Attachment 2.
See 47 V .C. ~ 271(d)(2)(B) (requiring the FCC to consult with state commissions in reviewing RBOC
compliance with the 271 checklist).
Section 271 pricing.
Thus, the Commission clearly has the authority to enforce Qwest's obligations to provide
unbundled access to loops (including high capacity loops, line splitting arrangements and
subloop elements) and dedicated transport under Section 271 checklist item #4, including the
right to set prices. Specifically, this Commission has clearly been granted the authority to
arbitrate provisions of interconnection agreements addressing Section 271 obligations, as well as
set prices that comply with federal pricing standards. On this point, the United States Supreme
Court directly held:
(Section) 252( c)(2) entrusts the task of establishing rates to the
state commissions ... the FCC's prescription, through rulemaking,
of a requisite pricing methodology no more prevents the States
from establishing rates than do the statutory 'Pricing standards
set forth in ( section) 252( d) (of the Act). It is the states that willapply those standards and implement that methodology,
determining the concrete result in particular circumstances.
AT&Tv. Idaho Utils. Bd.525 U.S. 366 384 142 L.Ed.2d 834 876 (1999).
The FCC made it clear in the TRO that a different pricing standard should be applied to
network elements required to be unbundled under Section 271 as opposed to network elements
unbundled under Section 251 of the Act. Specifically, the FCC stated that "the appropriate
inquiry for network elements required only under Section 271 is to assess whether they are
priced on a just, reasonable and not unreasonably discriminatory basis - the standards set forth
in sections 201 and 202." TRO, CJJ 656. In other words, according to the FCC, the legal standard
under which pricing for Section 271 checklist items should be determined is a different legal
standard than that applied to price Section 251 UNEs. Thus
, "
Section 271 requires RBOCs to
provide unbundled access to elements not required to be unbundled under Section 251, but does
not require TELRIC pricing.Triennial Review Order CJJ 659 (emphasis added).
Notably, in the TRO, the FCC nowhere forbids the application of such pricing of network
elements required to be unbundled under Section 271. Rather, the FCC merely states that
unbundled access to Section 271 checklist items is not required to be priced pursuant to the
particular forward/looking cost methodology specified in the FCC's rules implementing Section
252( d)(l) of the Act - namely, TELRIC. The FCC states that the appropriate legal standard to
determine the correct price of Section 271 checklist items is found in Sections 201 and 202.
However, nowhere does the FCC state these two different legal standards may not result in the
same rate/setting methodology.
Furthermore, the FCC does not preclude the use of forward/looking, long/run
incremental cost methodologies other than TELRIC to establish the prices for access to Section 271
checklist items. As the FCC made clear when it adopted the TELRIC pricing methodology in its
Local Competition Order there are various methodologies for the determination of forward/
looking, long/run incremental cost. Local Competition Order g) 631. TELRIC describes only one
variant, established by the FCC for setting UNE prices under Section 252(d)(1), derived from a
family of cost methodologies consistent with forward/looking, long/run incremental cost
principles. See Local Competition Order CJJCJJ 683/685 (defining "three general approaches" to setting
forward/looking costs). Thus, the FCC's TRO does not preclude the use of a forward/looking,
long/run incremental cost standard other than TELRIC in establishing prices consistent with
Sections 201 and 202 of the Act.
Adopting the rates established by the Commission for elements that may eventually be
subject only to Section 271 unbundling obligations at least for an interim period, makes far more
sense than any other result. See In the Matter of Determining Prices for Unbundled Network Elements in
~west Corporations Statement of Generally Available Terms Case No. QWE/ T /01/, Order No. 29408.
In resolving this issue the Maine Public Utilities Commission stated:
Until such time as we approve new rates for section 271 UNEs
adopt FCC/approved rates, or CLECs agree to section 271 UNE
rates, Verizon must continue to provide all section 271 UNEs at
existing TELRIC rates. We find this requirement necessary to
ensure a timely transition to the new unbundling scheme. We
have no record basis to conclude that TELRIC rates do not qualify
In the Matter of Implementation bf the Local Competition Provisions in the Telecommunications Act of 1996, CC
Docket No. 96-, First Report and Order , 11 FCC Rcd 15499 (reI. August 8 , 1996) Local Competition
Order5 For example, where the 271 checklist item for which rates are being established is not legacy loop plant but
next-generation loop plant, incumbents might argue for the use of a forward-looking, long-run incremental cost
methodology based on their current network technologies - in other words, a non- TELRIC but nonetheless
forward-looking, long-run incremental cost methodology. See, e.g., Local Competition Order, , 684
as 'Just and reasonable" rates; while we might ultimately approve
higher rates, we cannot do so without the benefit of a record or the
agreement of the parties. We note that the decision we reach
today is consistent with the approach embodied in the FCC'
Interim Rules, which require a six/month moratorium on raising
wholesale rates.
Maine Unbundling Order pp. 20/
UNDER IDAHO LAW THE COMMISSION HAS AUTHORITY TO COMPEL
QWEST TO INTERCONNECT AND UNBUNDLE NETWORK ELEMENTS
INCLUDING LOOPS AND TRANSPORT.
When it adopted the Telecommunications Act of 1988, the legislature recognized, wisely,
that in a partially de/regulated environment, there would be a continuing need for resolution of
carrier/to/carrier disputes. Accordingly, the 1988 Act included section 62/614, which provides:
RESOLUTION OF INTER/TELEPHONE CORPORATION DISPUTES.
(1) If a telephone corporation providing basic local exchange service which has exercised the
election provided in section 62/604(2)(a), Idaho Code, and any other telephone corporation
subject to title 61, Idaho Code, or any mutual, nonprofit or cooperative telephone corporation, are
unable to agree on any matter relating to telecommunication issues between such companies
then either telephone corporation may apply to the commission for determination of the matter.
(2) Upon receipt of the application, the commission shall have jurisdiction to conduct an
investigation, and upon request of either party, to conduct a hearing and, based upon evidence
presented to the commission, to issue its findings and order determining such dispute in
accordance with applicable provisions of law and in a manner which shall best serve the public
interest.
The disagreement in this case is clearly a "matter relating to telecommunications issues
between such companies" and the Commission has jurisdiction to resolve it.
The Commission has correctly concluded that Idaho Code section 62/614 is a "broad
grant of authority to the Commission to resolve disputes between incumbent telephone
companies, like Qwest, and any other telecommunications provider.See Idaho Telephone
Association v. ~west Case No. QWE/O2/, Order No. 29219.
There can be no doubt but that the Commission has independent, state law based
authority to resolve this dispute.
THE COMMISSION SHOULD ADOPT THE INTERCONNECTION AGREEMENT
LANGUAGE COV AD HAS PROPOSED
The language Covad has proposed for inclusion in the interconnection agreement is set
forth, in part, below. As the Commission can see, this language preserves Covad's right to
continue to obtain unbundled network elements under section 271 of the Act and Idaho state
law. This language applies on its face even if the FCC concludes now or at a later time that
Qwest is not required to unbundle select elements under section 251 of the Act.
General provisions include:
Section 9.1.1
Qwest will provide to CLEC 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, or which are ordered by the FCC
any state commission or any court of competent jurisdiction. Qwest is required to
connect or combine 251(c)(3) UNEs with any and all of its service offerings, as required
by the Telecommunications Act of 1996, FCC Rules, FCC Orders and/or state law or
orders. Qwest must provide all technically feasible 251( )(3) UNE combinations
including 251(c)(3) UNEs ordinarily combined and new 251(c)(3) UNE combinations.
Section 9.1.1.6
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
Section 9.1.1.7 Q!gposes prices for elements at the TELRIC rate)
, on the Effective Date of this Agreement, Qwest is providing to CLEC, pursuant to
orders placed in accordance with a Interconnection Agreement, any of the Network
above for which an independent unbundling obligation exists under Section 271 of the
Act, or applicable state law, then Qwest shall bill for such UNEs and services using the
Commission/approved TELRIC rates for such UNEs until such time as new, just
reasonable and non/discriminatory rates (as required by Sections 201 and 202 of the Act
or applicable state law) are approved for the Section 271 or state law required UNEs .
The remaining provisions Covad proposes for inclusion in the interconnection agreement
are of a similar nature as the sections quoted above but require Qwest to provide access to
specific unbundled network elements - See, e., 9.1.5 , 9.1.3 (access to loops), 9.1.4 (access to
loops), 9.3.1.1 (feeder subloops), 9.3.1.2 (feeder loop), 9.3.2 (DS/1 feeder loops), 9.3.2.1 (feeder
subloops), 9.6 (dedicated interoffice transport), 9.1.5.1 (DS/3 transport) (and related 9.1.5),
1.6.1 (DS/1 dedicated interoffice transport) (and related Section 9.1.6), and 9.21.2 (line
splitting) .
FED ERAL LAW
LEGISLATION
DOES NOT PREEMPT IDAHO'UND BUND LIN G
As a very significant preliminary matter, this Commission, as a matter of law, has no
authority under state law to declare that any portion of state law is preempted by the Act or any
other federal law. This was the very recent conclusion of the Illinois Commerce Commission
ICC"when confronted with the identical issue here: whether state network element
unbundling obligations were pre/empted by federal law. The ICC concluded:
Moreover, the Illinois Supreme Court has long instructed that an administrative
agency can neither limit nor extend the scope of its enabling legislation. "
administrative agency lacks the authority to invalidate a statute on constitutional
grounds or to question its validity.Carpetland U.A. v. Ill. Dept. Employment Security,
201 Ill. 2d 351, 397, 776 N.2d 166, 192 (Ill. 2002). The Commission must follow
and implement the statute s plain language irrespective of its opinion regarding
the desirability of the results surrounding the operation of the statute. Citizens
Util. Bd. v. Ill. Commerce Comm , 275 Ill. App. 3d 329, 341/, 655 N.2d 961 , 969/70
(1st Dist., 1995). In other words, the Commission is not empowered to declare
portions of Section 13/801 (unbundling statutuelPreempted or unconstitutional.
In Re: Illinois Bell Telephone Company Filing to implement tariff provisions related to Section 13/801 of the Public
Utilities Act Order on Remand (Phase I), docket 01/0614, p. 61 (April 20, 2005) (emphasis
added) 6
6 The ICC decision cited above is 140 pages long and therefore it is not attached to this brief. However, a
complete copy of the decision will be provided to the Commission, Staff or Qwest upon request. Alternatively, a
copy can be obtained at the ICC website by performing a search with the docket number at
http://eweb. icc. state. il. us/ e-docket/
The ICC conclusion is consistent with Idaho law. The Idaho Supreme Court has held:
The Idaho Public Utilities Commission has no authority other than that granted
to it by the legislature. It exercises a limited jurisdiction, and nothing is presumed
in favor of its jurisdiction. Washington Water Power Co. v. Kootenai Environmental
Alliance 99 Idaho 875, 591 P.2d 122 (19791 United States v. Utah Power Light Co.
Idaho 665, 570 P.2d 1353 (1977). The Commission is a creature of statute and
absent compliance with the enabling statutes, the Commission lacks jurisdiction.
Washington Water Power v. Kootenai Environmental Alliance supra; Arrow
Transportation Co. v. Idaho Public Utilities Commission 85 Idaho 307, 379 P.2d 422
f1963 )
Idaho State Homebuilders v. Washington Water Power, 107 Idaho 415, 418, 690 P.2d 350, 353 (1984)
Consequently, this Commission, like the ICC, has no authority to declare portions of Idaho law
pre/empted. Nonetheless, as detailed below, even if the Commission had such authority, the
outcome is the same: no preemption.
Federal administrative agencies such as the FCC have the power to preempt inconsistent
state regulations, so long as the federal agency is acting within the scope of its delegated
authority. City of New York v. FCC 486 U.S. 57,63/64 (1988). "However, courts do not lightly
attribute. . . to a federal agency the intent to preempt state or local laws.Opthalmic Mut. Ins. Co.
Musser 143 F.3d 1062, 1066 (7th Cir. 1998). Rather, there must be a "clear and manifest"
expression of the federal agency s preemptive intent because "agencies normally address
problems in a detailed manner and can speak through a variety of means (and) we can expect
that they will make their intentions clear if they intend for their regulations to be exclusive.
Hillsborough County v. Automated Med. Labs.471 U.S. 707, 715/, 18 (1985).As detailed below
neither the Act nor FCC orders that addressed the issue of unbundling have the effect of pre/
empting Idaho legislation.
The 1996 Act.
Congress passed the Act to "end the longstanding regime" under which local telephone
service was provided by "state sanctioned monopolies.AT&T Corp. v. Idaho Utils. Bd.525 U.
366 , 371 (1999).Under the Act, Congress required incumbents like Qwest to provide
competitors with access to network elements on an "unbundled" (i.e., separately priced) basis.
Id. ~ 251(c)(3). Incumbents have the federal duty under section 251 to provide unbundled access
to network elements if "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.Id. ~ 251(d)(2). Several of the key unbundled network elements at issue here are loops
and transport.
Under the Act, state utility commissions like the Commission playa primary role in the
effort to create competition in local telephone markets. State commissions fulfill two distinct
functions under the Act. First, Congress has delegated certain federal authority to the states
and the state commissions thus act as "deputized federal regulators" in implementing the Act
and the FCC's regulations. MCI Telecommunications Corp. v. Illinois Bell Tel. Co.222 F.3d 323 344
(7th Cir. 2000) (internal quotation omitted). Specifically, in section 252 of the Act, Congress
prescribed a process for implementing the incumbents' federal duties. The principal mechanism
for implementing these duties are interconnection agreements between incumbents and
competing carriers, and section 252 "specifically provides state commissions with an important
role to play" in the formation of those agreements. Illinois Bell 179 F.3d at 574.
Congress was explicit, however, that federally delegated authority is not the only source
of state authority to regulate local competition. As the Seventh Circuit has explained
, "
the roles
and the authority of the state commission and the FCC are distinct under the Act.Indiana
Bell Tel. Co. v. McCarty, 362 F.3d 378 393 (7th Cir. 2004). In passing the Act, Congress noted with
approval ongoing state efforts to "open the local networks of telephone companies " S. Rep. No.
104/23 at 5 (1995), and it endeavored to build on them not undermine them. This intent
clearly evinced by four explicit savings clauses that safeguard state authority. See 47 U.C. ~~
251(d)(3), 252(e)(3), 261(c); 1996 Act ~ 601(c)(1).
Congress first stated that "nothing in (section 252) shall prohibit a State commission
from establishing or enforcing other requirements of State law in its review of an agreement.Id.
~ 252( e)(3). Similarly, section 251( d)(3), entitled "Preservation of State Regulations " bars the
FCC from "prescribing" or "enforcing" regulations that "preclude the enforcement of any
regulation, order, or policy of a State " so long as those state measures are "consistent with the
requirements of (section 251)," and do "not substantially prevent implementation of the
requirements of this section and the purposes of this part (of the Act)." 47 U.C. ~ 251(d)(3)(B)
&:;
(C). Section 261(c) further provides that "(n)othing in this part (of the Act) precludes a State
from imposing requirements on a telecommunications carrier for intrastate services that are
necessary to further competition. . . as long as the State s requirements are not inconsistent with
this part or the (FCC's) regulations to implement this part." 47 U.C. ~ 261(c).
Finally, Congress directed courts to interpret the Act to preserve state authority. In
section 601(c)(1), Congress specified that the "Act shall not be construed to modify, impair, or
supersede. . . State or local law unless expressly so provided.Act ~ 601(c)(1), 110 Stat. 56, 143
(1996) (uncodified note to 47 U.C. ~ 152). Congress included this clause to "prevent affected
parties from asserting that the (Act) impliedly pre/empts other laws." Conf. Rep. at 201 reprinted
in 1996 U.N. 124, 215. As the Seventh Circuit has noted, section 601(c) "precludes a
reading that ousts the state legislature by implication.AT&T Communications v. Illinois Bell Tel. Co.
349 F.3d 402 410 (7th Cir. 2003).
2. The Triennial Review Order and the D.C. Circuit's Decision in USTA
Beginning in 1996, the FCC issued a series of orders in which it attempted to implement
the Act s federal unbundling requirements in light of the federal "impairment" standard. The
Supreme Court, and later the D.C. Circuit, rejected the FCC's initial interpretations of the
federal impairment standard. Specifically, the D.C. Circuit rejected the FCC's attempts to
adopt a uniform national rule mandating the (network) element s unbundling in every
geographic market and customer class, without regard to the state of competitive impairment in
any particular market.United States Telecom Ass v. FCC 290 F.3d 415, 422 (D.C. Cir. 2002)
USTA I"); see also AT&T Corp.525 U.S. at 387/92 (rejecting FCC's initial definition of
impairment). The D.C. Circuit held that the Act "require ( s) a more nuanced concept of
impairment than is reflected in findings such as the (FCC's) . . ..USTA , 290 F.3d at 426.
In August 2003, the FCC issued the TRO. ILECs asked the FCC to declare in the TRO
that the states are preempted from requiring unbundling beyond the Act s minimum
requirements. The FCC rejected their arguments, holding that ~e do not agree with
incumbent (carriers J that the states are preempted from regulating in this area (of unbundled
network elements J as a matter of law.TRO CJJ 192 (emphasis added). The FCC observed that
(i)f Congress intended to preempt the field Congress would not have included section
251(d)(3) (one of the savings clauses) in the 1996 Act.Id. The FCC noted that "(m)any states
have exercised their authority under state law to add network elements to the national list.Id.
CJJ 191. It noted that "'merely an 'inconsistency' between a state regulation and (an FCC)
regulation was not sufficient for (FCC) preemption under section 251(d)(3).Id. CJJ 192 n.611
(quoting Idaho Utils. Bd. v. FCC 120 F.3d 753 806 (8th Cir.1997)).
To be sure, the FCC expressed its "belie(fJ" that "in some instances" state unbundling
requirements likely would not be "consistent with our new framework and may frustrate its
implementation.TRO CJJ 195. However, the FCC refused the incumbents' request that it issue a
preemption ruling in the TRO. Instead, the FCC held that "(p)arties that believe that a
particular state unbundling obligation is inconsistent with the limits of section 251( d)(3)(B)
and (C) may seek a declaratory ruling" on preemption from the FCC. Id. CJJCJJ 192 195.
In subsequent briefs before the D.C. Circuit, the FCC reiterated that the TRO "did not
preempt states from adding to the unbundling requirements that the FCC adopted.(FCC TRO
Br. at 91 (emphasis in original).) Rather, the FCC again stated "that parties could petition the
FCC for a declaratory ruling that a particular state unbundling obligation exceeds the statutory
limits on state authority.Id. Only such "future
" "
fact/intensive" proceedings, if any are
initiated, would result in "actual preemption.Id.
On appeal from the TRO, the D.C. Circuit held that the FCC's scheme of delegating the
FCC'federal impairment determinations under section 251( d)(2) of the Act to state
commissions was unlawful. United States Telecom Ass FCC 359 F.3d 554 (D.C. Cir. 2004)
USTA II"
).
The court "vacated, as an unlawful subdelegation of the (FCC's) ~ 251( d)(2)
responsibilities, those portions of the (TRO) that delegate to state commissions the authority to
determine whether (competing carriers) are impaired without access to network elements. .
. .
Id. at 568. The D.C. Circuit specifically noted that the FCC could not "subdelegat( e)" its federal
impairment analysis with respect to "mass market switching determinations.Id.
However, consistent with the FCC's position, the D.C. Circuit rejected the claim, raised
by concerned state commissions, that the FCC had decided whether any particular state law
unbundling requirements were preempted by the TRO. The D.C. Circuit found that the FCC
has not taken any view on any attempted state unbundling order " and that judicial
consideration would be premature "until the FCC actually issues a ruling that a specific state
unbundling requirement is preempted.Id. at 594.
The Triennial Review Remand Order.
On February 4, 2005, the FCC issued the Triennial Review Remand Order TRO Remand
Order
),
on remand from USTA II. TRO Remand Order 2005 WL 289015 (reI. Feb. 4, 2005). In the
TRO Remand Order the FCC yet again refused incumbents' requests that it declare that states
have been preempted from requiring any unbundling of network elements beyond what is
provided under section 251 of the Act. For example, one RBOC (SBC) argued in its TRO Remand
Order comments that "the (FCC) should now establish a rule that all. . . state attempts to impose
unbundling requirements that the (FCC) has rejected are unlawful." (emphasis in original). But
the FCC did not grant this request, leaving intact its prior directive from the TRO that parties
believing that a state commission order is preempted should petition the FCC for such a ruling.
TRO CJJ 195.
Applying the foregoing laws, neither the Act, the TRO, the TRO Remand Order nor any
other law preempts Idaho s unbundling regime. Put simply, the FCC did not preempt states
from imposing unbundling obligations under state law and nothing in the TRO or TRO Remand
Order could be read to apply to the unbundling obligations under Idaho law. On the contrary,
. the FCC has refused time and again to do so, despite repeated requests from incumbent carriers
during the TRO or TRO Remand Order proceedings. The FCC itself made it clear in the TRO and
the TRO Remand Order that its unbundling rulings did not preempt state unbundling laws. In
both the TRO and the TRO Remand Order the FCC rejected requests from incumbent carriers that
the FCC declare that states are preempted from requiring unbundling beyond the Act
minimum requirements. In a portion of the TRO that was not disturbed on appeal, the FCC
stated that "(w)e do not agree with incumbent (carriers) that the states are preempted from
regulating in this area (of unbundled network elements) as a matter of law." TRO CJJ 192. The
FCC noted that "(m)any states have exercised their authority under state law to add network
elements to the national list.Id. CJJ 191.
As noted above, the only lawful mechanism available to determine whether a state law is
preempted is to seek a declaratory ruling from the FCC. Qwest has, to the best of Covad'
knowledge, never filed a petition for declaratory ruling contending that Idaho s unbundling
requirements are preempted. Accordingly, a finding of preemption in this proceeding would be
both unlawful and premature.
CONCLUSION
For the foregoing reasons, Covad requests that the Commission adopt its proposed
interconnection agreement language requiring unbundling pursuant to section 271 of the Act
and the state law requirements detailed above.
Respectfully submitted, this 27th day of April 2005.
DIECA COMMUNICATIONS, INC., D/B/ACO D COMMUNICATIONS COMPANY
Dean J. Q oe) Miller
McDevitt
&:;
Miller LLP
420 West Bannock Street
Boise, ID 83702
(208) 343/7500
(208) 336/6912 Fax
and
Gregory Diamond
Senior Counsel
Covad Communications Company
7901 Lowry Boulevard
Denver, CO 80230
(720) 670/1069
(720) 670/3350 Fax
Its attorneys
CERTIFICATE OF SERVICE
I hereby certify that on this 27th day of April, 2005, I caused to be served a true and correct
copy of the foregoing by the method indicated below, and addressed to the following:
Mary Hobson S. MailStoel Rives Hand Delivered101 S. Capitol Blvd. Overnight MailSuite 1900 Telecopy (Fax)
Boise, ID 83702
[phone] (Fax)
John Devaney
Mary Rose Hughes
Perkins Coie, LLP
607 Fourteenth Street, N., Suite 800
Washington, DC 20005-2011
[phone] (Fax)
u. S. Mail
Hand Delivered
Overnight Mail
Telecopy (Fax)
;~~/
Attachment 1
STATE OF MAINE
PUBLIC UTILITIES COMMISSION
VERIZON-MAINE
Proposed Schedules, Terms
Conditions and Rates for Unbundled
Network Elements and Interconnection
(PUC 20) and Resold Services (PUC 21)
Docket No. 2002-682
September 3, 2004
ORDER - PART
WELCH , Chairman; DIAMOND and REISH US, Commissioners
SUMMARY
In this Order, we find that Verizon must include all of its wholesale offerings ilJ itsstate wholesale tariff, including unbundled network elements (UNEs) provided pursuant
to section 271 of the Telecommunications Act of 1996 (TeIAct). In addition , Verizon
must file prices for all offerings contained in the wholesale tariff for our review for
compliance with federal pricing standards, Le. "Total Element Long Run Incremental
Cost (TELRIC)" for section 251 UNEs and "just and reasonable" rates pursuant to
sections 201 and 202 of the Communications Act of 1934 for section 271 UNEs. We
also find that we are not preempted from considering in this proceeding whether Verizon
must continue to offer line sharing pursuant 35-A M.A. SS 1306 and 7101.
II.BACKGROUND
In our Comments to the Federal Communications Commission (FCC) regarding
Verizon s section 271 application for authority to enter the interLATA toll market
(Verizon s 271 Application), we stated that the availability of a wholesale tariff or
Statement of Generally Available Terms (SGA T) would greatly reduce the time required
to effect a valid interconnection agreement and would also eliminate the perception
shared by some CLECs that they were being "forced" to accept contract terms in their
interconnection agreements that were unrelated to the terms that they were interested
in negotiating.1 Thus, in a March 1 , 2002 letter from the Commission to Verizon
(Commission s 271 Letter), we explicitly conditioned our support of Verizon s 271
Application on Verizon s agreement to fulfill a number of additional requirements
including the filing of a wholesale tariff. Verizon committed to meeting the
Commission s conditions in a March 4, 2002 letter to the Commission (Dinan Letter),
Application by Verizon New England Inc., Bell Atlantic Communications, Inc.
(d/b/a Verizon Long Distance), NYNEX Long Distance Company (d/b/a Verizon
Enterprise Solutions), Verizon Global Networks, Inc. and Verizon Selective Services
Inc., for Authorization To Provide In-Region, InterLA TA Services in the State of Maine
CC Docket No. 02-, Report of the Maine Public Utilities Commission on Verizon
Maine s Compliance with Section 271 of Telecommunications Act of 1996 (April 10,
2002) at 7.
ORDER Docket No. 2002-682
and on November 1 , 2002, Verizon submitted a schedule of terms, conditions and ratesfor Resold Services (P.C. No. 21) and the provision of Unbundled Network Elements
and Interconnection Services (P.C. No. 20) along with cost studies for certain non-
recurring charges and aSS-related issues.
In order to allow enough time to thoroughly examine the tariff, we suspended it
on November 11 , 2002. On November 13, 2002, the Hearing Examiner issued a
Procedural Order requesting intervention and scheduling an initial case conference for
December 10th On December 4, 2002, prior to the case conference, the Hearing
Examiner issued a second Procedural Order granting intervention to all parties that
requested if and proposing a schedule for processing this case. Between December2002 and August 2003, the parties conducted some discovery and attempted to identify
all the issues that need to be litigated.
On August 11 , 2003, the H~aring Examiner issued a Procedural Order setting a
hearing date of October 2, 2003, and attaching a list of issues that the Advisors
intended to explore at the hearing. Before a hearing could take place, however, on
August 21 , 2003, the FCC issued its Triennial Review Order (TRO).A case
2 The parties at that time included: the Office of the Public Advocate (OPA),
Association of Communications Enterprises (ASCENT), MCllWorldCom (MCI), Mid-
Maine Telecommunications (Mid-Maine), and Oxford Networks (Oxford). Mid-Maine
and Oxford filed joint briefs as the CLEC Coalition.
At the Case Conference on December 10th, the proposed schedule was
discussed and on December 17th the Hearing Examiner issued a Procedural Order to
grant three additional interventions (Biddeford Internet Corporations d/b/a Great Works
Internet (GWI), Conversent Communications (Conversent), and Cornerstone
Communications (Cornerstone) and to set a preliminary schedule. On January 15, 17and 23 , and February 3 2003. the Hearing Examiner issued Procedural Orders
adjusting the case schedule and outlining further instructions and an initial list of issues
to be litigated in the proceeding. On January 22"d, the CLEC Coalition and Cornerstone
Communications also filed a list of initial issues. On February 3, 7, and 14 , 2003Verizon submitted responses to Staff's and other parties' issues and questions. On
February 18, 2003, both Staff and the CLEC Coalition filed a list of issues that Verizon
should attempt to address in its testimony. On February 24 2003, the Hearing
Examiner issued a Procedural Order establishing a schedule for testimony and
discovery. On March 3, 2003 , the Commission suspended the Verizon tariff for a
second time to allow additional time to review it. On March 24, 2003, Verizon witnesses
filed panel testimony. Staff issued its first set of data requests on the Verizon testimony
on April 1 , 2003, to which Verizon responded on April 22nd and 23rd On May 20, 2003,
Verizon issued discovery requests to GWI , to which GWI responded on May 2ih
Report and Order and Order on Remand and Further Notice of Rulemaking,
Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange
Carriers, CC Docket 96-98 et a/.FCC03-, 18 FCC Rcd 16978 (reI. August 21
2003)(Triennial Review Order or TROj.
ORDER Docket No. 2002-682
conference was held on September 16, 2003 , to discuss with the parties the potential
impact of the TRO on the wholesale tariff. On September 18, 2003, the Examinerissued a Procedural Order summarizing the September 16th case conference andsetting deadlines for Verizon to file new red-lined tariff schedules based on the changes
required by the TRO.
On October 16, 2003, the CLEC Coalition filed a Motion for Issuance of
Temporary Order. In its Motion , the CLEC Coalition objected to a letter sent by Verizon
on October 2nd which stated that Verizon would be discontinuing the provisioning of
certain UNEs in compliance with the TRO. On October 21 , 2003, the Hearing Examinerissued a Procedural Order stating that Verizon had correctly identified those UNEs that
the FCC eliminated from the TelAct's section 251 unbundling requirements and that
while changes in terms and conditions caused by the TRO would be litigated in thisproceeding, the Commission would not re-litigate the decision by the FCC to eliminate
specific l)NEs from section 251's requirements. Finally, the Examiner stated that the
Commission had not anticipated the need to address Verizon s continuing obligations
under section 271 in this proceeding and that the Advisors would further consider the
issues and determine the next steps.
On December 16, 2003, a case conference was held. After discussion, the
Hearing Examiner determined that before hearings on the substance of the Wholesale
Tariff could be held, legal briefing was necessary on two issues: (1) whether the
Commission had authority, under either state or federal law, to require Verizon to tariff
its obligations to continue providing UNEs under section 271 of the TelAct and whether
it could set the rates for those obligations; and (2) whether the Commission has the
authority, under either state or federal law, to order Verizon to continue providing line-
sharing at Commission-set TELRIC rates.
On January 16, 2004, Initial Briefs were filed by Verizon, the CLEC Coalition, and
the Consolidated Intervenors (GWI, OPA and Cornerstone). The same parties filed
Reply Briefs on January 30, 2004.
Before a decision could be reached by the Commission on the legal issues, the
C. Circuit Court of Appeals issued its decision in USTA II 5 the
appeal of the TRO.
Because UST A II was directly relevant to many of the legal issues raised in this Docket
the Hearing Examiner issued a Procedural Order on March 4, 2004, allowing all parties
to supplement previously filed briefs to address the impact of the D.C. Circuit Court
decision on their positions in this case. On March 26, the Consolidated Intervenors filed
a supplemental brief, as did Verizon.
On July 23, 2004, the Hearing Examiner issued her Report recommending that
we find that that Verizon must include all of its wholesale offerings, including UNEs
S. Telecomm. Ass n v. FCC 359 F.3d 554 (D.C. Cir. 2004)(USTA II).
ORDER Docket No. 2002.682
provided pursuant to section 271 , in its state wholesale tariff. The Examiner also
recommended that we find that Verizon must continue to offer line sharing pursuant to
Checklist Item No.4 of section 271. Finally, the Examiner recommended that we
decline the opportunity to exercise any authority we might have to set rates for section271 UNEs. In addition to serving her Report on the parties to this proceeding, the
Examiner also served the Report on the parties to Docket No. 2004-135, Verizon
Request for Arbitration, pursuant to our June 11 , 2004 decision in that case to
consolidate the Arbitration proceeding with this Wholesale Tariff proceeding. All partiesto both cases were given an opportunity to file exceptions.
On August 6 , 2004, Verizon, Conversent, Cornerstone, the Association for LocalTelecommunications Services (AL TS), Covad Communications (Covad), the CLEC
Coalition, United Systems Access Telecom, Inc. (USA Telephone), AT&T
Communications of New England, Inc. (AT&T), and GWI filed Exceptions to the
Examiner s Report. The arguments from all parties in the three rounds of briefs and
exceptions are summarized below along with our analysis and decision.
III.COMMISSION AUTHORITY TO REQUIRE TARIFFING OF SECTION 271OFFERINGS
Introduction
As will be explained in detail below, at the time we conditioned our support
of Verizon s 271 Application on Verizon filing a wholesale tariff, Verizon s unbundling
obligations under sections 251/252 of the TelAct were synonymous with its section 271unbundling obligations. Thus, we made no distinction between the two potentially
differing obligations; we simply required a wholesale tariff. Since that time, the
USTA f decision was released, the FCC issued its TRO and , most recently, the USTA
/I decision was issued. The impact of these three decisions on the issue at hand can be
summed up as follows: today an ILEC's 251/252 obligations are narrower (in most
respects ) than its 271 obligations. The CLECs contend that Verizon must now amend
its proposed wholesale tariff to include its section 271 unbundling obligations. Verizon
argues that the FCC has exclusive jurisdiction over matters relating to its 271
obligations and that this Commission has no authority to require Verizon to amend its
wholesale tariff to include its 271 obligations.
AlmJicabl, Law
United States Telecom Association v. FCC 290 F.3d 415 (D.C. Cir. 2002)
(USTA I).
1n a recent order in the Skowhegan Online Proceeding, we found that subloops
were a requirement under Section 251 but not a requirement under Section 271.
Investigation of Showhegan Online s Proposal for UNE Loops, Docket No. 2002-704,
Order (April 20 , 2004), and Order Denying Reconsideration (June 16 2004).
ORDER Docket No. 2002-682
Difference Between Section 251 and 271 UNEs
Section 271 of the TelAct sets forth the requirements an ILEC must
meet before it will be allowed to enter the interLA T A toll market. The so-calledcompetitive checklist" contains 14 measures which were intended to ensure that theILEC had opened the local exchange market to competition. Checklist Item No.requires "nondiscriminatory access to network elements in accordance with the
requirements of sections 251 (c)(3) and 252 (d)(1)." Section 251 (c)(3) requires ILECs toprovide access to their network, Le. UNEs, while Section 252(d)(1) sets the pricing
standard for those UNEs , Le., TELRIC pricing. Section 251 (c)(3) also requirescompliance with section 251 (d)(2) which limits access to UNEs at TELRIC pricing to
only those which meet the "necessary and impair" standard.8 Thus, Checklist Item No.2 requires an ILEC to meet all of the 251 and 252 unbundling and pricing standards
which the FCC limited in the TRO to specific types of loops, subloops, and transport.
Checklist Items Nos. 4 , and 10 require ILECs to provideunbundled access to loops, transport, switching and signaling. The FCC has explicitly
found that, despite elimination of a number of UNEs under section 251 , ILECs mustcontinue to provide access to those UNEs under section 271.10 However, none of these
other checklist items, unlike Checklist Item No., cross reference sections 251 (c)(3)and 252(d)(1). Thus, according to the FCC in the TRO UNEs unbundled underChecklist Items Nos. 4, 5, 6 and 9 must only meet the "just and reasonable" standard of
47 U.C. 99201-202 and not the TELRIC standard required under section 251.
State Commission Authori in 271 Enforcement Matters
1n the TRO the FCC retained its earlier definition of "necessary
" ("
... aproprietary network element is . necessary' within the meaning of section 251 (d)(2)(A) if
taking into consideration the availability of alternative elements outside the incumbent'
network, including self-provisioning by a requesting carrier or acquiring an alternative
from a third-party supplier, lack of access to that element would, as a practical
economic, and operational matter, preclude a requesting carrier from providing the
services it seeks to offer.) and adopted a new definition of .'impairment" ("A requestingcarrier is impaired when lack of access to an incumbent LEG network element poses abarrier or barriers to entry, including operational and economic barriers, that are likely to
make entry into a market uneconomic.TRO at 1J1f 170 , 84.
USTA 1/ vacated the TRO'findings regarding mass market switching, thereby
effectively eliminating switching as a 251 UNE.
TRO at 11 653.
11 TRO at 11 656.
ORDER Docket No. 2002-682
FCC stated:
In the FCC's Order granting Verizon 271 authority in Maine 12 the
Working in concert with the Maine Commission , we intend to
monitor closely Verizon s post-approval compliance for
Maine to ensure that Verizon does not "cease () to meet any
of the conditions required for (section 271) approval.
The FCC referred readers of the Maine 271 Order to its Kansas/Oklahoma 271 Order,for a more complete description of the 271 enforcement process. The
Kansas/Oklahoma 271 Order states:
Furthermore, we are confident that cooperative state and
federal oversight and enforcement can address any
backsliding that m~y arise with respect to SWaT's entry into
the Kansas and Oklahoma long distance markets.
(emphasis added). Thus , the FCC recognized the important role that state
commissions would play in enforcing the requirements of section 271. Of moreimportance, however, is the Kansas/Oklahoma 271 Orders citation to the New York 271
Order, 15 which made several relevant findings. First, while noting that Congress had
authorized the FCC to enforce section 271 to ensure continued compliance, the New
York 271 Order specifically endorsed state commission authority to enforce
commitments made by Verizon (then Bell Atlantic) to the New York Public Service
Commission. The FCC stated that:
Application by Verizon New England Inc., Bell Atlantic Communications, Inc.(d/b/a Verizon Long Distance), NYNEX Long Distance Company (d/b/a Verizon
Enterprise Solutions), Verizon Global Networks, Inc. and Verizon Selective Services
Inc., for Authorization to Provide In-Region, InterLA TA Services in the State of Maine,CC Docket No. 02-, Order, 17 FCC Rcd 11676 (June 19, 2002) (Maine 271 Order).
Maine 271 Order at ~ 65.
14 Joint Application by SBC Communications Inc., Southwestern Bell Tel. Co.and Southwestern Bell Communications Services, Inc., d/b/a Southwestern Bell Long
Distance for Provision of In-Region, InterLA TA Services in Kansas and Oklahoma,
Docket No. 00-217, Memorandum Opinion and Order, 16 FCC Rcd 6237,6241-42,
paras. 7-10 (2001) (SWBT Kansas/Oklahoma Order), aff'd in part, remanded in part sub
nom. Sprint Communications Co. v. FCC 274 F.3d 549 (D.C. Cir. 2001)
(Oklahoma/Kansas 271 Order).
15 Application by Bell Atlantic New York for Authorization Under Section 271
the Communications Act to Provide In-Region, InterLA T A Service in the State of NewYorkMemorandum Opinion and Order, 15 FCC Rcd 3953 (New York 271 Order).
ORDER Docket No. 2002-682
Complaints involving a BOC's (Bell Operating Company)
alleged noncompliance with specific commitments the BOC
may have made to a state commission, or specific
performance monitoring and enforcement mechanisms
imposed by a state commission should be directed to that
state commission rather than the FCC.
(emphasis added). Thus, the FCC explicitly recognized the authority of state
commissions to enforce 271-related commitments including, but not limited to
performance assurance plans (PAPs). Indeed , the FCC noted "with approval" the fact
that the New York PAP I'will be enforceable as a New York Commission order.,,17
Verizon s 271 Commitments to the Commission
Turning to Verizon s commitments here in Maine, as stated above,Verizon committed to the following relevant conditions, contained in the March 1 , 2002letter from the Commission:
Verizon will file a wholesale tariff for Maine no later
than October 1 , 2002. In the interim, CLECs shall be
allowed to amend their interconnection agreements
with Verizon in such a manner that enables them to
negotiate the inclusion of a single UNE (and any
terms and conditions related to the single UNE) rather
than be required to sign a multi-part or omnibus
amendment which contains provisions unrelated to
the single UNE.
In our April 1 0, 2002 Report of the Maine Public Utilities
Commission on Verizon Maine s Compliance with Section 271 of the
Telecommunications Act of 1996 , we explicitly conditioned our support of Verizon s 271
application upon Verizon s compliance with the list of conditions contained in our March
2002 letter to Verizon , including its commitment to file a wholesale tariff. Specifically,
we stated:
The MPUC finds, based upon the record before us, including
the commitments made by Verizon in its March 4, 2002 letter
16
New York 271 Order at 1r 452.
New York 271 Order at n. 1353.
Commission s 271 Letter.
ORDER Docket No. 2002-682
to the MPUC , that Verizon meets the Section 271
Competitive Checklist.19
Verizon s commitment to file a wholesale tariff for Maine alleviated certain concerns wehad regarding the ability of individual CLEGs to negotiate interconnection agreements.Specifically, during the course of our 271 proceeding, we heard from a number of
CLECs regarding the difficulties and delays they encountered with Verizon when trying
to re-negotiate or amend their interconnection agreements. We found that requiringVerizon to submit a wholesale tariff would simplify the interconnection process for
CLEGs and provide a single forum for litigating disputes and thus we explained in our
271 Report to the FCC that:
Unlike some other states, Verizon does not have a
Statement of Generally Available Terms (SGAT) or
wholesale tariff for the State of Maine. Availability of a
wholesale tariff would greatly reduce the time required to
effect a valid contract and would also eliminate the possibility
of "tying" unrelated sections of an interconnection agreement
together when trying to add new terms to an existing
agreement. Thus, at our request, Verizon has agreed to file
a wholesale tariff for our review by October 1 , 2002. This
will provide us an opportunity to review all of the terms and
conditions that Verizon imposes on CLECs purchasing
wholesale services.
Thus, we found the filing of a wholesale tariff encompassing all of
Verizon s wholesale obligations would benefit the CLECs, Verizon, and the Commission
by consolidating our review of Verizon s wholesale terms and conditions.
Positions of the Parties
Verizon
Verizon s initial brief did not directly respond to the Hearing
Examiner s question concerning Commission authority to require Verizon to tariff its 271
obligations. In its arguments concerning the availability of specific elements, Verizon
Application by Verizon New England Inc" Bell Atlantic Communications, Inc.
(d/b/a Verizon Long Distance), NYNEX Long Distance Company (d/b/a Verizon
Enterprise Solutions), Verizon Global Networks, Inc. and Verizon Selective Services
Inc., for Authorization To Provide In-Region , InterLATA Services in the State of Maine
CC Docket No. 02-, Report of the Maine Public Utilities Commission on Verizon
Maine s Compliance with Section 271 of Telecommunications Act of 1996 (April 10,
2002) (271 Report to FCC) at p.
271 Report to FCC at p. 7.
ORDER Docket No. 2002-682
admitted that in paragraph 653 of the TRO the FCC recognized that former Bell
Operating Companies (BOCs) have ongoing access obligations under section 271 ofthe TelAct but argued that nothing in the TelAct gives a state commission any power to
interpret or enforce section 271 requirements. According to Verizon, only the FCC mayissue regulations relating to 271 UNEs and only the FCC may set rates for these UNEs.
Verizon maintained that the pricing standard set by the FCC for 271 network elementsjust and reasonable " is not the same as the TELRIC standard used for section 251UNEs.
In its reply brief, Verizon acknowledged that the Commission may
playa role in enforcing 271 obligations - for example, by administering the PAP and
Carrier to Carrier Guidelines - but argued that this in no way suggests that the FCC has
delegated, or could delegate, to state commissions the authority to determine, in thefirst instance, whether section 271 requires the unbundling of a particular network
element, independent of section 251 requir~ments. Finally, although Verizon did not
specifically address state authority under section 271 in its Supplemental Brief, Verizonstated that the "Commission plainly has no authority to order additional unbundling of
network elements under the TeIAct."
In its Exceptions, Verizon argued that, even if the FCC orders cited
by the Examiner contained a delegation of section 271 enforcement authority to state
commissions, after USTA II any such delegation would be illegal. Verizon claimed thatCongress had expressly limited the states' role in section 271 matters to consultation
with the FCC during its review of a 271 application and that any "cooperative
enforcement" envisioned by the FCC was limited to a monitoring role.
Verizon also argued that requiring it to file a wholesale tariff at the
Commission violated federal law. Specifically, Verizon argued that two federal appellate
decisions, Wisconsin Bell, Inc. v. Sie, et al.340 F.3d 441 (th Cir. 2003) and Verizon
North, Inc. v. Strand 309 F.3d 935 (6th Cir. 2002), had found that state commissions
could not require an ILEC to tariff its TelAct unbundling and interconnection obligations
with the state commissions. Verizon contended that the rationale motivating our desire
for a state wholesale tariff, namely concerns with difficulties and delays associated with
individual negotiations, had been struck down by both courts. Thus, according to
Verizon , the two federal decisions "are cause for serious reservation" regarding whether
the Commission should "continue to expend resources on state wholesale tariffing
inquiries.
Consolidated Intervenors
In their initial brief, the Consolidated Intervenors stated that the
FCC "took pains" to confirm that section 271 creates independent access obligations for
BOCs and cited paragraphs 653 and 655 of the TRO. They also pointed to the fact that
this Commission conditioned its support of Verizon s 271 Application to the FCC on
Verizon s willingness to adhere to a number of requirements that it would not otherwise
be required to meet under section 251.
ORDER Docket No. 2002-682
In their reply brief, the Consolidated Intervenors urged the
Commission to reject Verizon s argument that we do not have authority to enforce 271
obligations. They pointed to the history of this case , and the fact that Verizon filed the
wholesale tariff in compliance with a condition set by the Commission during its 271review, as evidence of the Commission s authority. They asserted that Verizon
argument that the Commission has no power to regulate its wholesale tariff "constitutesan outright repudiation of a fundamental premise of the agreement" in the 271 case.
In their Supplemental Brief, the Consolidated Intervenors stated
that USTA /I confirms that Verizon has section 271 obligations that are independent of
its obligations under section 251. They also interpreted the USTA II decision to confirm
that the TRO does not impact a state commission s ability to exercise its power under
state and federal law to add to the FCC's list of UNEs.
The Consolidated Intervenors filed separate Exceptions, howeverall three parties (GWI, OPA, and Cornerstone) concurred with the Examiner s analysis
of the differing section 251 and section 271 unbundling obligations and her
recommendation that Verizon be required to include its section 271 unbundlingobligations in the wholesale tariff.
CLEC Coalition
In its brief, the CLEC Coalition stated that the authority for the
Commission to require Verizon to tariff its UNE obligations under section 271 comes
from the Congressional framework of section 271 , Verizon s explicit agreement to the
UNE tariffing obligations in Verizon s March 4, 2002 letter, and the plain and
unambiguous declarations of the FCC in paragraphs 653-655 of the TRO. The CLEC
Coalition also concluded that the FCC expressly found that it was the responsibility of
both the FCC and state commissions to ensure compliance with section 271 , includingsetting prices for UNEs established pursuant to section 271. Finally, the CLEC
Coalition argued that the Commission must exercise its 271 authority over Verizon
because if the state does not, no one will; the FCC is simply without the resources. The
absence of state action would have a drastic effect on the competitive landscape in
Maine.
In their reply brief, the CLEC Coalition concurred with the
Consolidated Intervenors and urged the Commission not to let Verizon break its
agreement to meet the obligations it agreed to during the 271 approval process. The
CLEC Coalition s exceptions generally supported the Examiner s Report and included
specific comments on issues addressed in other sections of this order.
Other CLECs
AL TS, Covad, USA Telephone, AT&T, and Conversent, though
they did not participate in the briefing phase of this proceeding, filed exceptions to the
Report. AL TS and Covad filed joint exceptions which concurred with the Examiner
ORDER Docket No. 2002-682
conclusion that we have authority to "ensure Verizon s ongoing compliance with the
competitive checklist of section 271" and that we can . and should, require Verizon to file
a wholesale tariff including all of its unbundling obligations. AL TS and Covad dismissedVerizons arguments regarding exclusive FCC jurisdiction as contrary to the existing and
continued authority of state commissions to enforce PAPs. USA Telephone
exceptions focused on pricing issues, though they did appear to support the
recommendations regarding Commission authority to require a wholesale tariff.
Conversent's exceptions supported the Examiner s conclusion that
Verizon should include all of its wholesale offerings, including section 271 UNEs, in itsMaine wholesale tariff. Conversent claimed that such a requirement will reduce the risk
that Verizon will unilaterally cease providing high-capacity DS1 and DS3100ps and dark
fiber. Conversent countered Verizon s arguments concerning the voluntary nature of its
PAP commitments and pointed out that if those commitments were entirely voluntary,
Verizon could stop making payments at any time - a result not contemplated by the
FCC , state commissions or CLECs. Conversent urged us to enforce the 271 conditions
and commitments made by Verizon and to specifically require Verizon to include DS
and DS3 high-capacity loops in its wholesale tariff. Conversent argued that neither the
USTA /I decision nor the Court's mandate eliminated the 251 unbundling requirement
for high capacity OS 1 and DS3 loops - the decisions only vacated the sub-delegation to
the states and not the national finding of impairment. Conversent argued that we are
not preempted from requiring Verizon to include those UNEs in the state wholesale tariff
because such a requirement does not substantially prevent the implementation of
section 251 or the purposes of the Act.
AT&T concurred with the Examiner s recommendations concerning our
jurisdiction over 271 unbundling requirements and the need for Verizon to include all of
its unbundling obligations in its wholesale tariff.
Analysis
As stated above, at the time of Verizon s 271 proceeding, Verizon
unbundling obligations under 251/252 of the TelAet were the same as its 271
unbundling obligations and thus there was no need to distinguish between the two types
of requirements. Now that they are different, we must determine both the scope of
Verizon s commitment to file a wholesale tariff and , if that commitment includes
Verizon s 271 unbundling obligations under Checklist Items 4 , 5, 6, and 10, our authority
to enforce such a commitment.
~pe of Verizo~mmitmen~
Interpretation of Verizon s commitment to file a wholesale tariff
requires an examination of the language of the letters exchanged with Verizon during
our 271 proceeding and as well as a review of the underlying purposes of the condition.
Neither the Commission s 271 Letter nor the Dinan Letter contain any language that
would limit Verizon s commitment to file a wholesale tariff to its 251 obligations. Thus
ORDER Docket No. 2002-682
we must turn to the underlying purposes of the condition for guidance. During our 271proceeding, we heard numerous complaints from CLECs regarding the difficulties anddelays associated with negotiating amendments to interconnection agreements withVerizon. Today, we continue to hear complaints from CLECs regarding difficulties with
interconnection agreements. In the Verizon Arbitration proceeding.21 CLECscomplained that Verizon had not responded to requests from CLECs to negotiateamendments to their interconnection agreements.
We find that a reasonable interpretation of the condition we placed
upon Verizon during our 271 proceeding, and the condition it committed to fulfill
requires Verizon to include both its section 251 and 271 unbundling obligations in itswholesale tariff filed in Maine. Indeed, the reasons underlying the condition apply even
more today when the legal and regulatory landscape has become increasingly
confusing and complex, making it difficult to completely address and negotiate all of the
issues that may arise in an interconnection agreement negotiation.
Our authori to enforce Verizon s commitment
While Verizon is correct that section 271 (d)(6) allows for continued
enforcement of an I LEC's 271 obligations by the FCC, Verizon ignores the FCC'
directives regarding enforcement of I LEC commitments to state commissions and fails
to explain adequately why states have authority over some section 271 issues, such as
PAPs, and not others. Verizon also does not address the requirement. pursuant to
section 271 (c)(2)(A)(ii) I that its interconnection agreements, subject to state arbitration
pursuant to section 252(b), include access and interconnection that meets the
requirements of section 271 (c)(2)(B) - the competitive checklist. We find, upon
consideration of each of these factors, that we do have authority to enforce Verizon
commitment to file a wholesale tariff with us that includes both its section 251 and 271
obligations.
Under section 271 , state commissions do not have authority to
approve an ILEC's 271 application but are allowed to consult with the FCC concerning
an ILEC's 271 application. In fulfilling that role, the FCC encouraged state commissions
to conduct extensive fact-finding proceedings to ascertain whether the terms
conditions, and prices of an ILEC's wholesale operations met section 271's standards.
While the FCC made the ultimate finding of compliance, it relied heavily upon the work
of state commissions. Indeed, the FCC noted in its Maine 271 Order.3. We wish to recognize the effort and dedication of the
Maine Public Utilities Commission (Maine Commission). In
smaller, more rural states, the section 271 process taxes the
resources of the state commissions, even more heavily than
/nvestigation Regarding Verizon Maine s Request for Consolidated Arbitration
Docket No. 2004-135, Order (June 4, 2002).
ORDER Docket No. 2002-682
in other states. Yet, by diligently and actively conducting
proceedings beginning in 1997 to set TELRIC prices, to
implement performance measures, to develop a
Performance Assurance Plan (PAP), and to evaluate
Verizon s compliance with section 271 of the Act, the Maine
Commission laid the necessary foundation for our review
and approval. We are confident that the Maine
Commission s efforts, culminating in the grant of this
application, will reward Maine consumers by making
increased competition in all markets for telecommunications
services possible in the state.
5. We rely heavily in our examination of this application
on the work completed by th~ Maine Commission. .
. .
Thus, the FCC explicitly acknowledged the prominent role the Commission played in
evaluation of Verizon s 271 Application and the depth of the Commission
understanding of the particular circumstances of the competitive market in Maine.
As indicated above, the FCC has clearly stated that states may enforce
commitments made to them by ILECs during the 271 process. The FCC's statement
regarding enforcement of state 271 commitments and our significant experience with
the issues associated with the wholesale tariff, provide us with legal authority and
substantive expertise to enforce Verizon s wholesale tariff commitment. We will
exercise this authority by requiring Verizon to honor the commitment it made to us in the
271 process to file a wholesale tariff which includes all of its unbundling requirements
and then evaluating that tariff for compliance with state and federal standards. If a party
believes the Commission has not applied the correct standard, the party may file an
action with the FCC pursuant to 47 U.C. ~271(d)(6) and the FCC will have the benefit
of the detailed factual record developed by us. Nothing about our review of Verizon
wholesale tariff preempts or invalidates the FCC's authority under section 271 (d)(6). If
the FCC disagrees with the position we take here, it can explain itself in any order
issued on appeal. In the meantime, our decision will provide a single litigation
proceeding to resolve the myriad of issues resulting from the TRO and UST A 11.
We do not find Verizon s reliance upon the Sixth Circuit'Verizon North
Strand decision and the Seventh Circuit'Bie v. War/deem decision persuasive. In both
the Strand and Bie cases, the issue before the court was whether a state commission
could order a complete by-pass of the TelAct interconnection requirements - a matter
not at issue in this case. Specifically, we never envisioned that our wholesale tariff
would replace the need for an interconnection agreement, only that it would simplify the
process by providing a "floor" of standard terms and conditions, which is consistent with
Verizon s own practice of offering an interconnection agreement template with standard
offerings. Further, we note that section 252 of the TelAct specifically provides that a
state commission may consolidate the litigation associated with multiple arbitration
ORDER Docket No. 2002-682
Verizon s express agreement to file a wholesale tariff, in its letter
confirming that it would abide by the Commission s conditions for recommending
Section 271 approval, provide us with an independent basis for requiring Verizon to file
such a tariff now. We assume Verizon did not lightly make its commitment, and thatVerizon understood that the Commission, in accepting that commitment, would notcondone or allow conduct inconsistent with the obligations thus undertaken. It follows,then, that Verizon by its acceptance of the condition (for which Verizon obtained
Commission support for its Section 271 application) granted to the Commission the
authority to ensure that Verizon fully complied with the wholesale tariff obligation
defined by Section 271. This is not to suggest that the Commission has theindependent authority to define the scope of those obligations where the FCC has
clearly spoken; merely that, in light of Verizon s commitment, the Commission has an
independent role in determining whether those obligations have been met.
IV.COMMI$SION AUTHORITY TO SET PRICES FOR I 271 OFFERINGS
Introduction
Having determined that Verizon must tariff its 271 obligations , we consider
the extent of our authority to set rates for those 271 offerings. Under state law, our
authority is clear: 35-A M.A. ~ 301 requires that rates be just and reasonable and
gives the Commission the authority to determine whether a utility's rates meet this
standard. The Commission s authority under federal law is not as clear and requires a
review of sections 251 and 252 of the TelAct, the TRO and USTA II.
AJ!plicable Law
Section 252 of the T elAct requires state commissions to apply the pricing
standards found in section 252(d) to set the rate for interconnection pursuant to section
251 (c)(2) and for UNEs unbundled pursuant to section 251 (c)(3). Section 252(d)
requires that the rate be based upon cost, and be nondiscriminatory, and further
provides that it may include a reasonable profit. This standard has been interpreted by
the FCC (and upheld by the Supreme Court23) to require forward-looking TELRIC
pricing for all UNEs unbundled pursuant to section 251 of the TeiAct.
Section 271 does not contain its own pricing standard. Section
271 (c)(2)(B)(ii) (Checklist Item No.2) requires that ILECs make UNEs available "
requests. Given that Verizon s pending Arbitration proceeding involves over 100
carriers and the same issues associated with the wholesale tariff, we believe that our
approach of consolidating the two proceedings and developing a baseline wholesale
tariff as a first step in the interconnection agreement process achieves the underlying
goal of the TelAct, Le., encouragement of interconnection between competitors and
ILECs.
See A T& Tv. Iowa Utilities Bd.525 U.S. 355 (1999)(Jowa II).
ORDER Docket No. 2002-682
accordance with the requirements of section 251 (c)(3) and 252(d)(1)" while sections271 (c)(2)(B)(iv, v, vi , and x) (Checklist Items Nos. 4 6 and 10), which provide foraccess to loops , switching, trunk side transport, and databases, make no reference to apricing standard.
In the TRO the FCC interpreted the pricing provisions of the TelAct as
requiring TELRIC pricing for section 251 (c)(3) elements only and "just and reasonable
rates for 271 (c)(2)(B)(iv, v, vi , and x) elements. The FCC found that TELRIC pricing for
non-251 UNEs "is neither mandated by statute nor necessary to protect the public
interest,,24 Relying upon the Supreme Court's holding in Iowa /I that section 201 (b) ofthe Communications Act empowered the Commission to adopt rules that implement the
TelAct, the FCC found that it had authority to impose the just and reasonable and
nondiscriminatory standard of sections 201 and 202 of the Communications Act. TheFCC went even further and found that it would determine, based upon a fact-specific
inquiry pursuant to a section 271 application or a 271 enforcement action, whether the
price for a particular 271 element met the section 201/202 standard.25 The FCC noted
that prices similar to those currently charged in ILEC access tariffs would likely meet the
standard, as would any prices negotiated through arms-length agreements.
In its March 2004 decision in UTSA II the D.C. Circuit affirmed the FCC'
finding that the pricing standard for UNEs unbundled pursuant to ~ 271 is found in
sections 201-202 of the TelAct and not section 251. Specifically, the court upheld the
FCC's determination that TELRIC pricing was not required under section 271; all that
was required was that the prices not be "unjust, unreasonable or discriminatory.,,27 The
Court did not address the FCC's assertion that it, rather than state commissions, shoulddetermine whether the price for a 271 element meets the just and reasonable standard.
The Court did find , in the context of state unbundling authority, that claims relating to the
preemptive scope of the TRO were not ripe, because no party had challenged a specific
state decision.
Since the USTA II decision was released, several state commissions have
directly addressed the issue of state authority to review pricing for 271 elements. TheMassachusetts Department of Telecommunications and Electricity recently found that it
could approve or deny, on the basis of market-based pricing, the prices included in
Verizon s wholesale tariff for its ~271 obligations because those services are
TRO at ~ 656.
TRO at ~ 664.
/d.
27 USTA 1/ at 53.
ORDER Docket No. 2002-682
jurisdictionally intrastate.28 On June 21 , 2004, the Tennessee Regulatory Authority
(TRA) issued an order which sets a 271 switching rate in the context of a section 252
arbitration proceeding.29 Bellsouth has appealed that decision to the FCC and asked for
an emergency declaratory ruling by the FCC that the action taken by the TRA violates
the T elAct, FCC Orders, and federal precedent. The FCC has asked for comment onBellsouth's petition.
Position of the Parties
Verizon
In its briefs, Verizon argued that the TRO makes clear that the FCChas exclusive jurisdiction over the pricing of 271 UNEs and that the "just andreasonable" standard, rather than TELRIC, should be applied to the rates for those
elements. Verizon contended that even if TELRIC prices meet the "just and
reasonable" standard, there is nothing that precludes Venzon from charging higher
rates that also meet the "just and reasonable" standard. According to Verizon, the
Commission would have no grounds for insisting on the lower TELRIC rate. Verizon
also pointed out that while state commissions have authority to set rates for section 251UNEs, there is no similar grant of authority for section 271 UNEs.
In its exceptions, Verizon urged us to clarify that all matters
involving prices for section 271 elements are "deferred" to the FCC. Verizon argued
that, because of its belief that we have no authority to define UNEs under section 271
we also would have no authority to set prices of any such UNEs. Venzon contested the
grounds underlying the Examiner s finding that we have authority to set prices for
section 271 UNEs, contending that the Examiner places too much significance on the
Massachusetts DTE order cited above and that Verizon s petition for reconsideration of
that order is still pending. Verizon also argued that Congress s silence on the issue of
state enforcement of 271 obligations does not imply that states do, in fact, have any
authority. Finally, Verizon alleged that USTA II flatly rejected" any sub-delegation of
FCC powers to state commissions.
Verizon also challenged the Examiner's recommendation that the
Commission require Verizon to offer section 271 UNEs at TELRIC prices until Verizon
obtained approval from the FCC of its 271 UNE rates. Verizon alleged that the FCC
ruled unequivocally" that TELRIC should not apply to section 271 UNEs and that the
Examiner s recommendation was "based on a misunderstanding" of the process the
28 Proceeding by the DTE on its own Motion to Implement the Requirements of
the FCC'TRO Regarding Switching for Large Business Customers Serviced by High-
Capacity Loops DTE 03-59-(Jan. 23, 2004), tn. 9.
29 In the Matter of Bel/south Emergency Petition for Declaratory Ruling and
Preemption of State Action WC Docket No. 04-(July 1 , 2004) at
ORDER Docket No. 2002-682
FCC intends to use for section 271 UNEs. Finally, Verizon urged the Commission to
adopt the FCC's "safe harbor' pricing standards for section 271 UNEs, i.e. specialaccess rates or commercially agreed upon prices.
CLECs
In its briefs, the CLEC Coalition argued that by agreeing to submit a
wholesale tariff, Verizon agreed to file rate schedules for 271 UNEs which the
Commission could review, accept, and/or reject. The Consolidated Intervenors did not
directly address the Commission s authority to set prices for 271 UNEs because they
believed , despite the specific questions posed in the Hearing Examiner s ProceduralOrder, that pricing issues would be addressed later.
In their exceptions, a number of CLECs challenged the Examiner
analysis and recommendation that we, refrain from exercising any section 271 pricing
authority that we might have. The CLEC Coalition argued that the FCC's statements in
paragraph 664 of the TRO should be viewed as a "limited statemenf' regarding the
FCC's assertion of jurisdiction over section 271 pricing and that we should, in fact,exercise our 271 pricing authority. Specifically, the CLEC Coalition argued that
paragraph 664's emphasis on pre-entry review by the FCC indicates a desire by the
FCC not to "reach down to affect pricing in existing 271 approvals. n The CLEC
Coalition asserted that the FCC did not establish itself as the initial rate setting body in
a circumstance such as the one in Maine" but rather simply asserted its authority to
review rates in the event of a disagreement between Verizon and the state commission.
The CLEC Coalition urged us to exercise our authority to ensure that prices are
conducive to competition and to provide reasonable transition for any rate changes.
Finally, the CLEC Coalition endorsed the Examiner s recommendation that current
TELRtC-based rates remain in place until we approve new 271 rates. The Coalition
however, urged us not to determine at this time that FCC-approved prices automatically
be allowed to go into effect.
AL TS and Covad argued that the Supreme Court, in Iowa II clearly held
that while the FCC could establish the pricing methodology to be used for setting rates
under section 252, it was the states that actually applied the methodology and set the
rates. AL TS and Covad contended that we have an ongoing role in ensuring that the
rates charged by Verizon under section 271 meet the appropriate standards. AL TS and
Covad dispute the Examiner s "preemptive preemption" approach of finding preemption
before finding an actual conflict with an FCC determination on the merits of an issue.
They argued that the question is not whether a state pricing decision thwarts the
policies of the TRO but, instead, whether it thwarts the requirements of section 251 and
lt is true that pricing issues were scheduled to be addressed later in the
proceeding. However, parties should have reasonably expected that if a specific
question relating to the legal underpinnings of the Commission s authority was posed for
briefing, the question needed to be addressed.
ORDER Docket No. 2002-682
271 of the TeiAct. Finally, they argued that, contrary to Verizon s assertions, the FCCdid not forbid the application of forward-looking pricing to section 271 UNES but rather
only stated that TELRIC pricing was not required. Thus, a state commission could find
that TELRIC pricing met the "just and reasonable" standard or that another forward-
looking pricing methodology could be used.
USA Telephone also contended that we should exercise our authority to
set prices for section 271 UNEs in order to protect the competitive environment in Maine
and to meet the needs of Maine consumers. USA Telephone argued that we must be
prepared to exercise our authority to encourage stability in the market. The currentinstability makes it very difficult for CLECs to secure the necessary capital to implement
planned facility build-outs. While not suggesting a permanent status quo USATelephone did urge consideration of the competitive impacts during any transitions.
AT&T argued that the Examiner s recommendation that we refrain from
exercising our pricing authority over section 271 UNEs was unwarranted because it was
based upon the mistaken belief that the FCC had asserted exclusive jurisdiction in the
TRO. AT&T pointed out that the Examiner s Report itself admitted that the FCC did not
specifically preclude state commissions from evaluating compliance with the federal
just and reasonable" standard. AT&T urged us to preclude Verizon from raising its 271
UNE rates above TELRIC until it obtained specific approval for its new rates from the
FCC.
Analysis
Determining the scope of the Commission s 271 pricing authority involves
both interpretation of the TRO and a determination under both state and federal law of
the Commission s authority to set rates for intrastate services and products. First
Verizon is correct that the FCC stated in the TRO that it would review rates for 271
UNEs in the context of 271 applications and enforcement proceedings. However, as
described above, and as acknowledged by Verizon, the FCC has already delegated
significant authority to state commissions to enforce 271-related requirements. While
the FCC stated it would conduct the review, the FCC did not specifically preclude state
commissions from also conducting such an evaluation. Thus, we find, for the reasons
discussed below, that we have the authority to require Verizon to file prices for its
section 271 UNEs in its wholesale tariff and that we may review those prices for
compliance with the FCC's "just and reasonable" standard.
There are a number of factors which generally support a state
commission s authority to set prices for section 271 UNEs. First, the standard the FCC
has announced for section 271 UNEs
, "
just and reasonable " is the same standard the
Commission applies under 35-A M.A. 9 301. Thus, the Commission has
1t is also possible that we may order Verizon to unbundle certain elements
pursuant to state law, in which case we will use state law pricing standards to evaluate
Verizon s proposed rates.
ORDER Docket No. 2002-682
considerable experience in applying this standard to the rates of Verizon and many
other public utilities. Further, state commissions, and not the FCC , are most familiarwith the detailed company-specific data that will be used to support an ILEC's claim thatparticular rates are just and reasonable. In addition, as both CLECs and the NationalAssociation of Regulatory Utility Commissioners (NARUC) have argued in filings related
to the appeal of the TRO the Supreme Court's decision in Iowa II and the Eighth
Circuit's decision in Iowa IIp2 clearly establish that states, not the FCC, set rates forUNEs. Indeed , the Supreme Court stated that:
(Section) 252( c)(2) entrusts the task of establishing rates to
the state commissions.... The FCC's prescription, through
rulemaking, of a requisite pricing methodology no more
prevents the States from establishing rates than do the
statutory 'Pricing standards' set forth in 252(d). It is the
States that will apply those standards and implemen~ that
methodology, determining the concrete result in particular
circumstances.
Finally, state commissions have authority to arbitrate and approve interconnection
agreements pursuant to section 252 of the TeiAct. Section 271 (c)(2)(A)(ii) requires thatILECs provide access and interconnection which meet the requirements of the 271
competitive checklist, i.e. includes the ILEC's 271 unbundling obligations. Thus , state
commissions have the authority to arbitrate section 271 pricing in the context of section
252 arbitrations.
In addition to all of the supporting factors, we find that Verizon
commitment to file a wholesale tariff included a commitment to file prices for the
elements included in the tariff. Indeed, if we do not require Verizon to file prices, its
commitment to file a wholesale tariff becomes a hollow promise, given the complexities
of the wholesale marketplace at this time. In addition , practical concerns, such as
timely access to section 271 UNEs, require that we enforce Verizon s commitment by
requiring it to file proposed rates for each of the section 271 UNEs. We do not foreclose
the possibility that Verizon may also seek approval of such rates from the FCC. If it
does obtain such approval, it may file those same rates with us and we will give the
FCC's determination substantial weight during our review.
Until such time as we approve new rates for section 271 UNEs, adopt
FCC-approved rates, or CLECs agree to section 271 UNE rates, Verizon must continue
to provide all section 271 UNEs at existing TELRIC rates. We find this requirement
necessary to ensure a timely transition to the new unbundling scheme. We have no
record basis to conclude that TELRIC rates do not qualify as "just and reasonable
rates; while we might ultimately approve higher rates, we cannot do so without the
benefit of a record or the agreement of the parties. We note that the decision we reach
/owa Utilities Board v. FCC 219 F.3d 744 (8th Cir. 2000).
/owa 1/525 U.S. at 384.
ORDER Docket No. 2002-682
today is consistent with the approach embodied in the FCC's Interim Rules, whichrequire a six-month moratorium on raising wholesale rates.
COMMISSION AUTHORITY TO ORDER LINE SHARING PURSUANT TO
STATE LAW
Line Sharina
In the TRO the FCC overturned its earlier decision in the UNERemand Orde(35 and found that CLECs are not impaired without access to the high
frequency portion of the loop (HFPL), Le. access to line sharing. Specifically, the FCC
shifted its focus from the revenues derived from a single service deployed using the
H FPL. to the potential revenues derived from all services that could be provided over the
full functionality of the loop. Thus, the FCC concluded that the increased operational
and economic costs of acquiring a stand-alone loop are offset by the increased revenue
opportunities afforded by use of the whole loop for services such as voice, voice over
xDSL, data and video services.36 While the FCC declined to explicitly find that any
decision by a state commission to require line sharing under state law was automatically
preempted , in paragraph 264 it invited any party aggrieved by such a decision to seek a
declaratory ruling from the FCC.
In USTA II the D.C. Circuit upheld the FCC's line sharing decision
finding that:
(E)ven if the CLECs are right that there is some impairment
with respect to the elimination of mandatory line sharing, the
Commission reasonably found that other considerations
outweighed any impairment.
34 Order and Notice of Proposed Rulemaking, Review of the Section 251
Unbundling Obligations of Incumbent Local Exchange Carriers, CC Docket 01-338,
FCC 03-313, (rei. August 20, 2004)(lnterim Rules Order).
35 In the Matter of Implementation of the Local Competition Provisions in the
Telecommunications Act of 1996, CC Docket 96-, Third Report and Order And Fourth
Further Notice of Proposed Rulemaking, 15 FCC Rcd 3696, reI. November 5, 1999
(UNE Remand Order).
TRO at 11 258.
37
USTA /I at 45.
ORDER Docket No. 2002-682
Thus, under federal law, section 251 line sharing will only be available on a
grandfathered basis for the next three years, with the price increasing each year until it
reaches the full price of the loop, at which time unbundling will no longer be required.
State authori to order unbundlin
Recently, in the Skowhegan OnLine proceeding , we found that wehave authority, pursuant to 35-A M. R.A. 99 1306 and 7101 , to order the unbundling of
network elements not required by federal law when doing so meets a demonstrated
need by CLECs and is consistent with both state and federal policies concerning
broadband deployment. We predicated our decision in Skowhegan Online on an earlier
decision in the Mid-Maine Arbitration Case 40 in which we found that we had authority to
order access to additional UNEs under section 252(d)(3) of the TelAct41 and that 35-
A. 9 130642 provided us with authority to designate additional UNEs so long as
our actions did not conflict with federal law. We founc;l in Skowhegan Online that section
1306 continued to provide us with independent authority under state law and that 35-
M. R.A. 9 7101 provided additional authority to order unbundling where doing so will
allow for further deployment of broadband, especially in rural areas. Thus, we foundthat unbundling pursuant to state law requires a showing that the lack of unbundling
constitutes an unreasonable act or is insufficient when consideration is given to state
law, public policy, and the potential impact of the unbundling on the availability of
Neither the TRO or USTA /I directly addressed whether an ILEC's continuing
unbundling obligations under section 271 include continued access to line sharing with
the ILECs and we will not reach that issue in this Order.
1nvestigation of Skowhegan Online, Inc.s Proposal for UNE Loops, Docket No.
2002-704, Order (April 20, 2004) and Order on Reconsideration (June 15, 2004).
Mid-Maine Telplus, Re: Request for Arbitration of an Interconnection
Agreement with Bell Atlantic Order Addressing Subloop and Extended Link Issues (E3
and E7) - Part 2, Docket No. 98-593 (April 9, 1999) (Mid-Maine).
0ur holding was based upon the fact that there was nothing in the TelAct that
provided the FCC with exclusive authority to designate UNEs. Mid-Maine at 3. Indeed,
the FCC'Local Competition Order specifically provided that states had authority to
order additional UNEs pursuant to state law and the FCC's Rules at that time
specifically provided for state commission designation of additional UNEs during
arbitration proceedings. In the Matter of Implementation of the Local Competition
Provisions in the Telecommunications Act of 1996, First Report and Order, 11 FCC Rcd
15499 (1996). The TRO has since vacated both of those rules/findings.
Section 1306 provides that, if the Commission determines that a term,
condition , practice or act is unjust, unreasonable, insufficient, or unjustly discriminatory,
the Commission may "establish or change terms, conditions, measurement, practice
service or acts, as it finds just and reasonable.
ORDER Docket No. 2002-682
telecommunications services to Maine consumers. In addition, any decision to
unbundle pursuant to state law must not conflict with federal law.
In our Order on Reconsideration in Skowhegan Online we re-
affirmed our earlier findings and pointed to other provisions of state law that supported
our unbundling authority. Specifically, we found that the standards in 35-A M.A. ~
301 , requiring all utilities to provide "safe, reasonable and adequate facilities and
service " as well as those set forth in 35-A M.A. ~ 711 , granting us authority to order
the joint use of wires and prescribe reasonable compensation and reasonable terms
and conditions, supported unbundling. We emphasized section 71 01's clear
expression of the Legislature s policy objective of supporting broadband deployment
throughout the state. Finally, we pointed out that the Law Court had already found that
the Commission has all the implied and inherent powers necessary to implement the
objective set forth in section 7101. New England Telephone v. PUG 1997 ME 222.
Thus, we found that the clear policy objectives contained in section 7101, when
combined with our broad mandate to ensure that utility practices and rates are
reasonable pursuant to section 1306, provided us with the necessary authority to
require Verizon to unbundle its legacy copper network.
Federal PreemllliQ.Q
Definition of PreemDtion
The Supreme Court has held that "preemption will not lie
unless it is 'the clear and manifest purpose of Congress.1II43 If a federal statute contains
an express preemption clause, the court will first focus on the plain wording of the
clause
, "
which necessarily contains the best evidence of Congress' preemptive intentn44
Similarly, savings clauses, which specifically reserve state authority, are "the best
evidence of Congress' preemptive intent. ,,45 Generally speaking, preemption will be
found when state law stands as an obstacle to the accomplishment and execution of the
full purposes and objectives of Congress.46 What constitutes a sufficient obstacle
however, is a matter of judgment, informed b.y examining the statute as a whole and
identifying its purpose and intended effects.
CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 664 (1993) citing Rice v. Santa
Fe Elevator Corp.331 U.S. 218 , 230 (1947).
ld.
1d.
Crosby v. National Foreign Trade Council 530 U.S. 363, 372-373 (2000).
1d.
ORDER Docket No. 2002-682
Section 251 (d)(3) of the TelAct states that the FCC may not
preclude enforcement of any state commission decision establishing local exchange
interconnection and access requirements which is consistent with section 251 and
which "does not substantially prevent implementation of the requirements of this
section." In the TRO the FCC asserted that its interpretation of the requirements of
section 251 , Le., its Rules, was intended by Congress to be included under the
requirements of this section" language of section 251 (d)(3).48 Thus, according to theFCC, any state decision that is inconsistent with the FCC's Orders or Rules (the so-
called "federal regime ) violates section 251 (d)(3) and is preempted.
However, the FCC's assertion that its Rules are included in
the requirements of this section" language of section 251 was specifically rejected by
the Eighth Circuit Court of Appeals jn a decision concerning the FCC'Local
Competition Order, which implemented the Te1Act.49 The Eighth Circuit held that
section 251 (d)(3) does not require state commission orders to be consistent with all of
the FCC's regulations promulgated under section 251.50 It stated that "(t)he FCC'conflation of the requirements of section 251 with its own regulations is unwarranted
and illogical."51 While portions of the Eighth Circuifs decision were ultimately reversedby the Supreme Court, the FCC did not challen , nor did the Supreme Court reverse
the Eight Circuit's holding on section 251 (d)(3). 2 Indeed, the FCC admits in footnote
611 of the TRO that the Eighth Circuit's interpretation of section 251 (d)(3) is the law of
the land and that mere inconsistency with the FCC's rules is not enough to trigger
federal preemption. Thus , contrary to the assertions of both the FCC and Verizon, themere fact that a state requires an additional unbundled element does not mean it
automatically will be preempted. Instead, consideration must be given to whether the
requirement is consistent with section 251 and whether it prevents its implementation.
In analyzing the legislative intent behind a statutory
requirement that two mandates be consistent, courts have defined the word by its
common usage, as found in the dictionary. See!UL. Cross v. Warden, N.H. StatePrison644 A.2d 542 , 543 (N.H. 1994)(the meaning of "consistent" is synonymous with
consonant" or "compatible.
);
Ryan v. Roach Drug Co., 239 P. 912 , 914 (Okla.1925)
TRO at 191.
See Iowa Utilities ad. v. FCC, 120 F.3d 753 (8th Cir. 1997), rev d sub nom. on
other grounds, AT&Tv./owa Utilities Bd.525 U.S. 366 (1999)(Iowa I).
ld. at 806.
1d.
52
See TRO at~ 192, fn. 611.
ORDER Docket No. 2002-682
("'
Consistent' means not contradictory, compliable, accordant"
).
Courts have also
concluded that two designs may be consistent even if one contains additional elements.
Lake City Corp. v. City of Mequon 558 N.2d 100, 104 (Wis.1997) ("so long as anyissues addressed in both a master plan and an official map are not contradictory, the
master plan is consistent with the official map
The Supreme Court of Vermont addressed the meaning of
section 251's "consistency" requirement in a challenge to an order of the Vermont
Public Service Board requirin~ Verizon to make certain facilities or services available to
CLECs pursuant to state law. 3 Verizon argued that the Board's order was inconsistent
with federal law and not supported by independent state authority.54 In holding that
there was ample state authority to support the order and that the order did not contradict
federal law, the Vermont court described how Congress intended the Act to work in
conjunction with state regulatory commissions:
The Telecommunications Act of 1996 fundamentally amends
the Communications Act of 1934, the principal legislation
that regulates telecommunications and established the FCC.
. . . The use of a federal statute by a state board is
consistent with the federal government's approach to
telecommunications regulation, in which states are
considered partners in regulation. In both the 1934 Act and
the 1996 Act, Congress has taken pains to preserve the
overlapping jurisdiction of the states and the federal
government over the telecommunications industry.
. . .
Congress did not intend to occupy the field of
telecommunications regulation , it took explicit steps to
maintain the authority of state regulatory bodies to enforce
and work within the Act.
The court further explained that the "federal scheme does
not outline any limitations on state authority to regulate above and beyond the minimum
requirements of the Act. . . federal law sets only a floor, the requirements of which may
be exceeded by state law."56 Furthermore, the Vermont court emphasized that when
1n re Petition of Verizon New England Inc. d/b/a Ver;zon Vermont 795 A.
1196 (Vt. 2002).
1d. at 1198.
1d. at 1201.
1d. at 1204.
ORDER Docket No. 2002-682
compliance with a state commission s order does not interfere with a carrier s ability to
comply with federal law, there is no conflict between the state and federal regulations.
Positions of the Parties
Verizon
Verizon argued that the FCC has determined that CLECs are not
impaired without unbundled access to line sharing. According to Verizon, where federal
law sets forth the legal and regulatory framework for accomplishing a lawful objective
through the balancing of competing interests
, "
the states may neither alter that
framework nor depart from the federal judgment regarding the proper balance of
competing regulatory concerns." Citing section 251 (d)(3) and !llong-standing federal
preemption principles," Verizon asserted that state commissions have no authority to
override the FCC's determination that the unbundling of certain network elements is not
required under the TeiAct.
Verizon contended that the Commission has no independent
authority under state law to impose additional unbundling requirements on Verizon
especially where the FCC has explicitly declared that the UNE is not required. Verizon
further argued that the Commission does not have authority to order unbundling under
section 271 , but even if it did, Checklist Item No.4 - the local loop - does not include
separate access to the H FPL. Additionally, it argued that the pricing would not be
TELRIC but would be "just and reasonable" which would require a "fact specific inquiry
conducted by the FCC.
In its Reply Brief, Verizon reiterated its position that "(t)he
Commission is legally preempted from re-imposing unbundling obligations eliminated by
the FCC's rulings in its TRO.In particular, Verizon disputed the CLECs' claim that the
Commission has separate state authority to order line sharing and stated that, "where
the FCC determines that an element should not be unbundled, a state may not lawfully
override that determination. It Verizon also refuted the CLECs' claim that the
Commission can unbundle HFPL based on Maine specific facts.
In its Supplemental Brief, Verizon asserted that USTA /I affirms the
FCC's findings in the TRO on line sharing and unambiguously struck down the FCC'
delegation of any unbundling authority to states. 58 Verizon also repeated its belief that
the "Commission may not lawfully rely on state law to impose an unbundling obligation
for line sharing, feeder subloops, DCN transport, entrance facilities or other UNEs
expressly eliminated or curtailed by the FCC in the TRO.Referring to its previous
statements concerning the absence of state law authorizing unbundling, Verizon argued
that even if the state is authorized to order unbundling (which they insist, it is not), it
/d. at 1205.
USTA /I at 12.
ORDER Docket No. 2002-682
may not do so in the case of line sharing because UST II affirmed the FCC's decision
in the TRO not to order line sharing because it discourages investment.
In its exceptions, Verizon objected to the Examiner s recommendation that
we find that line sharing is a continuing 271 obligation under Checklist Item No.4 but
did not directly address state unbundling authority.
CLECs
In their Brief, the Consolidated Intervenors pointed to the
Commission s reliance upon Verizon s performance in Maine on the number of line
sharing arrangements when it found Verizon in compliance with Checklist Item No.
during Maine s 271 proceeding. They contended that allowing Verizon to discontinue
line sharing now effectively repudiates one of the conditions for the Commission
support and is anti-competitive. The Consolidated Intervenors argued that the FCC
took pains to make clear that 271 requirements remain unaffected by the TRO (citing to
~~ 653, 655). They also suggested that the Commission follow the Pennsylvania
Public Utilities Commission s lead in insisting that Verizon honor its 271 obligations.
Finally, they cited 35-A M.S. A. ~ 7101 and argued that Verizon s proposal contradicts
state telecommunications policy of promoting broadband, especially in rural areas, and
urged us to order line sharing because it has been instrumental in creating and fostering
competition in rural Maine.
In their Reply Brief, the Consolidated Intervenors again described
how Verizon and the Commission relied on the provisioning of line sharing to show that
Verizon had opened up its network to competition during the 271 review. The
Consolidated Intervenors also cited paragraph 650 of the TRO which states that
Section 271 (c)(2)(B) establishes an independent obligation for BOCs to provide access
to loops...." and implored the Commission to enforce Verizon s 271 obligations and
require continued line sharing.
In their Supplemental Brief, the Consolidated Intervenors stated
that USTA /I confirmed the FCC's conclusion that section 271's unbundling
requirements for BOCs are independent of a BOC's section 251 requirements. They
also argued that "the Court essentially held that the TRO has no impact whatsoever
from a legal standpoint, on a state Commission s ability to exercise its power under
state and federal law to add to the FCC's list of UNEs.
As stated earlier, the Consolidated Intervenors filed separate
exceptions. GWI argued that the Commission is not preempted from ordering line
sharing and that, absent a court finding of preemption, the Commission should rely
upon state law and policy to require unbundled line sharing. GWI argued that that no
The CLEC Coalition did not brief the line sharing issues but "supports the
arguments and conclusions set forth in the briefs on Line Sharing issues submitted by
GWI , Conversant and the Office of the Public Advocate.
ORDER Docket No. 2002.682
court had supported the FCC's proposition that any unbundling not required by the
FCC's rules promulgated under section 251 is preempted by the "requirements of thissection" language. GWI also pointed to the FCC's own acknowledgement of the
limitations of the preemptive effect of the TeiAct.
GWI's exceptions also addressed both the state policy supporting
broadband deployment and the impact on that policy if line sharing is eliminated. GWIpointed out that the price for line sharing will rise in October and that if GWI has to raise
its rates to cover increased costs, rural areas will be the hardest hit. GWI also arguedthat the FCC's line sharing decision was based upon a vision of the competitive
landscape that does not match what is occurring in Maine and which has changed since
the issuance of the TRO itself. Specifically, USTA /I overturned the FCC's findingsregarding the unbundling of mass market switching, which will limit the development of
residential voice competition and the revenues associated with it.
GWI argued that the consequences of the FCC's actions seriouslyimpact the future of competition in Maine, particularly for broadband services.
According to GWI , while cable broadband service is available in urban and suburban
areas, it is generally not available in rural areas. While Verizon broadband is available
in many Verizon exchanges, over 40% of the customers are impacted by distance
limitations. GWI asserted that there are ways to overcome those problems but they
require CLEC access to Verizon line sharing and Verizon s cooperation in deploying thesolutions. Thus, GWI urged us to exercise our authority to order line sharing and to set
a fair rate for line sharing because failure to do so will result in constant litigation over
interconnection agreement terms.
The OPA's exceptions urged us to order Verizon to continue to
provide unbundled line sharing at affordable rates. The OPA argued that the FCC'
decision regarding line sharing transition rates should not be interpreted as an FCC
decision as to a just and reasonable rate under section 271 and that we should exercise
our authority to make a determination regarding pricing. Absent Commission action
Maine consumers will be harmed by substantial increases in prices for xDSL and the
potential destruction of the nascent broadband market in Maine.
Cornerstone s exceptions also recommended that we exercise our
authority to order the continued availability of line sharing at reasonable rates.
Cornerstone alleged that if the FCC's transition rates are allowed to go into effect
Cornerstone would not be able to serve many of the rural exchanges it intends to serve
because it could not cover the exchange-specific costs. Cornerstone pointed out that ifit and other Maine CLECs cannot economically serve these rural areas, it is unlikely that
larger firms would be willing to invest in areas where the margins are so slim. For someof these exchanges, where neither Verizon nor the cable provider have deployed xDSL
this means that citizens and businesses in these areas will continue to lag behind more
urban areas.
ORDER Docket No. 2002-682
AL TS and Covad urged us to exercise our own authority to order
line sharing under state law. They argued that sections 251 and 252 of the TelAct
preserve the authority of state commissions to order unbundling and that the Supreme
Court has refused to diminish the role of state commissions in overseeing local
competition matters. Further, and contrary to the assertions of the FCC, the FCC
cannot preempt state commissions by its orders or rules - the language of the TelAct
preserving state authority controls. AL TS and Covad also pointed out that in the TRO
the FCC did not preempt any existing state law unbundling requirements nor any future
state law unbundling requirements - it acknowledged that such unbundling
requirements may be consistent with the federal framework.
AL TS and Covad argued that facts supporting the FCC's decision
not to unbundle line sharing on a national basis do not exist in Maine. Specifically I the
FCC relied upon a carrier s ability to line-split with other carriers. However, in Maine,
Verizon has not made line splitting operatiof1ally available in the same manner as its
own retail voice and data bundles, thereby limiting CLECs' ability to line split. In
addition, there are customer-impacting time constraints on line splitting, and different
policies for submission of orders, and Verizon will not line split on resold voice service.
Thus, AL TS and Covad urged the Commission to order the continued availability of line
sharing at TELRIC rates.
AT&T supported the Hearing Examiner s determination that line
sharing should be provided under section 271 but disagreed with the recommendation
that we not exercise our authority to set prices for section 271 UNEs. Specifically,
AT&T contended that the FCC had not asserted exclusive jurisdiction over section 271
pricing and that we need not refrain from exercising our section 271 authority in
deference to a claim of exclusive jurisdiction that the FCC did not make.
Decision
We find that the FCC has not preempted our further consideration of
whether to unbundle line sharing under state law. First, we agree with GWI that the
Hearing Examiner essentially recommended preemptive preemption , i.e. that we not
take action on the grounds that the FCC might attempt to preempt our action. We reject
this approach because , as several parties pointed out, the FCC specifically declined to
make a finding of preemption of both existing and future state unbundling decisions.
While the FCC made clear that it might find preemption if the state decision met federal
preemption standards , such a determination would need to be made based upon the
specific circumstances of each case. The D.C. Circuit reached the same conclusion in
USTA II i.e., that claims relating to preemption were not ripe because no specific state
decision had been challenged.
While we recognize the federal policies enunciated by the FCC in the
TRO we find that further exploration of the specific circumstances in Maine and state
law policies and mandates are necessary in order to determine whether we should , in
fact, exercise our authority under 35-A M.R. S.A. 99 301 , 711 , 1306 and 7101 to order
ORDER Docket No. 2002-682
line sharing. As we stated in our Skowhegan Online decision, we take very seriously
the Legislature s directive that all Maine citizens should have access to broadband
services. The issues raised by GWI , Cornerstone, and the OPA concerning the viability
of rural broadband deployment warrant a closer examination. It would be premature to
find at this time, both on a factual and legal basis, that we have already been preempted
by the FCC. In addition, there are several pending legal challenges at the FCC and in
the courts which may provide further direction concerning the scope of any federal
preemption relating to line sharing. Waiting for resolution of those proceedings
however, would mean delaying for an uncertain period a decision that might prevent a
significant declaration in rural broadband deployment. Given our obligation to
implement legislative directives. We think the more appropriate course is to proceed as
expeditiously as possible to resolve the question of whether to order the unbundling of
line sharing under state law.
If we decide to order line sharing pursuant to state law, we would also set
the price for such sharing using state law standards, i.e., just and reasonable rates. We
invite the parties to develop a record in this proceeding that would allow us to set rates
at the conclusion of the proceeding.
VI.CONCLUSION
For the reasons discussed above , we order Verizon to include 271 UNEs and
prices for those UNEs in its state wholesale tariff. We also determine that we have
authority under state law to order the unbundling of line sharing and that we should
proceed to investigate whether to exercise that authority.
Dated at Augusta, Maine, this 3rd day of September, 2004.
BY ORDER OF THE COMMISSION
Dennis L. Keschl
Administrative Director
COMMISSIONERS VOTING FOR:Welch
Diamond
Reishus
ORDER Docket No. 2002-682
NOTICE OF RIGHTS TO REVIEW OR APPEAL
5 M.A. 99061 requires the Public Utilities Commission to give each party to
an adjudicatory proceeding written notice of the party's rights to review or appeal of its
decision made at the conclusion of the adjudicatory proceeding. The methods of reviewor appeal of PUC decisions at the conclusion of an adjudicatory proceeding are as
follows:
1. Reconsideration of the Commission s Order may be requested under
Section 1004 of the Commission s Rules of Practice and Procedure (65-407
110) within 20 days of the date of the Order by filing a petition with the
Commission stating the grounds upon which reconsideration is sought.
2. eal of a final decision of the Commission may be taken to the Law
Court by filing, withil1 21 days of the date of the Order, a Notice of Appeal with
the Administrative Director of the Commission , pursuant to 35-A M. R.A. 9
1320(1 )-(4) and the Maine Rules of Appellate Procedure.
3. Additional court review of constitutional issues or issues involving the
justness or reasonableness of rates may be had by the filing of an appeal with
the Law Court, pursuant to 35-A M. R.A. ~ 1320(5).
Note The attachment of this Notice to a document does not indicate the Commission
view that the particular document may be subject to review or appeal. Similarly,
the failure of the Commission to attach a copy of this Notice to a document does
not indicate the Commission s view that the document is not subject to review or
appeal.
Attachment 2
STATE OF MAINE
PUBLIC UTILITIES COMMISSION
VERIZON-MAINE
Proposed Schedules , Terms
Conditions and Rates for Unbundled
Network Elements and Interconnection
(PUC 20) and Resold Services (PUC 21)
Docket No. 2002-682
July 23, 2004
EXAMINER'S REPORT
NOTE:This Report contains the recommendation of the Hearing Examiner.
Although it is in the form of a draft of a Commission Order, it does not
constitute Commission action. Parties may file responses or exceptions to
this Report on or before noon on August 6, 2004. It is expected that the
Commission will consider this report at a special deliberative session on
August , 2004.
SUMMARY
In this Order, we find that Verizon must include all of its wholesale offerings,
including unbundled network elements (UNEs) provided pursuant to section 271 of the
Telecommunications Act of 1996 (TeIAct) , in its state wholesale tariff. We also find that
Verizon must continue to offer line sharing pursuant to Checklist Item No.4 of section
271. Finally, we decline the opportunity to exercise any authority we might have to set
rates for section 271 UNEs.
II.BACKGROUND
In our Comments to the Federal Communications Commission (FCC) regarding
Verizon s section 271 application for authority to enter the interLATA toll market
(Verizon s 271 Application), we stated that the availability of a wholesale tariff or
Statement of Generally Available Terms would greatly reduce the time required to effect
. .
a valid interconnection agreement and would also eliminate the perception shared by
some CLECs that they were being "forced" to accept contract terms in their
EXAMINER'S REPORT Docket No. 2002-682
interconnection agreements that were unrelated to the terms that they were interested
in negotiating. 1 Thus, in a March 1 , 2002 letter from the Commission to Verizon
(Commission s 271 Letter), we explicitly conditioned our support of Verizon s 271
Application on Verizon s agreement to fulfill a number of additional requirements
including the filing of a wholesale tariff. Verizon committed to meeting the
Commission s conditions in a March 4 , 2002 letter to the Commission and on November
, 2002, Verizon submitted a schedule of terms, conditions and rates for Resold
Services (P.C. No. 21) and the provision of Unbundled Network Elements and
Interconnection Services (P.C. No. 20) along with cost studies for certain non-
recurring charges and aSS-related issues.
In order to allow enough time to thoroughly examine the tariff, we suspended it
on November 11 , 2002. On November 13, 2002 , the Hearing Examiner issued a
Procedural Order requesting intervention and scheduling an initial Case Conference for
December 10th On December 4 2002, prior to the Case Conference, the Hearing
Examiner issued a second Procedural Order granting intervention to all parties that
requested if and proposing a schedule for processing this case. Between December
Application by Verizon New England Inc., Bell Atlantic Communications, Inc.
(d/b/a Verizon Long Distance), NYNEX Long Distance Company (d/b/a Verizon
Enterprise Solutions), Verizon Global Networks, Inc. and Verizon Selective Services
Inc., for Authorization To Provide In-Region, InterLA TA Services in the State of Maine
CC Docket No. 02-, Report of the Maine Public Utilities Commission on Verizon
Maine s Compliance with Section 271 of Telecommunications Act of 1996 (April 1 02002) at 7.
2 The parties include: OPA, ASCENT, WorldCem , Mid-Maine Tele-
communications, and Oxford Networks. Mid-Maine and Oxford filed joint briefs as the
CLEC Coalition.
EXAMINER'S REPORT Dock~ No. 2002~82
2002 and August 2003, the parties conducted some discoverY and attempted to identify
all the issues that need to be Iitigated.
On August 11 , 2003 , the Hearing Examiner issued a Procedural Order setting a
hearing date of October 2 , 2003, and attaching a list of issues that the Advisors
intended to explore at the hearing. Before a hearing could take place, however, on
August 21 2003, the FCC issued its Triennial Review Order (TRO).A case
conference was held on September 16 , 2003, to discuss with the parties the potential
impact of the TRO on the wholesale tariff. On September 18, 2003, the Examiner
issued a Procedural Order summarizing the September 16th case conference and
setting deadlines for Verizon to file new red-lined tariff schedules based on the changes
required by the TRO.
At the Case Conference on December 10th, the proposed schedule was
discussed and on December 17th the Hearing Examiner issued a Procedural Order to
grant three additional interventions (Great Works Internet, Conversent Communications,
and Cornerstone Communications) and to set a preliminary schedule. On January 15
, and 23, and February 3 2003 , the Hearing Examiner issued Procedural Orders
adjusting the case schedule and outlining further instructions and an initial list of issues
to be litigated in the proceeding. On January 22nd, the CLEC Coalition and Cornerstone
Communications also filed a list of initial issues. On February 3, 7, and 14, 2003
Verizon submitted responses to Staffs and other parties' issues and questions. On
February 18 , 2003, both Staff and the CLEC Coalition filed a list of issues that Verizon
should attempt to address in its testimony. On February 24 , 2003, the Hearing
Examiner issued a Procedural Order establishing a schedule for testimony and
discovery. On March 3, 2003, the Commission suspended the Verizon tariff for a
second time to allow additional time to review it. On March 24, 2003, Verizon witnesses
filed panel testimony. Staff issued its first set of data requests on the Verizon testimony
on April 1 , 2003, to which Verizon responded on April 22nd and 23rd On May 20, 2003
Verizon issued discovery requests to GWI , to which GWI responded on May 2ih
Report and Order and Order on Remand and Further Notice of Rulemaking,
Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange
Carriers, CC Docket 96-98 et a/.FCCO3-, 18 FCC Rcd 16978 (reI. August 21
2003)(Triennial Review Order or TRO).
EXAMINER'S REPORT Docket No. 2002-682
. On October 16 , 2003 , the CLEC Coalition filed a Motion for Issuance of
Temporary Order. In its Motion , the CLEC Coalition objected to a letter sent by Verizon
on October 2nd which stated that Verizon would be discontinuing the provisioning of
certain UNEs in compliance with the TRO. On October 21 . 2003 , the Hearing Examiner
issued a Procedural Order stating that Verizon had correctly identified those UNEs that
the FCC eliminated from the TelAct's section 251 unbundling requirements and that
while changes in terms and conditions caused by the TRO would be litigated in this
proceeding, the Commission would not re-litigate the decision by the FCC to eliminate
specific UNEs from section 251's requirements. Finally, the Examiner stated that the
Commission had not anticipated the need to address Verizon s continuing obligations
under section 271 in this proceeding and that the Advisors would further consider the
issues and determine the next steps.
On December 16,2003 , a case conference was held. After discussion , the
Hearing Examiner determined that before hearings on the substance of the Wholesale
Tariff could be held, legal briefing was necessary on two issues: (1) whether the
Commission had authority, under either state or federal law, to require Verizon to tariff
its obligations to continue providing unbundled network elements (UNEs) under section
271 of the TelAct and whether it could set the rates for those obligations; and (2)
whether the Commission has the authority, under either state or federal law, to order
Verizon to continue providing line-sharing at Commission-set TELRIC rates.
On January 16 , 2004 , Initial briefs were filed by Verizon-Maine (Verizon), the
CLEC Coalition, and the Consolidated Intervenors (Biddeford Internet Company d/b/a
Great Works Internet (GWI), the Office of the Public Advocate (OPA) and Cornerstone
EXAMINER'S REPORT Docket No. 2002-682
Communications (CC)). The same parties filed reply briefs on January 30, 2004.
Before a decision could be reached by the Commission on the legal issues, the
C. Circuit Court of Appeals issued its decision in USTA II 5 the appeal of the TRO.
Because USTA II was directly relevant to many of the legal issues raised in this Docket,
the Hearing Examiner issued a Procedural Order on March 4, 2004, allowing all parties
to supplement previously filed briefs to address the impact of the D.C. Circuit Court
decision on their positions in this case. On March 26, the Consolidated Intervenors filed
a supplemental brief, as did Verizon. The arguments from all parties in the three rounds
of briefs are summarized below along with our analysis and decision.
III.COMMISSION AUTHORITY TO REQUIRE TARIFFING OF SECTION 271OFFERINGS
Introduction
As will be explained in detail below, at the time we conditioned our support
of Verizon s 271 Application on Verizon filing a wholesale tariff, Verizon s unbundling
obligations under sections 251/252 of the TelAct were synonymous with its section 271
unbundling obligations. Thus, we made no distinction between the two potentially
differing obligations; we simply required a wholesale tariff. Since that time, the USTA I
decision was released , the FCC issued its TRO and, most recently, the USTA /I
decision was issued. The impact of these three decisions on the issue at hand can be
summed up as follows: today an ILEC's 251/252 obligations are narrower (in most
S. Telecomm. Ass n v. FCC 359 F.3d 554 (D.C. Gir. 2004)(USTA II).
EXAMINER'S REPORT Docket No. 2002-682
respects ) than its 271 obligations. The CLECs contend that Verizon must now amend
its proposed wholesale tariff to include its section 271 unbundling obligations. Verizon
argues that the FCC has exclusive jurisdiction over matters relating to its 271
obligations and that this Commission has no authority to require Verizon to amend its
wholesale tariff to include its 271 obligations.
AQplicable Law
Section 271 of the TelAct sets forth the requirements an ILEG must meet
before it will be allowed to enter the interLA TA toll market. The so-called "competitive
checklist" contains 14 measures which were intended to ensure that the ILEC had
opened the local exchange market to competition. Checklist Item No.2 requires
nondiscriminatory access to network elements in accordance with the requirements of
sections 251(c)(3) and 252 (d)(1)." Section 251 (c)(3) requires ILECs to provide access
to their network, i.e. UNEs , while Section 252(d)(1) sets the pricing standard for those
UNEs, i.e., TELRIC pricing. Section 251 (c)(3) also requires compliance with section
251 (d)(2) which limits access to UNEs at TELRIC pricing to only those which meet the
necessary and impair" standard? Thus, Checklist Item No.2 requires an ILEC to meet
1n a recent order in the Skowhegan Online Proceeding, we found that subloops
were a requirement under Section 251 but not a requirement under Section 271.
Investigation of Showhegan Online s Proposal for UNE Loops Docket No. 2002-704
Order (April 20 , 2004), and Order Denying Reconsideration (June 16, 2004).
1n the TRO the FCC retained its earlier definition of "necessary
" ("...
proprietary network element is 'necessary' within the meaning of section 251 (d)(2)(A) if
taking into consideration the availability of alternative elements outside the incumbent's
network, including self-provisioning by a requesting carrier or acquiring an alternative
from a third-party supplier, lack of access to that element would, as a practical,
economic, and operational matter preclude a requesting carrier from providing the
services it seeks to offer. ") and adopted a new definition of "impairment" ("A requesting
carrier is impaired when lack of access to an incumbent LEC network element poses a
EXAMINER'S REPORT Docket No. 2002-682
all of the 251 and 252 unbundling and pricing standards , which the FCC limited in the
TRO to specific types of loops, subloops, and transport.
Checklist Items Nos. 4, 5, 6 , and 10 require ILECs to provide unbundled
access to loops, transport, switching and signaling. The FCC has explicitly found that
despite elimination of a number of UNEs under section 251 , ILECs must continue to
provide access to those UNEs under section 271. However, none of these other
checklist items, unlike Checklist Item No., cross reference sections 251 (c)(3) and
252(d)(1). Thus , according to the FCC in the TRO, UNEs unbundled under Checklist
Items Nos. 4 , 5, 6 and 9 must only meet the "just and reasonable" standard of 47 U.
99 201-202 and not the TELRIC standard required under section 251.
In the FCC's Order granting Verizon 271 authority in Maine 9 the FCC
stated:
Working in concert with the Maine Commission we intend to
monitor closely Verizon s post-approval compliance for
Maine to ensure that Verizon does not "cease () to meet any
of the conditions required for (section 271) approval.10
barrier or barriers to entry, including operational and economic barriers, that are likely to
make entry into a market uneconomic.TRO at 1I~ 170 84.
USTA /I vacated the TRO'findings regarding mass market switching, thereby
effectively eliminating switching as a 251 UNE.
Application by Verizon New England Incot Bell Atlantic Communications, Inc.
(d/b/a Verizon Long Distance), NYNEX Long Distance Company (d/b/a Verizon
Enterprise Solutions), Verizon Global Networks, Inc. and Verizon Selective Services
Inc., for Authorization to Provide In-Region, InterLA TA Services in the State of Maine,
CC Docket No. 02-, Order, 17 FCC Rcd 11676 (June 19,2002) (Maine 271 Order).
Maine 271 Order at 1165.
EXAMINER'S REPORT Docket No. 2002-682
(emphasis added). The FCC referred readers of the Maine 271 Order to its
Kansas/Oklahoma 271 Order for a more complete description of the 271 enforcement
process. The Kansas/Oklahoma 271 Order states:
Furthermore , we are confident that cooperative state and
federal oversight and enforcement can address any
backsliding that may arise with respect to SWBT's entry into
the Kansas and Oklahoma long distance markets.
(emphasis added). Thus , the FCC recognized the important role that state
commissions would play in enforcing the requirements of section 271. Of more
importance, however, is the Kansas/Oklahoma 271 Orders citation to the New York 271
Order, which made several relevant findings. First, while noting that Congress had
authorized the FCC to enforce section 271 to ensure continued compliance , the New
York 271 Order specifically endorsed state commission authority to enforce
commitments made by Verizon (then Bell Atlantic) to the New York Public Service
Commission. The FCC stated that:
Complaints involving a BOC's (Bell Operating Company)
alleged noncompliance with specific commitments the BOC
may have made to a state commission , or specific
performance monitoring and enforcement mechanisms
imposed by a state commission, should be directed to that
state commission rather than the FCC.
11
Joint Application by SBC Communications Inc., Southwestern Bell Tel. Co.
and Southwestern Bell Communications Services, Inc.d/b/a Southwestern Bell Long
Distance for Provision of In-Region, InterLA TA Services in Kansas and Oklahoma,
Docket No. 00-217 , Memorandum Opinion and Order, 16 FCC Rcd 6237 , 6241-42
paras. 7-10 (2001) (SWBT Kansas/Oklahoma Order), affd in part remanded in part sub
nom. Sprint Communications Co. v. FCC, 274 F.3d 549 (D.C. Cir. 2001)
(Oklahoma/Kansas 271 Order).
12
Application by Bell Atlantic New York for Authorization Under Section 271
the Communications Act to Provide In-Region, InterLA T A Service in the State of New
York Memorandum Opinion and Order, 15 FCC Rcd 3953 (New York 271 Order)
11 452.
EXAMINER'S REPORT Docket No. 2002-682
Thus, the FCC explicitly recognized the authority of state commissions to enforce 271-
related commitments including, but not limited to , performance assurance plans (PAPs).
Indeed , the FCC noted "with approval" the fact that the New York PAP "will be
enforceable as a New York Commission order.,,13
Turning to Verizon s commitments here in Maine, as stated above
Verizon committed to the following relevant conditions, contained in the March 1, 2002
letter from the Commission:
Verizon will file a wholesale tariff for Maine no later
than October 1 , 2002. In the interim, CLECs shall be
allowed to amend their interconnection agreements
with Verizon in such a manner that enables them to
negotiate the inclusion of a single UNE (and any
terms and conditions related to the single UNE) rather
than be required to sign a multi-part or omnibus
amendment which contains provisions unrelated to
the single UNE.
In our April 1 0, 2002 Report of the Maine Public Utilities Commission on
Verizon Maine s Compliance with Section 271 of the Telecommunications Act of 1996
we explicitly conditioned our support of Verizon s 271 application upon Verizon
compliance with the list of conditions contained in our March 1 , 2002 letter to Verizon
including its commitment to file a wholesale tariff. Specifically, we stated:
New York 271 Order at n. 1353.
March 1 , 2004 Letter from Commission to Edward Dinan , President, Verizon
Maine.
EXAMINER'S REPORT Docket No. 2002-682
The MPUC finds, based upon the record before us, Including
the commitments made by Verizon in its March 4, 2002 letter
to the MPUC, that Verizon meets the Section 271
Competitive Checklist.
Verizon s commitment to file a wholesale tariff for Maine alleviated certain concerns we
had regarding the ability of individual CLECs to negotiate interconnection agreements.
Specifically, during the course of our 271 proceeding, we heard from a number of
CLECs regarding the difficulties and delays they encountered with Verizon when trying
to re-negotiate or amend their interconnection agreements. We found that requiring
. Verizon to submit a wholesale tariff would simplify the interconnection process for
CLECs and provide a single forum for litigating disputes and thus we explained in our
Report to the FCC that:
Unlike some other states, Verizon does not have a
Statement of Generally Available Terms (SGA T) or
wholesale tariff for the State of Maine. Availability of a
wholesale tariff would greatly reduce the time required to
effect a valid contract and would also eliminate the possibility
of I'tying" unrelated sections of an interconnection agreement
together when trying to add new terms to an existing
agreement. Thus, at our request, Verizon has agreed to file
a wholesale tariff for our review by October 1 , 2002. This
will provide us an opportunity to review all of the terms and
conditions that Verizon imposes on CLECs purchasing
wholesale services.
Application by Verizon New England Inc., Bell Atlantic Communications, Inc.
(d/b/a Verizon Long Distance), NYNEX Long Distance Company (d/b/a Verizon
Enterprise Solutions), Verizon Global Networks, Inc. and Verizon Selective Services,
Inc., for Authorization To Provide In-Region , InterLATA Services in the State of Maine
CC Docket No. 02-, Report of the Maine Public Utilities Commission on Verizon
Maine s Compliance with Section 271 of Telecommunications Act of 1996 (April 1 0,2002) (271 Report to FCC) at p.
271 Report to FCC at p. 7.
EXAMINER'S REPORT Docket No. 2002-682
Thus, we found the filing of a wholesale tariff encompassing all of Verizon
wholesale obligations would benefit the CLECs , Verizon , and the Commission by
consolidating our review of Verizon s wholesale terms and conditions.
Positions of the Parties
Verizon.
Verizon s initial brief did not directly respond to the Hearing
Examiner s question concerning Commission authority to require Verizon to tariff its 271
obligations. In its arguments concerning the availability of specific elements, Verizon
admits that in paragraph 653 of the TRO the FCC recognized that former Bell
Operating Companies (BOCs) have ongoing access obligations under section 271 of
the TelAct but argues that nothing in the TelAct gives a state commission any power to
interpret or enforce section 271 requirements. According to Verizon , only the FCC may
issue regulations relating to 271 UNEs and only the FCC can set rates for these UNEs.
Verizon maintains that the pricing standard set by the FCC for 271 network elements
just and reasonable " is not the same as a total element long run incremental cost
methodology (TELRIC) used for section 251 UNEs.
I n its reply brief Verizon acknowledged that the Commission may
playa role in enforcing 271 obligations - for example, by administering the Performance
Assurance Plan (PAP) and Carrier to Carrier Guidelines - but argued that this in no way
suggests that the FCC has delegated, or could delegate , to state commissions the
authority to determine, in the first instance , whether section 271 requires the unbundling
of a particular network element, independent of section 251 requirements. Finally,
although Verizon does not specifically address state authority under section 271 in its
EXAMINER'S REPORT Docket No. 2002-682
Supplemental Brief, Verizon states that the "Commission plainly has no authority to
order additional unbundling of network elements under the TelAct"
Consolidated Intervenors.
In their initial brief, the Consolidated Intervenors state that the FCC
took pains" to confirm that section 271 creates independent access obligations for
BOCs and cites paragraphs 653 and 655 of the TRO. They also point to the fact that
this Commission conditioned its support of Verizon s 271 Application to the FCC on
Verizon s willingness to adhere to a number of requirements that it would not otherwise
be required to meet under section 251.
In their reply brief, the Consolidated Intervenors urged the
Commission to reject Verizon s argument that we do not have authority to enforce 271
obligations. They point to the history of this case, and the fact that Verizon filed the
wholesale tariff in compliance with a condition set by the Commission during its 271
review as evidence of the Commission s authority. They assert that Verizon s argument
that the Commission has no power to regulate its wholesale tariff "constitutes an
outright repudiation of a fundamental premise of the agreement" in the 271 case.
In their Supplemental Brief, the Consolidated Intervenors state that
USTA " confirms that Verizon has section 271 obligations that are independent of its
obligations under section 251. They also interpret the UST /I decision to confirm that
the TRO does not impact a state commission s ability to exercise its power under state
and federal law to add to the FCC's list of UNEs.
EXAMIN ER'S REPORT Docket No. 2002-682
CLEC Coalition.
In its brief, the CLEC Coalition states that the authority for the
Commission to require Verizon to tariff its UNE obligations under section 271 comes
from the Congressional framework of section 271 , Verizon s explicit agreement to the
UNE tariffing obligations in Verizon s March 4 2002 letter, and the plain and
unambiguous declarations of the FCC in paragraphs 653-655 of the TRO. The CLEC
Coalition also concludes that the FCC expressly found that it was the responsibility of
both the FCC and state commissions to ensure compliance with section 271. Here, the
state should secure compliance by setting prices for UNEs established pursuant to
section 271. Finally, the CLEC Coalition argues that the Commission must exercise its
271 authority over Verizon, because if the state does not, no one will; the FCC is simply
without the resources. The absence of state action would have a drastic effect on the
competitive landscape in Maine. In their reply briefl the CLEC Coalition concurred with
the Consolidated Intervenors and urged the Commission not to let Verizon break its
agreement to meet the obligations it agreed to during the 271 approval process.
Ana~vsis
As stated above, at the time of Verizon s 271 proceeding, Verizon
unbundling obligations under 251/252 of the T elAct were the same as its 271
unbundling obligations and thus there was no need to distinguish between the two types
of requirements. Now that they are different, we must determine both the scope of
Verizon s commitment to file a wholesale tariff and whether this Commission has
authority to require Verizon to file a tariff in Maine reflecting its 271 unbundling
obligations, Le. its obligations under Checklist Items 4 , 5 , 6, and 9.
EXAMINER'S REPORT Docket No. 2002-682
First, with regard to the scope of Verizon s commitment to file a wholesale
tariff in Maine, we examine the underlying purposes of the condition and find that the
same reasons for requiring a wholesale tariff encompassing Verizon s 251 obligations
apply equally to Verizon s 271 obligations. Indeed , they apply even more today when
the legal and regulatory landscape has become increasingly confusing and complex
making it difficult to completely address and negotiate all of the issues that may come
up in an interconnection agreement negotiation. In the Verizon Arbitration proceeding,
CLECs complained that Verizon has not responded to requests from CLECs to
negotiate amendments to their interconnection agreements. These are the same types
of complaints we heard during the 271 process which led us to adopt the wholesale
tariff condition in this first place. Finally, Verizon has not argued to us that it did not
commit to tariff all of its wholesale obligations. Instead , it focuses on the jurisdictional
issues without examining the motivations and intentions behind its 271 commitment.
We find that a reasonable interpretation of the condition we placed upon Verizon , and
the condition it committed to fulfill, requires Verizon to include both its 251 and 271
unbundling obligations in its wholesale tariff filed in Maine.
We turn now to our authority to enforce that commitment. While Verizon is
correct that section 271 (d)(6) allows for continued enforcement of an ILEC's 271
obligations by the FCC , Verizon fails to explain adequately why states have authority
over some 271 issues, such as pertormance assurance plans , and not others.
Previously, state commissions did not have authority to approve an ILEG's 271
/nvestigation Regarding Verizon Maine s Request for Consolidated Arbitration
Docket No. 2004-135 , Order (June 4 2002).
EXAMINER'S REPORT Docket No. 2002-682
application but were allowed I indeed encouraged . by the FCC to conduct extensive fact-
finding proceedings to ascertain whether the terms, conditions, and prices of an ILEG'
wholesale operations met 271 standards. While the FCC made the ultimate finding of
compliance , it relied heavily upon the work of state commissions. Indeed, the FCC
noted in its Maine 271 Order.
3. We wish to recognize the effort and dedication of the
Maine Public Utilities Commission (Maine Commission). In
smaller, more rural states, the section 271 process taxes the
resources of the state commissions, even more heavily than
in other states. Yet, by diligently and actively conducting
proceedings beginning in 1997 to set TELRIC prices, to
implement performance measures. to develop a
Performance Assurance Plan (PAP), and to evaluate
Verizon s compliance with section 271 of the Act. the Maine
Commission laid the necessary foundation for our review
and approval. We are confident that the Maine
Commission s efforts, culminating in the grant of this
application , will reward Maine consumers by making
increased competition in all markets for telecommunications
services possible in the state.
5. We rely heavily in our examination of this application
on the work completed by the Maine Commission.
. . .
We find that states have a similar role with regard to enforcement of 271
obligations. Indeed, it makes both procedural and substantive sense to allow state
commissions, which are much more familiar with the individual parties, the wholesale
offerings, and the issues of dispute between the parties, to monitor ILEC compliance
with section 271 by applying the standards prescribed by the FCC, i.e. ensuring that
Verizon meets its Checklist Items No., 5, 6 , and 9 obligations.
EXAMINER'S REPORT Docket No. 2002-682
As indicated above , the FCC has already clearly stated that states may
enforce commitments made by ILECs during the 271 process. Here, where the
commitment involves filing a wholesale tariff, we believe we also have authority to
review that tariff for compliance with the applicable federal and state requirements. If a
party believes the Commission has not applied the correct standard, the party may then
file an action with the FCC pursuant to 47 U.C. ~271 (d)(6) and the FCC will have the
benefit of the detailed factual record developed by us. Nothing about our review of
Verizon s wholesale tariff preempts or invalidates the FCC's authority under section
271 (d)(6). If the FCC disagrees with the position we take here, it can explain itself in
any order issued on appeal. In the meantime, our decision will provide a single litigation
proceeding to resolve the myriad of issues resulting from the TRO and USTA II.
In addition to the legal basis for our decision , our decision also addresses
a significant practical consideration facing the Commission. Specifically, from a
Commission resource perspective , it makes much more sense to litigate all of the
issues associated with unbundling in one docket and develop a standard offer or
Statement of Generally Available Terms (SGAT). A single litigated case ensures that
we receive the benefit of briefing on an issue from all interested parties , rather than rely
on individual litigants to brief issues that may, or may not, be important to them.
Individual litigation diverts Commission resources from addressing matters that impact
all carriers to issues that may only affect one or two carriers.
Finally, we note that 35-A M.A. ~ 304 requires that all utilities file
schedules containing the rates, terms, and conditions for any service performed by it
within the State. We have previously interpreted this provision to require filing of
EXAMINERIS REPORT Docket No. 2002-682
wholesale rates with the Commission, Le. services which are resold to other carriers or
special contracts made with specific customers. For example, Verizon has on file with
the Commission a state access tariff through which it offers many UNE-like services
such as high capacity transport. Thus, subject to the specific finding below, we require
Verizon to file both its terms and conditions and rates for all of its 251 and 271
obligations in its Maine wholesale tariff.
IV.COMMISSION AUTHORITY TO SET PRICES FOR S 271 OFFERINGS
Introduction
Now that we have determined that Verizon must tariff its 271 obligations
we must consider the extent of our authority to set rates for those 271 offerings. Under
state law , our authority is clear: 35-A M.A. ~ 301 requires that rates be just and
reasonable and gives the Commission the authority to determine whether a utility s rates
meet this standard. The Commission s authority under federal law is not as clear and
requires a review of sections 251 and 252 of the TelAct, the TRO and USTA II.
AIlltlicable ~aw
Section 252 of the TelAct requires state commissions to apply the pricing
standards found in section 252(d) to set the rate for interconnection pursuant to section
251(c)(2) and for UNEs unbundled pursuant to section 251(c)(3). Section 252(d)
req uires that the rate be based upon cost, be nondiscriminatory, and may include a
reasonable profit. This standard has been interpreted by the FCC (and upheld by the
EXAMINER'S REPORT Dock~ No. 2002~82
Supreme Court
) '
to require forward-looking TELRIC pricing for all UNEs unbundled
pursuant to section 251 of the TeiAct.
Section 271 does not contain its own pricing standard. Section
271 (c)(2)(B)(ii) (Checklist Item No.2) requires that ILECs make UNEs available "
accordance with the requirements of section 251 (c)(3) and 252(d)(1)" while sections
271 (c)(2)(B)(iv , v , vi, and x) (Checklist Items Nos. 4, 5 6 and 10), which provide for
access to loops , switching, trunk side transport, and databases, make no reference to a
pricing standard.
In the TRO the FCC interpreted the pricing provisions of the TelAct as
requiring TELRIC pricing for section 251 (c)(3) elements only and "just and reasonable
rates for 271 (c)(2)(B)(iv, v, vi, and x) elements. The FCC found that TELRIC pricing for
non-251 UNEs "is neither mandated by statute nor necessary to protect the public
interest.',19 Relying upon the Supreme Court's holding in Iowa /I that section 201 (b) of
the Communications Act empowered the Commission to adopt rules that implement the
TelAct, the FCC found that it had authority to impose the just and reasonable and
nondiscriminatory standard of sections 201 and 202 of the Communications Act. The
FCC went even further and found that it would determine, based upon a fact-specific
inquiry pursuant to a section 271 application or a 271 enforcement action , whether the
price for a particular 271 element met the section 201/202 standard.2O The FCC noted
SeeAT&Tv./owa Utilities Bd.525 U.S. 355 (1999)(Iowa II).
TRO at 11656.
TRO at 11664.
EXAMINER'S REPORT Docket No. 2002-682
that prices similar to those currently charged in ILEG access tariffs would likely meet the
standard , as would any prices negotiated through arms-length agreements.
In its March 2004 decision in UTSA 1/the D.C. Circuit affirmed the FCC'
finding that the pricing standard for UNEs unbundled pursuant to ~ 271 is found in
sections 201-202 of the TelAct and not section 251. Specifically, the court upheld the
FCC's determination that TELRIC pricing was not required under section 271; all that
was required was that the prices not be "unjust, unreasonable or discriminatory."22 The
Court did not address the FCC's assertion that it, rather than state commissions, should
determine whether the price for a 271 element meets the just and reasonable standard.
The Court did find , in the context of state unbundling authority, that claims relating to the
preemptive scope of the TRO were not ripe, because no party had challenged a specific
state decision.
Since the USTA /I decision was released , several state commissions have
directly addressed the issue of state authority to review pricing for 271 elements. The
Massachusetts Department of Telecommunications and Electricity recently found that it
could approve or deny, on the basis of market-based pricing, the prices included in
Verizon s wholesale tariff for its ~271 obligations because those services are
jurisdictionally intrastate.23 On June 21 2004, the Tennessee Regulatory Authority
(TRA) issued an order which sets a 271 switching rate in the context of a section 252
1d.
USTA /I at 53.
23 Proceeding by the DTE on its own Motion to Implement the Requirements of
the FCC's TRO Regarding Switching for Large Business Customers Serviced by High-
Capacity Loops DTE 03-59-A (Jan. 23 , 2004), tn. 9.
EXAMINER'S REPORT Docket No. 2002-682
arbitration proceeding.24 Bellsouth has appealed that decision to the FCC and asked for
an emergency declaratory ruling by the FCC that the action taken by the TRA violates
the TelAct, FCC Orders, and federal precedent. The FCC has asked for comment on
Bellsouth's petition.
Position of the Parties
Verizon.
Verizon argues that the TRO makes clear that the FCC has
exclusive jurisdiction over the pricing of 271 UNEs and that the "just and reasonable
standard , rather than TELRIC, should be applied to the rates for those elements.
Verizon contends that even if TELRIC prices meet the "just and reasonable" standard
there is nothing that precludes Verizon from charging higher rates that also meet the
just and reasonable" standard. Verizon argues that the Commission would have no
grounds for insisting on the lower TELRIC rate. Verizon also points out that while state
commissions have authority to set rates for section 251 UNEs , there is no similar grant
of authority for section 271 UNEs.
CLECs.
The CLEC Coalition argues that by agreeing to submit a wholesale
tariff, Verizon agreed to file rate schedules for 271 UNEs over which the Commission
would have the authority to review, accept, and/or reject. The Consolidated Intervenors
did not directly address the Commission s authority to set prices for 271 UNEs because
24 In the Matter of Bel/south Emergency Petition for Declaratory Ruling and
Preemption of State Action, WC Docket No. 04-(July 1 , 2004) at
EXAMINER'S REPORT Docket No. 2002-682
they believed , despite the specific questions posed in the Hearing Examiner
Procedural Order, that pricing issues would be addressed later.
Analysis
Determination of the scope of the Commission s 271 pricing authority
requires both interpretation of the TRO and a determination under both state and
federal law of the Commission s authority to set rates for intrastate services and
prod ucts. First , Verizon is correct that the FCC stated in the TRO that it would review
rates for 271 UNEs in the context of 271 applications and enforcement proceedings.
However, as described above and as acknowledged by Verizon , the FCC has already
delegated significant authority to state commissions to enforce 271-related
requirements. While the FCC stated it would conduct the review, the FCC did not
specifically preclude state commissions from also conducting such an evaluation.
There are a number of factors which could support a state commission
authority to set prices for section 271 UNEs. First, the standard the FCC has
announced for section 271 UNEs, "just and reasonable " is the same standard the
Commission applies under 35-A M.A. 9 301. Thus, the Commission has
considerable experience in applying this standard to the rates of Verizon and many
other public utilities. Further, state commissions, and not the FCC , are most familiar
with the detailed company-specific data that will be used to support an ILEC's claim that
particular rates are just and reasonable. Finally, both CLEGs and the National
1t is true that pricing issues were scheduled to be addressed later in the
proceeding. However, parties should have reasonably expected that if a specific
question relating to the legal underpinnings of the Commission s authority was posed for
briefing, that the question needed to be addressed.
EXAMINER'S REPORT Docket No. 2002..682
Association of Regulatory Utility Commissioners (NARUC) have argued in filings related
to the appeal of the TRO that the Supreme Court's decision in Iowa 1/ and the Eighth
Circuit's decision in Iowa 11126 clearly establish that states , not the FCC, set rates for
UNEs. Indeed, the Supreme Court stated that:
(Section) 252(c)(2) entrusts the task of establishing rates to
the state commissions.... The FCC's prescription , throughrulemaking, of a requisite pricing methodology no more
prevents the States from establishing rates than do the
statutory 'Pricing standards' set forth in 252(d). It is the
States that will apply those standards and implement that
methodology, determining the concrete result in particular
circumstances.
These same parties also point to a state commission s authority to arbitrate and
approve interconnection agreements pursuant to section 252 of the TelAct as another
source of authority to set rates for elements provided pursuant to section 271.
Notwithstanding these arguments in favor of Commission authority to set
271 UNE rates! we decline at this time to exercise that authority. While we do not
necessarily agree with the FCC's assertion of exclusive jurisdiction over 271 UNE rates
it is, nonetheless, the current law of the land. Rather than add an additional layer of
confusion to an already complex situation , we will allow time for the process envisioned
by the FCC to work , i.e., for Verizon to file federal tariffs or for the parties to reach arms-
length agreements. While we will not set the rates charged by Verizon, we will exercise
our authority to require Verizon to file those rates with us in its wholesale tariff. Indeed
before Verizon may begin charging any CLEC 271 UNE rates which are higher than its
current TELRIC rates , Verizon must first obtain the FCC's approval for the specific rates
/owa Utilities Board v. FCC, 219 F.3d 744 (8th Cir. 2000).
/owa 1/525 U.S. at 384.
EXAMINER'S REPORT Docket No. 2002-682
(in whatever form necessary) and then must file the rates here pursuant to our usual
tariffing process. We will suspend any rates filed with us which have not been
specifically approved by the FCC.
We leave open today the possibility that in the future, perhaps after the
FCC has ruled on the BeliSouth Emergency Petition or if the Supreme Court takes the
TRO appeal and reverses the USTA /I decision , we might revisit the issues decided
today. We also leave open the possibility that we will step in and take action if the FCC
abdicates its authority. either explicitly or by taking an undue amount of time to exercise
its authority. We firmly believe that all parties would greatly benefit from increased
certainty concerning wholesale pricing and if the FCC does not actively assert its
jurisdiction, we will assert ours so as to ensure the continued viability of local
competition in Maine.
COMMISSION AUTHORITY TO ORDER LINE SHARING PURSUANT TO
STATE LAW
b!.gal Authori~
In the TRO, the FCC overturned its earlier decision in the UNE Remand
Orde~8 and found that CLECs are not impaired without access to the high frequency
portion of the loop (HFPL), Le. access to line sharing. Specifically, the FCC shifted its
focus from the revenues derived from a single service deployed using the HFPL to the
potential revenues derived from all services that could be provided over the full
functionality of the loop. Thus , the FCC concluded that the increased operational and
28 In the Matter of Implementation of the Local Competition Provisions in the
Telecommunications Act of 1996, CC Docket 96-, Third Report and Order And Fourth
Further Notice of Proposed Rulemaking, 15 FCC Rcd 3696, reI. November 5 1999
(UNE Remand Order).
EXAMINER1S REPORT Docket No. 2002-682
economic costs of acquiring a stand-alone loop are offset by the increased revenue
opportunities afforded by use of the whole loop for services such as voice , voice over
xDSL, data and video services.29 While the FCC declined to explicitly find that any
decision by a state commission to require line sharing under state law was automatically
preempted, in paragraph 264 it invited any party aggrieved by such a decision to seek a
declaratory ruling from the FCC.
th at:
In USTA 1/the D.C. Circuit upheld the FCC's line sharing decision, finding
(EJven if the CLECs are right that there is some impairment
with respect to the elimination of mandatory line sharing, the
Commission reasonably found that other considerations
outweighed any impairment.
USTA 1/ at 45. Thus, under federal law, section 251 line sharing will only be available
on a grandfathered basis for the next three years, with the price increasing each year
until it reaches the full price of the loop, at which time unbundling will no longer be
required.
Neither the TRO or UST /I directly addressed whether an ILEC'
continuing unbundling obligations under section 271 include continued access to line
sharing with the ILECs. In its Line Sharing Order 30 the FCC discussed the necessity of
unbundling the HFPL as part of an ILEC's 251 unbundling obligations. In its
Oklahoma/Kansas 271 Order, the first 271 Order issued after the Line Sharing Order
TRO at 11 258.
0eployment of Wireline Services Offering Advanced Telecommunications
Capability and Implementation of the Local Competition Provisions of the
Telecommunications Act of 1996, CC Docket Nos. 98-147, 96-, Third Report and
Order in CC Docket No. 98-147 and Fourth Report and Order in CC Docket No. 96-
14 FCC Red 20912 (1999) (Line Sharing Order).
EXAMINER'S REPORT Docket No. 2002-682
the FCC included its discussion of compliance with the line sharing requirement under
its discussion of compliance with Checklist Item No., access to local loops. 31 In the
Massachusetts 271 Order the FCC explicitly stated that:
On December 9, 1999 the Commission released the Line
Sharing Order that, among other things, defined the high-
frequency portion of local loops as a UNE that must be
provided to requesting carriers on a nondiscriminatory basis
pursuant to section 251 (c)(3) of the Act and , thus, checklist
items 2 and 4 of section 271.
Thus, the FCC appears to consider line sharing a form of access to the local loop that
must be provided pursuant to section 271 , regardless of whether it must also be
provided pursuant to section 251.
Positions of the Parties
Verizon.
Verizon argues that in the TRO, the FCC determined that CLEGs
are not impaired without unbundled access to line sharing. Verizon argues that where
federal law sets forth the legal and regulatory framework for accomplishing a lawful
objective through the balancing of competing interests
, "
the states may neither alter that
framework nor depart from the federal judgment regarding the proper balance of
competing regulatory concerns." Citing section 251 (d)(3) and "long-standing federal
preemption principles " Verizon asserts that state commissions have no authority to
override the FCC's determination that the unbundling of certain network elements is not
required under the TeiAct.
31
Oklahoma/Kansas 271 Order at 1f 214.
/n the Matter of Application of Verizon New England, Inc. et ale for Authorization
to Provide In-Region, InterLA TA Services in Massachusetts Memorandum Opinion and
Order (April 16, 2001) at 1f 163 (Verizon MA 271 Order).
EXAMINERIS REPORT Docket No. 2002-682
Verizon contends that the Commission has no independent
authority under state law to impose additional unbundling requirements on Verizon.
This is especially true where the FCC has explicitly declared that line sharing is not
required. Verizon points out that the FCC authorized the state to perform "granular
review of specific elements only and that line sharing was not one of them.
Verizon further argues that the Commission does not have
authority to order unbundling under section 271 , but even if it did, Checklist Item No.4 -
the local loop - does not include separate access to the HFPL. Additionally, it argues
that the pricing would not be TELRIC but would be "just and reasonable" which would
require a "fact specific inquiry" conducted by the FCC.
I n its Reply Brief, Verizon reiterated its position that "(t)he
Commission is legally preempted from re-imposing unbundling obligations eliminated by
the FCC's rulings in its TRO.In particular, Verizon disputes the CLEGs' claim that the
Commission has separate state authority to order line sharing and states that
, "
where
the FCC determines that an element should not be unbundled , a state may not lawfully
override that determination." Verizon also refutes the CLEGs' claim that the
Commission can unbundle HFPL based on Maine specific facts. Since the FCC has
already found no impairment, they conclude , the Commission is not free to order line
sharing.
In its Supplemental Brief, Verizon asserts that USTA /I affirms the
FCC's findings in the TRO on line sharing and unambiguously struck down the FCC'
delegation of any unbundling authority to 5tates.33 Verizon also repeats its belief that
USTA /I at 12.
EXAMINER'S REPORT Docket No. 2002-682
the I'Commission may not lawfully rely on state law to impose an unbundling obligation
for line sharing, feeder subloops! DCN transport, entrance facilities or other UNEs
expressly eliminated or curtailed by the FCC in the Triennial Review Order.Referring
to its previous statements concerning the absence of state law authorizing unbundling,
Verizon argues that even if the state is authorized to order unbundling (which they
insist, it is not), it may not do so in the case of line sharing because USTA /I affirmed the
FCC's decision in the TRO not to order line sharing because it discourages investment.
CLECs.
In their Brief, the Consolidated Intervenors point to the
Commission s reliance upon Verizon s performance in Maine on the number of line
sharing arrangements when it found Verizon in compliance with Checklist Item No.
during Maine s 271 proceeding. They contend that allowing Verizon to discontinue line
sharing now effectively repudiates one of the conditions for the Commission s support
and is anti-competitive. The Consolidated Intervenors argue that the FCC took pains to
make clear that 271 requirements remain unaffected by the TRO (citing to ~~ 653, 655).
They suggest that the Commission follow the Pennsylvania Public Utilities
Commission s lead in insisting that Verizon honor its 271 obligations. Finally, they cite
35-A M.S. A. ~ 7101 and argue that Verizon s proposal contradicts state
telecommunications policy of promoting broadband , especially in rural areas. The
Consolidated Intervenors argue that the Commission should order line sharing because
it has been instrumental in creating and fostering competition in rural Maine.
The CLEC Coalition did not brief the line sharing issues but "supports the
arguments and conclusions set forth in the briefs on Line Sharing issues submitted by
GWI , Conversant and the Office of the Public Advocate
EXAMINER'S REPORT Docket No. 2002-682
In their Reply Brief, the Consolidated Intervenors again describe
how Verizon and the Commission relied on the provisioning of line sharing to show that
Verizon had opened up its network to competition during the 271 review. The
Consolidated Intervenors also cite to paragraph 650 of the TRO where the FCC states
that "Section 271 (c)(2)(B) establishes an independent obligation for BOGs to provide
access to loops...." The Consolidated Intervenors implore the Commission to enforce
Verizon s 271 obligations.
In their Supplemental Brief, the Consolidated Intervenors state that
the decision in USTA 1/ confirms the FCC's conclusion that section 271's unbundling
requirements for BOCs are independent of a BOC's section 251 requirements. They
also argue that "the Court essentially held that the TRO has no impact whatsoever, from
a legal standpoint , on a state Commission s ability to exercise its power under state and
federal law to add to the FCC's list of UNEs.
Decision
We find , based upon the language quoted above from the FCC'
Massachusetts 271 Order, that Verizon must continue to provide CLECs with access to
line sharing in order comply with Checklist Item No.4 of section 271. As discussed
above , however, we will not exercise any authority we might have to set rates for 271-
based UNEs such as line sharing and will leave those issues to the FCC, which has
already stated what it believes to be the fair rate, Le. three years of transition rates
leading to up to the full cost of the loop. While our decision today does not provide the
CLECs with all of the relief they requested, it does provide them with the continued
EXAMINER'S REPORT Dock~ No. 2002~82
opportunity to share lines with Verizon , which retains the majority of local service lines
in Maine.
We decline the opportunity to exercise any authority we have under either
federal or state law to order line sharing at TELRIC rates at this time. While we do not
concede the point as argued by Verizon, the FCC clearly intended to preempt state
authority to order line sharing pursuant to section 251 or state law. Section 251 (d)(3) of
the TelAct states that the FCC may not preclude enforcement of any state commission
decision establishing local exchange interconnection and access requirements which is
consistent with section 251 and which "does not substantially prevent implementation of
the requirements of this section. II In the TRO the FCC asserts that its interpretation of
the requirements of section 251 , i.e., its rules , was intended by Congress to be included
under the "requirements of this section" language of section 251 (d)(3).35 Thus
according to the FCC, any state decision that is inconsistent with the FCC's Orders or
Rules (the so-called "federal regime ) violates section 251 (d)(3) and is preempted. Any
party aggrieved by a state decision to require line sharing after the effective date of the
TRO can seek a declaratory ruling from the FCC
The Supreme Court has held that "preemption will not lie unless it is 'the
clear and manifest purpose of Congress.1II36 If the statute contains an express
preemption clause , the court will first focus on the plain wording of the clause
, "
which
necessarily contains the best evidence of Congress' preemptive intent,,37 Savings
TRO at 11191.
CSX Transp., Inc. v. Easterwood 507 U.S. 658,664 (1993) citing Rice v. Santa
Fe Elevator Corp.331 U.S. 218 230 (1947).
/d.
EXAMINER'S REPORT Docket No. 2002-682
clauses! which specifically reserve state authority, are "the best evidence of Congress
preemptive intent.,,38 Generally speaking, preemption will be found when state law
stands as an obstacle to the accomplishment and execution of the full purposes and
objectives of Congress.
The FCC's assertion that its rules are included in "the requirements of this
section " language of section 251 was specifically rejected by the Eighth Circuit Court of
Appeals in Iowa 1.40 The Eighth Circuit held that section 251 (d)(3) does not require
state commission orders to be consistent with all of the FCC's regulations promulgated
under section 251.41 It stated that "(t)he FCC's conflation of the requirements of section
251 with its own regulations is unwarranted and iIIogical.'J42 While portions of the Eighth
Circuit's decision were ultimately reversed by the Supreme Court, the FCC did not
challenge, nor did the Supreme Court reverse, the Eight Circuit's holding on section
251 (d)(3).43 Thus, contrary to the assertions of both the FCC and Verizon, the mere
fact that a state requires an additional unbundled element does not mean it
1d.
Crosby v. National Foreign Trade Council 530 U.S. 363, 372-373 (2000).
See Iowa Utilities Bd. v. FCC 120 F.3d 753 (8th Cir. 1997), rev d sub nom. on
other grounds, AT&T v. Iowa Utilities Bd.525 U.S. 366 (1999).
1d. at 806.
1d. It further held that section 261 (c) of the TelAct (which requires state
commission decisions to be consistent with the FCC's regulations) applies only to state
requirements that are not promulgated pursuant to section 251. Id. at 807.
43
See TRO at ~ 192, fn. 611
EXAMINER1S REPORT Docket No. 2002-682
automatically will be preempted. Instead , consideration must be "given to whether the
requirement is consistent with section 251 and whether it prevents its implementation.
We find that, with respect to line sharing, there has been a clear policy
decision at the federal level that line sharing should not be made available at TELR1C
pricing. Any decision on our part, whether based upon federal or state law, to require
line sharing at TELRIC prices would directly contradict federal policy and would , in fact,
substantially prevent implementation of section 251 as interpreted by the FCC.44 We do
not reach the issue of whether the FCC's interpretation of 251 would limit state authority
in every instance but instead find that here, with regard to line sharing, and where the
federal policy has been so clearly enunciated and upheld by the D.C. Circuit, that the
most appropriate action at this time requires denial of the CLECs' request for state-
ordered unbundling at TELRIC rates. We leave open the possibility that if, at some
future date the Supreme Court overturns the FCC's interpretation of its powers of
preemption and/or overturns the FCC's decision concerning line sharing, we might
revisit this issue and reach a different result. Until such time , the only line sharing that
will be available in Maine will be pursuant to section 271 at "just and reasonable rates
as determined by the FCC.
. -
44 But see, Investigation into Skowhegan Online s Request for UNE Loops,
Docket No. 2002-704, Orders (April 20, 2004 and June 16, 2004) where the
Commission asserted its authority under 35-A M.A. ~~ 301 7101 and ordered
Verizon to unbundle certain copper sub loops not required under federal law.
EXAMINER'S REPORT Docket No. 2002..682
VI.CONCLUSIO
For the reasons discussed above , we order Verizon to include 271 UNEs in its
state wholesale tariff and to continue to offer line sharing pursuant to Checklist Item
No.4 of section 271.
Respectfully submitted
Trina M. Bragdon
Hearing Examiner