20100709Post-Hearing Brief.pdf

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John R. Hammond, Jr., ISB No. 5470
BATT FISHER PUSCH & ALDERMAN, LLP
U.S. Bank Plaza, 5th Floor
101 S. Capitol Boulevard, Suite 500
Post Office Box 1308
Boise,ID 83701
Telephone: [phone]
Facsimile: [phone]
E-mail: jrh(fbattfisher.com
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Attorney for Time Warner Cable
Information Services (Idaho), LLC
Before the
IDAHO PUBLIC UTILITIES COMMISSION
Application of )
) Case No. TIM-T-08-01
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) POST-HEARING BRIEF
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TIME WARNER CABLE INFORMATION
SERVICES (IDAHO), LLC
For a Certificate of Public Convenience and
Necessity to Provide Competitive Facilities-
Based Local and Interexchange
Telecommunications Services within the
State of Idaho
Time Warner Cable Information Services (Idaho), LLC, d/b/a Time Warner Cable
("TWCIS"), by and through its attorneys, submits this brief to address key legal issues in
connection with its Petition for Reconsideration (the "Petition") in the above-captioned
proceeding. On February 23,2010, the Commission issued Final Order No. 31012 (the "Order")
denying TWCIS' s request for a certificate of public convenience and necessity ("CPCN") to
provide statewide, competitive facilities-based local and interexchange telecommunications
services within the State of Idaho. i TWCIS timely filed the Petition on March 16, 2010, and the
Commission held a hearing on June 10, 201 O.
TWCIS's Application was submitted on November 14, 2008. A Supplement to the Application was
submitted on November 9,2009.
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TWCIS respectfully submits that its Application, Supplement and Petition amply
demonstrate that it is entitled to be granted the requested CPCN by the Idaho Public Utilities
Commission (the "Commission"). However, the questioning at the June 10, 2010 hearing
suggests there may be continuing uncertainty regarding certain legal aspects of TWCIS's
position. Accordingly, TWCIS provides herein additional legal analysis on several key points to
demonstrate further that: (i) TWCIS is a "telephone corporation" entitled to apply for and be
granted a CPCN under Idaho law; (ii) the Commission has the requisite legal authority to grant
the requested CPCN based on TWCIS's qualifications and proposed service offerings, which
include both wholesale and retail services; (iii) the Commission already has granted CPCNs to
similarly situated carrers and cannot lawfully discriminate against TWCIS by refusing its
request-particularly in the absence of a reasonable justification; and (iv) the Order, if not
reconsidered, invites federal preemption under at least two different legal theories. In light of
this analysis, TWCIS renews its request that the Commission reconsider the Order and grant
TWCIS's request for a CPCN.
I.
ARGUMENT
A. TWCIS Is a "Telephone Corporation" Entitled To Obtain a CPCN Under
Idaho Law.
As a threshold matter, TWCIS reiterates that it qualifies as a "telephone corporation"
under Idaho law. Idaho Code § 61-121(1) defines a "telephone corporation" to mean "every
corporation ... providing 'telecommunications services' for compensation" within Idaho. Idaho
Code § 61-121 (2), in turn, defines "telecommunications service" to include "the transmission of
two-way... messages ... which originate and terminate in (Idaho), and are offered to or for the
public, or some portion thereof, for compensation." TWCIS's Local Interconnection Service for
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example, enables two-way interconnection between the facilities of its customers and the public
switched telephone network ("PSTN"). This will allow, among other things, the transport and
termination of voice calls within a local callng area, thus enabling two-way interactive switched
voice communications within the relevant local exchange calling area, using soft switch
technology. Local Interconnection Service will also provide TWCIS's interconnected VoIP
provider customers with access to domestic and international toll services, operator services,
telephone number resources, 911 calling, and related services and features. Based upon the
foregoing, TWCIS's Local Interconnection Service falls within the statutory definition of Idaho
Code § 61-121(2). In addition, TWCIS is a "telephone corporation" as defined by Idaho law,
and accordingly is entitled to apply for and receive a CPCN.2
The Order correctly recognizes as much, referrng to TWCIS repeatedly as a "telephone
corporation.,,3 Nevertheless, Staff maintains that TWCIS is not a "telephone corporation"
because TWCIS will provide its Local Interconnection Service on a wholesale basis to retail
service providers, rather than "directly to the consumer or end user.,,4 Staffs assertion is based
upon a misreading of Idaho Code § 61-121.Nothing in that provision requires a
telecommunications service to be provided directly to end users. Rather, it requires only that
such a service be "offered to or for the public, or some portion thereof, for compensation."
TWCIS's Local Interconnection Service is offered both to a class of retail providers-which
surely constitutes "some portion" of the public-andfor the benefit of the public generally. Staff
2
Staff incorrectly claims that TWCIS has conceded that it is not a "telephone corporation." See Staff
Answer to TWCIS Petition for Reconsideration at 4. In its Petition, TWCIS merely noted that Staff cannot
claim that TWCIS is not a telephone corporation while simultaneously claiming that Idaho Code § 62-604,
which applies only to telephone corporations, bars TWCIS from obtaining a CPCN. See Petition at 8
("Accordingly, ifTWCIS were not a 'telecommunications corporation,' there would be no basis for using
Idaho Code § 62-604 to preclude TWCIS from seeking a CPCN.").
See, e.g., Order at 4-5.3
4
See Staff Direct Testimony at 6.
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provides no legal basis for its attempt to restrict this definition; indeed, Staff admits in its
testimony that this interpretation is not grounded in Commission precedent. 5 By the same token,
while Staff asserts that its interpretation ofIdaho Code § 61-121 has been applied consistently, it
fails to cite even a single case in which a wholesale telecommunications carrer was denied a
CPCN on the ground that it did not qualify as a "telephone corporation" under Idaho law.
Moreover, Staffs position contrasts sharply with the FCC's construction of comparable
definitions in the Communications Act of 1934, as amended (the "Act"). The Act defines
"telecommunications service" as service "to the public, or to such classes of users as to be
effectively available directly to the public.,,6-a formulation similar to that reflected in Idaho
Code § 61-121. Critically, the FCC has squarely rejected the view that the reference to "the
public" in this statutory definition was intended to exclude wholesale telecommunications
services.7 Indeed, in analyzing the very type of local interconnection service at issue here, the
FCC's Wireline Competition Bureau observed that "(iJt is clear ... that the definition of
telecommunications services ... includes wholesale services when offered on a common carrier
basis."S In turn, that decision made clear that "providers of wholesale telecommunications
services enjoy the same rights as any 'telecommunications carrer' under ... the Act.,,9
5 See Hearing Transcript at 72 lines 16-18 ("I'm unaware that (this interpretation) is in any Commission
Order; however, it has been the consistent application of that interpretation with Staff as they review CPCN
Applications.").
6 47 U.sc. § 153.
7
See, e.g., Implementation of the Non-Accounting Sajeguards of Sections 271 and 272 of the
Communications Act of 1934, as Amended, Second Order on Reconsideration, 12 FCC Rcd 8653, at ~ 33
(1997).
S Time Warner Cable Requestjòr Declaratory Ruling that Competitive Local Exchange Carriers May Obtain
Interconnection Under Section 251 of the Communications Act of 1934, as Amended, to Provide Wholesale
Telecommunications Services to VoIP Providers, Memorandum Opinion and Order, 22 FCC Rcd 3513, at ~
11 (2007) ("TWC Declaratory Ruling").
9 Id. at~9.
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The Commission should construe Idaho Code § 61-121 in a manner consistent with this
federal precedent. As an initial matter, the FCC has established a body of law on this issue
through careful deliberation over a period of years. In contrast, the record introduced in this case
by Staff does not demonstrate that Staffs interpretation ofIdaho Code § 61-121 is the result of
careful statutory interpretation (which would focus on the text, purpose and legislative history of
the provision) or other deliberative process. Moreover, the Idaho legislature has provided
support for the proposition that the Commission should read Idaho Code § 61-121 in harmony
with federal law; most notably, Idaho Code § 62-615 provides that "(tJhe commission shall have
full power and authority to implement the federal telecommunications act of 1996,"10 which
includes the definition of "telecommunications service" described above.
Further, following the FCC's pro-competitive precedent in interpreting Idaho Code § 61-
121 would advance Idaho's stated policy objectives by ensuring that TWCIS and similar service
providers may obtain critical inputs and thereby compete in the Idaho market. By contrast, the
interpretation favored by Staff would deny these critical inputs, for no apparent purpose, and
"would impede the important development of wholesale telecommunications and facilities-based
VoIP competition, as well as broadband deployment ... by limiting the ability of wholesale
carriers to offer service.")) As explained below, that interpretation would needlessly invite
federal preemption.
B. The Commission Has the Authority to Grant the Requested CPCN.
Staff also proposes that a CPCN may not be granted because "the services TWCIS
proposes to offer do not meet the statutory definition of 'basic local exchange services' as the
10
II
Idaho Code § 62-615(1).
TWC Declaratory Ruling at ~ 8.
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1996 Act codified Section 251, which guarantees the right of telecommunications carriers-
including wholesale carrers such as TWCIS-to enter local markets and obtain interconnection,
numbers and other critical inputs from ILECs. Accordingly, Idaho Code § 62-615 grants the
Commission the authority to take measures to ensure that competitive entrants can vindicate
those rights by, for example, granting CPCNs upon application. Nevertheless, the Order
achieves the opposite result by thwarting TWCIS's ability to exercise its federal rights and by
empowering ILECs and other entities to deny TWCIS the inputs that it needs to provide service.
Again, both the Commission and Staff fail to consider the Commission's independent authority
to act pursuant to Idaho Code § 62-615.
C. The Commission Previously Has Granted CPCNs to Similarly Situated
Service Providers
Further bolstering TWCIS's entitlement to a CPCN, the Commission has granted CPCNs
to a number of providers that did not offer "basic local exchange service" at the time of
certification. As TWCIS has noted previously, the Commission has granted CPCNs to ALEC
Telecom, Inc. ("ALEC") and Eltopia Communications, LLC ("Eltopia")-carrers that proposed
to offer services comparable to those proposed by TWCIS. Staff attempts in vain to distinguish
these cases. The simple fact is that both ALEC and Eltopia did not provide, or even agree to
provide, retail services at the time they were certified. Yet the Commission (with the Staffs full
support) granted these carriers CPCNs anyway. The rationalization that these carrers may have
indicated the intent to provide retail service at some point in the future is irrelevant, as they
received CPCNs without actually offering such services.19 If Staff were correct that the
19 Staff has alleged in this case that Eltopia was granted a CPCN for the reasons stated in the Direct Prefied
Rebuttal Testimony of Grace Seaman at pp. 8-9. However, the record in that case clearly demonstrates it
was granted largely because: 1) Eltopia's Application satisfied the requirements outlined in Commission
Rule of Procedure 111 , IDAP A 31.01.01. 111 , and Procedural Order No. 26665; and 2) Eltopia's service
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provision of retail services were an absolute prerequisite to obtaining a CPCN, then the grants of
such authority to ALEC and Eltopia would have been improper. The far more plausible reading
of the law is that those grants were permissible in light of the Commission's broad authority,
discussed above, to issue CPCNs in its discretion.
If Idaho law truly precluded the Commission from granting a CPCN to a wholesale
provider, the Commission presumably would have informed ALEC and Eltopia of that fact and
stayed their proceedings until they offered retail services. The mere fact that those carrers might
provide retail services at some future point, which would remove any doubt as to the
Commission's authority, would not have been sufficient under Staffs reasoning to confer
authority with respect to wholesale services in the present. The Commission's authority simply
cannot be grounded in speculation as to future conduct, particularly in the absence of a
procedural mechanism for verifying that ALEC and Eltopia have ever offered retail services.2o It
would be a perverse result to award CPCNs based upon vague statements of future intent, while
punishing earners like TWCIS that are entirely forthcoming II describing the
telecommunications services they wil provide.
In addition, the Commission has granted CPCNs to a number of service providers that are
not even demonstrably telephone corporations-including Cox Idaho Telecom, LLC and
Millennium Networks, LLC-without any apparent concerns about its authority to do so. As
Staff has admitted, the Commission does not "regulate VoIP service providers." But if such
providers "on (sic J their own volition, apply for a CPCN," Staff will evaluate such requests-and
20
has the capability to provide both voice and data services over the same trunk even though at the outset, it
would be providing unregulated services. Order No. 30442.
See Hearing Transcript at 70.
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D. The Order Wil Invite Federal Preemption if Reconsideration Is Denied.
The Supremacy Clause of the Constitution provides that "the Laws of the United States ...
shall be the supreme Law of the Land ... any Thing in the Constitution or Laws of any State to
the Contrary notwithstanding.,,24 Here, federal law preempts the Order under the doctrine of
"conflict preemption," as well as under Section 253 of the federal Communications Act of 1934,
as amended.25
1. The Order Is Preempted under the Doctrine of "Conflct
Preemption."
Under the "conflict preemption" doctrine, federal law preempts state law "where the state
law stands as an obstacle to the accomplishment and execution of the full objectives" of federal
policy.26 Preemption is particularly appropriate where "compliance with both federal and state
regulations is a physical impossibility.,,27 The Supreme Court has held that preemption may
result not only from action taken by Congress but also from a federal agency action that is within
the scope of the agency's congressionally delegated authority.28
Both Congress and the FCC have established a clear federal policy in favor of
competitive entry into local telecommunications markets. For example, Sections 251 and 271 of
the Act are designed to open local markets to new service providers,z9 Moreover, Section 706
24 U.S. Const. art. VI., cl. 2.
25 47 US.C. § 253.
26 La. Pub. Seni. Comm 'n v. FCC, 476 US. 355, 368-69 (1986). See also Geier v. American Honda Motor
Co., 529 US. 861, 873 (2003) (where State law frustrates the purposes and objectives of Congress,
conflicting State law is "nullified" by the Supremacy Clause); City of New York v. FCC, 486 US. 57,64
(1988) ("The statutorily authorized regulations of an agency will preempt any state or local law that
conflicts with such regulations or frustrates the purposes thereof.").
27 Crosby v. Nat'! Foreign Trade Council, 530 U.S. 363, 373 (2000).
28 See Fidelity Federal Savings & Loan Ass'n v. De la Cuesta, 458 US. 141 (1982); Capital Cities Cable,
Inc. v. Crisp, 467 U.S. 691 (1984).
47 U.sC. §§ 251,271.29
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of the 1996 Act directs the FCC to adopt "measures that promote competition in the local
telecommunications market.,,30 Pursuant to these statutory mandates, the FCC's implementing
orders have consistently sought to encourage competition in local markets. Further, the FCC has
made clear that the federal regulatory scheme affords wholesale providers the same ability as
retail providers to enter local markets on a competitive basis. In particular, the TWC Declaratory
Ruling recently reaffirmed that wholesale carriers are fully entitled to exercise the critical rights
granted by Section 251 of the Act, including interconnection.
The Order conflicts with these core federal policies, and therefore is subject to
preemption.31 As TWCIS has explained in detail and repeatedly, the Commission's refusal to
grant TWCIS a CPCN effectively has precluded TWCIS from entering the Idaho market, and has
kept TWCIS from exercising its federally protected rights. The Commission's overly restrictive
reading of Idaho Code § 62-604, if not reconsidered, will harm competition and ultimately
restrict consumer choice. In short, the Commission's actions will result in precisely the harms
that the FCC sought to avoid through the TWC Declaratory Ruling, which found that denying
interconnection and related rights to a wholesale provider "would impede the important
development of wholesale telecommunications and facilities-based VoIP competition, as well as
broadband deployment ... by limiting the ability of wholesale carrers to offer service.,,32
Any decision to deny a CPCN to TWCIS, therefore, is subject to preemption. The
Commission can easily avoid such a result by interpreting the Idaho Code as TWCIS proposes,
which is consistent with its own precedent. Indeed, TWCIS's reading of the law would further
30 47 U.sC. § 1302(a).
31
Notably, Staff has suggested that denying the CPCN requested by TWCIS would serve the public interest
because it would prevent TWCIS from accessing numbering resources to which it is entitled under federal
law. See, e.g., Hearing Transcript at 78 line 11 ("We are also concerned about number exhaustion.").
32 TWC Declaratory Ruling at ~ 8.
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both state and federal policy interests, and the Commission should reconsider the Order
accordingly.
2. The Order is Subject to Preemption Under Section 253 of the
Communications Act.
Section 253 of the Communications Act provides that "( n Jo State or local statute or
regulation, or other State or local legal requirement, may prohibit or have the effect of
prohibiting the ability of any entity to provide any interstate or intrastate telecommunications
service.,,33 This provision is an essential part of Congress's commitment to opening local
telephone markets to competition.34 The FCC has explained that Section 253(a) precludes not
only outright prohibitions on market entry, but also any requirement that "materially inhibits or
limits the ability of any competitor or potential competitor to compete in a fair and balanced
legal and regulatory environment.,,35 The courts have likewise recognized that "a prohibition
does not need to be complete or 'insurmountable' to run afoul of § 253(a).,,36
TWCIS has explained that, in its experience, without a CPCN, it simply cannot enter the
Idaho market or obtain interconnection, numbers and other inputs necessary to provide service in
that market. In particular, without a CPCN, TWCIS will be unable to perform the following:
(1) Interconnect with other carriers operating in Idaho, since those carriers typically
will not interconnect with any entity that does not have a CPCN ;37
33 47 U.sc. § 253(a).
34
See, e.g., Public Utility Commission of Texas, Memorandum Opinion and Order, 13 FCC Rcd 3460, ~ 41
(1997) (Congress enacted Section 253 "to ensure that no state or local authority could erect legal barriers to
entry that would potentially frustrate the 1996 Act's explicit goal of opening local markets to
competition.").
35
See CaL. Payphone Ass 'n, 12 FCCRcd 14191,'131 (1997).
TCG New York, Inc. 1'. Cit)! of White Plains, 305 F.3d 67, 76 (2d Cir. 2002). See also Qwest Corp. v. City of
Santa Fe, 380 F.3d 1258, 1269 (10th Cir. 2004).
36
37 See TWCIS Direct Testimony at Exh. A; TWCIS Rebuttal Testimony at 5-6.
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(2)Obtain numbering resources, because an entity's status as a holder of a CPCN is
verified by the numbering authority before number blocks are assigned; 38
(3)Route calls, because critical Operating Company Numbers and listings in the
Local Exchange Routing Guide are not granted until the National Exchange
Carrier Association confirms that a potential recipient holds a CPCN; or
(4)Obtain other resources necessary to operate as a CLEC.
Neither the Staff nor the Commission itself has ever disputed these points, or that
excluding TWCIS from the Idaho market would be contrary to the public interest. At most, the
Commission and Staff claim that not having a CPCN poses no legal bar to providing competitive
telecommunications service or obtaining interconnection. However, that sidesteps the relevant
issue, which arises from the insurmountable practical impediments to obtaining interconnection
and other critical inputs without a CPCN. The fact that the Commission may have the best of
deregulatory intentions is unhelpful where, as here, the Commission's actions have the effect of
preventing TWCIS from entering the market. Simply put, the Commission must recognize the
real-world consequences of the Order and the adverse impact its findings will have on TWCIS,
and ultimately consumers. The Commission's choice is not between granting TWCIS a CPCN
or allowing it to operate on a deregulated basis without one, but rather between granting TWCIS
a CPCN and thwarting its ability to operate at all in Idaho.
In short, the Commission's denial ofTWCIS's request for a CPCN constitutes a barrer to
TWCIS's ability to enter the Idaho market, in violation of federal law and contrary to clear
federal and state policies in favor of greater intrastate competition. This barrier is exacerbated by
the discriminatory application of state law. As discussed above, the Commission has granted
CPCNs both to: (i) carrers proposing services similar to those proposed by TWCIS (e.g., ALEC
38 See, e.g., Telephone Number Requirementsfor IP-Enabled Services Providers, Report and Order, 22 FCC
Rcd i 953 i , at '1 12 (2007) (noting that NANP A "provides numbers only to entities that are licensed or
certificated as carriers under the (Federal Communications) Act.").
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t".
CERTIFICATE OF SERVICE
I HEREBY CERTIFY That on this 9th day of July, 2010, I caused a true and correct copy
of the foregoing document to be served upon the following individual(s) in the manner indicated
below:
Jean Jewell
IDAHO PUBLIC UTILITIES COMMISSION
472 W Washington St.
P.O. Box 83720
Boise, ID 83720-5983
Neil Price
Deputy Attorney General
IDAHO PUBLIC UTILITIES COMMISSION
472 W Washington St.
P.O. Box 83720
Boise,ID 83720-5983
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