At & T Communications of the Southwest, Inc. v. City of Dallas

8 F. Supp. 2d 582, 1998 U.S. Dist. LEXIS 8932, 1998 WL 309145
CourtDistrict Court, N.D. Texas
DecidedJune 8, 1998
Docket1:98-cr-00003
StatusPublished
Cited by44 cases

This text of 8 F. Supp. 2d 582 (At & T Communications of the Southwest, Inc. v. City of Dallas) is published on Counsel Stack Legal Research, covering District Court, N.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
At & T Communications of the Southwest, Inc. v. City of Dallas, 8 F. Supp. 2d 582, 1998 U.S. Dist. LEXIS 8932, 1998 WL 309145 (N.D. Tex. 1998).

Opinion

MEMORANDUM OPINION

BUCHMEYER, Chief Judge.

This opinion concerns the Federal Telecommunications Act of 1996, which was passed to end the monopolies in local telephone services and to benefit consumers by fostering competition between telephone companies in cities throughout the United States — -including Dallas.

In this case, AT & T Communications (“AT & T”) plans to compete by using its existing fiber optic facilities to provide a new local telephone service known as “AT & T Digital Link” (“ADL”) to Dallas customers. However, the City of Dallas (“City”) claims that before AT & T can offer this service, it must first complete an extensive and detailed, eighteen-page franchise, application, and must agree to pay a fee that equals four percent of its revenues from any business it conducts in Dallas, and must meet certain other requirements.

*586 ■ This opinion holds that Dallas may require AT & T to obtain a franchise in order to use City rights-of-way for the provision of ADL. The City may not, however, condition this franchise on anything other than AT & T’s agreement to comply with the City’s reasonable regulations of its rights-of-way and the fees for use of those rights-oLway. Dallas does not have the authority under state or federal .law to require a wide-ranging franchise application, to impose conditions on a franchise that are unrelated to the telecommunications provider’s use of the City’s rights-of-way, or to impose fees that are unrelated to use of the rights-of-way.

AT & T’s Motion for Preliminary Injunction is therefore GRANTED, and the City’s Motion to Dismiss is DENIED.

I.. Factual and Statutory Background

Prior to 1996 local telephone services were provided by monopolies in all cities in Texas and in virtually all other states. The telecommunications companies holding these monopolies are referred to as “incumbent local exchange carriers” or “incumbent LECs.” In Dallas, the’ exclusive carrier was Southwestern Bell Telephone Company (“SWBT”).

There were no such monopolies in the market for long distance telephone services, and AT & T has been providing long distance services in Dallas for a number of years. In 1985 the City adopted Ordinance No. 18613 (“the Ordinance”) which grants AT & T a fifteen-year license to use certain portions of City right-of-way for physical facilities to support its long distance services. 1 These physical facilities are comprised of small fiber-optic cables in an underground conduit which occupies a strip of land approximately three-feet wide and 5.6 miles long. In the Ordinance the City regulates AT & T’s construction, maintenance, and use of those facilities, and provides for a fee to compensate the City which “represents the value ... of the public right-of-way ... used by AT & T for the construction of new facilities, ... as well as for the use of public right-of-way ... for existing facilities.” 2 Because AT & T was not allowed to offer local telephone service when the Ordinance was enacted, the Ordinance contains a specific provision that excludes the use of these facilities for local exchange telephone service. 3

The Federal Telecommunications Act of 1996 4 (“FTA”) made sweeping changes to the industry and ended the monopolies in local telephone service. It is entitled: “An Act to promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies.” 5 Congress sought to foster immediate competition by stripping away many of the legal and economic impediments to entry into the local telephone markets.

One way that Congress intended to bring about this demonopolization was to encourage viable competition with incumbent LECs by allowing new market entrants to use the incumbent’s existing networks and facilities by reselling the incumbent’s local services. 6 For example, in Dallas AT & T purchases SWBT’s services, much like an individual telephone consumer would, but on a wholesale basis. AT & T then re-sells these local services to its customers. In providing local service through this means, AT & T uses no AT & T owned or operated facilities, but rather SWBT continues to own, operate and maintain all of its own facilities.

*587 Another important provision of the FTA prohibits barriers to entry into local telephone markets. In § 253(a) Congress preempts all state and local statutes, regulations, and other legal requirements which “prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.” There are only two limitations on this provision. First, § 253(b) provides that states maintain the authority to regulate to “preserve and advance universal service, protect the public safety and welfare, ensure the continued quality of telecommunications services, and safeguard the rights of consumers.” Second, § 253(c) allows states or local governments to “manage the public rights-of-way” and “require fair and reasonable compensation from telecommunications providers, on a competitively neutral and nondis-eriminatory basis, for use of public rights-of-way.”

In November of 1996, pursuant to the FTA and the Texas Public Utilities Regulatory Act (“PURA”), AT & T applied for a Certificate of Operating Authority (“COA”) from the Texas Public Utilities Commission (“PUC”) to operate as a provider of local exchange service in Dallas and other localities throughout Texas. The PUC conducted a thorough review of AT & T’s qualifications, and required AT & T to provide detailed financial and technical information, information relating to the types of services to be provided, and information about the company’s organizational structure. On June 5, 1997, the PUC granted AT & T a COA to provide local services. 7

As part of its entry into the Dallas local telephone market, now authorized by the FTA and the State COA, AT & T plans to offer AT & T Digital Link (“ADL”) to some of its business customers. The vast majority of facilities needed to provide this service will be SWBT lines, to which AT & T will obtain access through arrangements with SWBT. For certain customers, however, it will be necessary to use the facilities owned by AT & T that are governed by the Ordinance (and which previously have only been used for long distance services). AT & T will not need to do any construction or modification of the existing facilities in order to route ADL traffic through them, and would like to begin to offer the service by the end of the first quarter or beginning of the second quarter of 1998.

AT & T approached Dallas and requested that the City allow the company to use the facilities governed by the Ordinance to provide ADL.

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Bluebook (online)
8 F. Supp. 2d 582, 1998 U.S. Dist. LEXIS 8932, 1998 WL 309145, Counsel Stack Legal Research, https://law.counselstack.com/opinion/at-t-communications-of-the-southwest-inc-v-city-of-dallas-txnd-1998.