New Edge Network, Inc. v. Federal Communications Commission

461 F.3d 1105
CourtCourt of Appeals for the Ninth Circuit
DecidedAugust 29, 2006
Docket04-73800, 04-74410, 04-75445, 04-74401, 04-74720, 04-76136, 04-74408, 04-74724
StatusPublished
Cited by9 cases

This text of 461 F.3d 1105 (New Edge Network, Inc. v. Federal Communications Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
New Edge Network, Inc. v. Federal Communications Commission, 461 F.3d 1105 (9th Cir. 2006).

Opinion

T.G. NELSON, Circuit Judge.

I. Introduction

These petitions arise from the Federal Communications Commission’s (“FCC”) report and order changing its interpretation of a provision of the Telecommunications Act of 1996, Pub.L. 104-104,110 Stat. 56. In 2004, the FCC adopted a new rule replacing its so-called “pick-and-choose” interpretation of 47 U.S.C. § 252(i) with an “all-or-nothing” interpretation. Petitioners in various circuits challenged the new rule, and the Judicial Panel on Multidis-trict Litigation consolidated the petitions in this court. 1 We have jurisdiction pursuant to 28 U.S.C. § 2342(1) and 47 U.S.C. § 402(a). We conclude that § 252(i) is ambiguous and that the FCC’s all-or-nothing interpretation is reasonable. We also conclude that the FCC did not abuse its discretion by adopting new rule. Accordingly, we deny the petitions for review.

II. Background

In passing the Telecommunications Act of 1996, Congress fundamentally restructured local telephone markets to promote competition. 2 States can “no longer enforce laws that impede competition,” and incumbent local exchange carriers (“ILECs”), 3 which had been state-sanctioned monopolies, are “subject to a host of duties intended to facilitate market entry.” 4 ILECs must make their networks available to new entrants to the market, referred to as competitive local exchange carriers (“CLECs”). ILECs must also attempt in good faith to negotiate interconnection agreements with the CLECs. 5

Title 47 U.S.C. § 252 provides procedures for negotiation, arbitration, and approval of interconnection agreements between ILECs and CLECs. Section 252(i) provides:

A local exchange carrier shall make available any interconnection, service, or network element 6 , provided under an agreement approved under this section to which it is a party to any other requesting telecommunications carrier upon the same terms and conditions as those provided in the agreement.

The meaning of this provision lies at the heart of this dispute.

A. Pick-and-Choose

In August 1996, the FCC first interpreted § 252(i), adopting the pick-and-choose rule. 7 Under pick-and-choose, a request *1108 ing CLEC could adopt individual provisions from any approved interconnection agreement to which the ILEC was already a party. 8

CLECs’ ability to pick and choose individual provisions from existing interconnection agreements was not unrestricted. ILECs were only required to make individual provisions of an agreement available to CLECs “for a reasonable period of time,” and ILECs could avoid the rule where hardship would result. 9 In addition, ILECs could require a requesting CLEC to agree to terms and conditions that were “legitimately related” to the service or element requested. 10

Soon after the FCC released the Local Competition Order, many ILECs and some state utility commissions filed petitions challenging various aspects of the order; these cases were consolidated in the Eighth Circuit. 11 The petitioners argued, among other things, that the pick- and-choose rule was an unreasonable interpretation of § 252(i). 12 The Eighth Circuit agreed with the petitioners, held that the text of § 252(i) was ambiguous, 13 and concluded that piek-and-ehoose was an unreasonable interpretation. 14

The Supreme Court reversed. The Court held that the FCC’s interpretation was not only “reasonable” but ‘‘the most *1109 readily apparent.” It also observed that whether pick-and-choose would in practice impede or promote voluntary negotiations between ILECs and CLECs was a matter eminently within the FCC’s expertise. 15

B. All-or-Nothing

After using pick-and-choose for seven years, the FCC decided to revisit the rule. In 2003, it sought “comment on whether the Commission should alter its interpretation of section 252(i) to promote more meaningful commercial negotiations.” 16 In response, many CLECs, some state utility commissions, and a consumer advocacy association submitted statements in favor of pick-and-choose. ILECs, other state utility commissions, and two CLECs submitted statements in favor of eliminating pick-and-choose.

On July 13, 2004, the FCC adopted the new all-or-nothing rule. 17 Under all-or-nothing, if a requesting CLEC is interested in a service or network element provided by an ILEC, it may adopt in its entirety any approved agreement that includes that service or element to which the ILEC is already a party. 18

As a threshold matter, the FCC determined that it had the authority to reinterpret § 252(i) “because the plain meaning of the section’s text gives rise to two different, reasonable interpretations, and because the Supreme Court expressly recognized that the Commission has leeway to reinterpret section 252(i).” 19 In particular, Congress’s use of the phrase “upon the same terms and conditions” created ambiguity regarding whether CLECs could adopt individual provisions of existing approved agreements, or whether they had to adopt the entire agreement. 20 An agency has discretion to change its interpretation of an ambiguous statute and is not subject to estoppel for changing its view, the FCC noted. 21

As to why it believed reinterpretation of § 252(i) was necessary, the FCC observed that, when it first adopted the pick-and-choose rule, it “had no practical experience with the actual mechanics of interconnection agreements” and had “made inaccurate presumptions.” 22

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461 F.3d 1105, Counsel Stack Legal Research, https://law.counselstack.com/opinion/new-edge-network-inc-v-federal-communications-commission-ca9-2006.