Verizon New England, Inc. v. Public Utilities Commission

2005 ME 64, 875 A.2d 118, 2005 Me. LEXIS 67
Supreme Judicial Court of Maine·Decided June 2, 2005·Published·Cited by 3 cases

Opinion

DANA, J.

[¶ 1] Verizon New England, Inc. appeals from a decision of the Public Utilities Commission ordering it to provide a Maine competitor access to a portion of Verizon’s telecommunications network. Verizon contends that the order is preempted by federal telecommunications law and, in any event, beyond the authority of the PUC. Because we disagree, we affirm.

I. BACKGROUND

[¶ 2] The federal Telecommunications of Act of 1996 (TelAct), Pub.L. No. 104-104, 110 Stat. 56 (1996) (codified as amended at 47 U.S.C.A. §§ 251-710 (West 2001 & Supp. 2004)), was enacted to “promote competition and reduce regulation in order to secure lower prices and higher quality services for ... consumers and encourage the rapid deployment of new telecommunications technologies.” Id. Preamble. To carry out this purpose, the TelAct requires incumbent local exchange carriers (ILECs), such as Verizon, to “unbundle” portions of their telecommunication networks by making them available to competing local exchange carriers (CLECs). 47 U.S.C.A. § 251(c)(3), (d) (West 2001). The Federal Communications Commission determines which network elements are subject to unbundling pursuant to the Te-lAct. Id. § 251(d)(2).

[¶ 3] In late 2001, Skowhegan Online, Inc. (SOI), a CLEC, requested the unbun-dling of a portion of Verizon’s copper wire network for purposes of providing high-speed broadband internet services to SOI customers in the Skowhegan area. Specifically, SOI sought access to the copper wire network running between Verizon’s central office and either pole-mounted network interface devices or SOI-owned remote terminals.

[¶ 4] Verizon rejected SOI’s request and SOI filed a complaint with the PUC. In June 2002, the PUC’s Rapid Response Process Team found that SOI was not requesting access to an entire loop terminating at the end-user’s premises, but rather to only a portion of the loop, and concluded that Verizon was not required by the TelAct to comply with SOI’s request because the portion of the network to which SOI sought access had not been classified by the FCC as an element subject to unbundling pursuant to the TelAct. Nevertheless, because unbundling in this case would further the public policy of providing internet access to rural Maine citizens, the Team recommended a further PUC investigation.

[¶ 5] The PUC commenced an investigation in November 2002. While the investigation was underway, the FCC issued its Triennial Review Order (TRO), which reviewed the unbundling obligations of ILECs and the implementation of local competition provisions of the TelAct. In the Matter of Review of the Section 251 Unbundling Obligations of Incumbent Local Exch. Carriers, 18 F.C.C.R. 16978 (2003) (TRO). The TRO defines a “loop” as a transmission facility between a company’s central office and an end-user cus[120]*120tomer’s premises. TRO, 18 F.C.C.R. at 17105. The TRO determined which network elements were subject to unbundling pursuant to the TelAct. See generally TRO, 18 F.C.C.R. at 16978. This analysis was based on the FCC’s construction of the provision in the TelAct requiring ILECs to allow access to their local exchange networks 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.” 47 U.S.C.A. § 251(d)(2)(B). In general, the TRO does not require the unbundling of loops that are made up entirely of fiber optic cable, or so-called “next generation” technologies, because to do so would discourage ILECs from making these investments and because these technologies are so new that CLECs are not at a strong competitive disadvantage. See TRO, 18 F.C.C.R. at 17141-48; 47 C.F.R. § 51.319(a)(3) (2004). The TRO does, however, require the unbundling of traditional stand-alone copper loops, which are made up entirely of copper wire and include no next generation technologies. See TRO, 18 F.C.C.R. at 17128-30. The FCC reasoned that permitting increased access to these existing loops would foster competition and advance the purposes of the Act. Id. at 17128-29.

[¶ 6] Some loops are hybrids composed of both fiber optic cable and copper wire. See TRO, 18 F.C.C.R. at 17121, 17148. Typically, fiber optic cable is utilized at the beginning of the loop — the “feeder” portion of the loop, running from the company’s central office to a centrally located feeder distribution point — and copper wire is used for the rest of the loop — the “distribution” portion of the loop, running between the feeder distribution point and the end-user’s premises. See 47 C.F.R. § 51.319(a)(2) (2004). The TRO does not require the unbundling of the fiber optic feeder portion of a hybrid fiber/copper loop, but will permit unbundling of the copper wire distribution portion of the loop running to the end-user. See TRO, 18 F.C.C.R. at 17131-32. This copper portion is referred to as a subloop. Id.

[¶ 7] The FCC anticipated some need for local determinations regarding whether, pursuant to 47 U.S.C.A. § 251(d)(2)(B), the failure to unbundle specific network elements would sufficiently impair the ability of competitors to provide services. TRO, 18 F.C.C.R. at 17064-66. Accordingly, the FCC expressly delegated authority to local utilities commissions to conduct geographically sensitive analyses of impairment pursuant to the TelAct. Id. at 17065-66.

[¶ 8] In December 2003,1 taking into account the FCC’s pronouncements in the TRO, a PUC hearing examiner ordered Verizon to unbundle its network as requested by SOI. The examiner agreed with Verizon that the network element requested by SOI did not constitute a “loop” according to the FCC rules, because a loop must terminate at an end-user’s premises and not, as SOI requested, at a pole-mounted or remote terminal. The examiner concluded, nonetheless, that Verizon could be ordered to unbundle a portion of the copper wire loop, even though SOI did not seek access to a loop terminating at the end-user’s premises, because the Te-lAct permits the unbundling of copper wire loops. The examiner stated that “the FCC intended CLECs to have full access to [stand-alone] copper loops and that an in[121]*121dividual CLEC may decide not to use the entire loop but instead choose to terminate the loop at a point before the customer demarcation point.”

[¶ 9] Three months later, the United States Court of Appeals for the District of Columbia Circuit issued an opinion rejecting the FCC’s delegation of impairment determinations to local state utilities commissions. United States Telecom Ass’n v. Fed. Communications Comm’n, 359 F.3d 554, 565-68 (D.C.Cir.2004) (USTA II). The court held that, although delegation to a subordinate agency would be appropriate, delegation to outside parties was improper when Congress had not affirmatively authorized it. Id. at 565-66.

[¶ 10] The PUC thereafter reviewed SOI’s request for access and, in April 2004, affirmed the hearing examiner’s order requiring Verizon to provide access to its network as requested by SOI.

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Verizon New England, Inc. v. Public Utilities Commission, 2005 ME 64, 875 A.2d 118, 2005 Me. LEXIS 67 (Me. 2005).

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