Z-Tel Communications, Inc. v. Federal Communications Commission

333 F.3d 262, 357 U.S. App. D.C. 141, 29 Communications Reg. (P&F) 506, 2003 U.S. App. LEXIS 13274
CourtCourt of Appeals for the D.C. Circuit
DecidedJuly 1, 2003
Docket01-1461
StatusPublished
Cited by1 cases

This text of 333 F.3d 262 (Z-Tel Communications, Inc. v. Federal Communications Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Z-Tel Communications, Inc. v. Federal Communications Commission, 333 F.3d 262, 357 U.S. App. D.C. 141, 29 Communications Reg. (P&F) 506, 2003 U.S. App. LEXIS 13274 (D.C. Cir. 2003).

Opinion

Opinion for the Court filed by Chief Judge GINSBURG.

GINSBURG, Chief Judge:

The Federal Communications Commission granted intervenor Verizon’s application seeking approval under § 271 of the Telecommunications Act of 1996, 47 U.S.C. § 271, to provide long-distance service to *264 callers in Pennsylvania, where Verizon is the incumbent local exchange carrier. Verizon Pennsylvania Inc., 16 F.C.C. Rcd. 17419, 2001 WL 1097019 (2001). Z-Tel Communications, a competitive local exchange carrier, challenges the resulting Order, maintaining the Commission erred in finding that Verizon provides competitors nondiscriminatory access to its wholesale billing services, as required by the Commission pursuant to § 271. We affirm the Order.

I. Background

We presented a detailed history of § 271 in AT&T Corp. v. FCC, 220 F.3d 607, 610-12 (D.C.Cir.2000), which we shall not repeat here. Suffice it to say that in order for a Bell Operating Company (BOC) to obtain authority to provide inter-LATA (long-distance) service to callers in a region where it provides local exchange service, it must first obtain approval from the Commission. One method of obtaining approval, and the one Verizon pursued in this case, requires the BOC first to apply to the state regulatory agency, which makes an initial determination of the BOC’s eligibility. If the state agency approves, then the BOC may file an application with the Commission, which has 90 days in which to evaluate whether the application establishes the BOC’s compliance with, among other things, the “competitive checklist” in § 271(c)(2)(B). The checklist “incorporates by reference many of the substantive requirements of the Act’s local competition provisions,” AT&T Corp., 220 F.3d at 612, which in turn require the BOC to take various steps to open its market to competitive local exchange carriers (CLECs). In particular, the checklist requires the BOC to provide CLECs with “[n]ondis-criminatory access to [unbundled] network elements” (UNEs). § 271(c)(2)(B)(ii).

The only UNE relevant to this appeal is the Operation Support Systems (OSS) element, which the Commission has described as the various “systems, databases, and personnel” that the BOCs use “to provide service to their customers.” SBC Communications Inc., 15 F.C.C. Rcd. 18354, ¶ 92, 2000 WL 870853 (2000). The OSS element itself consists of five functions, of which “billing” is one. Bell Atlantic New York, 15 F.C.C. Rcd. 3953, ¶ 82, 1999 WL 1243135 (1999). The billing requirement in turn has two components: the BOC must provide CLECs with “complete and accurate reports on the service usage of competing carriers’ customers in substantially the same time and manner that [it] provides such information to itself,” and it must provide “wholesale bills in a manner that gives competing carriers a meaningful opportunity to compete.” SBC Communications Inc., 16 F.C.C. Rcd. 6237, ¶ 163, 2001 WL 55637 (2001). The latter component is the subject of the present dispute.

In June 2001 the Pennsylvania Public Utility Commission approved Verizon’s application to provide long-distance services to callers in Pennsylvania, conditioned upon Verizon taking certain further action. In particular, the PUC expressed concern that Verizon be able to provide “timely and accurate electronic bills,” and required Verizon to take steps to alleviate that concern.

Verizon provides CLECs in Pennsylvania with bills in two formats: a “retail-formatted bill,” generally printed on paper, and a Billing Output Specification Bill Data Tape, or “BOS BDT,” which is designed to be computer-readable. Verizon has always provided retail-formatted bills, and their accuracy is not at issue in this appeal. Verizon began offering BOS BDT bills in January 2000, but it experienced problems, including incorrect charges appearing on the bills, that caused it to sus *265 pend BOS BDT billing for several months. It reintroduced BOS BDT bills in October 2000, but some problems remained despite Verizon’s continuing effort to fix its software.

In April 2001 Verizon “implemented a process ... to manually review and adjust the BOS BDT bills to match them to the retail-formatted bills and to reconcile internal inconsistencies.” Order ¶20. Verizon then contracted with PriceWaterhou-seCoopers (PWC) to compare its BOS BDT bills with its retail-formatted bills “and to test the readability and auditability of the BOS BDT bill.” Id. ¶ 21. PWC’s studies showed that “the BOS BDT bill is largely comparable to the retail-formatted bill.” Id. ¶ 35. Meanwhile, Verizon had sponsored a separate study, completed in December 2000 by KPMG Consulting, that found its retail-formatted bills were accurate. Based upon these studies, in May 2001 Verizon offered CLECs the'option of treating the BOS BDT bill as their “bill of record.” It also continued working to fix its billing system, making changes to its software through June 2001.

Verizon filed its application with the Commission on June 21, 2001. The Commission thereafter received: (1) the comments of Z-Tel and of other interested parties; (2) Verizon’s reply comments; (3) the report of the Department of Justice required by § 271(d)(2)(A); and (4) numerous ex parte submissions.

In their comments Z-Tel and certain other CLECs claimed that Verizon had not demonstrated it could deliver an accurate BOS BDT bill and indeed that as of June 2001 it never had delivered such a bill. Z-Tel also claimed that certain “performance metrics” Verizon had submitted in support of its application were inadequate to measure the accuracy of Verizon’s billing performance.

Verizon replied on August 17 in an ex parte letter containing additional data and arguments, three aspects of which are noteworthy. First, Verizon provided a table showing the rates of error in its bills had decreased from approximately 27% in February to about 2% in May and June. Second, Verizon’s data showed the error rates in what the Commission called Verizon’s “historic problem areas” had also dropped over time. Finally, Verizon submitted a “recalculation” of certain of the billing performance metrics.

In the Order approving Verizon’s application, the Commission found that “despite some historical problems in producing a readable, auditable and accurate wholesale bill ... Verizon now provides a wholesale bill that gives [CLECs] a meaningful opportunity to compete.” Order ¶ 15. Although the Commission considered “commercial performance data” to be the “most persuasive form of evidence,” it determined that in this case it could not rely exclusively upon such data because “Verizon has made significant changes to its wholesale billing systems in the most recent months leading up to [its] application.” Id. ¶ 24.

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Bluebook (online)
333 F.3d 262, 357 U.S. App. D.C. 141, 29 Communications Reg. (P&F) 506, 2003 U.S. App. LEXIS 13274, Counsel Stack Legal Research, https://law.counselstack.com/opinion/z-tel-communications-inc-v-federal-communications-commission-cadc-2003.