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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
)
CoreComm Communications, Inc., )
and )
Z-Tel Communications, Inc., )
)
Complainants, ) File No. EB-01-MD-017
)
v. )
)
SBC Communications Inc., )
Southwestern Bell Telephone )
Company, )
Pacific Bell Telephone Company, )
Nevada Bell Telephone Company, )
The Southern New England )
Telephone Company, )
Illinois Bell Telephone )
Company, )
Indiana Bell Telephone Company, )
Michigan Bell Telephone )
Company, )
The Ohio Bell Telephone
Company, and
Wisconsin Bell, Inc.,
Defendants.
ORDER ON RECONSIDERATION
Adopted: April 28, 2004 Released: May 4,
2004
By the Commission:
I. INTRODUCTION
1. In this
Order, we deny the Petition for Reconsideration1 filed by
Z-Tel Communications, Inc. (``Z-Tel'') pursuant to section
405 of the Communications Act of 1934, as amended
(``Act'').2 Z-Tel seeks reconsideration of the
Commission's Liability Order3 insofar as it denies Z-Tel's
claim, made in a section 208 formal complaint, that
defendant Pacific Bell Telephone Company (``Pacific'')
violated sections 201(b), 251(c)(1) and (c)(3) of the Act,
and Commission rules 51.309 and 51.313.4 For the
following reasons, we conclude that Z-Tel's Petition lacks
merit.
II. BACKGROUND
2. Z-Tel is a competitive local exchange carrier
(``CLEC''), and Pacific is an incumbent local exchange
carrier (``ILEC'').5 Pursuant to section 252(i) of the
Act,6 Z-Tel opted into an existing section 252
interconnection agreement between Pacific and another CLEC
(the ``Pacific Agreement''). The Pacific Agreement
granted Z-Tel access to the shared transport unbundled
network element (``UNE''), but Pacific refused to allow Z-
Tel to use the shared transport UNE to transport Z-Tel's
customers' intraLATA toll calls. Z-Tel sought to amend
the Pacific Agreement by asking Pacific to execute a
``Memorandum of Understanding'' that would have allowed Z-
Tel to use the shared transport UNE for intraLATA toll.
Pacific refused Z-Tel's request.7
3. In its Complaint filed in this proceeding, Z-
Tel alleged that Pacific's refusal to allow Z-Tel to use
the shared transport UNE for intraLATA toll, and its
refusal to execute the Memorandum of Understanding,
violated, inter alia, sections 201(b), 251(c)(1), and
251(c)(3) of the Act and Commission rules 51.309 and
51.313.8 The Complaint did not include a copy of the
Pacific Agreement. Nor did the Complaint discuss or
direct the Commission's attention to any of the language
found in the Pacific Agreement.9
4. Pacific asserted in its Answer that it was not
obligated by the Pacific Agreement to provide Z-Tel shared
transport for intraLATA toll or to execute the Memorandum
of Understanding.10 Pacific also stated that, ``in
conference calls with Commission staff ... counsel for [Z-
Tel] specifically disavowed any claim that [Pacific] had
violated their interconnection agreement[]... .''11
Pacific asserted as an affirmative defense that Z-Tel
failed to state a claim and had waived any claim because
Z-Tel ``specifically disavowed any claim that [Pacific]
ha[s] violated [the Pacific Agreement]'' and had
voluntarily entered into an agreement ``that do[es] not
make available the intraLATA interexchange transmission
[Z-Tel] seek[s].''12 Pacific also stated, ``The reason
[Z-Tel] attempt[s] to base [its] claims on the Act and the
Commission's rules and orders rather than the governing
agreements...is simple: [Z-Tel] ha[s] opted into
agreements that do not make available the intraLATA
interexchange transmission capability [Z-Tel]
seek[s]....''13
5. Z-Tel's Reply to the Answer did not dispute
Pacific's allegations about the requirements of the
Pacific Agreement or about Z-Tel's ``disavowal'' of any
claim of breach. Z-Tel subsequently informed the
Commission that two ``key legal issues'' to be decided by
the Commission were ``whether [Z-Tel] ha[s] waived any
claim that [Pacific's] conduct is inconsistent with the
Act, and the Commission's rules and orders, ...because [Z-
Tel] ... voluntarily ... adopted existing, approved
interconnection agreements that do not make available the
intraLATA interexchange transmission capability [Z-Tel]
seek[s]...'' and ``whether [Z-Tel]...failed to state a
claim upon which relief can be granted given that [Z-Tel]
... ha[s] disavowed any claim that [Pacific] ha[s]
violated the terms of [the Pacific Agreement]... .''14
6. In the Liability Order, after granting Z-Tel's
complaint against Ameritech for violating the
SBC/Ameritech Merger Order Conditions, the Commission
denied Z-Tel's claims against Pacific. The Commission
found that Z-Tel had effectively admitted that the Pacific
Agreement does not require Pacific to provide use of the
shared transport UNE for intraLATA toll.15 The Commission
reasoned that, although Commission rules ```plainly
require unbundling of shared transport for use with
intraLATA toll traffic,'''16 the obligations created by
section 251 and Commission implementing rules are
effectuated through the section 252 processes of
negotiation, arbitration, or opt-in.17 Therefore, because
Z-Tel had voluntarily opted into an agreement that did not
provide use of the shared transport UNE for intraLATA
toll, Z-Tel had waived its claims pursuant to section
251(c)(3) and Commission rules.18
7. The Commission also denied Z-Tel's claim that
Pacific's refusal to adopt Z-Tel's ``Memorandum of
Understanding'' violated section 251(c)(1). The
Commission reasoned that Z-Tel could not voluntarily opt
into the Pacific Agreement, and then invoke section
251(c)(1) to require Pacific to amend the agreement,
unless the Pacific Agreement obligated Pacific so to do.
Yet Z-Tel had not asserted that Pacific's refusal to adopt
the Memorandum of Understanding violated the Pacific
Agreement's amendment or change of law provisions, and,
indeed, had disavowed any claim that Pacific had breached
the Pacific Agreement. Accordingly, the Commission found
that Z-Tel had not met its burden of proving that Pacific
was obligated to adopt Z-Tel's Memorandum of
Understanding.19
8. Finally, the Commission denied Z-Tel's section
201(b) claims because Z-Tel had advanced no reason, other
than Pacific's alleged violation of its obligations under
section 251(c), why Pacific's conduct was ``unjust and
unreasonable'' within the meaning of section 201(b).
Therefore, because Z-Tel's section 251(c) claims failed,
its section 201(b) claims also failed.20
III. DISCUSSION
A. The Liability Order is Consistent with
Commission Precedent.
9. Z-Tel argues that, in denying Z-Tel's claims
against Pacific, the Commission ``abandon[ed]'' prior
Commission precedent establishing that the terms of any
interconnection agreement between a CLEC and an ILEC are
irrelevant to the issue of whether the CLEC may prevail on
a claim that the ILEC has violated section 251.21 Z-Tel
argues further that the Commission's failure to follow
this alleged precedent violated principles of
administrative law. According to Z-Tel, where the
Commission departs from its prior precedent, it is
required to provide ``a reasoned explanation'' for its
change of mind, 22 and also to give the parties notice of
the change and an opportunity to provide evidence bearing
on the new standard.23
10. We find, however, that the Liability
Order is fully consistent with Commission precedent.
Specifically, the Commission has never held that a
requesting carrier may successfully charge an ILEC with
violating its section 251(c) obligations when the
requesting carrier has, pursuant to section 252(i), opted
into an interconnection agreement that excludes the very
section 251(c) obligations at issue.24 As discussed
below, the Liability Order is not inconsistent with any of
the Commission precedent cited by Z-Tel in its Petition,
provides a reasoned explanation for the Commission's
finding,25 and thus fully complies with the requirements
of administrative law.
i. The Liability Order is Consistent with
Commission Rulemakings.
11. Z-Tel argues that the Commission's denial
of Z-Tel's claim against Pacific is inconsistent with the
Commission's statement, in the Local Competition Report
and Order,26 that a party may file a section 208 complaint
alleging violations of section 251 or Commission
implementing rules ``even if the [defendant carrier] is in
compliance with an agreement approved by the state
commission.''27 Z-Tel misconstrues the Commission's
statement. The cited language cannot reasonably be read
to suggest that section 251 is violated when a carrier
voluntarily enters into an agreement, as Z-Tel did, that
does not afford the full range of rights available under
section 251, and later demands to change its terms. Such
a construction would be fundamentally inconsistent with
the statutory scheme, which permits carriers to enter into
binding agreements ``without regard to the standards set
forth in subsections (b) and (c) of section 251.''28 The
Commission's discussion in the Local Competition Report
and Order simply does not address the situation where, as
here, the complainant voluntarily opted into an
interconnection agreement pursuant to section 252(i). As
we explained in the Liability Order, Z-Tel may not rely
upon the general section 251 duties to circumvent the more
specific terms of an agreement that it has voluntarily
chosen to adopt.
ii. The Liability Order is Consistent with
Commission Adjudications.
12. Z-Tel also argues that the Liability
Order is inconsistent with several Commission orders
resolving section 208 formal complaints. Again, Z-Tel is
incorrect. The cases upon which Z-Tel relies have no
bearing on the instant matter.
13. First, Z-Tel cites Net2000
Communications,29 in which the complainant CLEC alleged
that the defendant ILECs had violated sections 201(b) and
251(c)(3) of the Act, as well as Commission rules
requiring that, upon request, ILECs convert tariffed
special access circuits into enhanced extended loops.30
Net2000 does not stand for the proposition that an ILEC
may be found to have violated section 251(c) even though
the parties' interconnection agreement excludes the very
section 251(c) obligations at issue. The Commission found
it unnecessary to inquire into the terms of the special
access tariff or the parties' interconnection agreement
because the Commission denied complainant's claims on
other grounds. Specifically, the Commission found that
the complainant's factual allegations were
unsubstantiated.31
14. Z-Tel argues that the fact that Net2000's
claims were not dismissed on jurisdictional grounds makes
the case inconsistent with the Liability Order: ``If the
Commission lacked the appropriate authority to address
section 251 claims..., and if a violation of section 251
could not amount to a section 201(b) violation..., then
the Commission presumably would have dismissed Net2000's
claims on jurisdictional grounds - which is exactly what
the Commission did with regard to Z-Tel's claims against
Pacific.''32 With this argument, Z-Tel fundamentally
misconstrues the Liability Order.
15. First, the Liability Order does not stand
for the proposition that the Commission ``lack[s] the
appropriate authority to address section 251 claims.'' In
the Liability Order, the Commission did address Z-Tel's
section 251 claims. The Commission asserted jurisdiction
over Z-Tel's section 251(c) claims against Pacific, and
then denied those claims on the merits.33 The Commission
did not, as Z-Tel seems to believe, deny Z-Tel's claims on
jurisdictional grounds. Neither does the Liability Order
stand for the proposition that ``a violation of Section
251 could not amount to a Section 201(b) violation.'' No
such statement can be found in the Liability Order. The
Commission denied Z-Tel's section 201(b) claims because Z-
Tel advanced no reason why Pacific's conduct was ``unjust
and unreasonable'' other than that Pacific had allegedly
violated section 251(c), which the Commission found it had
not. Because its section 251(c) claims failed, Z-Tel's
section 201(b) claims also failed. Nothing in this
reasoning, however, supports Z-Tel's cited assertion.
Thus, the conflict that Z-Tel finds between the Liability
Order and Net2000 comes entirely from misconstruing the
Commission's decision in the Liability Order.
16. Z-Tel also cites TSR Wireless,34 in which
the Commission found that the defendant LECs had violated
Commission rule 51.703(b)35 by charging the complainants,
commercial mobile radio service (``CMRS'') providers, for
facilities used to deliver LEC-originated traffic. Z-Tel
argues that TSR Wireless establishes that the terms of the
Pacific Agreement were irrelevant to an analysis of Z-
Tel's claims against Pacific.36 As with Net2000, Z-Tel
again focuses on the jurisdictional issue that it has
misunderstood. Z-Tel argues that in TSR Wireless, ``the
Commission again unequivocally stated that carriers could
plead violations of its local competition implementing
rules as part of a section 208 complaint arising under
section 251.''37 Nothing in the Commission's statement of
jurisdiction in TSR Wireless conflicts with the Liability
Order.
17. Nothing in the substantive portion of the
TSR Wireless decision conflicts with the Liability Order,
either. We recognize that, in TSR Wireless, the
Commission found the defendants bound by rule 51.703(b)
even though the obligation created by that rule had not
been incorporated into an interconnection agreement. The
TSR Wireless defendants were bound by rule 51.703(b) for
reasons not applicable to Pacific's obligations at issue
here. First, the Commission's authority to issue rule
51.703(b), as applied to CMRS providers, arises under
section 332 of the Act.38 Accordingly, rule 51.703(b) may
apply, in circumstances such as those present in TSR
Wireless, regardless of the existence or terms of a
section 252 interconnection agreement. Further, in
adopting rule 51.703(b), the Commission stated that ``[a]s
of the effective date of [the Local Competition Report and
Order], a LEC must cease charging a CMRS provider ... for
terminating LEC-originated traffic ....''39 Thus, as the
Commission stressed in TSR Wireless, rule 51.703(b)
``clearly calls for LECs immediately to cease charging
CMRS providers for terminating LEC-originated traffic; the
[rule] does not require a section 252 agreement before
imposing such an obligation on the LEC.''40 The
Commission has imposed no such immediate obligation with
respect to shared transport. Indeed, the Commission
stressed in TSR Wireless that, ``to the extent that other
Commission rules promulgated under the Local Competition
[Report and] Order were not made `effective immediately,'
we would expect that requesting carriers would utilize the
interconnection agreement process of sections 251 and 252
to obtain services under section 251.''41 Thus, TSR
Wireless is not relevant to Z-Tel's claims against
Pacific, and does not stand for the proposition that a
CLEC may successfully charge an ILEC with violating
section 251(c) even though the parties' interconnection
agreement excludes the very section 251(c) obligations at
issue.
18. Z-Tel also relies upon the Commission's
statement in Cellexis42 that ``Defendants' statutory
interconnection obligations, whatever they may be, exist
independently of the [interconnection] Agreement's
terms.'''43 Z-Tel reads the Commission's statement out of
context. The Cellexis case involved entirely different
facts and statutory provisions than the instant matter.
The complainant in that proceeding was a reseller of CMRS
services who alleged that the defendant CMRS providers had
violated sections 201(b), 202(a), 251(a), and 332(c)(1)(B)
of the Act by refusing to continue to interconnect their
cellular networks with complainants after the parties'
interconnection agreement had expired. The
interconnection obligations at issue in Cellexis arose
under sections 251(a) and 332 of the Act, not under
section 251(c), as in this case. Neither the general
interconnection obligation of section 251(a) nor the
interconnection obligation arising under section 332 is
implemented through the negotiation and arbitration scheme
of section 252.44 Thus, the significance of the terms of
any agreement in Cellexis has no bearing on the
significance of the terms of the agreement in this case,
and nothing in the Liability Order is inconsistent with
Cellexis.
19. Finally, Z-Tel argues that, ``In the
context of pole attachment agreements entered into
pursuant to section 224 of the Act, the Commission
routinely has concluded that the existence of such
agreements does not constitute a waiver of a carrier's
ability to file a formal complaint under the Commission's
pole attachment rules.''45 Z-Tel's analogy is unavailing.
Section 252(a)(1) provides that an incumbent LEC ``may
negotiate and enter into a binding agreement ... without
regard to the standards set forth in subsections (b) and
(c) of section 251.''46 In contrast, nothing in section
224 provides that parties may negotiate without regard to
the requirements of the Act. Finally, the Commission's
pole attachment rules specifically contemplate that the
Commission will rule on the reasonableness of the rates,
terms, and conditions contained in pole attachment
agreements before the Commission.47
B. The Commission Correctly Concluded that Z-
Tel Waived Its Section 251(c) Claims.
20. Z-Tel argues that the Liability Order
incorrectly concludes that ``carriers, such as Z-Tel,
`implicitly' waive their rights under section 251 of the
Act and the Commission's rules by merely signing an
interconnection agreement - regardless of the language of
the interconnection agreement.''48 The Liability Order
draws no such conclusion. Rather, the Commission in the
Liability Order found that Z-Tel waived its claims because
Z-Tel effectively admitted that the Pacific Agreement did
not obligate Pacific either to provide shared transport
for intraLATA toll or to execute a Memorandum of
Understanding to do so.49
21. Z-Tel argues that it made no admissions
regarding the terms of the Pacific Agreement, but ``only
denied any need (under the Act, the Commission's rules, or
the [Pacific Agreement]) to plead a section 208 complaint
under the interconnection agreement itself.''50 Z-Tel
ignores the record in this proceeding. For example, as
stated above, Z-Tel informed the Commission that the
Pacific Agreement ``do[es] not make available the [use of
the shared transport UNE] capability [Z-Tel] seeks,'' and
that Z-Tel ``disavowed any claim that [Pacific] ha[s]
violated the terms of [the Pacific Agreement].''51 Thus,
we stand by our earlier conclusion that Z-Tel admitted
that the agreement Z-Tel chose to adopt did not require
Pacific to provide shared transport for intraLATA toll
traffic, and that Z-Tel accordingly waived its right to
demand such terms. Z-Tel opted into the Pacific Agreement
without first negotiating or arbitrating an amendment to
its terms regarding shared transport, and may not complain
now.
C. The Pacific Agreement Excludes Shared
Transport for IntraLATA Toll Unless
Z-Tel Requests Such Use in Accordance with the Terms of
the Agreement, and Z-Tel Has
Not Done So.
22. Z-Tel argues that the Commission should
have reviewed the Pacific Agreement to determine whether
it in fact obligated Pacific to provide shared transport
for intraLATA toll or to execute the Memorandum of
Understanding.52 As discussed above, Z-Tel's statements
and omissions in this proceeding meant that the Commission
was under no such obligation. In any event, however, any
such review would have been unavailing. The Pacific
Agreement provides use of the shared transport UNE for
intraLATA toll calls only if Z-Tel complies with the
Pacific Agreement's ``Bona Fide Request'' process or
requests ``Customized Routing, Option C.'' Z-Tel has not
demonstrated that it did either.
23. The Pacific Agreement provides at
Attachment 6, section 2:
General: Unbundled Network Elements and Combinations:
Access to [UNEs] shall be specified herein and not
presumed. The Network Elements offered under this
Agreement shall be clearly specified in this Agreement
or the attachments hereto. In no event will it be
presumed that access to a [UNE] is offered unless so
specified. Pacific will make available any other form
of access requested by [Z-Tel] that is required by the
Act and the regulations thereunder. Requests for
Network Elements not specified in this Attachment shall
be processed according to the process described in
Section 22 (Bona Fide Request) ... of this Agreement.53
Thus, section 2 provides initially that Z-Tel may not have
access to shared transport unless the Pacific Agreement
expressly so states. Yet section 2 further provides that Z-
Tel may obtain such access if it complies with the ``Bona
Fide Request'' provisions of the Agreement: Pacific ``will
make available any other form of access'' if that access is
``required by... [Commission] regulations.'' In short,
Pacific was obligated to provide access to shared transport
only to the extent provided in the Pacific Agreement unless
Z-Tel complied with the ``Bona Fide Request'' process. The
only section of the Pacific Agreement expressly granting
access to the shared transport UNE provides that the UNE may
be used for intraLATA toll only if Z-Tel exercises ``Option
C.''54 ``Option C'' is found in an earlier section of the
Pacific Agreement. That section is headed ``Option C:
Customized Routing-Complex for [Z-Tel] Using Routes
Designated by [Z-Tel].'' This section provides that, if Z-
Tel exercises ``Option C'', Pacific ``shall route [Z-Tel's]
intraLATA traffic over Pacific's Shared Transport
facilities... .''55
24. Z-Tel argues that the Pacific Agreement
``expressly provides that Z-Tel may...request use of the
shared transport UNE for intraLATA toll service,'' and
that ``Z-Tel made such a request through its Memorandum of
Understanding.''56 Consistent with our analysis above,
however, the language upon which Z-Tel relies provides
shared transport for intraLATA toll only if Z-Tel requests
``Option C'', or makes a request that complies with the
``Bona Fide Request'' process.57 Yet Z-Tel has not shown
that its Memorandum of Understanding complied with the
Bona Fide Request process, or that it constituted a
request to exercise Option C.58 Thus, as the Liability
Order correctly concluded,59 Pacific did not violate
section 251(c)(1) by failing to negotiate in good faith.
25. Z-Tel's additional arguments regarding
construction of the Pacific Agreement also fail. Z-Tel
asserts that the agreement ``permits either party to file
a complaint at the FCC... .''60 Yet the Pacific Agreement
does not state that any such complaint will succeed. Z-
Tel argues that the Pacific Agreement ``is expressly
designed to encompass the UNEs required by the Act....''61
The language cited by Z-Tel, however, does not state that
Pacific is offering all UNE access available under the Act
and Commission rules. The section is entitled
``Introduction,'' and merely explains that the purpose of
Attachment 6 is to enumerate the specific UNEs provided.
Indeed, Z-Tel omits the final sentence of this section:
``The specific terms and conditions that apply to the
[UNEs] and Combinations are described below.''62 Thus,
the terms pertaining to UNEs are ``described below'' -- in
the sections of the Pacific Agreement that follow.63
IV. ORDERING CLAUSE
26. Accordingly, IT IS ORDERED, pursuant to
sections 201, 208, 251, and 405 of the Communications Act
of 1934, as amended, 47 U.S.C. §§ 201, 208, 251, and 405,
and sections 51.309 and 51.313 of the Commission's rules,
47 C.F.R. §§ 51.309 and 51.313, that the instant petition
for reconsideration IS DENIED.
FEDERAL COMMUNICATIONS
COMMISSION
Marlene H. Dortch
Secretary
_________________________
1 Petition for Reconsideration, File No. EB-01-MD-017
(filed May 19, 2003) (``Petition'').
2 47 U.S.C. § 405.
3 CoreComm Communications, Inc. and Z-Tel Communications,
Inc. v. SBC Communications Inc. et al., Memorandum Opinion
and Order, 18 FCC Rcd 7568 (2003), petition for review
pending release of the instant order, sub nom. SBC
Communications Inc. v. FCC, No. 03-1147 (D.C. Cir. 2003)
(``Liability Order'').
4 47 U.S.C. §§ 201(b), 251(c)(1) and (c)(3); 47 C.F.R. §§
51.309(a), 51.309(b), 51.313(b). Z-Tel does not seek
reconsideration of the Commission's denial of its section
202(a) claims. The Commission granted Z-Tel's claim that
defendants Illinois Bell Telephone Company, Indiana Bell
Telephone Company, Michigan Bell Telephone Company, and
Wisconsin Bell Telephone, Inc. (collectively,
``Ameritech'') violated paragraph 56 of the SBC/Ameritech
Merger Order Conditions. Liability Order, 18 FCC Rcd at
7576-78, ¶¶ 20-25 (citing Applications of Ameritech Corp.,
Transferor, and SBC Communications Inc., Transferee, for
Consent to Transfer Control of Corporations Holding
Commission Licenses and Lines Pursuant to Sections 214 and
310(d) of the Communications Act and Parts 5, 22, 24, 25,
63, 90, 95, and 101 of the Commission's Rules, Memorandum
Opinion and Order, 14 FCC Rcd 14712, 15023-24 (1999),
(subsequent history omitted) (``SBC/Ameritech Merger Order
Conditions''). Specifically, the Liability Order noted
that Z-Tel purchased the shared transport UNE from
Ameritech, that Z-Tel requested permission to use the UNE
for intraLATA toll, and that Ameritech refused Z-Tel's
request. Ameritech's refusal violated the SBC/Ameritech
Merger Order Conditions, because those conditions require
Ameritech to ``offer'' shared transport for intraLATA toll.
Liability Order at 18 FCC Rcd at 7576-77, ¶¶ 20-21. The
Commission has issued a forfeiture order against Ameritech
for violation of the Merger Order Conditions. See SBC
Communications, Inc., Apparent Liability for Forfeiture,
Forfeiture Order, 17 FCC Rcd 19923 (2002), appeal pending.
5 Liability Order, 18 FCC Rcd at 7571, ¶ 8.
6 47 U.S.C. § 252(i).
7 Liability Order, 18 FCC Rcd at 7579-81, ¶ 29.
8 Liability Order, 18 FCC Rcd at 7569, ¶ 2.
9 Liability Order, 18 FCC Rcd at 7580, ¶ 29 n.67.
10 Liability Order, 18 FCC Rcd at 7572, ¶ 11, 7579-81, ¶
29.
11 Defendants' Answer, File No. EB-01-MD-017 (filed Oct.
10, 2001) (``Answer''), Ex. B (Defendants' Legal Analysis)
at 11.
12 Liability Order, 18 FCC Rcd at 7580, ¶ 29 n.67; Answer
at 4-5.
13 Answer Ex. B (Defendants' Legal Analysis) at 14.
14 Liability Order, 18 FCC Rcd at 7580, ¶ 29 n.67; Revised
Joint Statement, File No. EB-01-MD-017 (filed Nov. 23, 2001)
at Statement of Key Legal Issues, 11-12, ¶¶ 6-7.
15 Liability Order, 18 FCC Rcd at 7579-81 ¶ 29.
16 Liability Order, 18 FCC Rcd at 7581, ¶ 30 (citing SBC
Communications, Inc., Apparent Liability for Forfeiture,
Forfeiture Order, 17 FCC Rcd 19923, 19932, ¶ 18 (2002)).
17 Liability Order, 18 FCC Rcd at 7581, ¶ 30.
18 Liability Order, 18 FCC Rcd at 7579-81, ¶¶ 29-30.
19 Liability Order, 18 FCC Rcd at 7581-82, ¶¶ 30-32.
20 Liability Order, 18 FCC Rcd at 7582, ¶ 33.
21 Petition at 3. Accord Petition at 6-12.
22 Petition at 13.
23 Petition at 3, 12-14.
24 Indeed, to so hold under these specific circumstances
would undermine the point of these interconnection
agreements, which Congress established as the mechanism to
implement the duties arising section 251(c). In the
present case, Z-Tel opted into a pre-existing Pacific
interconnection agreement without first negotiating or
arbitrating an amendment to the agreement regarding shared
transport. Z-Tel is bound by the Pacific Agreement, and
may not now require Pacific to amend its terms. See
Liability Order, 18 FCC Rcd at 7581-82, ¶ 30 (stressing
that any request by Z-Tel to change the Pacific Agreement's
terms would have to comply with the agreement's
modification or change of law provisions). We note that Z-
Tel had ample notice that it was taking a risk in failing
to allege that the Pacific Agreement provided shared
transport for intraLATA toll, because Pacific repeatedly
argued that Z-Tel's claims were precluded by the terms of
the Pacific Agreement. For example, Pacific alleged that
Z-Tel had waived its claims because Z-Tel had
``specifically disavowed any claim that [Pacific] ha[s]
violated [the Pacific Agreement].'' Liability Order, 18
FCC Rcd at 7580, ¶ 29 n.67. Nevertheless, far from
contesting Pacific's allegations, Z-Tel affirmatively
adopted them. See discussion at ¶ 5, supra (discussing Z-
Tel's ``key legal issues''). Moreover, as discussed below,
Z-Tel would not have prevailed even if it had asserted that
Pacific breached the Pacific Agreement, because there was
no such breach.
25 Liability Order, 18 FCC Rcd at 7581-82, ¶¶ 30-32.
26 Implementation of the Local Competition Provisions in
the Telecommunications Act of 1996, First Report and Order,
11 FCC Rcd 15499 (1996) (subsequent history omitted)
(``Local Competition Report and Order'').
27 Petition at 6 (citing Local Competition Report and
Order, 11 FCC Rcd at 15565, ¶ 127).
28 47 U.S.C. § 252(a)(1).
29 Net2000 Communications, Inc. v. Verizon-Washington,
D.C., Inc., Memorandum Opinion and Order, 17 FCC Rcd 1150
(2002).
30 See 47 C.F.R. §§51.305 - .321.
31 The Commission found that the circuits at issue did not
meet the criteria for conversion prescribed by Commission
rules. Net2000 Communications, Inc., 17 FCC Rcd at 1157, ¶
23, 1160, ¶ 33.
32 Petition at 9.
33 See Liability Order, 18 FCC Rcd at 7572-73, ¶¶ 12-13.
34 TSR Wireless, LLC v. U.S. West Communications, Inc.,15
FCC Rcd 11166 (2000), petition for review denied sub nom.
Qwest Corporation v. FCC, 252 F.3d 462 (D.C. Cir. 2001).
35 47 U.S.C. § 51.703(b) (``A LEC may not assess charges on
any other telecommunications carrier for telecommunications
traffic that originates on the LEC's network.'')
36 Petition at 9-10.
37 Petition at 9.
38 47 U.S.C. § 332. See Iowa Utilities Brd .v. FCC, 120
F.3d 753, 800 n.21 (8th Cir. 1997) (subsequent history
omitted); Qwest Corp. v. FCC, 252 F.3d 462, 465-67 (D.C.
Cir. 2001) (confirming that section 332(c)(1)(B) gives the
Commission authority to require that LECs interconnect with
CMRS providers).
39 TSR Wireless, 15 FCC Rcd at 11167, ¶ 3.
40 TSR Wireless, 15 FCC Rcd at 11183, ¶ 29 (emphasis
added).
41 TSR Wireless, 15 FCC Rcd at 11182, ¶ 29 n.97.
Similarly, the Liability Order emphasized that ``the
obligations created by section 251 and our rules are
effectuated through the process established in section 252
- that is, by reaching agreement through negotiation,
arbitration, or opt-in.'' Liability Order, 18 FCC Rcd at
7581, ¶ 30.
42 Cellexis Int'l, Inc. v. Bell Atlantic NYNEX Mobile
Systems, Inc., et al., Memorandum Opinion and Order, 16 FCC
Rcd 22887 (2001) (``Cellexis'').
43 Petition at 10 (citing Cellexis, 16 FCC Rcd at 22891, ¶
9, but omitting the word ``Defendants''').
44 Section 251(c) obligates incumbent LECs ``to negotiate
in good faith in accordance with section 252 the particular
terms and conditions of agreements to fulfill the duties
described in paragraphs (1) through (5) of subsection (b)
and this subsection [i.e., subsection (c)].'' 47 U.S.C. §
251(c)(1). It does not require such negotiation with
respect to section 251(a). Similarly, section 252(a)(1),
47 U.S.C. § 252(a)(1), permits ILECs to negotiate
agreements ``without regard to the standards set forth in
subsections (b) and (c) of section 251,'' but does not
mention subsection 251(a). Section 332(c)(1)(B) requires
interconnection when the Commissionfinds such action
necessary or desirable in the public interest. See 47
U.S.C. § 332(c)(1)(B) (providing that, upon reasonable
request of a CMRS provider, the Commission shall order
interconnection pursuant to section 201.) There is, again,
no mention of the section 251/252 negotiation process.
45 Petition at 10.
46 47 U.S.C. § 252(a)(1).
47 See Commission rule 1.1410 (``If the Commission
determines that the rate, term, or condition complained of
is not just and reasonable, it may prescribe a just and
reasonable rate, term, or condition and...[s]ubstitute in
the pole attachment agreement the just and reasonable rate,
term, or condition established by the Commission.'') 47
C.F.R. § 1.1410. See also Southern Co. Servs. Inc. v. FCC,
313 F.3d 574 (D.C. Cir. 2002) (concluding that the
Commission has authority to review the reasonableness of the
terms of a pole attachment agreement). Accord Pub. Service
Co. of Colorado v. FCC, 328 F.3d 675, 677-678 (D.C. Cir.
2003).
48 Petition at 3.
49 Z-Tel argues that the Commission in Cellexis ``confirmed
that a carrier does not waive its statutory right merely by
signing an interconnection agreement.'' Petition at 10
(citing Cellexis, 16 FCC Rcd at 22891, ¶ 9). What the
Commission said, however, was that the interconnection
agreement at issue in that case, which had expired, ``does
not alter whatever right to interconnection Cellexis may
have under the Act.'' Cellexis, 16 FCC Rcd at 22891, ¶ 9.
The Commission's statement is not inconsistent with the
Liability Order because, as discussed, the duty of CMRS
providers to interconnect can be imposed pursuant to
section 332 independently of an interconnection agreement.
50 Petition at 16.
51 Z-Tel argues that its ``disavowal'' of any claim that
Pacific breached the Pacific Agreement, see Liability
Order, 18 FCC Rcd at 7580, ¶ 29 n.67, merely meant that Z-
Tel denied that it was obligated so to allege. Petition at
16. We disagree. As Z-Tel notes, ``disavow'' means, among
other things, ```to disclaim knowledge of... .''' Petition
at 16 (citing Webster's II New College Dictionary 323
(2001)). If Pacific were in breach of the Pacific
Agreement's terms governing shared transport, Z-Tel would
have had ``knowledge of'' that breach. Hence, when Z-Tel
``disavowed'' any claim that Pacific had breached the
Pacific Agreement, it effectively admitted that there was
no breach. In any event, the Commission's conclusion, that
Z-Tel effectively admitted that the Pacific Agreement had
not been breached, was not based solely upon Z-Tel's
``disavowal,'' but upon the totality of Z-Tel's statements
and omissions during the proceeding. See Liability Order,
18 FCC Rcd at 7580, ¶ 29 n.67.
52 Petition at 4-5, 17-20.
53 Letter dated December 7, 2001 from Christopher M.
Heimann, counsel to Pacific, to Magalie R. Salas,
Secretary, FCC, File No. EB-01-MD-017 (``Heimann Letter'')
Ex. 1 (Pacific Agreement) at Attachment 6, § 2.1.
54 Heimann Letter Ex. 1 (Pacific Agreement) at Attachment
6, § 7.4.1 (providing that the shared transport UNE may be
used for intraLATA toll ``if requested by [Z-Tel] in
connection with LSNE option `C' under Section 6.5.3
above.'')
55 Heimann Letter Ex. 1 (Pacific Agreement) at Attachment
6, § 6.5.3.
56 Petition at 5. Accord Petition at 17-20.
57 With regard to Option C, Z-Tel relies upon two sections
of the Pacific Agreement providing shared transport for
intraLATA toll only if Z-Tel exercises Option C. See
Petition at 19 (citing Pacific Agreement, Attachment 6, §
6.5.3, which, as discussed above at paragraphs 25-26,
provides shared transport for intraLATA toll only if Z-Tel
exercises Option C). See also Petition at 19, n.45 (citing
Pacific Agreement, Attachment 6, § 7.4.1, which provides,
```Pacific shall route [Z-Tel]'s intraLATA traffic over
Pacific's Shared Transport facilities if requested by [Z-
Tel] in connection with LSNE option C under section 6.5.3
above.'') (emphasis added). Finally, with regard to the
Bona Fide Request process, Z-Tel quotes a single sentence
from Attachment 6, section 2. Petition at 18, n.42. As
discussed above, however, when read in its entirety, this
section requires compliance with the Bona Fide Request
process.
58 Z-Tel did not place the Memorandum of Understanding in
the record, and it does not allege that the Memorandum was a
``Bona Fide Request'' or the exercise of Option C. On the
contrary, Z-Tel admits that the Memorandum was an
``amend[ment]'' to the Pacific Agreement. See Formal
Complaint, File No. EB-01-MD-017 (filed Aug. 28, 2001)
(``Complaint'') at 8, ¶ 18. Further, Z-Tel used the
Memorandum of Understanding as a proposed amendment to a
number of interconnection agreements, not just the Pacific
Agreement. Id. Thus, the Memorandum of Understanding was not
tailored specifically to comply with the requirements of the
Pacific Agreement. See also Complaint Ex. 7 (Letter dated
Jan. 19, 2001 from Michael Hazzard, counsel to Z-Tel, to
Adam McKinney, counsel to Pacific) (describing the
Memorandum of Understanding as ``based on the MOU drafted by
SBC and executed by Z-Tel in Texas...''); Petition at 5
(same). Z-Tel argues that Pacific was obligated to
``suggest that Z-Tel modify or otherwise reformulate its
request.'' Petition at 5. Z-Tel made no such claim in the
liability phase of this proceeding, and therefore may make
no such claim now. In any event, Z-Tel has advanced no
reason why section 251(c)(1) imposes an obligation upon
Pacific to explain to Z-Tel why Z-Tel's Memorandum did not
comply with the Pacific Agreement.
59 Liability Order, 18 FCC Rcd at 7579-82, ¶¶ 29-32.
60 Petition at 17-18 (citing Pacific Agreement at
Attachment 3, §2.1).
61 Petition at 18 (citing Pacific Agreement at Attachment
6, ¶ 1.1)
62 Heimann Letter Ex. 1 (Pacific Agreement) at Attachment
6, § 1.1.
63 Because we affirm our denial of Z-Tel's section 251(c)
claims, we also affirm our denial of Z-Tel's section 201(b)
claims. Z-Tel's Petition provides no reason, independent
of its claim that Pacific violated section 251(c), why
Pacific violated section 201(b). See Liability Order, 18
FCC Rcd at 7582, ¶ 33.