Puerto Rico Tel. Co. v. Puerto Rico Telecomm. Regulatory Bd.

53 Communications Reg. (P&F) 286

825 F.Supp.2d 327

PUERTO RICO TELEPHONE COMPANY, Plaintiff,

v.PUERTO RICO TELECOMMUNICATIONS REGULATORY BOARD, et al., Defendants.

Civil No. 05–2225 (BJM).

United States District Court, D. Puerto Rico.

March 30, 2011.

Ricardo L. Ortiz–Colon, Yesika Z. Ramos–Carro, Fiddler Gonzalez & Rodriguez, P.S.C., Carlos David Ruiz–Mantilla, Puerto Rico Telephone Co., San Juan, PR, for Plaintiff.

Alexandra Fernandez–Navarro, Santurce, PR, PHV Leslie Paul Machado, Leclair Ryan, Michael C. Sloan, Davis Wright Tremaine LLP, Washington, DC, Ramon E. Davila–Carlos, Davila & Davila, Eugenia I. Orsini–Herencia, San Juan, PR, for Defendants.

OPINION AND ORDER

BRUCE J. McGIVERIN, United States Magistrate Judge.

This case arises out of an administrative proceeding before a Commonwealth regulatory agency, the Puerto Rico Telecommunications Regulatory Board (“Board”), concerning an interconnection agreement under the Telecommunications Act of 1996 (the “Act”), 47 U.S.C. § 251 et seq., between two telecommunications carriers, Puerto Rico Telephone Company (“PRTC”) and Centennial Puerto Rico License Corporation (“Centennial”). PRTC seeks judicial review of the Board's decision ordering PRTC to apply a discounted rate to certain services it provides to Centennial. (Docket No. 1).

Before the court are PRTC's and the Board's cross-motions for summary judgment (Docket Nos. 85, 87, 88), which they have supported with respective statements of material facts. (Docket Nos. 86, 89). The Board and PRTC opposed each other's motions and fact statements (Docket Nos. 91, 92, 93, 94), and each replied to the other's opposition. (Docket Nos. 99, 100). Upon the parties' consent to proceed before me, the case was referred to me for all further proceedings, including entry of judgment. (Docket Nos. 70, 71). For the reasons explained below, I grant summary judgment to the Board and deny PRTC's motion.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

PRTC is an incumbent local exchange carrier (“ILEC”) that provides telecommunications and related services in Puerto Rico. (Docket Nos. 1, ¶ 8; 89, ¶ 1). Centennial is a competitive local exchange carrier (“CLEC”) also doing business in Puerto Rico. (Docket Nos. 1, ¶ 11; 89, ¶ 2). The Board is the Commonwealth agency in charge of regulating telecommunications services in Puerto Rico. (Docket Nos. 1, ¶ 9; 114, ¶ 5). See also 27 L.P.R.A. § 267. On or about July 19, 2002, PRT and Centennial entered into a negotiated interconnection agreement (the “Agreement”), which the Board approved. (Docket Nos. 86, ¶ 1; 89, ¶¶ 3, 4). Section 6.01 of the Agreement provides:

Any and all Telecommunications Services now or hereafter offered by PRTC on a retail basis to customers that are not Telecommunications Carriers shall be made available by PRTC to [Centennial] for resale under the terms of the Communications Acts, the FCC rules (including the limitations set forth in 47 CFR § 51.605), and the Board Rules, and this Agreement as [sic] such time and in those locations as they are offered by PRTC on a retail basis to customers....

(Docket Nos. 86, ¶ 2; 89, ¶ 5; 89–1, p. 4). This term was privately negotiated by the parties. (Docket No. 89, ¶ 6).

PRTC offers T–1 circuits ¹ (sometimes referred to as Digital Service 1 or DS1 circuits) via its access tariffs, and not via its end-user tariffs. PRTC's access tariffs are principally designed for telecommunications carriers. Although end users are not prohibited from purchasing services offered on the access tariffs, end users who do so tend to be large, sophisticated telecommunications users. Centennial sought to purchase high-capacity T–1 circuits offered in PRTC's access tariffs at a wholesale discount off the listed price. PRTC agreed to provide the T–1 circuits sought by Centennial, but refused to apply the requested discount. (Docket No. 86, ¶¶ 3–5; 89, ¶ 8).

Centennial filed an administrative complaint with the Board in May 2003, alleging that PRTC had breached the Agreement.² (Docket Nos. 86, ¶ 6; 89, ¶ 7). PRTC and Centennial agreed that their dispute “was strictly a legal issue which they had agreed to submit to the Board for decision,” namely (in the Board's words) whether “high capacity retail circuits [ i.e., T–1 circuits] qualify for the wholesale discount established in the Interconnection Agreement.” (Docket Nos. 86, p. 5; 89, ¶ 10). In the administrative proceeding, PRTC argued that the Federal Communications Commission (“FCC”) explicitly excluded so-called “special access services” from the ambit of the Act's wholesale rate resale requirement, and that the T–1 circuits fell within that class of services not subject to the wholesale discount. (Docket Nos. 94, ¶ 6; 94–2, p. 3). The parties filed a joint stipulation of facts with the Board, submitted memoranda of law, appeared for oral argument, and subsequently responded to additional questions posed by the Board. (Docket No. 89, ¶¶ 11–13).

In its administrative Resolution and Order of April 8, 2005 (“Order”), the Board adopted the parties' stipulations in its findings of fact ³ and made a further finding of fact that “PRTC has refused to provide said [T–1] circuits to Centennial at a wholesale discount.” (Docket Nos. 86, ¶ 7, p. 7; 89, ¶ 29). In the Order, the Board noted that Section 6.01 of the Agreement contained the language critical to the dispute, which the Board said was controlled by the FCC's limitations on the wholesale discount in 47 C.F.R. § 51.605 (“ Section 51.605”), on whose “scope and interpretation” the matter turns. (Docket No. 86, p. 7, 8; 89, ¶¶ 15, 16; 89–1, p. 4). The Board noted that the limitation's “crux ... centers upon the interplay of two definitions: ‘exchange access services' and ‘access services',” and that the parties' disagreement, in turn, centered on the applicable scope of the limitation, which the parties agreed is controlling. (Docket No. 86, pp. 8–9) (emphasis in original).

After quoting the language of Section 51.605,⁴ which “is clearly identified in the Interconnection Agreement as limiting the application of the wholesale discount,” the Board held that “[t]he dispute between the parties lies in the application of subpart (b) of the FCC rule,” which “clearly excludes” the discount's “use for exchange access services.” (Dockets No. 86, p. 9; 89, ¶¶ 17–18). The Board explained that since the statutory purpose of “exchange access” ⁵ is “the origination or termination of telephone toll service,” then, “[a]s a consequence, origination and termination of any toll service[ ] is expressly excluded from the resale obligation.” (Docket Nos. 86, p. 10; 89, ¶ 19).

According to the Order, Centennial contended that “it does not anticipate providing exchange access service to end users with said [T–1] circuits, even when it admits some toll [ i.e., exchange access] service will likely flow over these circuits.” The Board further noted that “[w]hile Centennial expresses it does not intend for the circuits to be used primarily for exchange access service, PRTC emphasizes that there is no indication of any prohibition for Centennial's customers to use these circuits solely for exchange access service.” (Docket No. 86, p. 10; 89, ¶ 21).

The Board then addressed PRTC's argument that “there is no particular class of access services—exchange access or not—that can be fairly characterized as an end-user retail offering,” and Centennial's counter-argument that specific classes of access services can be so characterized. ⁶ (Docket No. 86, p. 10). The Board also noted PRTC's argument “that its access services are sold primarily to carriers” and Centennial's counter-argument that the FCC classifies “end-user connections to the Internet” as “ ‘access services' in the broadest sense of the term,” and that “there are uses of access service—not classified as ‘exchange access'—that are sold to end-user customers.” ( Id.). The Board concluded that since “PRTC offers high-capacity circuits to end-user customers,” “under the parties' Interconnection Agreement it follows [that] high-capacity circuits may be eligible for the wholesale discount as long as they are not used for the provision of exchange access.” (Docket No. 86, p. 11) (emphasis in original).

Given that determination, the Board found it necessary to address “whether a mixed-use of the circuit [ i.e., for both exchange access and non-exchange access services] disqualifies the entire circuit offered on a retail basis that would otherwise be eligible for a wholesale discount,” and concluded that it does not. (Docket No. 86, p. 11). The Board noted that neither the FCC nor the Interconnection Agreement addressed the matter, and rejected both Centennial's and PRTC's arguments. (Docket Nos. 86, p. 11; 89, ¶¶ 22–24). Instead, absent any guidance or controlling authority, the Board analogized to what it alleged is the industry custom of determining a circuit's jurisdiction based on its percent interstate use (“PIU”) factor. The Board determined “that in order to make a mixed circuit eligible for the wholesale discount, Centennial must ... declare the percent of each circuit that is used for exchange access. Said portion of the circuit will not be eligible for the wholesale discount pursuant to the terms of the Interconnection Agreement.” (Docket No. 86, p. 11; 89, ¶¶ 25–26) (emphasis in original).

The Board stated that its decision “is a fair resolution of the dispute surrounding the Interconnection Agreement. It is consistent with the language in the Agreement and applies the FCC limitation to the situation where mixed use high-capacity circuits are offered to and used by retail customers.” (Docket Nos. 86, p. 12; 89, ¶ 27).

The Board's Order granted Centennial “a wholesale discount to the portion of high-capacity circuits from PRTC that are not to be used for exchange access” and ordered PRTC to “apply the wholesale discount for the portion of the circuit not engaged in exchange access,” subject to a...