Ninth Circuit Holds That State Commissions Have No Authority To Implement Section 271 Of The Telecommunications Act In Interconnection Agreements

In an opinion issued on June 8, 2009 the Ninth Circuit affirmed

an Arizona district court ruling that state commissions may not

impose access or pricing requirements under Section 271 of the

Telecommunications Act of 1996 (the "Act"), 47 U.S.C.

§§ 151, et. seq., in the course of arbitrating

interconnection agreements. Qwest Corp. v. Arizona Corp.

Comm'n, Nos. 07-17079, 07-17080, 2009 WL 1578528, at *1

(9th Cir. June 8, 2009). The court further held that state

commissions are preempted from forcing carriers to make parts of

their networks available on a separately purchasable basis when the

Federal Communications Commission ("FCC") has determined

that they are not required to do so. Id.

Statutory Background

Section 251(c)(3) of the Act requires incumbent local exchange

carriers ("ILECs"), like Qwest, to offer competitive

local exchange carriers ("CLECs"), like Covad, certain

"network elements" on an unbundled basis at cost-based,

regulated rates. These unbundled network elements are

commonly referred to as "UNEs." The FCC designates

UNEs by determining if access to a given UNE is

"necessary" and if the failure to provide such access

would competitively "impair" CLECs in providing

services. Id. at *2.

Section 252(a) of the Act permits carriers to negotiate an

interconnection agreement voluntarily without regard to the duties

otherwise imposed under Section 251(b) or (c). If

negotiations fail, pursuant to Section 252(b)(1) either party may

petition a state commission to arbitrate any open issues. The

state commission may only consider issues identified in the

arbitration petition and must ensure that Section 251 requirements

are met. Id. at *3.

Section 271 only applies to those ILECs like Qwest that are, or

incorporate, former Bell Operating Companies ("BOCs").

Section 271(c) allows BOCs to provide "interLATA

services" (roughly meaning long-distance services) only if two

conditions are met: First, the BOC must either have in place

an interconnection agreement approved under Section 252 or, if no

CLEC has requested such an agreement, it must have filed a

statement of generally available terms approved by the state

commission under Section 252(f). Second, independent of

Section 251(c)(3) UNE duties, the BOC must make a statutorily

specified list of elements available on an unbundled basis in

addition to complying with Section 251 and other requirements set

forth in the "competitive checklist."

In contrast to Section 251 UNEs, the FCC has...