Before theFederal Communications Commission

Washington, D.C. 20554

In the Matter of ))

Petition of CRC Communications of Maine, Inc. ) Docket No. ----and Time Warner Cable Inc. )for Preemption Pursuant to Section 253 )of the Communications Act, as Amended )

FILED/ACCEPTED

.11" 15 2010Federal Communications Commission

Office of the Secretary

PETITION FOR PREEMPTION

SUMMARY

CRC Communications of Maine, Inc. ("CRC") and Time Warner Cable Inc. ("TWC")

hereby request that the Commission issue an order preempting the Maine Public Utilities

Commission's ("MPUC") erroneous interpretation of Section 251 of the Communications Act,

which has the effect of prohibiting CRC's and TWC's entry into the service territories of five

rural incumbent local exchange carriers ("RLECs") in Maine.

The MPUC has denied CRC's basic right to interconnect and exchange traffic pursuant to

Sections 251 (a) and 251 (b) and, in tum, blocked CRC from offering wholesale

telecommunications services and TWC from offering its interconnected voice-over Internet

Protocol ("VoIP") services in certain rural areas of Maine. The MPUC erected this

insurmountable barrier to entry when it issued an order concluding that, unless and until the rural

exemption in Section 251 (f) is terminated, RLECs are not required to negotiate agreements with

competitive carriers under Sections 251 (a) and 251 (b) and such requests are not subject to

arbitration under Section 252. That ruling is squarely at odds with the plain language of the Act

and this Commission's binding precedent. The MPUC later exacerbated its error by denying

CRC's request to rely on Section 251(c) as a means of entering the rural markets at issue, leaving

no doubt that CRC is flatly prohibited from introducing competitive telecommunications services

in Maine absent the consent of the incumbent providers. As a result, thousands of Maine

consumers have no opportunity to choose a competitive wireline service option, a fact the MPUC

itself underscored in a recent press release.

For these reasons and others explained more fully in this petition, the Commission should

preempt the MPUC's order and direct it to compel the RLECs to negotiate and, in the event such

negotiations are not successful, commence an arbitration proceeding without further delay.

Absent such action. other rural incumbents may decide that they are free to ignore their

obligations under Sections 25 I(a) and 25 I(b), and other state commissions may endorse such

efforts. As the National Broadband Plan recognized, the MPUC's analysis is clearly erroneous

and anticompetitive. Section 253 of the Act requires this Commission to eliminate the entry

barriers created by the MPUC, and the Commission should promptly issue an order that provides

the requested relief.

11

TABLE OF CONTENTS

SUMMARy i

BACKGROUND 2

ARGUMENT 14

I. THE MPUC'S REFUSAL TO PERMIT CRC TO INTERCONNECT WITHOUTPIERCING THE RURAL EXEMPTION VIOLATES SECTION 253(A) 15

A. The MPUC's Section 251 (aJ Order Is Subject to Preemption 15

B. The MPUC's Denial of Section 251(a) Interconnection Has the Effect ofProhibiting Entry 16

C. The Commission Should Clarify Carriers' Rights Under Sections 251 (a)and (b) 21

II. SECTION 253(8) DOES NOT REMOTELY JUSTIFY THE MPUC'SREQUIREMENT THAT CRC PIERCE THE RLECS' RURAL EXEMPTIONS 25

CONCLUSION 29

Before theFederal Communications Commission

Washington, D.C. 20554

In the Matter of ))

Petition of CRC Communications of Maine, Inc. ) Docket No. ----and Time Warner Cable Inc. )for Preemption Pursuant to Section 253 )of the Communications Act, as Amended )

PETITION FOR PREEMPTION

Pursuant to Sections 1.1 and 1.2 of the Commission's rules and Section 253 of the

Communications Act of 1934 (the "Act"), as amended, I CRC Communications of Maine, Inc.

("CRC") and Time Warner Cable Inc. ("TWC") hereby request that the Commission issue an

order to eliminate a significant obstacle that the Maine Public Utilities Commission ("MPUC")

has placed in the way of voice competition and broadband deployment. CRC sought over three

years ago to interconnect and exchange traffic with rural incumbent local exchange carriers

("RLECs") in Maine pursuant to Sections 251 (a) and (b) of the Act, and TWC, in turn, planned

to purchase wholesale telecommunications services from CRC to enable TWC's provision of

interconnected voice-over Internet Protocol ("VoIP") services in those areas. The MPUC,

however, issued an order that effectively authorized the RLECs to evade their basic

interconnection obligations,2 based on a legal theory that the National Broadband Plan has since

confirmed is not only wrong but also "anticompetitive.,,3 In the wake of that order, CRC and

47 C.F.R. §§ 1.1, 1.2; 47 U.S.C. § 253.

See CRC Commc'ns o/Me., Inc. Petition/or Consol. Arbitration with Indep. Tel. Cos.Towards an Interconnection Agreement Pursuant to 47 Us.c. 251, 252, Order, No. 2007-611, at14 (Me. Pub. Utils. Comm'n May 5, 2008) ("Section 251 (a) Order") (Tab 1, attached hereto).

Omnibus Broadband Initiative, Connecting Americg: The National Broadband Plan, at49 (2010) ("National Broadband Plan").

4

TWC sought other avenues to interconnect and compete with the RLECs, but those efforts

resulted in protracted litigation that recently culminated in the MPUC's denying CRC the ability

to interconnect under Section 251 (a) or 251 (c).

Consistent with the recommendation set forth in the National Broadband Plan, the

Commission should clarify RLECs' "obligations regarding interconnection," in particular by

confirming that "all telecommunications carriers, including rural carriers, have a duty to

interconnect their networks."4 By preempting the MPUC's order denying CRC's right to

interconnect under Section 251(a), the Commission also will "eliminate a barrier to broadband

deployment.,,5 In light of the insurmountable barrier to entry erected by the MPUC and the long

delay that CRC and TWC have already endured in trying to obtain interconnection, petitioners

request that the Commission adjudicate this petition on an expedited basis. 6

BACKGROUND

1. The Petitioners

In 2003, TWC launched a facilities-based, interconnected VoIP service for residential

customers called Digital Home Phone, and TWC later introduced a commercial VoIP service

called Business Class Phone. TWC now serves more than 4 million Digital Home Phone

[d.; see also id. at 66 n.92 (citing MPUC proceedings as a basis for recommended action).

[d. at 49; Letter from Matthew A. Brill, Counsel for Time Warner Cable Inc., to MarleneH. Dortch, Secretary, FCC, ON Docket No. 09-51, at 5-7 (filed Nov. 12,2009) ("TWCInterconnection Ex Parte"); id., Decl. (explaining that barriers to entry in the voice marketplace,including delays and limitations in obtaining interconnection, impede broadband deployment).

6 See Suggested Guidelinesfor Petitions for Ruling Under Section 253 oftheCommunications Act, Public Notice, 13 FCC Rcd 22970,22973-74 (1998) ("If the matterpresented in the petition is of an urgent nature, the Bureau may, where it determines good causeexists," adopt an expedited schedule for both comments and replies.). Here, expedition isnecessary in light of the severe anticompetitive impact of the MPUC's decision, which, asexplained below, is withholding the benefits of telephone competition from tens of thousands ofrural consumers.

2

subscribers and 67,000 Business Class Phone subscribers nationwide. TWC continues to expand

the geographic reach of its offerings, thus providing competitive alternatives for many thousands

of rural consumers who have been deprived of any choice of wireline service providers for far

too long.

As a prerequisite to introducing its VoIP services in any given area, TWC must obtain

local interconnection services from a wholesale telecommunications carrier. In Maine, TWC

obtains those services from CRC. As part of their agreement (which dates to 2003), CRC

provides transport between TWC's network and the public switched telephone network

("PSTN"), which requires it to enter into interconnection agreements with incumbent LECs

("fLECs"). These arrangements permit TWC's VoIP customers to call and be called by end

users on the PSTN. CRC's status as a telecommunications carrier also enables consumers to

keep their local telephone numbers when they sign up for TWC's service and in the event they

choose to switch providers thereafter.

CRC's wholesale telecommunications services and TWC's retail VoIP services are

delivering significant benefits to consumers in rural communities where CRC has been able to

obtain interconnection with the incumbent carrier. Where CRC and TWC have entered rural

areas in Maine, consumers enjoy advanced new features (such as Caller ID on TV), high-quality

service, and significant savings. For example, because TWC offers unlimited local, in-state, and

long distance calling throughout the United States and Canada for a flat monthly fee, subscribers

who had previously made a high volume of toll calls will pay far less under TWC's any-distance

plans. Moreover, TWC offers customers added value and convenience by providing discounts

for bundles that include its video and broadband Internet access services. And competition from

TWC and CRC both has spurred incumbent providers to improve their voice offerings and has

3

led to more robust competition in the provision of broadband services as well, thereby bolstering

incentives for providers to increase their coverage and throughput speeds.

2. CRC's Requests Under Sections 251(a) and (b)

In 2007, CRC requested the negotiation of interconnection and reciprocal compensation

agreements with 21 RLECs in Maine pursuant to Sections 251(a) and (b). Section 251(a) applies

broadly to all telecommunications carriers, imposing a basic duty to "interconnect directly or

indirectly with the facilities and equipment of other telecommunications carriers."? In addition

to their duty to interconnect under Section 251 (a), all local exchange carriers must "establish

reciprocal compensation arrangements for the transport and termination of telecommunications"

under Section 251 (b)(5).8 Section 251(b) further requires LECs to provide number portability

and dialing parity to other telecommunications carriers, among other duties. 9 Interconnection

and reciprocal compensation arrangements requested pursuant to these provisions are distinct

from agreements requested pursuant to Section 251 (c), as that provision imposes additional

obligations on incumbent LECs,JO unless they are eligible for the so-called "rural exemption"

established by Section 251 (t). By its terms, Section 251 (t) grants a provisional exemption from

the responsibilities imposed by Section 251(c), but not those imposed by Sections 251(a) or

8

9

47 U.S.c. § 251(a).

Id § 251(b)(5).

Id §§ 251(b)(2) & (3).

10 In particular, Section 251 (c)(2) requires each incumbent LEC to interconnect "at anytechnically feasible point within the carrier's network" and to provide interconnection "that is atleast equal in quality to that provided by the local exchange carrier to itself or to any subsidiary,affiliate, or any other party to which the carrier provides interconnection." Id §§ 251(c)(2)(B) &(C). Moreover, interconnection under Section 251 (c)(2) entitles the requesting carrier to rates setin conformity with Section 252(d), pursuant to which the Commission established its TELRICmethodology. Id § 251 (c)(2)(D).

4

251 (b).11 As a result, while Sections 251 (a) and 251 (b) do not afford competitors the full range

of market-opening provisions available under Section 251(c), those sections do provide carriers

seeking only basic interconnection with a streamlined means of entering a particular service area.

Consistent with this statutory framework, 16 of the RLECs with whom CRC sought to

interconnect and exchange traffic under Sections 251 (a) and (b) voluntarily negotiated

interconnection agreements with CRe. As a result, TWC is now providing its Digital Home

Phone and Business Class Phone services in those RLEC territories, to the substantial benefit of

consumers and small business customers in those areas.

Five of the RLECs, however, flatly refused CRC's request to interconnect and exchange

traffic, asserting that even though CRC had made such requests under Sections 251 (a) and (b),

they were nevertheless exempt from such duties in light of Section 251 (f).12 Following the

statutorily prescribed negotiation period, CRC sought to avail itself of the arbitration procedures

under Section 252 and petitioned the MPUC to compel these RLECs to interconnect. 13 In

support ofCRC's petition (and in opposition to an RLEC motion to dismiss), CRC and TWC

explained that in light of its plain language and structure, Section 251 must be read to impose a

duty of basic interconnection on all telecommunications carriers, while granting a provisional

II Id § 251 (f)(1 )(A) (providing that "Subsection (c) of this section shall not apply to a ruraltelephone company" unless the requesting carrier makes a bona fide request for interconnection,services, or network elements and makes other required showings); Tel. Number Portability,First Memorandum Opinion and Order on Reconsideration, 12 FCC Red 7236, 7305 ~ 121 nAO 1(1997) ("Rural LECs are not exempt from Section 251 (a) or (b) requirements under Section251(f)(1)." (internal citations omitted».

12 These five RLECs are UniTel, Inc., Lincolnville Telephone Company, TidewaterTelecom, Inc., Oxford Telephone Company, and Oxford West Telephone Company.

13 47 U.S.C. § 252; see CRC Commc 'ns ofMe., Inc. Petitionfor Consol. Arbitration withIndep. Tel. Cos. Towards an Interconnection Agreement Pursuant to 47 Us.c. 251, 252, PetitionofCRC Commc'ns of Me. Inc. for Conso!. Arbitration, No. 2007-611 (Nov. 29,2007) (Tab 2,attached hereto).

5

exemption only from the duties set forth in Section 251 (c). 14 Indeed, this Commission had long

ago made clear that Section 251 (f)(l) "offers an exemption only from the requirements of

Section 251(c)."15 Furthermore, the Wireline Competition Bureau had explained that carriers

such as CRC "are entitled to interconnect and exchange traffic with incumbent LECs pursuant to

section[s] 251(a) and (b)," irrespective of whether they provide retail or wholesale services, and

that "state decision[s] to the contrary [are] inconsistent with the Act and Commission

precedent."lb CRC and TWC thus urged the MPUC to recognize, as many other state

commissions have, that a request to interconnect and exchange traffic pursuant to Sections

251 (a) and (b) represents a request for basic interconnection without regard to either Section

251(c) or the rural exemption under Section 251(f).17

3. The MPUC's Section 251(a) Order

Despite the plain language of Section 251 and clear precedent affirming CRC' s

interconnection rights, the MPUC did not commence arbitration as requested by CRC. 18 On May

5,2008, the MPUC instead followed a single unpublished court decision from 2006, in which the

14 See CRC Commc 'ns ofMe., Inc. Petitionfor Conso!. Arbitration with Indep. Te!. Cos.Towards an Interconnection Agreement Pursuant to 47 Us.c. 251, 252, Comments ofCRCCommc'ns of Me., Inc., No. 2007-611, at 3-7 (Jan. 30,2008) (Tab 3, attached hereto); CRCCommc 'ns ofMe., Inc. Petitionfor Conso!. Arbitration with Indep. Te!. Cos. Towards anInterconnection Agreement Pursuant to 47 Us.c. 251, 252, Comments of Time Warner CableInfo. Servs. (Me.), LLC d/b/a Time Warner Cable, No. 2007-611, at 1-5 (Jan. 31, 2008) (Tab 4,attached hereto).

15 Tel. Number Portability, 12 FCC Rcd at 7303 ~ 117.

16 Time Warner Cable Requestfor Declaratory Ruling that Competitive Local ExchangeCarriers May Obtain Interconnection Under Section 251 ofthe Communications Act, asAmended. to Provide Wholesale Telecommunications Services to VoIP Providers, MemorandumOpinion and Order, 22 FCC Rcd 3513, 3517, 3520 ~~ 8, 14 (WCB 2007) ("TWC InterconnectionRuling").

17 See irifra at 22-23 nn.64-65 (citing decisions from other states).

18 Section 251(a) Order at 14.

6

Western District of Texas ruled that a carrier requesting interconnection under Section 251(a)

rather than Section 251 (c) must nonetheless pierce the rural exemption. 19 The MPUC further

found that the five RLECs that had refused to interconnect were covered by that exemption and

thus relieved of any obligation to negotiate an interconnection agreement in good faith under

Section 251 (c), which in its view meant that the MPUC lacked authority to compel arbitration in

cases where a carrier requests interconnection under Section 251(a).20 Thus, the MPUC ordered

evidentiary hearings for the purpose of determining whether the RLECs' rural exemptions should

be lifted.21

Although CRC and TWC were confident that the MPUC's Section 251 (a) Order was

erroneous and that CRC could not lawfully be required to pierce the RLECs' rural exemptions

before obtaining interconnection and exchanging local traffic pursuant to Sections 251 (a) and

(b), they acceded to the MPUC's prescribed course in the interest of minimizing disputes and

moving forward with the proposed interconnection arrangements. Based on the 120-day

statutory deadline applicable to rural exemption proceedings under Section 251(f)(1),22 CRC and

TWC presumed that CRC would be able to vindicate its interconnection rights more efficiently

by complying with the MPUC's flawed order than by challenging it (whether by asking the

Commission to preempt it at that time or by seeking relief in federal or state court).

Accordingly, CRC and TWC filed petitions to lift the five RLECs' rural exemptions and

19 /d. (following Sprint Commc 'ns Co. L.P. v. Pub. Uti!. Comm 'n ofTex., No. A-06-CA-065-SS, 2006 U.S. Dist. LEXIS 96569 (W.D. Tex. Aug. 14,2006) ("Brazos"».

20 /d.

21 /d.

22 47 U.S.c. § 251(f)(1)(B).

7

submitted expert economic testimony and other evidence in support of their request to obtain

basic interconnection.23

Unfortunately, that attempt to accommodate the MPUC's preferred route for obtaining

interconnection backfired. For the next two years, CRC and TWC were embroiled in litigation

before the MPUC concerning the applicability of the RLECs' rural exemptions. Indeed, six

months after it issued the Section 251 (a) Order, the MPUC dismissed the Section 251(t)

proceedings without holding evidentiary hearings, despite acknowledging that the MPUC

"generally disfavor[s]" such an outcome. The MPUC found that CRC and TWC had failed to

satisfy the burden of proof necessary to pierce the rural exemption and warned that a rigorous

empirical showing would be required to demonstrate the absence of any "undue burden" on the

RLECs before interconnection would be ordered. 24

Despite this setback, and believing that compliance with the MPUC's Section 251(a)

Order was the most expedient path to interconnection, CRC and TWC forged ahead and filed

renewed petitions pursuant to Section 251 (t) in January 2009. Unfortunately, the Commission

did not adopt a procedural schedule that would allow compliance with the 120-day deadline

established by Congress. Instead, for nine months, the Commission entertained round after

round of procedural motions from the RLECs. It was not until October 2009 that CRC and TWC

were able to submit their voluminous factual, legal, and economic testimony and argument

23 Based on the MPUC's decision to require a rural exemption proceeding, CRC clarifiedthat it would seek interconnection under Section 251 (c) so that it could obtain the additionalprotections it affords requesting carriers.

24 Me. Pub. Utils. Comm 'n Investigation Pursuant to 47 Us.c. § 251 (f)(l) Regarding CRCCommc 'ns ofMe. 's Request ofOxford West Tel. Co., Oxford Tel. Co., Lincolnville Tel. Co., &Tidewater Telecom, Inc., Order, Nos. 2008-215 through 2008-218, at 4-6 (Me. Pub. Utils.Comm'n Nov. 6,2008) ("2008 Dismissal Order") (Tab 5, attached hereto); see also Me. Pub.Uti/so Comm 'n Investigation Pursuant to 47 Us. C. § 251 (f)(l) Regarding CRC Commc 'ns ofMe. 's Request ofUniTe I, Inc., Order, No. 2008-214, at 2 (Me. Pub. Utils. Comm'n Nov. 25,2008) (Tab 6, attached hereto).

8

demonstrating that interconnection is technically feasible, would not cause an undue burden, and

would be consistent with universal service principles. It took another six months before the

matter went to hearings before the Commission. Only on July 9, 2010-three years after CRC

first sought interconnection under Section 251 (a) and 18 months after CRC's second attempt to

pierce the rural exemption and obtain interconnection under Section 25 1(c)-<lid the MPUC

issue a final decision and, as discussed below, it refused to require any of the five RLECs to

interconnect under any provision of the Act.

4. The National Broadband Plan's Conclusions Concerning Section 251(a)Interconnection

TWC briefed Commission staff on these troubling developments during the fact-

gathering leading up to the issuance of the National Broadband Plan. 25 In particular, TWC

described the events in Maine to that point, inc1uding the release of the MPUC's Section 251 (a)

Order and its insistence that RLECs were free to refuse any interconnection requests unless and

until their rural exemptions were lifted. TWC explained that such decisions by state

commissions had erected significant barriers to TWC's ability to provide competitive voice

service, which in tum hampered its ability to invest in broadband network facilities and

services. 26

The staff of the Omnibus Broadband Initiative ("OBI") addressed this issue in the

National Broadband Plan. Based on established precedent regarding the duty of carriers to

interconnect their networks, the National Broadband Plan ("Plan") unequivocally confirmed that

the MPUC's position on Section 251(a) interconnection was incorrect as a matter oflaw and

25 Letter from Matthew A. Brill, Counsel for Time Warner Cable Inc., to Marlene H.Dortch, Secretary, FCC, ON Docket No. 09-51 (filed Oct. 21, 2009); TWC Interconnection ExParte at 2-3, 4-5; id, Attach. at 4-5.26 TWC Interconnection Ex Parte at 6.

9

misguided as a matter ofpolicy.27 The Plan explained that the Brazos decision on which the

MPUC relied was "based on a misinterpretation of the Act's rural exemption and interconnection

requirements," and it specifically identified the MPUC's Section 251(a) Order as an example of

the anticompetitive effects that have flowed from Brazos.28 The Plan also reaffirmed precedent

emphasizing the importance of interconnection generally and confirmed the availability of

requests pursuant to Section 251 (a) as a means of obtaining it,29 The Plan noted that "[b]asic

interconnection regulations" have been "a central tenet of telecommunications regulatory policy

for over a century," and made clear that "[flor competition to thrive, the principle of

interconnection ... needs to be maintained."30 The Plan accordingly recommended that, in order

"to prevent the spread of this anticompetitive interpretation of the Act and eliminate a barrier to

broadband deployment," the Commission should "confirm that all telecommunications carriers,

including rural carriers, have a duty to interconnect their networks."31

5. The MPUC's Refusal To Require any Form of Interconnection

Despite the National Broadband Plan's confirmation that wholesale carriers such as CRC

are entitled to interconnect with RLECs under Section 251 (a) without having to pierce the rural

27

28

National Broadband Plan at 49.

Id. at 66 n.92.

29 See, e.g., TWC Interconnection Ruling, 22 FCC Rcd at 3521 ~ 15 (finding "that a carrieris entitled to interconnect with another carrier pursuant to sections 251 (a) and (b) in order toprovide wholesale telecommunications service").

30 National Broadband Plan at 49; see also, e.g., TWC Interconnection Ruling, 22 FCC Rcdat 3517, 3520 ~~ 8, 13 (stating that enforcing interconnection rights promotes "wholesaletelecommunications and facilities-based VoIP competition" as well as broadband deployment, anoutcome that "holds particular promise for consumers in rural areas").

31 National Broadband Plan at 49; see also id. at 66 n.93 (reiterating that alltelecommunications carriers have a basic duty to interconnect under Section 251 (a) and furtherconfirming that "[a] rural carrier's rural exemption under Section 251 (f) does not impact thisobI igation").

10

32

exemption under Section 251(f), and despite this Commission's well-settled authority to interpret

Section 251 of the Act,32 the MPUC declined to give any weight either to the Plan or to the

underlying Commission precedent. The MPUC held hearings in the rural exemption proceedings

in April 2010, after which the hearing examiner recommended that the MPUC deny CRe's

request for interconnection as to three of the five RLECs but allow CRC to interconnect with the

other twO. 33

Yet on June 8, 2010, the MPUC announced that it had voted to deny CRC the ability to

interconnect with any of the five RLECs at issue-noting with apparent approval that, as a result

of its decision, "these five rural telephone companies will remain-in their geographic service

territories-the sole providers of wireline telephone service.,,34 Although CRC and TWC

submitted detailed evidence demonstrating that each of the RLECs would be able to respond to

competition-as 16 other Maine RLECs and dozens of other rural incumbents around the nation

have done-the MPUC found that various concerns about the RLECs' financial prospects

trumped CRC's right to obtain interconnection.

See AT&T Corp. v. Iowa Uti/s. Bd., 525 U.S. 366, 378 (1999) (confirming in response tochallenge by state commissions that the FCC has authority to issue binding interpretations ofSections 251 and 252 of the Act based on its broad authority under Section 201(b».

33 CRC Commc 'ns ofMe., Inc. Investigation Pursuant to 47 USc. § 251(/)(1) RegardingCRC Commc 'ns ofMe. 's Request ofUniTel, Inc., Lincolnville Tel. Co., Tidewater Telecom, Inc.,Oxford Tel. Co., & Oxford West Tel. Co., Revised Examiner's Report, Nos. 2009-40 through2009-44, at 83-84 (Me. Pub. Utils. Comm'n May 27, 2010) ("Hearing Examiner's Report onRural Exemption") (Tab 7, attached hereto).

34 MPUC Press Release, MPUC Upholds Rural Exemptionfor 5 Maine Phone Companies(June 8, 20 I0), available at http://www.maine.gov/tools/whatsnew/index.php?topic=puc­pressreleases&id=98739&v=article08. The MPUC released its final order on July 9, 2010. SeeCRC Commc 'ns ofMe., Inc. Investigation Pursuant to 47 USc. § 251(/)1) Regarding CRCCommc 'ns ofMe. 's Request ofUniTel, Inc., Lincolnville Tel. Co., Tidewater Telecom, Inc.,Oxford Tel. Co., & Oxford West Tel. Co., Order, Nos. 2009-40 through 2009-44 (Me. Pub. Utils.Comm'n July 9, 2010) ("Rural Exemption Order") (Tab 8, attached hereto).

11

35

In fact, the MPUC refused to authorize CRC to interconnect even with Tidewater

Telecom, Inc., the strongest performing of the five RLECs at issue, thus reversing the

recommendation of its hearing examiner. The MPUC reached that decision even though

Tidewater reported robust financials in 2008, including a rate of return of 16 % (based on Net

Plant in Service) and a 17.5 % operating profit margin. Moreover, CRC's financial expert and

the hearing examiner alike projected that it would maintain healthy returns from its regulated

voice operations in the five years following entry by CRC and TWC, even without considering

all the actions Tidewater might take in response to competition or its substantial revenues from

affiliates' provision of toll and broadband services.35 In the MPUC's view, the effects of

competition, paired with the regulatory obligations faced by incumbent providers, militate in

favor of relieving the RLECs of any obligation to interconnect with competitive carriers. 36

Remarkably, while the MPUC expressed concern that CRC and TWC would win too many

customers from Tidewater, Oxford, Oxford West, and UniTel, it denied CRe's request to

interconnect with Lincolnville on the theory that CRC and TWC would capture too few

customers to make that request "bona fide.,,3? Given these competing theories, and in light of the

See Hearing Examiner's Report on Rural Exemption at 74 (describing Tidewater'sfinancial performance).

36 See Rural Exemption Order at 22-23 (declining to adopt a legal interpretation of Section251 (f) "that presumes benefits of competition" and stating that those "factors that are part of theeconomic realities experienced by the ILECs, such as tax implications, carrier of last resortobligations, and accounting rules that apply specifically to [ILECs] as regulated entities[,] ... arepart and parcel of being an ILEC and must be considered" as part of any Section 251 (f) analysis).

37 See id. at 11-12 (concluding that the request to pierce Lincolnville's rural exemption wasnot "bona fide" because TWC serves very few customers in Lincolnville's service territory andhas uncertain prospects of providing voice service to any such customers, without regard toCRe's efforts to identify other wholesale customers that operate in that area); but see HearingExaminer's Report on Rural Exemption at 8 (proposing to reject the RLECs' argument that theprospect of capturing a small number of customers renders the interconnection request non-bona

12

fact that the regulatory "burdens" cited as a basis for maintaining the rural exemptions are a core

part of the statutory framework, it is difficult to escape the conclusion that the MPUC was

unwilling to require rural incumbents to interconnect and engage in facilities-based competition

under any set of circumstances.

As this Commission and the courts have made clear, Congress reached a very different

conclusion.38 Although Congress required state commissions to ensure that requests under

Section 251(c) will not impose undue burdens on RLECs or undermine universal service, it

plainly did not intend to create an unqualified exemption from Section 251(c) obligations (which

is the practical effect of the MPUC's analysis). More significantly, for purposes of this petition,

Congress did not intend to exempt RLECs from their obligations under Sections 251 (a) and (b)

at all. While CRC and TWC are convinced that the MPUC's decision to uphold the five RLECs'

rural exemptions cannot be squared with the language or intent of Section 251 (t) and constitutes

a prohibition on entry that independently violates Section 253 of the Act, this petition does not

ask the Commission to preempt the MPUC's Rural Exemption Order, because it never should

have been necessary for CRC to pierce those rural exemptions in the first place. Rather, the

MPUC should have enforced CRC's rights under Sections 251(a) and (b). This Commission can

fide, noting that "nothing in the TelAct requires that a company requesting interconnectionspecify a number of persons intended to be served or that it delineate its specific business planfor acquiring customers").

38 See, e.g., Iowa Uti/so Bd. V. FCC, 219 FJd 744, 761 (8th Cir. 2000), rev'd in part onother grounds sub nom. Verizon Commc 'ns, Inc. V. FCC, 535 U.S. 467 (2002) ("Iowa Utils.Bd.") (recognizing that "all Americans, including those in sparsely settled areas served by smalltelephone companies, should share the benefit of the lower cost of competitive telephone serviceand the benefit of new telephone technologies" (emphasis added»; AVR, L.P. d/b/a Hyperion ofTennessee, L.P., Petition for Preemption ofTennessee Code Annotated § 65-4-201 (D) andTennessee Regulatory Authority Decision Denying Hyperion 's Application Requesting Authorityto Provide Service in Tennessee Rural LEC Service Areas, Memorandum Opinion and Order, 14FCC Rcd 11064, 11074 ~ 20 (1999) ("Tennessee Preemption Order") (rejecting "the assumptionthat competition and universal service are at cross purposes, and that in rural areas the formermust be curtailed to promote the latter" (internal citations omitted».

13

quickly and efficiently right that wrong by issuing an order preempting the Section 251 (a) Order

with instructions for the MPUC to order the RLECs to negotiate an interconnection agreement

and, in the event negotiations are unsuccessful, to arbitrate any and all open issues. Absent such

relief, CRC will be unable to obtain interconnection and "a central tenet of telecommunications

regulatory policy for over a century" will have been negated.39

ARGUMENT

While the odyssey that CRC and TWC have endured in Maine has featured several legal

errors by the MPUC, the core barrier to entry stems directly from the MPUC's Section 251 (a)

Order. As described above, that order denied CRC the ability to interconnect and exchange

traffic with the RLECs in question under Sections 251 (a) and (b) on the ground that CRC first

was required to pierce their rural exemptions. As explained in the National Broadband Plan,

however, that analysis is clearly erroneous, as it conflates the requirements in Sections 251 (a)

and (b) (which apply to all LECs in all circumstances) with the distinct obligations under Section

251 (c) (which require a requesting carrier to pierce the rural exemption). Because the MPUC's

Section 251 (a) Order has the effect of prohibiting CRC from providing telecommunications

services in violation of Section 253(a), and it is not necessary to fulfill any of the public interest

goals embodied in Section 253(b), it must be preempted. Such action will both restore bedrock

interconnection rights and create incentives for additional broadband investment by TWC and

the RLECs alike.40

39 National Broadband Plan at 49.

40 Although CRC and TWC limit this preemption request to the MPUC's Section 251(a)Order, other subsequent errors by the MPUC also had the effect of prohibiting the provision oftelecommunications services and thus would independently qualify for preemption under Section253. CRC and TWC reserve their right to petition for such relief in the future to the extentnecessary to vindicate their rights under Sections 251(c) and 251(f).

14

I. THE MPUC'S REFUSAL TO PERMIT CRC TO INTERCONNECT WITHOUTPIERCING THE RURAL EXEMPTION VIOLATES SECTION 253(A)

A. The MPUC's Section 251 (a) Order Is Subject to Preemption.

Pursuant to Section 253(a), "[n]o State or local statute or regulation, or other State or

local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to

provide any interstate or intrastate telecommunications service.,,41 Section 253 "expressly

empowers-indeed, obligates-the Commission to remove any state or local legal mandate that

'prohibit[s] or has the effect of prohibiting' a firm from providing any interstate or intrastate

telecommunications service.,,42

As an initial matter, the MPUC's Section 251(aJ Order constitutes the very type of legal

requirement that Congress empowered the Commission to preempt through this provision. The

Commission has made clear that preemption is not limited to addressing conflicts between a

statute and Section 253. Rather, it has explained that Congress intended the phrase "state or

local statute or regulation, or other State or local legal requirement" in Section 253(a) to be

interpreted broadly.43 As long as a "resolution ... by a state commission is legally binding on

41 47 U.S.C. § 253(a).

42 Public Utility Commission ofTexas, Memorandum Opinion and Order, 13 FCC Rcd3460, 3470 ~ 22 (1997) ("Texas Preemption Order"); see id at 3480 ~ 41 (Congress enactedSection 253 "to ensure that no state or local authority could erect legal barriers to entry thatwould potentially frustrate the 1996 Act's explicit goal of opening local markets tocompetition."). The Commission has interpreted Section 253 broadly as a "command[] ... tosweep away not only those state or local requirements that explicitly and directly bar an entityfrom providing any telecommunications service, but also those ... that have the practical effectof prohibiting an entity from providing service." ld at 3470 ~ 22.

43 Petition ofthe State ofMinnesota for a Declaratory Ruling Regarding the Effect ofSection 253 on an Agreement to Install Fiber Optic Wholesale Transport Capacity in StateFreeway Rights-o.fWay, Memorandum Opinion and Order, 14 FCC Rcd 21697, 21706-07~~ 17­18 (1999).

15

the carrier," it "constitutes a state 'legal requirement' under section 253(a)."44 This principle

plainly encompasses a state commission order such as the Section 251 (aJ Order. Although

Section 253 does not require carriers to exhaust other potential avenues of relief, CRC and TWC

in any event went to great lengths to accommodate the MPUC's preference to conduct rural

exemption proceedings before authorizing interconnection, only to find their efforts frustrated

again by the MPUC's Rural Exemption Order, which effectively foreclosed facilities-based

competitive entry in the territories served by the RLECs.

B. The MPUC's Denial of Section 251(a) Interconnection Has the Effect ofProhibiting Entry.

The MPUC's Section 251 (aJ Order has the clear effect of prohibiting CRC from

providing telecommunications service in the five RLEC territories at issue. The MPUC's

unjustified refusal to permit CRC to provide telecommunications services by interconnecting and

exchanging traffic pursuant to Sections 251 (a) and (b) plainly warrants preemption,

notwithstanding the theoretical availability of relief under Section 251(f), because requesting

carriers are entitled to choose their preferred means of entry and the MPUC's Section 251 (aJ

Order eliminates a key distinction between Sections 251(a) and 251(c).45 But even if the

MPUC's erroneous ruling (that CRC must pierce the rural exemption to interconnect and

44 Federal-State Joint Board on Universal Service; Western Wireless Corporation Petitionfor Preemption ofan Order ofthe South Dakota Public Utilities Commission, DeclaratoryRuling, 15 FCC Rcd 15168, 15172-73 ~ 11 (2000); see also Classic Telephone, Inc. Petition forPreemption, Declaratory Ruling and Injunctive Relief, Memorandum Opinion and Order, 11FCC Rcd 13082 (1996) ("Classic Telephone") (preempting state and local applications ofstatutes or ordinances without preempting the statutes or ordinances themselves).

45 See Implementation ofthe Local Competition Provisions in the Telecomms. Act of1996;Interconnection between Local Exchange Carriers and Commercial Mobile Radio ServoProviders, First Report and Order, 11 FCC Rcd 15499, 15509 ~ 12 (1996) ("Local CompetitionOrder") (explaining various "entry strategies" that new entrants may employ and stating that,because "Section 251 neither explicitly nor implicitly expresses a preference for one particularentry strategy[,] ... our obligation in this proceeding is to establish rules that will ensure that allpro-competitive entry strategies may be explored").

16

exchange local traffic under Sections 251 (a) and (b» were seen as merely delaying or impeding

CRC's entry, rather than having the "effect of prohibiting" it within the meaning of Section

253(a), the MPUC's subsequent refusal to authorize interconnection under that alternative

approach leaves no doubt that CRC has been flatly barred from providing telecommunications

services in any of the RLEC territories at issue.

In fact, the pertinent legal analysis has already been conducted by the OBI staff, based on

settled Commission precedent: The National Broadband Plan makes clear that the MPUC

misinterpreted Section 251 (a) in refusing to authorize interconnection under that provision, and

longstanding precedent confirms that a denial of interconnection amounts to a prohibition on

entry.

First, as discussed above, the National Broadband Plan found that the Brazos decision­

and, in tum, the MPUC's order relying on it-is based on a misinterpretation of the Act's

interconnection and rural exemption provisions.46 The OBI staff further found that this flawed

legal approach, to the extent it prevents interconnection, prohibits carriers that partner with VoIP

providers from providing telecommunications services that are essential inputs to a VoIP

provider's ability to offer retail voice service to customers.47 The OBI staff specifically cited the

Section 251 (a) Order as an example of this erroneous and anticompetitive position.48 Indeed, it

was the MPUC's issuance of that order (and similar orders by a few other state commissions)

that prompted the analysis and recommendations in the National Broadband Plan. Thus, the

46

47

48

National Broadband Plan at 49.

ld.

ld. at 66 n.92.

17

Commission can and should preempt the Section 251(a) Order based on the analysis in the

National Broadband Plan. 49

Second, the Commission has made clear on many occasions that interconnection is a

prerequisite to providing competitive telecommunications services. Indeed, the Commission has

stated that "Section 251' s fundamental purpose" is to "promot[e) the interconnection of all

telecommunications networks by ensuring that incumbent LECs are not the only carriers that are

able to interconnect efficiently with other carriers.,,50 In furtherance of this "fundamental

purpose," the Commission has rejected attempts to limit the reach of Sections 251(a) and (b),

even where competition has already taken hold, finding that lifting the basic obligations of

interconnection and non-discrimination found in Sections 251 (a) and (b) "would be inconsistent

49 Because the Commission has confirmed that the reasoning underlying the Section 251 (a)Order and the Brazos decision is inconsistent with the Act and with its pro-competitive policiesmore generally, the Section 251(a) Order also is subject to preemption under Section 251(d)(3),which provides that state commissions are entitled to "establish[] access and interconnectionobligations of local exchange carriers" only to the extent they are "consistent with therequirements of this section [i. e., Section 251]" and if they "do[] not substantially preventimplementation ofthe requirements of this section and the purposes of this part." 47 U.S.C. §251(d)(3)(A)-(C); see also Texas Preemption Order, 13 FCC Rcd at 3486 ~ 51 ("Section251 (d)(3) ... makes entirely clear, with respect to access and interconnection, that Congressintended to preempt state regulations that are inconsistent with section 251 and [theCommission's] regulations implementing section 251, and state regulations that are notinconsistent with section 251 and our regulations but substantially undermine the achievement ofthe purposes of section 251."); National Association ofRegulatory Utility CommissionersPetition for Clarification or Declaratory Ruling That No FCC Order or Rule Limits StateAuthority to Collect Broadband Data, Memorandum Opinion and Order, WC Docket No. 09­193, at ~ 6 n.19 (reI. Apr. 26, 2010) (referring to Section 251 (d)(3) as "an independent section251 preemption standard regarding State regulation of access and interconnection rights").

50 Deployment ofWireline Services Offering Advanced Telecomms. Capability, FourthReport and Order, 16 FCC Rcd 15435, 15478 ~ 84 (2001), ajJ'd sub nom. Verizon Tel. Cos. v.FCC, 292 F.3d 903 (D.C. Cir. 2002); Implementation ofthe Local Competition Provisions in theTelecomms. Act of1996; Local Competition Order, 11 FCC Rcd at 15991 ~ 997 (stating that "theduty to interconnect directly or indirectly is central to the 1996 Act and achieves importantpolicy objectives"); Petition ofWorldCom, Inc. Pursuant to Section 252(e)(5) ofthe Commc 'nsAct for Preemption ofthe Jurisdiction ofthe Va. State Corp. Comm 'n Regarding InterconnectionDisputes with Verizon Va. Inc., andfor Expedited Arbitration, Memorandum Opinion and Order,17 FCC Rcd 27039, 27101-02 ~ 118 (WCB 2002).

18

with the market-opening policies" of the 1996 Act. 51 The Commission also determined that

exempting some carriers from these duties would "undermine" the goals of the 1996 Act to

"foster the open and interconnected nature of our communications system[] and ... promote

competitive market conditions."52 Accordingly, denying a competitive carrier access to basic

interconnection pursuant to Section 251 (a), as the MPUC did here, has the effect of prohibiting

competitive entry,53 in violation of Section 253(a).54

The fact that it is technically feasible for CRC to terminate toll traffic to and from TWC's

retail customers in the five RLEC territories without entering into an interconnection agreement

does not alter this conclusion. Even assuming that CRC could discharge its duty under Section

251 (a) by indirectly interconnecting through the RBOC's tandem switch to permit the origination

and termination oflong-distance calls (and there is no reason to believe that to be the case), CRC

has an independent right under Section 251(b)(5) to exchange local calls with the RLECs

pursuant to reciprocal compensation arrangements (as opposed to paying access charges for the

51 Qwest Petitionfor Forbearance Under 47 Us.c. § 160(c) from Title 11 and ComputerInquiry Rules with Respect to Broadband Servs., Memorandum Opinion and Order, 23 FCC Rcd12260, 12291-92 ~ 64 (2008) ("Qwest Forbearance Order").

52 Id at 12292 ~ 65; see also Local Competition Order, 11 FCC Rcd at 15991 ~ 997("Nothing in the record convinces us that we should forbear from imposing the provisions ofsection 251(a) on non-dominant carriers.").

53 Cf id at 15508-09 ~~ 10-11 (describing an incumbent LEC's refusal to interconnect witha new entrant's network as an "[e]conomic [b]arrier[]" to competition and explaining that the1996 Act requires the removal of the "most significant economic impediments to efficient entryinto the monopolized local market"). See also TWC Interconnection Ruling, 22 FCC Rcd at3519 ~ 13 (characterizing Section 251 (a) interconnection as "a critical component for the growthof facilities-based local competition"); id at 3513 ~ 1 (concluding that state commissiondecisions denying the right to interconnect "pursuant to sections 251 (a) and (b) of the Act areinconsistent with the Act and Commission precedent and would frustrate the development ofcompetition and broadband development").54 47 U.S.c. § 253(a).

19

transport and termination of non-local traffic).55 Moreover, forcing end users to place long-

distance calls to communicate with others in the same rate center would violate the statutory

assurance of dialing parity, as the RLECs' customers face no such requirement.56 CRC is

entitled-indeed, obligated-to enforce these rights under Section 251 (b) by entering into

interconnection agreements with the RLECs pursuant to Section 252(a)(l).57 Moreover, as a

practical matter, forcing TWC's retail customers to bear the costs associated with long-distance

calls in areas that are considered local for RLEC subscribers (and forcing the RLECs' customers

to pay toll charges to reach TWC's customers) would make it impossible for TWC to compete as

a local voice provider in those areas.

The Commission's approach to preemption in prior proceedings provides strong support

for preempting the Section 251 (aJ Order here. While the MPUC forthrightly acknowledged that

its rejection of CRC's interconnection requests ensured that the five RLECs would remain "the

sole providers of wireline telephone service" in their respective service territories,ss this

Commission has made clear that "section 253(a), at the very least, proscribes State and local

legal requirements that prohibit all but one entity from providing telecommunications services in

55

56Id § 251(b)(5).

Id § 251(b)(3).

57 See Qwest Commc 'ns Int 'lIne. Petitionfor Declaratory Ruling on the Scope ofthe Dutyto File and Obtain Prior Approval ofNegotiated Contractual Arrangements under Section252(a)(1), Memorandum Opinion and Order, 17 FCC Rcd 19337, 19340-41 ~ 8 (2002) ("[W]efind that an agreement that creates an ongoing obligation pertaining to resale, number portability,dialing parity, access to rights-of-way, reciprocal compensation, interconnection, unbundlednetwork elements, or collocation is an interconnection agreement that must be filed pursuant tosection 252(a)(l)." (emphasis in original».

58 MPUC Press Release, MPUC Upholds Rural Exemptionfor 5 Maine Phone Companies(June 8, 2010), available at http://www.maine.gov/tools/whatsnew/index.php?topic=puc­pressreleases&id==98739&v==article08.

20

a particular State or locality.,,59 For that reason, the Commission has preempted various

requirements that protect RLECs at the expense of new entrants, including, for example,

restrictions on competitors' ability to obtain a certificate of public convenience and necessity to

operate in areas served by RLECs.60 Similarly, the Commission later preempted other state

orders that denied CPCNs pursuant to similar policies,61 in one case finding that a "regulation

that flatly prohibits the Texas Commission from granting a [certificate of authority] in the

specified territories ... is in direct conflict with section 253(a), which is designed to prevent

such restrictions on entry.,,62 Just as these RLEC-protecting measures warranted preemption, the

MPUC's refusal to permit interconnection runs afoul of Section 253(a).

C. The Commission Should Clarify Carriers' Rights Under Sections 251(a) and(b).

Preemption is critical not only to remedy the MPUC's erroneous ruling, but also to

provide much-needed clarity to other states that have relied on Brazos to preclude

interconnection. o3 To be sure, many state commissions-including several after the Section

59 See, e.g., Silver Star Telephone Company, Inc. Petitionfor Preemption and DeclaratoryRuling, Memorandum Opinion and Order, 12 FCC Rcd 15639, 15656-57 ~ 38 (1997) ("WyomingPreemption Order") (preempting state policy that allowed RLECs to delay entry bycompetitors), aff'd, RT Communications, Inc. v. FCC, 201 F.3d 1264 (10th Cir. 2000); TexasPreemption Order, 13 FCC Rcd at 3511 ~ 107 (ruling that a Texas regulation that "flatlyprohibits the Texas Commission from granting a [certificate of authority] in the specifiedterritories ... is in direct conflict with section 253(a), which is designed to prevent suchrestrictions on entry."). See also Tennessee Preemption Order, 14 FCC Rcd at 11071 ~ 15(preempting TENN. CODE ANN. § 65-4-201 (d), which protected incumbent LECs serving fewerthan 100,000 access lines from competition, and a Tennessee Regulatory Authority orderenforcing the statute).

60 Wyoming Preemption Order, 12 FCC Rcd at 15656-57 ~~ 38-39.

61 Texas Preemption Order, 13 FCC Rcd at 3511 ~ 106.

62 Id at 3511 ~ 107.

63 See, e.g., Petition ofSprint Commc 'ns, LP, for Arbitration with Pineville Tel. Co.;Application ofSprint Commc 'ns Co. L.P. for an Amendment to its Certificate ofPublicConvenience and Necessity, Order Holding Sprint's Petition to Establish an Interconnection

21

251(a) Order-have rejected the reasoning of Brazos, recognizing that competitive carriers that

seek only to interconnect and exchange traffic (without requesting unbundled network elements

or other entitlements under Section 251(c)) are free to rely on Sections 251(a) and (b) alone.64

Other courts and state commissions have ordered RLECs to interconnect and exchange traffic

Agreement in Abeyance, Nos. P-120 SUB-26, P-294 SUB 7, 2010 N.C. PUC LEXIS 47, at *28­30 (N.C. Utils. Comm'n Jan. 14,2010) (following Brazos and requiring Sprint to pierce the ruralexemption in order to interconnect and exchange traffic pursuant to Sections 251 (a) and (b)).See also Petitionfor Arbitration by Sprint Commc'ns Co., L.P. Against Yelcot Tel. Co. &Northern Ark. Tel. Co., Order, Nos. 08-076-U, 08-077-U, 2009 Ark. PUC LEXIS 189, at *6-7(Ark. Pub. Servo Comm'n May 22, 2009) (stating that "the ILECs could have argued that theyhave no obligation to negotiate" and citing Brazos).

64 See, e.g., Petition for Arbitration ofan Interconnection Agreement with Union Tel. Co.,Final Order, No. 09-048, 2009 N.H. PUC LEXIS 90, at *31 (N.H. Pub. Utils. Comm'n Oct. 7,2009) ("New Hampshire Section 251 (a) Ruling") (finding a duty to provide interconnectionunder Sections 251(a) and (b) of the Act, "which is not affected by the rural exemption");Petitions of VI. Tel. Co., Inc. ("VTel"), and Comcast Phone of VI., LLC, d/b/a Comcast DigitalPhone ("Comcast "), for Arbitration ofan Interconnection Agreement Between VTel andComcast, Pursuant to Section 252 ofthe Telecomm. Act of1996, and Applicable State Laws,Order, No. 7469,2009 Vt. PUC LEXIS 37, at *136-37 (Vt. Pub. Servo Bd. Feb. 2, 2009)("Vermont Section 251 (a) Ruling") (same). See also Harrisonville Tel. Co. v. Ill. CommerceComm 'n, No. 06-73-GPM, slip op. at 8-9 (S.D. III. Sept. 5,2007) (concluding that "47 U.S.C. §251 (t)(l) provides no exemption for the ILECs from the obligations imposed in [Section 251(a)and (b)]" and finding this conclusion to be "consistent with the statutory language and the FCC'streatment of the issue"); Cambridge Tel. Co. et al. Petitions for Declaratory Ruling and/orSuspension or Modification Relating to Certain Duties under Section 251 (b) and (c) oftheFederal Telecomms. Act, Pursuant to Section 251(/)(2) ofthat Act,' And For Any OtherNecessary or Appropriate Relief, Order, No. 05-0259,2005 III. PUC LEXIS 379, at *13 (III.Commerce Comm'n July 13,2005) ("ICC Section 251(a) Ruling") (finding that "an exemptionfrom Section 251 (c) does not encompass the obligations imposed in Section 251 (b)"); Level 3Commc 'ns, LLC Petition for Arbitration Pursuant to 47 Us. C. Section 252 ofInterconnectionRates, Terms and Conditions with CenturyTel ofWis. , LLC, Arbitration Award, Docket No. 05­MA-130, at 8 (Wis. Pub. Servo Comm'n Dec. 2, 2002) ("Wisc. PSC Section 251 (a) Ruling")(holding that interconnection pursuant to Section 251 (a) "does not except any carrier from thereach of' Section 252); Petition for Arbitration ofan Interconnection Agreement Between Level3 Commc 'ns, and CenturyTel ofWash., Pursuant to 47 Us.c. Section 252, Third SupplementalOrder Confirming Jurisdiction, Docket No. UT-023043, 2002 Wash. UTC LEXIS 418, at *5(Wash. Utils. & Transp. Comm'n Oct. 25, 2002) ("Wash. UTC Section 251(a) Ruling") ("Arequest for an interconnection agreement pursuant to Section 251(a) is a request for an agreementwithout regard to the requirements of Sections 251(b) and (c).").

22

pursuant to Sections 251 (a) and (b) without any consideration of the rural exemption under

Section 251 (f). 65

But as TWC has explained and the National Broadband Plan recognized, several states in

addition to Maine persist in their misinterpretation of the statute.66 And, more generally, a

number of rural carriers claim that they face no clear obligation to interconnect their networks.67

The Commission should rectify such errors and misunderstandings by preempting the Section

25I (aJ Order and, as recommended by the National Broadband Plan, "confirm[ing] that all

telecommunications carriers, including rural carriers, have a duty to interconnect their

networks.,,68 Absent such action, other state commissions may refuse to enforce Sections 251 (a)

and (b), and other rural incumbents may decide that their obligation to interconnect under that

provision is no longer mandatory.

Contrary to the MPUC's ruling, the plain language of Section 252 authorizes state

commissions to arbitrate disputes arising from requests for interconnection under Sections 251 (a)

and (b). Section 252(b) specifically authorizes a party to seek arbitration of "any open issues"

from Section 252(a) negotiations, which include negotiations regarding a "request for

65 See, e.g.,Iowa Telecomms. Servs. v. Iowa Utils. Bd., 545 F. Supp. 2d 869,873 (S.D. Iowa2008) (listing the duty "to interconnect, directly or indirectly, with any requestingtelecommunications carrier" as the first obligation imposed under Section 251), aff'd IowaTelecomms. Servs. v. Iowa Uti/s. Bd., 563 F.3d 743 (8th Cir. 2009); Application ofSprintCommc 'ns Co. L.P. For Approval ofthe Right to Offer, Render, Furnish or Supply Telecomms.Servs. as a Competitive Local Exchange Carrier to the Public in the Servo Territories ofAlltelPennsylvania, Inc., Commonwealth Tel. Co. and Palmerton Tel. Co., Opinion and Order, Nos.A-310183F0002AMA, A-310183F0002AMB, A-310183F0002AMC, 2006 Pa. PUC LEXIS 97,at *51 (Pa. Pub. Util. Comm'n Dec. 1,2006); Re Sprint Commc 'ns Co., L.P., No. 43052-INT-OI,2006 WL 2663730, at *28 (Ind. Util. Reg. Comm'n Sept. 6,2006).

66 National Broadband Plan at 49 (citing TWC Interconnection Ex Parte).

67 See, e.g., Vermont Telephone Company, Petitionfor Declaratory Ruling Whether Voiceover Internet Protocol Services Are Entitled to the Interconnection Rights ofTelecommunications Carriers, WC Docket No. 08-56 (filed Apr. II, 2008).

68 National Broadband Plan at 49.

23

interconnection ... pursuant to section 251" (as opposed to a request under Section 251(c)).69

Sections 252(c) and (e), which establish standards for arbitration prescribed in Section 252(b),

also refer to "the requirements of Section 251" without any limitations.70 As noted above, where

a competitive carrier such as CRC requests interconnection and a reciprocal compensation

arrangement under Sections 251 (a) and (b), CRC must negotiate an interconnection agreement

under binding Commission precedent. 71 Of course, CRC cannot comply with that obligation

unless those requests are deemed "open issues" subject to arbitration under Section 252.

To hold that requests under Sections 251 (a) and (b) do not trigger a duty to negotiate and

a right to arbitrate disputes would undermine not only the plain language of Section 252, but also

Congress's strongly pro-competitive purposes. Competitive LECs would have no avenue

through which to compel incumbent LECs to comply with their obligations under those critical

statutory provisions, and those bedrock market-opening duties therefore would have little

meaning. Yet the MPUC, following Brazos, concluded that "there is, quite simply, nothing to

arbitrate" because "rural ILECs are exempt from the duty to negotiate in good faith."12 In

contrast, most state commissions that have considered the issue have compelled RLECs to

arbitrate requests pursuant to Sections 25 I(a) and (b), notwithstanding their exemption from the

duty to negotiate in good faith under Section 251 (c), either because of an impl ied duty to

negotiate under Section 251(a) and (b) or because arbitration is required in any event (or both).73

69

7047 V.S.c. §§ 252(b)(l), (a)(l).

ld. §§ 252(c), (e).

71 See supra at 20 & n.57.

12 See Section 251(a) Order at 14; see also Brazos, 2006 U.S. Dist. LEXIS 96569, at *16(noting that "[t]he only duty to negotiate arises under Section 251 (c)" and that Sections 251 (a)and (b) "say nothing at all about 'agreements,' 'negotiations,' or 'arbitration''').

73 For example, the Illinois Commerce Commission held that rural LECs "must negotiatethe terms and conditions for interconnection" under Section 251(a). ICC Section 251(a) Ruling,

24

The U.S. Court of Appeals for the Sixth Circuit also has observed that the duty to interconnect

pursuant to Section 251 (a) is enforceable through Section 252 arbitration. 74 Those decisions

correctly construe the text and pro-competitive purposes of Section 252, and the Commission

therefore should endorse them in preempting the Section 251(aJ Order.

II. SECTION 253(8) DOES NOT REMOTELY JUSTIFY THE MPUC'SREQUIREMENT THAT CRC PIERCE THE RLECS' RURAL EXEMPTIONS

Once the Commission detennines that a state's order prohibits or has the effect of

prohibiting the provision of service, it then must detennine whether that order falls within the

exception set forth in Section 253(b).75 Section 253(b) provides that a state may "impose, on a

competitively neutral basis and consistent with section 254, requirements necessary to preserve

2005 III. PUC LEXIS 379, at *35-36 (noting that its "findings are greatly serving the publicinterest" because of the "significant technological advances that few who live in rural areas inIllinois have been able to take advantage of'). See also, e.g., New Hampshire Section 251 (aJRuling, 2009 N.H. PUC LEXIS 90, at *31-32 ("The language of the Act further supports theposition that ... the right to conduct an arbitration for the purpose of enforcing obligations underSections 25 1(a) and (b) is not barred by Section 25 1(f)."); Vermont Section 251 (aJ Ruling, 2009Vt. PUC LEXIS 37, at *137 ("Even granting VTel's assertion that VTel has no duty to negotiatethe tenns of interconnection due to the rural exemption, this would not strip the Board of itsjurisdiction to arbitrate an interconnection agreement under Section 252(b)(1)."); Petition forArbitration ofCellco P 'ship d/b/a Verizon Wireless, Order of Arbitration Award, No. 04-00585,2006 Tenn. PUC LEXIS 10, at *35 (Tenn. Reg. Auth. Jan. 12,2006) (holding thatinterconnection pursuant to Section 25 1(a) falls within the TRA's arbitration jurisdiction underSection 252(b) because "Section 252(b) ... encompasses 'interconnection, services, or networkelements pursuant to section 251 '" (quoting 47 U.S.C. § 252(a)(I»); Wise. PSC Section 251(aJRuling (holding that interconnection requests under Section 251 (a) are subject to arbitrationunder Section 252); Wash. UTC Section 251 (aJ Ruling, 2002 Wash. UTC LEXIS 418, at *4(explaining that "the mechanisms for negotiation, mediation, and arbitration provided by Section252 apply to requests to negotiate made under Section 251(a)," because "[n]othing in Section252(a) limits the negotiation and arbitration processes to matters falling within Section 251 (c)").

74 Bellsouth Telecomms., Inc. v. Universal Telecom., Inc., 454 F.3d 559, 560 (6th Cir. 2006)(explaining that the Act requires ILECs to provide interconnection via Section 251 (a)( 1) eitherthrough negotiations (Section 252(a», arbitration (Section 252(b», or adoption of aninterconnection agreement between the incumbent and another telecommunications company(Section 252(i»).

75 Wyoming Preemption Order, 12 FCC Rcd at 15655-56 ~ 37.

25

and advance universal service, protect the public safety and welfare, ensure the continued quality

of telecommunications services, and safeguard the rights ofconsumers.,,76 If the state's order is

impermissible under Section 253(a) and does not satisfy the requirements of Section 253(b), the

Commission "must preempt the enforcement of [that order] in accordance with section 253(d)."77

Nothing in Section 253(b) remotely justifies the Section 251 (aJ Order, and the MPUC

does not appear to believe otherwise. The MPUC did not try to justify its ruling with reference

to any of these considerations, whether directly or indirectly. Rather, as the National Broadband

Plan already has observed, the MPUC based its order purely on a misinterpretation-indeed, an

"anticompetitive interpretation"--ofthe Act's provisions concerning interconnection and the

rural exemption. 78

In any event, in light of strong federal precedent, there is no conceivable way the MPUC

could justify its order pursuant to Section 253(b). Fundamentally, only a "competitively neutral"

order can be spared from preemption under this provision, and the Section 251 (aJ Order is the

antithesis of such a requirement-a fact that is dispositive of the Section 253(b) analysis. As

discussed, the effect of the MPUC's ruling is to relieve RLECs of their statutory duty to provide

basic interconnection. While they presumably would still be free to entertain an interconnection

request voluntarily under Section 251 (a), the Section 251 (aJ Order is essentially a get-out-of-

interconnection free card, as it establishes a precondition to interconnection that is not only

unlawful but also, the MPUC has since confirmed, effectively unattainable. That result is no

76 47 U.S.C. § 253(b).

77 Wyoming Preemption Order, 12 FCC Rcd at 15656 ~ 37. Section 253(d) directs theCommission to "preempt the enforcement of such statute, regulation, or legal requirement to theextent necessary to correct such violation [of,] or inconsistency [with, Section 253(a)]." 47U.S.c. § 253(d).78 National Broadband Plan at 49.

26

different than was the case with state regulations that gave RLECs veto rights over a

competitor's entry and that the Commission accordingly preempted: Like those requirements,

the Section 251 (aJ Order "awards those incumbent LECs the ultimate competitive advantage--

preservation of monopoly status-and saddles potential new entrants with the ultimate

competitive disadvantage-an insurmountable barrier to entry.,,79

Moreover, the MPUC could not demonstrate that barring CRC from interconnecting

prevents any public interest harm under Section 253(b). To the contrary, the MPUC's order

undermines interconnection rights that the National Broadband Plan has confirmed are critical to

the development of competition and broadband deployment, undermining each of Section

253(b)'s enumerated objectives. 80 Indeed, given the National Broadband Plan's observation that

"[b]asic interconnection regulations" are a century-old staple of "telecommunications regulatory

policy," any attempt to justify a denial of interconnection as necessary to promote the public

interest would tum that foundational policy on its head. 81 The MPUC's persistent view that

competition may not be suitable for rural areas cannot save the Section 251 (aJ Order; 82 even

apart from the MPUC's misunderstanding of the statutory scheme, its preference for protecting

the interests of rural incumbents does not advance the interests of rural consumers. Rather, the

pent-up demand for competitive voice services in the affected areas of Maine underscores the

79 Wyoming Preemption Order, 12 FCC Rcd at 15658 ~ 42; see also id (finding that theregulation at issue "favors certain incumbent LECs over all potential new entrants and allowsthose incumbent LECs, entirely at their own discretion, to determine if and when they will facecompetition"); Tennessee Preemption Order, 14 FCC Rcd at 11 072-73 ~~ 17-18.

80 See supra at 9-10.

81 National Broadband Plan at 49.

82 See, e.g., Wyoming Preemption Order, 12 FCC Rcd at 15658 ~ 42 ('''Congressenvisioned that in the ordinary case, States and localities would enforce the public interest goalsdelineated in section 253(b) through means other than absolute prohibitions on entry."') (quotingClassic Telephone, 11 FCC Rcd at 13102 ~ 38).

27

strong public interest in enforcing the RLECs' interconnection obligations. In short, far from

saving the Section 251 (aJ Order from preemption, the MPUC's protectionist goals demonstrate

why such preemption is essential.

28

CONCLUSION

The MPUC's refusal to pennit CRC to interconnect and exchange traffic under Sections

251(a) and (b) without first piercing an RLEC's rural exemption has the effect of prohibiting

eRC's provision of telecommunications services in violation of Section 253. That barrier to

entry in turn denies Maine consumers the opportunity to choose a competitive service option.

Accordingly, the Commission should preempt the MPUC's order and direct it to allow CRC to

interconnect and establish reciprocal compensation arrangements with RLECs pursuant to

Sections 25 I(a) and (b). The Commission should further direct the MPUC to commence

arbitration proceedings without delay in the event that negotiations with the RLECs are not

successful.

Trina M. BragdonCRC COMMUNICATIONS OF MAINE, INC.900 D Hammond StreetBangor, ME 04401

Counsel for CRe Communications ofMaine,Inc.

July 15,2010

R~!mitted'_---

Matthew A.Br~Brian W. MurrayAmanda E. PotterLATHAM & WATKINS LLP555 Eleventh Street, NW, Suite 1000Washington, DC 20004-1304

Steven TeplitzTerri NatoliTIME WARNER CABLE INC.901 F Street, NW, Suite 800Washington, DC 20004

Marc Lawrence-ApfelbaumJulie P. LaineTIME WARNER CABLE INC.60 Columbus CircleNew York, NY 10023

Counselfor Time Warner Cable Inc.

29

CERTIFICATE OF SERVICE

I, Amanda E. Potter, hereby certify that on this 15th day of July, 2010, a true and correctcopy of the foregoing Petition for Preemption was served, via first-class mail, upon thefollowing:

Karen M. GeraghtyAdministrative DirectorMaine Public Utilities Commission101 Second StreetHallowell, Maine 04347

Joanne SteneckGeneral CounselMaine Public Utilities Commission101 Second StreetHallowell, Maine 04347

Janet T. MillsAttomey GeneralState of Maine6 State House StationAugusta, Maine 04333

~~Amanda E. Potterd;