5/23. The U.S. Court of Appeals (7thCir) issued its opinion in Illinois Bell v. Box, a case regarding mandatory leasing of unbundled network elements (UNEs) by incumbent local exchange carriers (ILECs) to competitive local exchange carriers (CLECs) pursuant to 47 U.S.C. § 251(c)(3), and the Federal Communications Commission's (FCC) rules thereunder.

The Court of Appeals affirmed the District Court in its entirety.

One of two issues before the Court of Appeals, and previously before the U.S. District Court (NDIll) and the state public utilities regulatory commission, was whether ILECs must provide CLECs access to fiber optic loops as UNEs. The FCC previously determined that ILECs need not do so. The state commission ruled that certain fiber optic loops must be shared. The District Court reversed, and the Court of Appeals affirmed the District Court. Had the Court of Appeals ruled that fiber optic loops must be shared, this would not only have undone the FCC's rule on this issue, it would have provided both ILECs and CLECs a disincentive to deploy fiber to homes and businesses.

The ILEC in this case is Illinois Bell Telephone Company (AT&T). (Illinois is within the region of Ameritech, one of the original regional bell operating companies. Ameritech merged with SBC. SBC then merged with AT&T.)

The CLEC is Access One. AT&T and Access One did not reach as agreement as to Access One's access to entrance facilities at total element long run incremental cost (TELRIC) prices for interconnection, or for fiber optic loops to deliver voice and data services to Access One's business customers.

Entrance facilities are the connections between a switch maintained by an ILEC and a switch maintained by a CLEC. Loops are the set of wires and routing facilities that transmit a signal between a switch and a customer's premises.

Illinois Commerce Commission (ICC) then ruled, pursuant to its authority under 47 U.S.C. § 252(b), that AT&T must allow CLECs to use entrance facilities at TELRIC prices. The ICC also ruled that AT&T must allow CLECs to use its fiber optic loops, except for service to mass market customers.

The District Court then affirmed the ICC as to entrance facilities, but reversed as to fiber optic loops.

The present appeal followed. The Court of Appeals affirmed the District Court on both issues.

Legal Background. 47 U.S.C. § 251 requires ILECs to make available to CLECs UNEs at regulated rates.

§ 251(c)(3) provides that ILECs have "The duty to provide, to any requesting telecommunications carrier for the provision of a telecommunications service, nondiscriminatory access to network elements on an unbundled basis at any technically feasible point on rates, terms, and conditions that are just, reasonable, and nondiscriminatory in accordance with the terms and conditions of the agreement and the requirements of this section and section 252 of this title. An incumbent local exchange carrier shall provide such unbundled network elements in a manner that allows requesting carriers to combine such elements in order to provide such telecommunications service."

§ 251(d)(2) requires the FCC, in establishing unbundling requirements, to "consider, at a minimum, whether ... the failure to provide access to such network elements would impair the ability of the telecommunications carrier seeking access to provide the services that it seeks to offer." The interpretation of the work "impair" has been central the FCC's unbundling orders, and the Court opinions overturning them.

§ 251(d)(1) further requires the FCC to write implementing rules. After many years, and many tries, the FCC wrote rules that withstood judicial review.

The FCC adopted its triennial review order [576 pages in PDF] on February 20, 2003, and released the text on August 21, 2003. See, story titled "FCC Announces UNE Report and Order" and related stories in TLJ Daily E-Mail Alert No. 609, February 21, 2003, and story titled "Summary of FCC Triennial Review Order" in TLJ Daily E-Mail Alert No. 725, August 25, 2003. Then, the DC Circuit issued its opinion [62 pages in PDF] overturning parts of this order. See, story titled "Appeals Court Overturns Key Provisions of FCC Triennial Review Order" in TLJ Daily E-Mail Alert No. 848, March 3, 2004.

The FCC then adopted its triennial review remand order [185 pages in PDF] on December 15, 2004, and released the text on February 4, 2005. See, stories titled "FCC Adopts Unbundling Order" in TLJ Daily E-Mail Alert No. 1,039, December 16, 2004, and "Reaction to FCC Unbundling Order" in TLJ Daily E-Mail Alert No. 1,041, December 20, 2005. See also, story titled "FCC Releases Unbundling Order" in TLJ Daily E-Mail Alert No. 1,071, February 7, 2005. This order is FCC 04-290 in WC Docket No. 04-313 and CC Docket No. 01-338.

On June 16, 2006, the DC Circuit issued its opinion [41 pages in PDF] in Covad v. FCC, denying all petitions for review of this triennial review remand order. See, story titled "DC Circuit Upholds FCC's Unbundling Rules" in TLJ Daily E-Mail Alert No. 1,394, June 19, 2006.

Paragraph 140 of this triennial review remand order is pertinent to the first issue before the Court of Appeals. It states that "We note in addition that our finding of non-impairment with respect to entrance facilities does not alter the right of competitive LECs to obtain interconnection facilities pursuant to section 251(c)(2) for the transmission and routing of telephone exchange service and exchange access service. Thus, competitive LECs will have access to these facilities at cost-based rates to the extent that they require them to interconnect with the incumbent LEC’s network." (Footnote omitted.)

With respect to the second issue, the FCC ordered that ILECs need not provide optical loops to CLECs, and, although hybrid loops must be supplied as unbundled network elements, the incumbents are entitled to restrict the use to which these may be put.

Court of Appeals Holding. As for entrance facilities, the Court of Appeals held that "federal law permits a state agency to use the TELRIC method to regulate the price for the interconnection services that an ILEC must furnish under §251(c)(2)." As for fiber optic loops, the Court of Appeals held that the FCC's rules plainly exclude these from UNEs that must be shared. Hence, the Court of Appeals affirmed the District Court (and rejected the ICC's conclusion) as to fiber optic loops.

First, the Court of Appeals addressed the entrance facility issue. It explained that an "entrance facility" is "a connection between a switch maintained by an ILEC and a switch maintained by a CLEC. In other words, it is a means of transferring traffic from one carrier’s network to another. The connection may be by copper cable, fiber-optic cable, or radiofrequency link. The connection may be long or short; multiple carriers’ switches may even be in the same building (this is known as co-location). ILECs built entrance facilities to comply with their obligation to interchange traffic among networks." (Parentheses in original.)

It added that a CLEC "might route traffic among its own customers over the ILEC’s network. Using an entrance facility to move voice or data traffic among CLEC customers has come to be known as ``backhauling,´´ ..."

The Court of Appeals wrote that in its triennial review remand order "the FCC concluded that CLECs do not need entrance facilities for backhauling and should build their own equipment for handling CLEC--to--CLEC traffic. ILECs need not provide unbundled network elements to CLECs that can serve customers without ``impairment´´ through their own network elements."

The Court also noted that the ICC found that ILECs can detect and block any attempted use of an entrance facility for backhauling.

The Court of Appeals concluded that entrance facilities can be used by CLECs for interconnection. Moreover, the above quoted paragraph 140 of the triennial review remand order requires that the price to be paid is not AT&T's tariff price, but rather a cost based rate.

Second, the Court of Appeals addressed the fiber optic loop issue. The Court noted that FCC rules provide that ILECs must still provide CLECs access to their copper loops. However, under FCC rules, ILECs may build new loops entirely from fiber, which is also known as fiber to the home, or FTTH, whether the loops are to homes or offices, and not be subject to unbundling requirements.

The Court wrote that "The FCC found that CLECs' access to ILECs' loops based on traditional copper wire means that they are not ``impaired´´ by lack of access to ILECs' loops based on optical fiber. Carriers are building new circuits using optical fiber; the FCC concluded that CLECs, no less than the ILECs, can and should do this for themselves. As long as CLECs rely on network elements supplied by ILECs, real competition is hampered; the ILECs' facilities continue to be monopolies and require regulation."

Moreover, the Court wrote, the FCC's goal "is to wean CLECs from reliance on unbundled network elements so that fully competitive landline networks will be built".

The Court of Appeals held that the ICC was incorrect to conclude that CLECs can use the ILEC's fiber optic loops, except for service to mass market customers. It held that the FCC rules make no distinctions based on the nature of the customer.

The opinion also addresses state sovereign immunity, and the doctrine of Ex parte Young.

This case is Illinois Bell Telephone Company v. Charles Box, et al., U.S. Court of Appeals for the 7th Circuit, App. Ct. Nos. 07-3557 & 07-3683, an appeal from the U.S. District Court for the Northern District of Illinois, Eastern Division, D.C. No. 06 C 3550, Judge Virginia Kendall presiding. Judge Frank Easterbrook wrote the opinion of the Court of Appeals, in which Judge Wood and Tinder joined.

5/20. The U.S. Court of Appeals (5thCir) issued its opinion [10 pages in PDF] in Southwestern Bell Telephone v. Houston, another case regarding 47 U.S.C. § 253 and 42 U.S.C. § 1983.

Introduction. This is another in a series of opinions in cases brought by wireline and wireless carriers arguing that that violations of various provisions in the Communications Act give rise to private rights of action under §1983.

Previously, there was also much litigation, and a circuit divide, on the §332 issue. However, the Supreme Court resolved that question. See, March 22, 2005, opinion [22 pages in PDF] of the Supreme Court in Rancho Palos Verdes v. Abrams, and story titled "Supreme Court Holds That Individuals Who Sue Under §332 Cannot Also Recover Damages Under §1983" in TLJ Daily E-Mail Alert No. 1,101, March 23, 2005.

The various circuits are divided on the §253 question, with the 2nd, 9th, 10th, and now the 5th Circuits holding that there is not a private right of action, and the 6th and 11th Circuits holding that there is a private right of action.

See for example, March 13, 2007, opinion [33 pages in PDF] of the U.S. Court of Appeals (9thCir) in Sprint v. County of San Diego, and story titled "9th Circuit Holds That Wireless Zoning Ordinance Violates § 253(a), But This Creates No Private Right Of Action Under § 1983" in TLJ Daily E-Mail Alert No. 1,551, March 13, 2007. On May 14, 2008, the 9th Circuit ordered an en banc review. See also, story titled "En Banc Panel of 9th Circuit to Hear Sprint v. San Diego" in TLJ Daily E-Mail Alert No. 1,768, May 16, 2008.

See also, NextG Networks of NY, Inc. v. City of New York, 513 F.3d 49 (2d Cir. 2008) and Qwest Corp. v. City of Santa Fe, N.M., 380 F.3d 1258 (10th Cir. 2004).

In contrast, see BellSouth Telecomms., Inc. v. Town of Palm Beach, 252 F.3d 1169 (11th Cir. 2001) and TCG Detroit v. City of Dearborn, 206 F.3d 618 (6th Cir. 2000).

Section 1983's language ("Every person who, under color of any statute, ordinance ... subject ... any ... person ... to the deprivation of any rights ... secured by the Constitution and laws, shall be liable to the party injured in an action at law ...") may appear clear. Nevertheless, this and other courts have held this language is not to be given its plain meaning in the context of actions for violation of the Communications Act.

However, the carrier lost in this case not only because the court held that the Communications Act does not allow a §1983 action, but also because the government entity did not run afoul of the Communications Act.

Background. The City of Houston, in the state of Texas, passed an ordinance requiring owners of facilities located in its rights of way, including telecommunications facilities, to relocate, and to bear the cost of relocating, their equipment to accommodate a drainage improvement project.

Southwestern Bell Telephone (AT&T) incurred costs of $420,000 to relocate its facilities.

AT&T filed a complaint in U.S. District Court (SDTex) against Houston seeking recovery of these costs. It pled, among other things, that Houston took an action preempted by 47 U.S.C. § 253, and that this gives rise to an action for damages under 42 U.S.C. § 1983.

The District Court dismissed pursuant to Rule 12(b)(6), holding that a violation of §253 cannot serve as the basis of a cause of action under §1983. However, it also held that Houston's action was not preempted by §253.

AT&T brought present appeal. The Court of Appeals affirmed.

Statutes. §1983 provides, in part, that "Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress ..."

§253 of the Communications Act pertains to "Removals of barriers to entry". Subsection (a) provides that "No 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."

But then Subsection (c) provides that "Nothing in this section affects the authority of a State or local government to manage the public rights-of-way or to require fair and reasonable compensation from telecommunications providers, on a competitively neutral and nondiscriminatory basis, for use of public rights-of-way on a nondiscriminatory basis, if the compensation required is publicly disclosed by such government.

Court of Appeals Holding. The Court of Appeals reviewed precedent, and the existing circuit split, and concluded that "the more persuasive reasoning is found in the Second, Ninth, and Tenth Circuits’ holding ... that FTA § 253(a) does not create a private right enforceable under § 1983".

Also, the Court of Appeals held that Houston's ordinance is sheltered by the safe harbor of Subsection 253(c)

This case is Southwestern Bell Telephone, L.P. v. City of Houston, U.S. Court of Appeals for the 5th Circuit, App. Ct. No. 07-20320, an appeal from the U.S. District Court for the Southern District of Texas. Judge Rhesa Barksdale wrote the opinion of the Court of Appeals, in which Judges Jolly and Benavides joined.

The House will not meet.

The Senate will not meet.

12:15 - 1:45 PM. The Federal Communications Bar Association's (FCBA) FCC Enforcement Practice Committee will host a brown bag lunch titled "FCC Indecency Enforcement: Reviewing the Current Landscape". See, notice and registration page. Location: Wilmer Hale, 1875 Pennsylvania Ave., NW.

2:00 - 4:00 PM. The Department of State's (DOS) Advisory Committee on International Economic Policy (ACIEP) will meet. See, notice in the Federal Register, May 9, 2008, Vol. 73, No. 91, at Pages 26463-26464. Location: Room 1107, DOS, 2201 C St., NW.

6:00 - 8:15 PM. The Federal Communications Bar Association's (FCBA) Cable Practice and Intellectual Property Committees will host an event titled "Legal and Regulatory Issues Related to Internet Video Services". Prices vary. This event qualifies for continuing legal education (CLE) credits. See, notice and registration page. Location: Dow Lohnes, 1200 New Hampshire Ave., NW.

The House will not meet.

The Senate will not meet.

12:15 - 1:30 PM. The Federal Communications Bar Association's (FCBA) HLS/Emergency Communications Committee will host a brown bag lunch titled "Results of the FCC’s Commercial Mobile Alert System Rulemaking under the WARN Act: Establishing the Protocols and Requirements for Providers that Elect to Transmit Emergency Alerts to the Public". The speakers will be Lisa Fowlkes (FCC Public Safety & Homeland Security Bureau) and Jim Bugel (AT&T). See, notice. Location: Wilmer Hale, 1875 Pennsylvania Ave., NW.

The House will not meet.

The Senate will not meet.

9:00 AM. The U.S. District Court (DC) will hold a status conference in Covad v. Revonet, and breach of contract and misappropriation of trade secrets case involving customer lead information. Location: 333 Constitution Ave., NW.

12:00 NOON. The Cato Institute will host a panel discussion titled "Carrots and Sticks: The Evolving U.S. Economic Policy toward China". The speakers will be James Dorn (Cato) and Daniel Ikenson (Cato). See, notice and registration page. Location: Room B-339, Rayburn Building.

12:00 NOON - 2:00 PM. The DC Bar Association will host a program titled "A New Era for CFIUS: The Proposed Regulations and Their Possible Implications". The speakers will be Louis Rothberg (Associate Counsel for International Cooperative Programs, U.S. Army), Joseph Dennin (McKenna Long & Aldridge), Geoffrey Goodale (Foley & Lardner), Stephen Canner (U.S. Council for International Business), and Nova Daly (Department of the Treasury). The price to attend ranges from $5 to $35. For more information, contact 202-626-3488. See, notice. Location: McKenna Long & Aldridge, 1900 K St., NW.

4:00 - 5:30 PM. The American Enterprise Institute (AEI) will host a panel discussion titled "The Antitrust Burden: Can American Companies Still Compete Fairly Abroad?" The speakers will include Thomas Barnett (head of the Department of Justice's Antitrust Division), Deborah Majoras, Theodore Ullyot (Kirkland & Ellis), and John Yoo (AEI). Location: AEI, 12th floor, 1150 17th St., NW.

6:30 - 8:30 AM. The Federal Communications Bar Association's (FCBA) Young Lawyer's Committee will host an event titled "Happy Hour". For more information, contact Tarah Grant at tsgrant at hhlaw dot com or Krista Witanowski at krista dot witanowski at fcc dot gov. Location: Mandarin Oriental Hotel, Empress Lounge, 1330 Maryland Ave., SW.

The House will not meet.

The Senate will not meet.

12:00 NOON. The Cato Institute will host a panel discussion titled "China's Rise: Is Conflict Unavoidable?". The speakers will be Ted Carpenter (Cato) and Justin Logan (Cato). See, notice and registration page. Location: Room B-339, Rayburn Building.

Deadline to submit comments to the Copyright Office (CO) in response to its notice of proposed rule making (NPRM) regarding online group registration. The CO states that "this Notice proposes to amend further the current regulations governing group registration to require any applicant wishing to take advantage of group registration options to file the group claim electronically within the reengineered registration system". See, notice in the Federal Register, April 30, 2008, Vol. 73, No. 84, at Pages 23390-23393.

Deadline to submit to the U.S. Patent and Trademark Office (USPTO) nominations of individuals or corporations to receive the National Medal of Technology and Innovation. See, notice in the Federal Register, January 24, 2008, Vol. 73, No. 16, at Pages 4181-4182, and USPTO release.

Deadline to submit to the U.S. Patent and Trademark Office (USPTO) nominations of individuals for membership on the Patent Public Advisory Committee and Trademark Public Advisory Committee. See, notice in the Federal Register, April 25, 2008, Vol. 73, No. 81, at Pages 22343-22344.

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its Further Notice of Proposed Rule Making regarding public safety communications in the 800 MHz band. The FCC adopted and released this item on March 5, 2008. This item is FCC 08-73 in WT Docket No. 02-55 and ET Docket Nos. 00-258 and 95-18. See, notice in the Federal Register, March 31, 2008, Vol. 73, No. 62, at Pages 16822-16826.

The House will not meet. See, Rep. Hoyer's 2008 calendar [4.25 MB PDF].

The Senate will return from it Memorial Day recess. See, Senate 2008 calendar.

2:00 - 4:00 PM. The American Enterprise Institute (AEI) will host a panel discussion titled "Is China Taking Unfair Advantage of Its Trade Partners?". The speakers will be Philip Levy (AEI), Scott Paul (Alliance of American Manufacturers), Brad Setser (Council on Foreign Relations), and Desmond Lachman (AEI). See, notice. Location: AEI, 12th floor, 1150 17th St., NW.

6:00 PM. Deadline for upfront payments in the Federal Communications Commission's (FCC) Auction No. 77. See also, notice in the Federal Register, May 8, 2008, Vol. 73, Number 90, at Pages 26112-26118.

The House will return from its Memorial Day recess. Votes will be postponed at least until 6:30 PM. See, Rep. Hoyer's 2008 calendar [4.25 MB PDF].

9:00 AM - 4:30 PM. The Department of Commerce's (DOC) National Institute of Standards and Technology's (NIST) Judges Panel of the Malcolm Baldrige National Quality Award will hold a closed meeting to discuss applicants and award criteria. See, notice in the Federal Register: May 16, 2008, Vol. 73, No. 96, at Page 28433. Location: Administration Building, Lecture Room A, Gaithersburg, MD.

6:30 - 9:00 PM. The DC Bar Association will host a program titled "The Gates Foundation's Global Access Principles: Striking the Balance". The speaker will be Erik Iverson (Gates Foundation Associate General Counsel). The price to attend ranges from $8 to $20. For more information, contact 202-585-9654. See, notice. Location: Finnegan Henderson, 10th floor, 901 New York Ave., NW.

Day one of a two day conference hosted by the National Institute of Standards and Technology (NIST) titled "Applications of Pairing-Based Cryptography: Identity-Based Encryption and Beyond". See, notice. The basic price to attend is $145. Registrations are due by May 27, 2008. Location: NIST, Green Auditorium, 100 Bureau Drive, Gaithersburg, MD.

8:30 AM - 12:00 NOON. The Information Technology Association of America (ITAA) will host a half day conference titled "Level 3 Authentication: When Pin & Password Aren’t Enough". See, notice. Prices vary. Location: JW Marriot Hotel.

TIME? Day one of a two day invitation only conference hosted by the Business Software Alliance (BSA) titled "BSA CEO Forum". See, notice. Location?

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