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Verizon Telephone Companies v. Federal Communications Commission

July 16, 2004

VERIZON TELEPHONE COMPANIES, PETITIONERS
v.
FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS AT&T CORPORATION, ET AL., INTERVENORS



On Petition for Review of an Order of the Federal Communications Commission

Before: Ginsburg, Chief Judge, and Garland and Roberts, Circuit Judges.

The opinion of the court was delivered by: Ginsburg, Chief Judge

Argued April 22, 2004

Verizon petitions for review of an order of the Federal Communications Commission denying the Company's request that the Commission forbear from requiring it to unbundle and to lease certain elements of its network pursuant to § 271 of the Communications Act of 1934. The Commission had previously determined that incumbent local exchange carriers (ILECs), including Verizon, need not unbundle and lease those same elements under § 251 of the Act. Because the Commission failed adequately to explain its decision not to forbear, we grant Verizon's petition for review.

I. Background

Under § 10 of the Communications Act of 1934, as amended by the Telecommunications Act of 1996, the Commission "shall forbear from applying any regulation or any provision [of the Act] ... to a telecommunications carrier or telecommunications service" if it determines

(1) enforcement of such regulation or provision is not necessary to ensure that the charges, practices, classifications, or regulations by, for, or in connection with that telecommunications carrier or telecommunications service are just and reasonable and are not unjustly or unreasonably discriminatory;

(2) enforcement of such regulation or provision is not necessary for the protection of consumers; and

(3) forbearance from applying such provision or regulation is consistent with the public interest.

47 U.S.C. § 160(a)(1)-(3). The Commission must make its determination whether to grant or to deny a petition for forbearance within one year of receiving it, else the petition is deemed granted. Id. § 160(c). The Commission may, however, upon finding an extension is necessary in order to meet the requirements set out above, extend the one-year period by 90 days, as it did here.

As a Bell Operating Company (BOC), Verizon must satisfy the requirements of § 271 of the Act before it may provide interLATA (i.e., long distance) services. See 47 U.S.C. § 271. Those requirements include a "competitive checklist" setting out 14 conditions a BOC must satisfy when providing "access and interconnection" to competitive local exchange carriers (CLECs). 47 U.S.C. § 271(c)(2)(B). The four checklist items at issue in this case require the BOCs to provide CLECs with local loop transmission, transport, and switching, as well as nondiscriminatory access to certain network elements. See 47 U.S.C. § 271(c)(2)(B)(iv)-(vi) & (x). Section 251 of the Act sets out "interconnection" requirements with which all telecommunications carriers, not only the BOCs, must comply. Section 251(d)(2) instructs the Commission to "consider, at a minimum, whether ... the failure [of an ILEC] to provide access to such network elements would impair" the ability of a CLEC to provide the services it seeks to offer. See 47 U.S.C. § 251(d)(2).

On July 29, 2002 Verizon petitioned the Commission "to forbear from applying items four through six and item ten of the Section 271 competitive checklist once the corresponding elements no longer need to be unbundled under Section 251(d)(2)." Verizon took the position in its petition for forbearance that "[w]here an element no longer meets the Section 251(d)(2) standard for unbundling, forbearance with respect to the parallel checklist item is required by Section 10."

In August 2003 the Commission "eliminate[d]" the unbundling requirement of § 251 with respect to most broadband network elements, in order to "mak[e] it easier for companies to invest in new equipment and deploy the high-speed services that consumers desire." See Report and Order and Order on Remand and Further Notice of Proposed Rulemaking, Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers, CC Docket Nos. 01-338 et al., FCC 03-36, 18 FCC Rcd 16978 (Aug. 21, 2003) ( Triennial Review Order ). We upheld that part of the Triennial Review Order in United States Telecom Ass'n v. FCC, 359 F.3d 554, 585 (D.C. Cir. 2004).

On October 24, 2003, one business day before expiration of the 90-day extension of the time for the Commission to act upon Verizon's July 2002 petition, Verizon submitted an ex parte letter to the Commission, as authorized by ...


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