Centennial Puerto Rico License Corporation v. Telecommunications Regulatory Board of Puerto Rico et al, No. 3:2008cv02436 - Document 66 (D.P.R. 2009)

Court Description: OPINION AND ORDER GRANTING IN PART 27 MOTION for Summary Judgment filed by Miguel Reyes-Davila, Telecommunications Regulatory Board of Puerto Rico, Vicente Aguirre-Iturrino, Nixyvette Santini-Hernandez; DENYING IN PART 30 MOTION for Summary Judgm ent filed by Centennial Puerto Rico License Corporation; DENYING 25 MOTION for Summary Judgment filed by Puerto Rico Telephone Company, Inc. Judgment to be entered accordingly. Signed by Chief Judge Jose A Fuste on 11/25/09.(mrj)

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1 2 3 4 UNITED STATES DISTRICT COURT DISTRICT OF PUERTO RICO CENTENNIAL PUERTO RICO LICENSE CORPORATION, 5 6 Civil No. 08-2436 (JAF) Plaintiff, v. 7 8 9 10 Consolidated with: Civil No. 09-1002 (JAF) TELECOMMUNICATIONS REGULATORY BOARD OF PUERTO RICO, et al., Defendants. OPINION AND ORDER 11 12 This case consolidates two, one filed by Centennial Puerto Rico 13 License Corporation ( Centennial ) and one by Puerto Rico Telephone 14 Company, Inc. ( PRTC ) (Civil No. 09-1002). (See Docket No. 18.1) 15 Each seeks judicial review of certain determinations made by a 16 Commonwealth 17 Puerto Rico, and its members, in their professional capacities, 18 Miguel Reyes-Dávila, Vicente Aguirre-Iturrino, and Nixyvette Santini- 19 Hernández (collectively, the Board ), alleging violations of, inter 20 alia, the federal Telecommunications Act of 1996 ( TCA ), 47 U.S.C. 21 §§ 22 Communications 23 Telecommunications Act of 1996 ( Law 213"), 27 L.P.R.A. §§ 267-272 24 (2009). (Docket No. 1; Civil No. 09-1002 Docket No. 1.) agency, 251-261; 1 the Telecommunications applicable Commission rules and ( FCC ); Regulatory rulings and of the Board the Puerto of Federal Rico Unless otherwise noted, docket citations refer to Civil No. 08-2436. Civil No. 08-2436 (JAF) 1 -2- PRTC, the Board, and Centennial, separately, move for summary 2 judgment. (Docket Nos. 25; 27; 30.) All agree that summary judgment 3 is proper, but they differ on matters of law. 4 I. 5 (See Docket No. 22.) Jurisdiction 6 Pursuant to 28 U.S.C. § 1331, this court has jurisdiction over 7 the parties federal law claims. 8 Comm n, 535 U.S. 635, 643-44 (2002). 9 this court also has jurisdiction over the parties related Puerto 10 See Verizon Md. Inc. v. Pub. Serv. Pursuant to 28 U.S.C. § 1367, Rico law claims.2 11 II. 12 Factual and Procedural History 13 PRTC and Centennial are telecommunications carriers in Puerto (See Joint Ex. 39 at 1-2.3) 14 Rico. Both provide 15 telecommunications services within Puerto Rico, which renders them 16 local exchange carriers ( LECs ) under the TCA. (Id.) local The Board is 2 Section 269d of Law 213 mirrors the language of the TCA in reserving to this court review of the Board s determinations made under Law 213. See 47 U.S.C. § 252; 27 L.P.R.A. § 269d(e)(5). We question the validity of this jurisdictional allocation, as it appears to impose on this court a duty to adjudicate claims arising under Commonwealth law, in contravention of federal law. See U.S. Const. art. III, § 2; see also, e.g., Burford v. Sun Oil Co., 319 U.S. 315, 317 (1943) (noting that state legislature may not expand jurisdiction of federal district court). We, nevertheless, review the parties Puerto Rico law claims because, having supplemental jurisdiction under 28 U.S.C. § 1367, we assume the position of a Commonwealth court with plenary power to adjudicate claims arising under an otherwise valid Commonwealth statute. 3 The parties submitted joint exhibits via compact disc under seal. (See Docket No. 24.) Civil No. 08-2436 (JAF) -3- 1 a Commonwealth agency charged with implementing federal and Puerto 2 Rico telecommunications law. (Id.) 3 In 2005, PRTC and Centennial completed two interconnection 4 agreements ( 2005 Agreements ) that governed connections between the 5 two 6 telecommunications services within Puerto Rico. 7 No. 1 at 1-2.) 8 Agreements ), and the terms of the 2008 Agreements are the subject of 9 the instant dispute. 10 companies During for the provision of land-line and wireless (See, e.g., Docket In 2008, they renegotiated their agreements ( 2008 said (See id.) renegotiation, PRTC and Centennial reached an 11 impasse on various issues, which they then submitted to the Board for 12 arbitration, in accordance with 47 U.S.C. § 253(b) and 27 L.P.R.A. 13 § 269d. (See id. at 4.) Concluding the arbitration, the Board 14 resolved all outstanding issues in an order dated August 8, 2008 15 ( Order ) (Joint Ex. 39). 16 to reconsider portions of its Order; the Board obliged and, on 17 November 18 reversing in part its earlier decision ( Order on Reconsideration ) 19 (Joint Ex. 49). 20 suit in this court seeking review of certain issues, described infra 21 Part 22 Reconsideration. (See Docket No. 1; Civil No. 09-1002 Docket No. 1.) 23 PRTC, the Board, and Centennial, separately, now move for 24 25, IV.B, 2008, PRTC and Centennial each moved the Board rendered a decision retaining in part and On January 7, 2009, Centennial and PRTC each filed that summary judgment. the Board decided in its (Docket Nos. 25; 27; 30.) Order and Order on While all agree that Civil No. 08-2436 (JAF) -4- 1 summary judgment is proper in this case (Docket No. 22), the Board 2 opposes the legal conclusions drawn in PRTC s and Centennial s 3 motions (Docket No. 36); Centennial opposes the legal conclusions 4 drawn in PRTC s and the Board s motions (Docket No. 37); and PRTC 5 opposes the legal conclusions drawn in the Board s motion (Docket 6 No. 39) and in Centennial s motion (Docket No. 40). 7 replies to Centennial s and the Board s oppositions to its motion 8 (Docket No. 53); Centennial replies to PRTC s opposition to its 9 motion (Docket No. 54); and the Board responds to said replies 10 Further, PRTC (Docket No. 63). 11 III. 12 Summary Judgment Under Rule 56(c) 13 We grant a motion for summary judgment if the pleadings, the 14 discovery and disclosure materials on file, and any affidavits show 15 that there is no genuine issue as to any material fact and the movant 16 is entitled to judgment as a matter of law. 17 In this case, the parties stipulate that there is no genuine issue of 18 material fact requiring a trial. (Docket No. 22 at 2.) Thus, the sole 19 question for our consideration is which party is entitled to judgment 20 as a matter of law. Fed. R. Civ. P. 56(c). Civil No. 08-2436 (JAF) -5- 1 IV. 2 Analysis 3 A. 4 Standard of Review We review de novo a state agency determination based on federal 5 law. Global NAPs, Inc. v. Verizon New Eng., Inc., 396 F.3d 16, 23 6 (1st Cir. 7 deferential review to state agency s determination under the TCA). 8 Where the state agency determination is based on state law, we review 9 same with due deference to the agency s superior knowledge of its 2005); see also id. at 23 n.7 (declining to apply 10 governing statute. See WorldNet Telecomms., Inc. v. P.R. Tel. Co., 11 497 F.3d 1, 11 (1st Cir. 2007) ( Although the Board s authority under 12 local law is a legal issue, it is customary where any doubt exists to 13 give some deference to the agency charged with administering the 14 statute. ). 15 Where no error of law is alleged, we review a state agency s 16 determination under the arbitrary and capricious standard. See Global 17 NAPs, 396 F.3d at 23 n.7. An agency s determination is deemed 18 arbitrary and capricious where the agency fails to examine the 19 relevant data and articulate a satisfactory explanation for its 20 action including a rational connection between the facts found and 21 the choice made. 22 Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (internal quotation 23 marks omitted). Motor Vehicle Mfrs. Ass n of U.S., Inc. v. State Civil No. 08-2436 (JAF) 1 B. 2 -6- Disputed Issues PRTC disputes two decisions the Board made in its Order or Order 3 on Reconsideration, 4 consider each in turn. 5 1. 6 This while Centennial disputes three others. We Erroneous-Billing Fee issue concerns whether the Board erred in accepting 7 Centennial s proposal that the 2008 Agreements either include an 8 erroneous-billing fee or eliminate a late-payment fee. We derive the 9 following summary from the parties submissions on this issue. (See 10 Docket Nos. 26 at 6-21; 28 at 9-10, 22-23; 36 at 4-11; 37 at 6-11; 39 11 at 5-10; 53 at 4-14; 63 at 1-7; Joint Exs. 39 at 6-9; 49 at 9-10; 12 Civil No. 09-1002 Docket No. 1 at 6-7, 17-18.) 13 In their 2005 Agreements, PRTC and Centennial agreed to late- 14 payment fees on bills due one another as follows: Where the billing 15 party demanded payment and the billed party disputed the charge, the 16 billed party would hold payment in escrow until the resolution of the 17 dispute. 18 disputed payment, it would receive the payment and any interest 19 accrued thereon while in escrow, plus a 15 percent late-payment fee. 20 During renegotiation, Centennial proposed elimination of the 21 late-payment fee, arguing that it was unnecessary to compensate the 22 billing party for the funds it was owed. 23 the billing party was so compensated by receiving the interest earned 24 while in escrow. The late-payment fee, then, was a penalty available If the billing party were ultimately found entitled to the According to Centennial, Civil No. 08-2436 (JAF) 1 to 2 Centennial argued that no such penalty was available to a billed 3 party wronged by a billing dispute, when it was erroneously billed 4 and wrongfully required to hold funds in escrow. 5 Centennial argued, fairness required the Board to remedy this one- 6 sided access to penalties. 7 Board opted to retain the late-payment fee, it should also adopt an 8 erroneous-billing fee. This would also, according to Centennial, 9 encourage the billing party to avoid erroneous billing, which it had 10 the billing party -7when wronged by a billing dispute. But At the very least, Thus, Centennial proposed that if the no incentive to do under the standing scheme. 11 In its Order, the Board rejected Centennial s proposals. It 12 determined that, while penalties were currently only available to the 13 billing party, such asymmetry was justified. Unlike the billing 14 party, the billed party never rendered services for which it was 15 wrongfully forced to await payment. In its Order on Reconsideration, 16 however, the Board reversed its decision, finding that distinction 17 misleading. 18 obliged to either create equal access to penalties or eliminate them 19 altogether. Thus, the Board s Order on Reconsideration requires PRTC 20 and Centennial to choose between those two options. It adopted Centennial s reasoning and found itself 21 PRTC seeks review of the Board s decision, arguing that it 22 contravenes federal and Puerto Rico law.4 (Docket No. 26 at 8-18.) 4 In support of its interpretation of Puerto Rico law, PRTC essentially makes the same arguments that it made, unsuccessfully, in a Civil No. 08-2436 (JAF) -8- 1 Specifically, PRTC contends that the Board acted ultra vires by 2 imposing 3 arbitration of an interconnection agreement.5 4 PRTC, substantive Puerto Rico law prohibits the Board from adopting 5 such 6 contravene state law.6 a penalty provisions, and payable from federal law one does carrier not to (Id.) allow another via According to the Board to (See id. at 9-10.) 7 The First Circuit foreclosed PRTC s argument, however, holding 8 that neither federal nor Puerto Rico law forbids [the imposition of] 9 incentive-based liquidated damages by the arbitrator of an recent case in this court. See WorldNet Telecomms., Inc. v. Telecomms. Regulatory Bd., Nos. 08-1360, 08-1359, 2009 WL 2778058, at *5-9 (D.P.R. Aug. 25, 2009). The Board argues that PRTC is, thus, collaterally estopped from making them again now. (Docket No. 63 at 3-5.) We decline to reject PRTC s arguments on that ground, however, because the Board was obliged to raise collateral estoppel as an affirmative defense in its answer, which it failed to do (Docket No. 20 at 7-8). See Fed. R. Civ. P. 8(c). 5 Centennial takes issue with PRTC s characterization of the Board s action as an imposition because the Board gave the carriers the option of either adopting the erroneous-billing fee, to counterbalance the already operative late-payment fee, or eliminating both fees altogether. (Docket No. 37 at 9-10.) PRTC argues that this is properly understood as an imposition because PRTC is faced with the choice of either adopting the, in its view, unlawful penalty provision or giving up the late-payment fee to which it believes itself legally entitled. As PRTC s argument fails even if we consider this an imposition, we find the distinction irrelevant and need not resolve this dispute. 6 The Board argues that PRTC never raised this argument during the administrative proceedings and, thus, is precluded from doing so here. (Docket No. 36 at 5-7.) As support for this proposition, the Board cites authority regarding the scope of statutorily-prescribed judicial review of federal administrative agency decisions and the scope of appellate review of district court opinions. Such authority is irrelevant to the scope of our review, as ours is de novo regarding a Commonwealth agency decision. See Global NAPs, 396 F.3d at 23 n.7 (declining to review state agency decision deferentially and noting that the FCC, and not the individual state commissions, is the agency with the power granted by Congress to administer the TCA ); see also supra Part I. Civil No. 08-2436 (JAF) -9- 1 interconnection agreement. WorldNet, 497 F.3d at 8. PRTC acknowledges 2 that decision but argues that the First Circuit so held without 3 regard to a Puerto Rico Court of Appeals case ( Pan American 7) 4 denying the Board authority to adopt penalty provisions that would 5 call for the payment of damages from one carrier to another. 6 (Docket No. 53 at 7, 8 n.3; see Docket No. 53-2 (English-language 7 translation of Pan American).) 8 In making this argument, PRTC conflates two separate functions 9 of the Board. In Pan American, the court considered whether the Board 10 could establish regulations that would impose a penalty payable from 11 one carrier to another, finding that the Board had no such authority. 12 (Docket No. 53-2 at 17-18.) That is irrelevant to the question of 13 whether the Board can arbitrate and approve penalty provisions in an 14 agreement between two carriers. 15 the First Circuit s determination that neither federal nor Puerto 16 Rico law prohibits the Board s decision on this issue. Thus, Pan American does not upset 17 PRTC next argues that the Board s decision was arbitrary and 18 capricious because (1) it was contrary to evidence on the record 19 showing that the asymmetrical status of parties to a billing dispute 20 justified a late-payment fee but not an erroneous-billing fee; and 21 (2) the Board, without required explanation, switched its position on 7 The Spanish-language version of this case is published at Pan Am. Tel. Co. v. Junta Reglamentadora de Telecomms., 2004 T.C.A. 1268 (P.R. Cir. 2004). Civil No. 08-2436 (JAF) -10- 1 reconsideration based on fact findings that were inconsistent with 2 its original order. (Docket No. 26 at 18-19.) 3 PRTC showed during proceedings before the Board that the late- 4 payment fee was justified because the parties were in different 5 financial positions during the billing dispute: 6 had rendered services for which payment was wrongfully withheld, 7 while the billed party simply had to tender funds it owed. 8 further argued that no such asymmetry justified an erroneous-billing 9 fee, as the billed party never rendered services for which it awaited The billing party PRTC 10 payment. 11 different asymmetry that existed when the billed party put funds to 12 which it was lawfully entitled into escrow while the billing party 13 lost nothing. 14 remedy by imposing an erroneous-billing fee, provided the Board 15 rejected Centennial s original proposal of eliminating penalties 16 altogether. 17 Centennial refuted the latter argument, pointing out a This other asymmetry is what Centennial proposed to Centennial s logic prevailed before the Board upon 18 reconsideration. The Board s reversal of its earlier decision is not 19 inconsistent with PRTC s showing that the parties asymmetrical 20 position justified the late-payment fee. It merely makes a necessary 21 and logical distinction between that showing and the different 22 asymmetry illuminated by Centennial. 23 this point is reasonable and adequately explained in its Order on The Board s final decision on Civil No. 08-2436 (JAF) 1 Reconsideration. 2 -11- and capricious. 3 2. 4 This We reject PRTC s contention that it was arbitrary Requirement Regarding Direct Connection issue concerns proposal to whether the Board require Claro, erred PRTC s in accepting 5 Centennial s subsidiary and 6 wireless provider, to make all commercially reasonable efforts to 7 connect directly to Centennial when providing wireless services. 8 derive the following summary from the parties submissions on this 9 issue. (See Docket Nos. 26 at 21-34; 28 at 18-20, 29-32; 36 at 18-21; 10 37 at 11-14; 39 at 10-13; 53 at 14-17; Joint Exs. 39 at 30-33; 49 at 11 10-14; Civil No. 09-1002 Docket No. 1 at 4-17.) We 12 Centennial connects with Claro, PRTC s wireless subsidiary, to 13 provide wireless service to its customers. Under the TCA, this 14 Centennial-to-Claro interconnection is required, but they are not 15 required to connect directly. 16 least an indirect connection, which is done by connecting through 17 PRTC. 18 Centennial a fee; were Centennial able to connect directly to Claro, 19 no such fee would apply. That is, they are required to make at When Centennial makes this indirect connection, PRTC charges 20 Centennial s proposal before the Board was to have PRTC make all 21 commercially reasonable efforts to connect directly before PRTC 22 could charge indirect-connection fees. While Centennial acknowledged 23 that direct connection is not required by federal law, it argued that 24 this efforts requirement is not preempted by federal law. Civil No. 08-2436 (JAF) -12- 1 Moreover, it argued, direct connection is faster and more efficient 2 and, therefore, better for the public. 3 in its Order, in terms retained on reconsideration, to require PRTC 4 to make all commercially reasonable efforts to directly connect 5 before it could be entitled to indirect-connection fees. 6 PRTC argues that the Board s The Board agreed and decided decision on this matter is 7 inconsistent with, and preempted by, federal law, which specifies 8 that direct connection is not required. 9 21-33.) PRTC relies on FCC precedent holding that the TCA does not 10 require direct connection 11 interconnection obligations 12 voluntary private agreements. 13 In re Interconnection & Resale Obligations Pertaining to Commercial 14 Mobile Radio Servs. (CMRS Decision), 15 F.C.C.R. 13523, 13528, 13533- 15 34 (2000)).) 16 time lacked the 17 dominant market power that justifies regulatory intervention. See 18 CMRS Decision, 15 F.C.C.R. at 13533-34. PRTC also argues that the 19 FCC regulation 20 interconnection and that coercion from state regulators frustrates 21 the FCC s voluntary private agreements scheme. 22 31-33.) of has its and on (See, e.g., Docket No. 26 at declining wireless to impose carriers, in general favor of (Docket No. 26 at 21-22 (discussing In reaching that holding, the FCC reasoned that, at the decision, expressly wireless preempted providers local typically of wireless (Docket No. 26 at 23 But PRTC s arguments turn on mischaracterizations of the Board s 24 decision. First, the Board fell short of imposing a direct-connection Civil No. 08-2436 (JAF) -13- 1 requirement, as PRTC suffers no penalty for failure to do so. 2 Second, the Board s arbitration of an inter-carrier agreement does 3 not amount to regulation. 4 consistent with FCC precedent on this matter. See, e.g., In re 5 Interconnection and 6 Mobile Servs., 7 (acknowledging risk that LEC-affiliated [wireless] carriers, like 8 Claro, might unreasonably deny efficient connection and suggesting 9 that said denial would justify regulatory intervention). Thus, we 10 reject PRTC s contention that the Board s decision on this issue 11 contravenes federal law. Radio Furthermore, we find the Board s decision Resale 10 Obligations F.C.C.R. Pertaining 10666, to Commercial 10687-88 (1995) 12 PRTC also argues that the Board s determination was arbitrary 13 and capricious in that, having made a decision preempted by federal 14 law, the Board relied on factors Congress did not intend the Board to 15 consider. 16 rejection of PRTC s preemption argument. 17 3. 18 This (Docket No. 26 at 33-34.) This argument fails given our Application of Reciprocal Compensation to Certain Calls issue concerns whether the Board erred in rejecting 19 Centennial s proposal to apply a particular reciprocal-compensation 20 scheme to certain calls exchanged between Centennial and PRTC. 21 derive the following summary from the parties submissions on this 22 issue. 23 36 at 14-16; 37 at 14-16; 40 at 6-17; 54 at 2-9; 63 at 7-10; Joint 24 Exs. 39 at 21-25; 49 at 1-5.) We (See Docket Nos. 1 at 18-19; 28 at 12-13, 25-27; 32 at 7-13; Civil No. 08-2436 (JAF) 1 In 2005, PRTC and -14Centennial completed an interconnection 2 agreement that included terms on reciprocal compensation. Reciprocal 3 compensation, required by federal law, is intercarrier compensation 4 for the completion of calls that are local completed within a 5 geographically defined area and that pass from an originating LEC 6 to 7 §§ 251(b)(5), 252(d)(2)(A)(i). 8 resolve in 2005 was whose call-zone scheme would govern when they 9 completed A-B calls; Centennial maintained one, island-wide call 10 zone, while PRTC had ten. Thus, under Centennial s scheme, all calls 11 completed intraisland would be local, whereas under PRTC s, any call 12 crossing over PRTC zone lines would be long distance. 13 resolved this question in favor of Centennial s scheme, determining 14 that when Centennial and PRTC completed A-B calls, Centennial s call- 15 zone scheme would govern such that all intra-island calls would be 16 considered local. a different, terminating LEC ( A-B calls ). See 47 U.S.C. One issue PRTC and Centennial had to The Board 17 A new type of call is now at issue. In this case, both the 18 calling and the called parties have PRTC as their local carrier; 19 normally when they call each other, then, they pay long-distance fees 20 if they live in different PRTC call zones. But in this case, the 21 calling party has a long-distance plan through Centennial. As between 22 the carriers, this means that the call originates with PRTC, is 23 handed off to Centennial to transmit, then Centennial passes it back 24 to PRTC to terminate ( A-B-A call ). Currently, when Centennial Civil No. 08-2436 (JAF) -15- 1 passes the call back to PRTC, it pays an access charge, which is paid 2 by 3 Centennial, in turn, charges that calling customer long-distance 4 rates. any long-distance carrier terminating a call with an LEC. 5 Centennial s argument before the Board, and before this court, 6 is that the reciprocal-compensation arrangement formulated under the 7 2005 Agreements should apply to these A-B-A calls. 8 given the intra-island character of the call, and the fact that 9 Centennial and PRTC interconnect to complete it, the earlier decision It argues that, 10 setting Centennial s as the governing call zone applies. This would 11 eliminate Centennial s obligation to pay the access charge to PRTC, 12 though Centennial would continue to charge its customer long-distance 13 rates for that particular call. 14 The Board rejected Centennial s proposal, deciding, in effect, 15 to apply the formulated reciprocal-compensation scheme to only A-B 16 calls. 17 federal law that contemplates only A-B calls, which the Board dubs 18 local 19 compensation. 20 compensation arrangements must] provide for the mutual and reciprocal 21 recovery by each carrier of costs associated with the transport and 22 termination on each carrier s network facilities of calls that 23 originate on the network facilities of the other carrier . . . . ). 24 Further, the Board points to FCC rulings that limit reciprocal In defending that rejection, the Board points to language in calls, in establishing requirements for reciprocal See, e.g., 47 U.S.C. § 252(d)(2)(A)(i) ( [Reciprocal Civil No. 08-2436 (JAF) -16- 1 compensation to local calls to support its decision that reciprocal 2 compensation should not apply to calls falling outside its definition 3 of local calls. See, e.g., In re Implementation of Local Competition 4 Provisions in TCA (Local Competition Order), 11 F.C.C.R. 15499, 5 16013-14 (1996). 6 Centennial disputes the Board s decision, arguing (1) given the 7 purely geographic understanding of local under federal and Puerto 8 Rico law, the Board erred in taking into account Centennial s role in 9 the interconnection when classifying A-B-A calls as nonlocal (Docket 10 No. 32 at 8-13); and (2) under a recent FCC ruling, even long- 11 distance calls must fall under reciprocal compensation arrangements 12 (Docket No. 54 at 3-8). We examine each argument in turn. 13 Federal law supports the distinction drawn by the Board between 14 A-B calls and others. In 1996, the FCC explored the difference 15 between calls that require reciprocal compensation and those that 16 still may fall under an access-charge regime. 17 Order, 11 F.C.C.R. at 16013-14. For those that require reciprocal 18 compensation, the FCC contemplated only the scenario in which the 19 originating 20 Moreover, the FCC noted state commissions authority to determine 21 what geographic areas should be considered local areas for the 22 purpose of applying reciprocal compensation obligations, and to 23 determine whether intrastate access charges should apply to the 24 portions of [LECs ] local service areas that are different. and terminating carriers are See Local Competition different. See id. Id. Civil No. 08-2436 (JAF) provisions justify -17- 1 These the Board s refusal to extend 2 the reciprocal-compensation scheme it formulated for A-B calls. 3 As to Centennial s argument that reciprocal compensation should 4 apply regardless of whether the calls are considered local or long 5 distance, given new FCC precedent, we again find the distinction 6 between A-B calls and others to be warranted.8 7 Universal Serv. Support, 24 F.C.C.R. 6475, 6479-83 (2008). While the 8 FCC did broaden the application of reciprocal compensation to long- 9 distance calls, it maintained the distinction between A-B calls and 10 others. See id. at 6481-82 (considering whether long-distance traffic 11 at issue was terminated by carrier seeking reciprocal compensation). 12 Thus, the Board did not err even under the new FCC ruling in refusing 13 to apply reciprocal compensation to A-B-A calls. See In re High-Cost 14 Centennial argues that, regardless of federal law, Puerto Rico 15 law compels the Board to label these calls as local, again relying on 16 the argument that local is an entirely geographic label. (Docket 17 No. 32 at 7 (discussing 27 L.P.R.A. § 265a(cc), which defines local 18 telecommunications service as telecommunications service rendered 19 within a local area ).) The Board rejected this argument in its Order 8 The Board argues that Centennial is precluded from arguing the effect of the new FCC precedent, as Centennial failed to raise it either during the administrative proceedings or in its earlier briefs in the instant case. (Docket No. 63 at 8-9.) As to the scope of our review visà-vis arguments raised during the administrative proceedings, we again reject the Board s argument. See supra note 6. Likewise, Centennial s failure to raise this argument earlier in this case cannot bar our consideration of FCC rulings relevant to this issue. Civil No. 08-2436 (JAF) -18- 1 on Reconsideration, finding that the Puerto Rico legislature did not 2 have this particular question in mind when it wrote the definition of 3 local traffic. 4 decision, guided by federal law, to treat A-B calls specially. We 5 find the Board s decision under Puerto Rico law reasonable and, thus, 6 decline to disrupt it on that ground. 7 4. 8 This 9 Thus, it found said definition no impediment to its Restriction on Types of Traffic Allowed issue concerns whether the Board erred in rejecting Centennial s proposal that the 2008 Agreements explicitly allow PRTC 10 and Centennial to exchange all lawful traffic under their 11 interconnection arrangements instead of enumerating particular types 12 of traffic allowed. We derive the following summary from the parties 13 submissions on this issue. (See Docket Nos. 1 at 16-18; 28 at 13-15, 14 23-15; 32 at 13-20; 36 at 11-14; 37 at 16-20; 40 at 17-31; 54 at 9- 15 12; Joint Exs. 39 at 9-16; 49 at 5-7.) 16 Centennial and PRTC s agreements specifically enumerate the 17 types of traffic that they are allowed to exchange at their meet 18 points, the physical points at which they interconnect pursuant to 47 19 U.S.C. § 251 to exchange traffic. 20 is prohibited. Centennial proposed that the agreements be changed to 21 allow the exchange of all lawful traffic at the Centennial-PRTC 22 meet points, without restriction as to types. 23 that federal law and policy required, or at least permitted, carriers 24 to use the meet points for any type of traffic these could support. Any type of traffic not enumerated Centennial reasoned Civil No. 08-2436 (JAF) -19- 1 The Board found that federal law afforded no absolute right to 2 use § 251 meet points for any service. (Joint Ex. 39 at 14.) The 3 Board explained that while federal law supports the efficient and 4 expansive use of facilities, [t]here are constraints on the use of 5 interconnection arrangements established under § 251. 6 For example, the Board explained, the FCC determined that § 251(c)(2) 7 interconnections could not be used to terminate certain long-distance 8 traffic,9 9 that § 251 interconnections could be used to exchange information 10 services, see 47 C.F.R. § 51.100(b). (Joint Ex. 39 at 13-15; 49 at 11 7.) (Id. at 15.) see Local Competition Order, 11 F.C.C.R. at 15998-99, but 12 Centennial argues that the Board s determination contravenes 13 federal law, which promotes the maximum use of physical meet points, 14 once established, by LECs. 15 error in the Board s application of federal law on this issue. 16 Insofar as the FCC expressly expanded the type of traffic allowed 17 under a § 251 interconnection to include information services, we 18 find no legal error in the Board s decision to match that expansion 19 without 9 going further. (Docket No. 32 at 13-20.) While Centennial cites But we find no FCC language Centennial contends that the Board misapplied this federal rule that long-distance carriers may not obtain interconnection under § 251(c)(2) for the sole purpose of terminating long-distance traffic; Centennial is not a long-distance carrier seeking interconnection but rather an LEC seeking to make maximum use of meet points. (Docket No. 32 at 18 & n.41, 19; see also Docket No. 37 at 18.) As this dispute is collateral to the question before us whether federal law permits the Board to restrict the type of traffic exchanged under § 251 interconnection arrangements we need not resolve it here. Civil No. 08-2436 (JAF) -20- 1 encouraging expansive use of physical facilities accessed under 2 § 251(d), see, e.g., In re Review of § 251 Unbundling Obligations of 3 Incumbent LECs, 4 inapposite to 5 §§ 251(a)(1) and 251(c)(2). 18 F.C.C.R. 16978, interconnection 17072-73, arrangements such language established is under 6 A secondary issue under this heading is whether Centennial and 7 PRTC s list of allowed traffic should include Voice over Internet 8 Protocol ( VoIP ) traffic. 9 not fall into any of The parties agree that VoIP traffic does the categories already enumerated, yet 10 Centennial and PRTC are allowed to exchange VoIP traffic. 11 Board decided that Centennial and PRTC must maintain a list of 12 allowed traffic, thereby excluding all other traffic, its decision to 13 allow VoIP traffic without including it on the enumerated list is 14 arbitrary and capricious. Thus, the Board erred in excluding VoIP 15 traffic from the enumerated list, to the extent that VoIP traffic 16 does not already fall under an enumerated category. 17 5. 18 This Since the Voice over Internet Protocol issue concerns proposal the Board erred change the means by in Centennial s 20 Centennial 21 following summary from the parties submissions on this issue. 22 Docket Nos. 1 at 15-20; 28 at 16-17, 27-29; 32 at 20-25; 36 at 16-18; 23 37 at 20-23; 40 at 31-42; 54 at 12-14; 64; 65; Joint Exs. 39 at 9-16; 24 49 at 5-7.) the VoIP traffic they exchange. which rejecting 19 rate to whether We PRTC and derive the (See Civil No. 08-2436 (JAF) -21- 1 Centennial and PRTC exchange VoIP traffic, whereby callers use 2 a high-speed Internet connection, along with specialized equipment 3 and software, to make and receive telephone calls. (Docket No. 32 at 4 20.) 5 an 6 origination point of VoIP traffic. 7 carriers attempt to classify VoIP traffic as local or long distance 8 for the purpose of applying appropriate rates. 9 that the point at which the traffic switches to normal telephone During arbitration, Centennial proposed that the Board clarify ambiguity arising serve as a the proxy difficulty of identifying the This difficulty frustrates the for Centennial argued 10 traffic 11 proposal would render all VoIP traffic local, however, as such 12 switching for Puerto Rico VoIP traffic occurs within Puerto Rico, see 13 supra Part IV.3. 14 calls are local, rather than long distance, is supported by its 15 having identified enough VoIP-traffic origination points to know that 16 the majority of VoIP calls it transmits originate within Puerto Rico. 17 The Board rejected Centennial s proposal, opting instead to 18 retain the regime Centennial and PRTC already used for rating VoIP 19 traffic. Under that regime, calls whose origination can be identified 20 are rated based on that origination point;10 for the remaining, 21 unidentifiable calls, the carriers presume that the call is long 10 should from origination; Centennial s Centennial submits that a presumption that VoIP The Board reasoned that the identifiable calls would be the vast majority of VoIP calls, as Centennial had admitted its ability to identify the origination point of many VoIP calls. See, e.g., Joint Ex. 49 at 9.) Civil No. 08-2436 (JAF) -22- 1 distance. 2 the FCC s estimate that the majority of VoIP calls are long distance. 3 Centennial challenges the Board s decision, claiming that it 4 amounts to a refusal to arbitrate an intercarrier-compensation scheme 5 for 6 Centennial s factual showing that VoIP traffic in Puerto Rico is more 7 likely to be local than long distance. We decline to upset the 8 Board s decision on either ground. 9 maintain VoIP The Board maintained the latter presumption, relying on traffic the (Docket existing Nos. 32 at 23-25; 64) and ignores First, the Board s decision to intercarrier-compensation scheme does not 10 amount to a failure to arbitrate the issue. Second, the Board s 11 treatment 12 reasonable consideration of the evidence before it. In short, the 13 Board s decision on this issue neither contravenes federal law nor 14 was arbitrary and capricious. of Centennial s factual showing 15 grounded in a V. 16 was Conclusion 17 For the reasons stated herein, we hereby GRANT IN PART 18 Centennial s motion for summary judgment (Docket No. 30); VACATE IN 19 PART the Board s Order and Order on Reconsideration (Joint Exs. 39; 20 49); and DENY IN PART the Board s motion (Docket Nos. 27), as to the 21 Board s 22 allowable traffic, see supra Part IV.B.4. 23 see supra Part IV.B, we GRANT IN PART the Board s motion for summary exclusion of VoIP traffic from the enumerated list of As to all other issues, Civil No. 08-2436 (JAF) -23- 1 judgment (Docket No. 27); DENY PRTC s motion (Docket No. 25); and 2 DENY IN PART Centennial s motion (Docket No. 30). 3 IT IS SO ORDERED. 4 San Juan, Puerto Rico, this 25th day of November, 2009. 5 6 7 s/José Antonio Fusté JOSE ANTONIO FUSTE Chief U.S. District Judge

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