I had planned a definitive, thorough discussion of the recent state demands (CA, MI, KS and counting) that the carriers submit their agreements for approval to the state commissions. A correspondent has beaten me to the punch with a pretty thorough analysis. With permission, I reprint it here:
Since we are dealing with voluntary agreements, the analysis must start with
47 U.S.C. Â§ 251(a)(1), which states:
Agreements arrived at through negotiation
(1) Voluntary negotiations
Upon receiving a request for interconnection, services, or network elements pursuant to section 251 of this title, an incumbent local exchange carrier may negotiate and enter into a binding agreement with the requesting
telecommunications carrier or carriers without regard to the standards set forth in subsections (b) and (c) of section 251 of this title. ... The agreement ... shall be submitted to the State commission under subsection (e)
of this section.
So the requirement to submit an agreement to state commissions is dependent on whether the agreement is borne from a request for interconnection (or services or network elements) pursuant to section 251. Subsection 252(e)
does require a negotiated interconnection agreement to be submitted to a state commission for approval, but again this assumes the agreement was undertaken pursuant to section 251.
Subsection 251(c)(3) requires ILEC's to "offer 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," but subsection 251(d)(2) limits the requirement:
In determining what network elements should be made available for purposes of subsection (c)(3) of this section, the Commission shall consider, at a minimum, whether--
(A) access to such network elements as are proprietary in nature is necessary; and
(B) 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.
This statute, of course, is what the FCC attempted to apply in its Triennial Review Order. The D.C. Circuit Court struck down, among other things, the FCC's attempted delegation of the statutory analysis to the states with
respect to mass market switching. If the D.C. Circuit Court's decision goes into effect without any interim or new rules offered by the FCC, the unbundling obligation for mass market switching may go away, at least for
some period of time.
The argument that I think is being made by the ILEC's is: the voluntary negotiated agreements we are now entering into are to fill the void in the event that USTA II takes effect. Those agreements are not entered into
under section 251 because they relate to network elements that are no longer required to be unbundled by virtue of USTA II. Since the agreements are not made pursuant to section 251, the requirement under section 252 to submit
them to state commissions for approval is not applicable.
While the ILEC's argument is plausible, there are potential holes in the analysis:
Â· USTA II has not yet taken effect.
Â· Even if the USTA II stay expires, interconnection agreements touching upon 251(b) or (c) duties other than unbundling (e.g., interconnection with CLEC facilities and equipment for transmission and routing, 251(c)(2), resale,
251(c)(4), collocation, 251(c)(6)) must still be filed with state commissions for approval. It may be difficult to limit new agreements solely to network elements affected by USTA II.
Â· Subsection 251(d)(3) explicitly preserves state access regulations that establish access and interconnection obligations of local exchange carriers if they are consistent with the requirements, implementation and purposes of
the 1996 Act.
Â· Likewise, Subsection 252(e)(3) allows enforcement of state law regarding service quality or other requirements.
Result: Several states likely will assert jurisdiction over these new agreements, destroying hopes of confidentiality or package deals (as a result of nondiscrimination and pick and choose requirements). ILECs faced
with this possibility will tend to offer inflexible one-size-fits-all deals, making agreement with CLECs less likely.
This analysis seems plausible to me, complete with the pessimistic conclusion that contracts will be forced back to a standard-offer tariff, much like the current SGATs, and the related pick-and-choose inflexibility. In particular, I think that the second and third bullitt points of the potential problems will give the contracting carriers' difficulty. It seems clear that the FCC is going to have to provide guidance on this, and quickly.