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AT&T CORP. ET AL. v. IOWA UTILITIES BOARD ET AL. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT 525 U.S. 366

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OCTOBER TERM, 1998

Syllabus

AT&T CORP. ET AL. v. IOWA UTILITIES BOARD ET AL.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

No. 97-826. Argued October 13, 1998-Decided January 25, 1999*

The Telecommunications Act of 1996 (1996 Act) fundamentally restructures local telephone markets, ending the monopolies that States historically granted to local exchange carriers (LECs) and subjecting incumbent LECs to a host of duties intended to facilitate market entry, including the obligation under 47 U. S. C. § 251(c) to share their networks with competitors. A requesting carrier can obtain such shared access by purchasing local telephone services at wholesale rates for resale to end users, by leasing elements of the incumbent's network "on an unbundled basis," and by interconnecting its own facilities with the incumbent's network. Mter the Federal Communications Commission (FCC) issued regulations implementing the 1996 Act's local-competition provisions, incumbent LECs and state commissions filed numerous challenges, which were consolidated in the Eighth Circuit. Among other things, that court held that the FCC lacked jurisdiction to promulgate its rules regarding pricing, dialing parity, exemptions for rural LECs, the proper procedure for resolving local-competition disputes, and state review of pre-1996 interconnection agreements; that, in specifying the network elements available to requesting carriers under Rule 319, the FCC reasonably implemented the 1996 Act's requirement that it consider whether access to proprietary elements was "necessary" and whether lack of access to nonproprietary elements would "impair" an

*Together with AT&T Corp. et al. v. California et al. (see this Court's Rule 12.4), No. 97-829, MCI Telecommunications Corp. v. Iowa Utilities Board et al., MCI Telecommunications Corp. v. California et al. (see this Court's Rule 12.4), No. 97-830, Association for Local Telecommunications Services et al. v. Iowa Utilities Board et al., No. 97-831, Federal Communications Commission et al. v. Iowa Utilities Board et al., Federal Communications Commission et al. v. California et al. (see this Court's Rule 12.4), No. 97-1075, Ameritech Corp. et al. v. Federal Communications Commission et al., No. 97-1087, GTE Midwest Inc. v. Federal Communications Commission et al., No. 97-1099, US WEST, Inc. v. Federal Communications Commission et al., and No. 97-1141, Southern New England Telephone Co. et al. v. Federal Communications Commission et al., also on certiorari to the same court.cralaw


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entrant's ability to provide local service, see § 251(d)(2); that, in Rule 319, the FCC reasonably interpreted the statutory definition of "network element," see § 153(29); that the "all elements" rule, which effectively allows competitors to provide local phone service relying solely on the elements in an incumbent's network, is consistent with the 1996 Act; that Rule 315(b), which forbids incumbents to separate alreadycombined network elements before leasing them to competitors, must be vacated because it requires access to those elements on a bundled rather than an unbundled, i. e., physically separated, basis; and that the FCC's "pick and choose" rule, which enables a carrier to demand access to any individual interconnection, service, or network element arrangement on the same terms and conditions the LEC has given anyone else in an approved § 252 agreement without having to accept the agreement's other provisions, must be vacated because it would deter the "voluntarily negotiated agreements" that the 1996 Act favors.

Held:

1. The FCC has general jurisdiction to implement the 1996 Act's local-competition provisions. Since Congress expressly directed that the 1996 Act be inserted into the Communications Act of 1934, and since the 1934 Act already provides that the FCC "may prescribe such rules and regulations as may be necessary in the public interest to carry out the provisions of this Act," 47 U. S. C. §201(b), the FCC's rulemaking authority extends to implementation of §§ 251 and 252. Section 152(b) of the Communications Act, which provides that "nothing in this chapter shall be construed to apply or to give the Commission jurisdiction with respect to ... intrastate communications service ... ," does not change this conclusion because the 1996 Act clearly applies to intrastate matters. The Eighth Circuit erred in reaching the challenge of the incumbent LECs and state commissions to the FCC's claim that § 208 gives it authority to review agreements approved by state commissions under the local-competition provisions, because that claim is not ripe. See Toilet Goods Assn., Inc. v. Gardner, 387 U. S. 158. Pp. 377-386.

2. The FCC's rules governing unbundled access are, with the exception of Rule 319, consistent with the 1996 Act. Pp. 386-395.

(a) Given the breadth of § 153(29)'s "network element" definitioni. e., "features, functions, and capabilities ... provided by means of" a facility or equipment used in the provision of a telecommunications service-it is impossible to credit the incumbents' argument that a "network element" must be part of the physical facilities and equipment used to provide local phone service. It was therefore proper for Rule 319 to include operator services and directory assistance, operational supportcralawcralawcralaw


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