U.S. Appeals Court Rules for T-Mobile in Network Interconnection Dispute with Puerto Rico’s Incumbent Telephone Company
The U.S. Court of Appeals for the First Circuit ruled on May 2, 2012, in favor of wireless provider T-Mobile in a billing dispute with Puerto Rico Telephone Company (PRTC) involving several million dollars in disputed charges related to network interconnection and transport facilities. The appeals court reversed the district court and affirmed a ruling by the Puerto Rico regulatory authorities that under the interconnection agreements between T-Mobile and PRTC, interstate rates applied to the facilities in question. PRTC had been improperly billing T-Mobile at higher intrastate rates for those facilities.
At issue were the proper rates for certain network interconnection and transport facilities PRTC provided to T-Mobile. T-Mobile argued—and the Puerto Rico regulators agreed—that the parties’ contract required the facilities to be priced at interstate rates. PRTC, however, argued that the facilities were not covered by the contract; that T-Mobile did not qualify for interstate rates (because it had not certified that at least 10% of the traffic on the facilities was interstate); and that, therefore, higher intrastate rates applied. PRTC claimed that allowing T-Mobile to obtain the facilities at interstate rates, under these circumstances, would violate the filed rate doctrine. On appeal, the federal district court reversed the regulatory board and ruled that PRTC could charge the higher intrastate rates. The court thought that under Section 252(e)(2) of the Communications Act, it would be discriminatory against long distance carriers—who had to meet the 10% test to take advantage of interstate rates for special access facilities—to uphold the regulators’ interpretation of the contract.
The First Circuit reversed the district court and directed that judgment be entered for T-Mobile and that the original regulatory ruling be affirmed. The appeals court resolved several questions of law. First, the court found that Section 252(e)(2), which forbids state regulators from approving discriminatory interconnection agreements, did not control this case. Instead, Section 252(i), which allows requesting carriers to “adopt” existing interconnection agreements, protected against discrimination in these circumstances.
The appeals court also ruled that it did not violate the federal filed rate doctrine to apply interstate rates to the facilities in dispute. The parties’ agreement characterized the facilities as intrastate in nature, but contemplated applying interstate rates to the intrastate facilities. Given that the facilities were intrastate in nature, the filed rate doctrine (that generally calls for carriers to comply with the terms of their federal tariffs for interstate services) did not apply, and certainly did not preclude using interstate rates as prices for equivalent intrastate facilities. In relying on this ground to reject PRTC’s filed rate doctrine claim, the appeals court was able to avoid ruling on a number of complex regulatory claims that had arisen in the course of the litigation.
Davis Wright Tremaine attorneys argued and briefed this case before the 1st Circuit on behalf of T-Mobile.