Portland and Mount HoodDoes the 1996 Telecommunications Act grant state commissions the authority to arbitrate an interconnection agreement when the negotiations were initiated by an incumbent local exchange carrier (ILEC) rather than a competitive local exchange carrier (CLEC)?  That question remains unanswered by the Ninth Circuit following a June decision that resolved an interconnection dispute between North County Communications, a CLEC, and Qwest Corporation (now part of CenturyLink), an ILEC.

The matter involved North County affiliates in Arizona and Oregon, which were using analog MF signaling technologies rather than digital SS7 signaling, making it difficult for Qwest to verify the accuracy of North County’s bills.  As the Ninth Circuit explained, Qwest’s concerns that it was being overcharged led it to seek renegotiation of its existing ICA with North County, and eventually to seek arbitration by the Oregon Public Utility Commission (and the Arizona Corporations Commission).

North County argued that because Qwest had initiated the negotiations, the state utility commissions did not have the power to arbitrate a new deal, either under the Telecommunications Act of 1996 or under the existing ICAs themselves.  Qwest argued that the FCC had interpreted the Act as granting that power to state commissions, and further argued that, in any case, Qwest had a contractual right to state commission arbitration under the terms of the ICAs.

Ultimately, the court held that language in the 1997 agreements between the companies allowed Qwest to request renegotiation, and ultimately compel arbitration.  Consequently, the court did not reach the statutory issue of whether the Act entitles ILECs to initiate ICA negotiations with a CLEC and then compel state commission arbitration.  The court also agreed with the district courts in holding that that none of the provisions subject to its review violated the Telecommunications Act or its implementing regulations, and that none of the state Commissions’ actions were arbitrary or capricious.