Talk America, Inc. v. Michigan Bell Telephone Co.
564 U.S. 50
| SCOTUS | 2011Background
- The 1996 Act imposes duties on incumbent LECs to facilitate competition, including interconnection and unbundled access to network elements.
- Interconnection under § 251(c)(2) requires linking networks for mutual traffic exchange and must be provided at cost-based rates; unbundling under § 251(c)(3) is separate and impairment-based.
- Entrance facilities are transmission links between incumbent and competitive LECs; the FCC previously held they were not required to be unbundled under § 251(c)(3) but remained available for interconnection under § 251(c)(2).
- Triennial Review Order (2003) eliminated cost-based unbundled access to entrance facilities, treating them as not network elements for § 251(c)(3) purposes, while preserving interconnection rights under § 251(c)(2).
- Triennial Review Remand Order (2005) redefined entrance facilities as network elements for regulatory purposes but again stated they need not be unbundled for cost-based pricing, while reaffirming the interconnection obligation under § 251(c)(2).
- AT&T Michigan challenged the Michigan PSC’s order requiring cost-based interconnection access to entrance facilities; the Sixth Circuit upheld AT&T, and the Supreme Court granted certiorari to resolve the FCC’s interpretive authority.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether AT&T must lease entrance facilities for interconnection at cost-based rates. | AT&T: no obligation to lease entrance facilities for interconnection at cost-based rates. | AT&T: FCC interpretation requires cost-based interconnection access to entrance facilities. | Yes; interconnection requires cost-based access to entrance facilities. |
| Are entrance facilities network elements subject to § 251(c)(3) unbundling analysis? | Entrance facilities are not required to be unbundled under § 251(c)(3). | TRRO reclassifies entrance facilities as network elements, potentially implicating impairment analysis. | Entrance facilities are part of the incumbent's network, but unbundling under § 251(c)(3) remains not required. |
| Does interconnection under § 251(c)(2) require deference to FCC interpretations of its regulations? | Defer to agency interpretations but dispute the FCC’s novel reading. | FCC interpretation is reasonable and entitled to deference. | Yes; defer to FCC interpretation of its regulations. |
| Does the FCC's interpretation that entrance facilities are subject to interconnection obligations align with the regulatory text separating interconnection from transport/termination? | Interconnection is distinct from transport; entrance facilities may be transport-related. | Entrance facilities, as used for mutual traffic exchange, fall within interconnection. | Entrance facilities can be considered within interconnection for cost-based access. |
Key Cases Cited
- AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366 (1999) (statutory framework for incumbent duties to facilitate competition)
- Verizon Commc’ns Inc. v. FCC, 535 U.S. 467 (2002) (pre-1996 Act context on incumbent LECs and competition)
- United States Telecom Ass’n v. FCC, 359 F.3d 554 (D.C. Cir. 2004) (remand record insufficient on entrance facilities not being network elements)
- Michigan Bell Tel. Co. v. Covad Communications Co., 597 F.3d 370 (6th Cir. 2010) (circuit split on FCC’s entrance facilities ruling; agency views debated)
- Pacific Bell Tel. Co. v. California Pub. Util. Comm’n, 621 F.3d 836 (9th Cir. 2010) (joined Seventh and Eighth Circuits on related issues)
- Chase Bank USA, N. A. v. McCoy, 562 U.S. 195 (2011) (deferral to agency interpretations in regulatory contexts described)