As we reported on January 28, 2014, the Michigan Public Service Commission (MPSC) made a significant statement on December 6, 2013, when it issued a decision in Case Number U-17349 reversing the decision of an arbitration panel and requiring AT&T to interconnect with Sprint Spectrum (Sprint) on an Internet Protocol (IP) level as required by sections 251 and 252 of the 1996 Telecommunications Act.

The decision was significant because in the absence of FCC standards, state commissions are beginning to take a stand on the contentious issue of IP interconnection.  CLECs have repeatedly requested the FCC to find that IP interconnection for voice services is governed by sections 251 and 252 of the Act.  Without such a requirement, CLECs claim that ILECs would leverage their market power in interconnection negotiations to impose unfair charges on smaller carriers to complete calls and put them at a competitive disadvantage. 

ILECs argue, however, that IP interconnection is occurring quickly, fairly and effectively without FCC intervention and, therefore, carriers should be permitted to negotiate private contracts to interconnect and exchange IP traffic.

While stating that it would not address the interconnection issue in the upcoming transition market trials but would do so in other proceedings, the FCC has punted on IP interconnection so far.  It has required carriers to negotiate IP interconnection in good faith.  However, this inexact requirement has led to the many interconnection disputes the industry is now confronting.

In Michigan, the MPSC concluded that IP interconnection must meet section 251 and 252 regardless of the fact that the FCC has not made a final decision on this issue, the MPSC observed that;

[S]ection 251 of the Act is one of the key provisions specifying interconnection requirements, and that its interconnection requirements are technology neutral they do not vary based on whether one or both of the interconnecting providers is using TDM, IP, or another technology in their underlying networks… Accordingly, the Commission finds that pursuant to Section 251(c)(2)(A), an ILEC, such as AT&T Michigan, not only must provide, for the facilities and equipment of any requesting telecommunications carrier, interconnection, but also IP interconnection, with the local exchange carrier for the transmission and routing of telephone exchange service and exchange access.(MPSC Order pp. 5, 7, emphasis in original).  

From this unambiguous decision, a rational observer would expect that since it is required by section 252(e)(1) once it is approved by the MPSC, the AT&T-Sprint interconnection agreement would be made public, and other CLECs would have the opportunity to adopt the entire interconnection agreement for themselves in Michigan.  In other words, once approved, other carriers can “opt in” to an approved agreement.  However, as is per the norm in the telecom industry nothing comes easy!

In their February 24, 2014 Joint Submission to the MPSC seeking approval of their interconnection agreement, AT&T and Sprint did not include the requirement that IP interconnection must comply with section 251.  Instead, the carriers indicated that they had agreed to a “contingency resolution” that would involve a separate agreement for IP interconnection.  Moreover, there the parties gave no indication that this “separate agreement” would be filed with the MPSC, and made public with “opt in” permitted.  However as CompTel noted in a March 7, 2014 letter to the MPSC;

The law is clear on this matter. As the Commission has already concluded, an incumbent LEC’s duty to provide interconnection under Section 251(c)(2) of the Act includes IP interconnection.  Section 252(e)(1) of the Act states that “any interconnection agreement adopted by negotiation or arbitration shall be submitted for approval to the State commission.”  This is true even if an incumbent LEC enters into an interconnection agreement as result of a voluntary negotiation with the requesting carrier that does not meet all of the standards set forth in Sections 251(b) and (c). The filing requirement enables the Commission to fulfill its duty under the Act to review the agreement and confirm that carriers that are not party to the agreement are not being discriminated against and that the public interest is being served.  It also ensures that the incumbent LEC fulfills its obligation to make available interconnection to any other requesting carrier on the same terms and conditions. (CompTel letter, p.2).

Thus, the MPSC should require AT&T and Sprint to obtain its approval for their so-called “contingency agreement.”  Just as importantly, it would be extremely short-sighted of Sprint to agree to a private IP interconnection deal with AT&T.  The carrier may believe it can advantage itself over its competitors in Michigan by agreeing to an individual interconnection agreement.  However, in the long-run, CLECs who fail to support state commission approved IP interconnection agreements that comply with the section 251 and 252 rules will find themselves increasingly at the mercy of the power the large ILECs bring to the negotiating arena.  It is the opinion here that it would be better for the industry as a whole if the FCC would finally address this issue, and CLECs stick together to fight for section 251/252 based IP interconnection rules to ensure a strong competitive IP market in the future.

By Andrew Regitsky, President, Regitsky & Associates