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Click here for the full text of this decision FACTS:The Telecommunications Act of 1996 sought to open local telecommunication services to competition by allowing the Federal Communications Commission to require an incumbent local exchange carrier (ILEC) to “unbundle” certain of its network elements, such as loops, and lease them to other carriers for use in providing competing local services at substantially discounted, cost-based rates. In February 2005, the FCC issued the Triennial Review Remand Order (remand order), which addressed the scope of the duty of an ILEC to provide unbundled network element (UNE) access to a competing local exchange carrier (CLEC), such as Logix Communications LP, under the act. The remand order meant to provide a metric for determining when an ILEC’s failure to provide CLEC’s with UNE access would impair competition. The analysis looks to the volume of business in a particular wire center to determine impairment. The theory is that when business volume reaches a certain threshold, a CLEC could make enough money in an area such that “the CLEC has the incentive to install and operate its own fiber facilities, and thus there is no reason to require the ILEC to provide them.” On June 30, 2005, AT&T Texas initiated an arbitration proceeding before the Public Utility Commission of Texas regarding its interconnection agreement with Logix Communications LP, seeking resolution of a dispute regarding UNE declassification. AT&T sought to establish that its method of determining the volume of business, and thus the necessity for UNE access, in the Texas market was correct. The PUC upheld AT&T’s method of counting business lines in a wire center, and Logix challenged that determination. The district court granted summary judgment for AT&T. HOLDING:Affirmed. The FCC, the court stated, defines a “business line” as an incumbent LEC-owned switched access line used to serve business customers, whether by the incumbent LEC itself or by a CLEC that leases the line from the incumbent LEC. The number of business lines in a wire center shall equal the sum of all incumbent LEC business switched access lines, plus the sum of all UNE loops connected to the wire center, including UNE loops provision in combination with other unbundled elements. Among these requirements, business line tallies: 1. shall include only those access lines connecting end-user customers with incumbent LEC end-offices for switched services; 2. shall not include nonswitched special access lines; and 3. shall account for ISDN and other digital access lines by counting each 64 kbps-equivalent as one line. For example, the court stated, a DS1 line corresponds to 24 64 kbps-equivalents, and therefore to 24 “business lines.” The FCC, the court stated, uses this definition throughout the remand order to establish proxies for impairment, which in turn helps show where competition is sufficient such that CLECs have an incentive to provide their own facilities. Logix challenged the district court’s determination that AT&T’s method of counting business lines in a wire center was correct. This case concerns how to count two types of telecom lines UNE loops and 64 kbps-equivalent, digital access lines under the business line proxy set forth in 47 C.F.R. �51.5. The PUC and the district court determined that all UNE loops and 64 kbps-equivalent, digital access lines counted as business lines even if they did not serve business customers. Specifically, Logix challenged the PUC’s and the district court’s determination that all UNE loops, not just those serving business customers, count as business lines. Logix argued that the first line of the business line definition limits the remainder of the definition such that: 1. only business (as opposed to residential) lines are counted; 2. the line must be a switched access line; and 3. whether the line should be counted is not affected by whether the services are provided by an ILEC or a CLEC leasing the line. The FCC chose business lines, the court stated, as easily administrable proxies for determining where significant revenue opportunities were available. The FCC chose wire centers, not commercial buildings, as the appropriate level of analysis. With this choice came the recognition of the imprecision of the method, but the FCC determined that, because it was measuring potential competition in addition to actual competition, a certain level of imprecision was acceptable. It follows that “over-counting” of UNE loops by including those that serve residential customers along with those that serve business customers comports not only with the text of the rule but also with the policy underlying the TRRO. Logix’s second argument was that counting high capacity loops at the full digital equivalency, rather than by looking to end user of each line in the high capacity loop, is inconsistent with subpart (3) of the business line definition. In particular, Logix believes that only those lines in a high capacity loop that are: 1. connected to an end-user business customer; 2. providing switched access service; and 3. provided by either the ILEC or CLEC leasing the UNE loop should be counted as business lines. Logix urged that if the FCC had wished to declare all high-capacity services as business lines, it could have simplified the definition to say so. The court found that the FCC did say so in its regulations. The purpose behind the business-line-count methodology, the court stated, is impairment analysis, which aims at determining whether the market in a particular locale is robust enough to support unregulated competition. The FCC wanted to measure competition generally without the need for litigation or overly fact-based analysis. It should not be surprising that the method is not absolutely precise. Read as written, the regulation supports the PUC’s interpretation. OPINION:Smith, J.; Reavley, Smith and Garza, JJ.

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