Certificate of Authority

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In this week’s ICORE Blog we discuss an issue before the FCC related to a dispute between the South Dakota Public Utility Commission (SDPUC) and Midcontinent Communications (MC). The key question in the dispute is whether a state regulatory commission can require a telecommunications carrier to obtain a Certificate of Authority (COA) from the state as a pre-requisite to establishing interconnection under Section 251(a) of the Act. The following is a brief summary of the key events related to this issue:

* In the summer of 2021 Midcontinent requested interconnection from the James Valley Telecommunications Cooperative (JV) under Section 251(a) for the provision of wholesale interconnection services. JV chose not to negotiate an interconnection agreement because MV did not have a COA to provide service in its territory.

* In August 2021 MC sent a draft interconnection agreement to JV. In September JV filed a petition for a declaratory ruling with the SDPUC seeking a ruling confirming that MC was required to hold a COA covering JV’s territory as a requirement for interconnection. The SDPUC dismissed the JV petition and requested that MV provide formal notice that it had requested interconnection with JV. MC provided the formal notice in October,2021 and JV did not respond.

* In December,2021 MC filed for arbitration under Section 252 proposing the same terms for interconnection as contained in the August draft agreement. JV filed a petition to dismiss the petition for arbitration. This petition was denied in January 2022 and the SDPUC ordered the Parties to file briefs addressing whether MC is required to obtain a COA to provide service in JV’s territory before it can interconnect with JV.

* JV and the SDPUC staff took the position that MC could not obtain interconnection without first obtaining a COA to provide service in JV’s territory even when MC provides wholesale service to third party providers that had secured the authority to serve customers in JV’s territory on a retail basis. MC’s position was that state law and the ACT as well as FCC precedent provide that all telecommunication carriers, including wholesale providers, are entitled to interconnection under Section 251(a) and a COA is not required. MC’s positions relied heavily on Prior FCC rulings involving Time Warner and CRC Communications where the FCC concluded that wholesale providers were entitled to interconnection under 251(a) to provide wholesale interconnection service.

* In March 2022 the SDPUC ruled that MC was not entitled to interconnection until it obtained a COA to provide service in JV’s territory. In reaching this conclusion the SDPUC stated that prior FCC rulings in Time Warner and CRC Communications support MC’s right to interconnection but did not preempt a state’s right to require a COA. The SDPUC also ordered the Parties to negotiate an interconnection agreement so that an agreement would be in place when MC was authorized to interconnect via a COA. An interconnection agreement was approved by the Commission in July 2022 but has not taken effect because MC has filed for a COA with the SDPUC.

In response to the SDPUC’s ruling, MC filed a Petition for Declaratory Ruling with the FCC. The petition seeks a ruling from the FCC that a COA is not required for interconnection under 251(a) for wholesale providers. As in their filings to the SDPUC, MC relies heavily on the prior FCC rulings in the Time Warner and CRC cases. Several interested parties have filed comments in this case and numerous ex-partes have occurred. The key issue in this case is not whether or not a wholesale provider is entitled to interconnection. That issue was decided in the Time Warner and CRC cases where the FCC ruled that interconnection under 251(a) is required for providers of wholesale services. The key issue is whether a state Commission can require a COA as a condition of interconnection. As some commenters have stated, a COA provides a state Commission with the authority to impose requirements on telecommunications providers such as technical requirements, consumer complaints, and other issues that are deemed to be in the public interest. Based on our review of the Time Warner ruling we can find no provision in that ruling that preempts a state Commission’s authority to require a COA as a condition of interconnection and conclude that the FCC should reject the MC Petition.

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