## Facts

- The Telecommunications Act of 1996 imposes separate duties on incumbent local exchange carriers (ILECs) to (1) provide interconnection to competitors under 47 U.S.C. § 251(c)(2) and (2) lease certain unbundled network elements at cost-based rates under § 251(c)(3), subject to an FCC “impairment” analysis.
- The facilities at issue were “entrance facilities,” transmission links connecting an ILEC’s network to a competitive local exchange carrier’s (CLEC’s) network.
- In FCC orders issued in 2003 and 2005, the FCC concluded that ILECs need not provide cost-based unbundled access to entrance facilities for “backhauling” under § 251(c)(3), while repeatedly stating that these rulings did not alter the separate interconnection obligation under § 251(c)(2).
- After the 2005 order, AT&T Michigan notified CLECs that it would no longer provide entrance facilities at regulated cost-based rates, including when used for interconnection, and would instead charge higher tariffed rates.
- Talk America and other competitors complained to the Michigan Public Service Commission (MPSC), which ruled that AT&T Michigan must provide entrance facilities at cost-based rates when used for interconnection.
- AT&T Michigan sued in federal court; the district court reversed the MPSC, and the Sixth Circuit affirmed, declining to follow the FCC’s amicus interpretation of its own regulations.

## Issues

1. Whether an ILEC must make existing entrance facilities available to CLECs at cost-based rates when those facilities are used for interconnection under 47 U.S.C. § 251(c)(2).
2. Whether the FCC’s interpretation of its own interconnection regulations, offered in amicus briefing, warrants judicial deference.

## Decision

- The Supreme Court reversed the Sixth Circuit.
- The Court held that the FCC reasonably interpreted its regulations to require an ILEC to provide existing entrance facilities at cost-based rates when used to satisfy the § 251(c)(2) interconnection duty.
- The Court deferred to the FCC’s interpretation of its own ambiguous regulations because it was not plainly erroneous or inconsistent with the regulatory text.
- Justice Scalia concurred in the judgment, agreeing with the result on the merits and stating he would reach the same outcome without relying on deference to the agency’s interpretation offered in litigation.

## Legal Principles

- The interconnection duty in § 251(c)(2) is independent of the unbundling obligation in § 251(c)(3) and is not conditioned on an “impairment” analysis.
- The same physical facility may be subject to different regulatory treatment depending on its use (interconnection versus backhauling).
- Courts generally defer to an agency’s reasonable interpretation of its own ambiguous regulations unless the interpretation is plainly erroneous or inconsistent with the regulation.
- FCC decisions limiting unbundled access to entrance facilities for backhauling under § 251(c)(3) do not eliminate the obligation to provide facilities necessary for interconnection under § 251(c)(2).

## Conclusion

The Court concluded that, under the FCC’s reasonably interpreted regulations, an incumbent carrier must provide existing entrance facilities to competitors at cost-based rates when the facilities are used for interconnection, and it rejected the view that limits on unbundling for backhauling permit tariffed pricing for interconnection.


Talk America, Inc. v. Michigan Bell Telephone Co., 564 U.S. 50 (2011)