Talk America, Inc. v. Michigan Bell Telephone Co.

Background

AT&T Michigan is an incumbent local telephone company. Several smaller competing phone companies, including Talk America, and the Michigan Public Service Commission disagreed with AT&T after it said it would stop offering existing "entrance facilities" at cost-based rates. Entrance facilities are the wires or cables that link a competitor’s network to an incumbent’s network. The FCC issued rules and a Triennial Review Remand Order about whether entrance facilities must be unbundled, and the FCC filed a brief saying its rules require access for interconnection. Lower courts split; the District Court ruled for AT&T and the Sixth Circuit affirmed, and petitioners asked the Supreme Court to decide.

Reasoning

The Court found the statute and regulations do not clearly answer whether incumbents must lease entrance facilities for interconnection, so it looked to the FCC’s interpretation. The FCC said interconnection duties require providing any technically feasible method to interconnect, that entrance facilities are part of the incumbent’s network, and that the facilities at issue are technically feasible to lease. The Court deferred to the FCC’s reasonable interpretation, concluding it was neither plainly erroneous nor inconsistent with the rules, and rejected AT&T’s competing arguments.

Real world impact

The decision requires incumbent local carriers to provide existing entrance facilities for interconnection at cost-based rates when technically feasible, making it easier and less costly for competitors to link networks. The ruling does not decide whether incumbents must build new entrance facilities, and it resolves a split among federal appeals courts by adopting the FCC’s view.

Dissents or concurrances

Justice Scalia wrote a short concurrence joining the judgment but said he would reach the same result without deferring to the agency and expressed skepticism about judicial deference to an agency’s interpretation of its own rules.