In this Order, the Wireline Competition Bureau (Bureau) grants a petition for declaratory ruling filed by Time Warner Cable (TWC) asking the Commission to declare that wholesale telecommunications carriers are entitled to interconnect and exchange traffic with incumbent local exchange carriers (LECs) when providing services to other service providers, including voice over Internet Protocol (VoIP) service providers pursuant to sections 251(a) and (b) of the Communications Act of 1934, as amended (the Act).  As explained below, we reaffirm that wholesale providers of telecommunications services are telecommunications carriers for the purposes of sections 251(a) and (b) of the Act, and are entitled to the rights of telecommunications carriers under that provision.  We conclude that state commission decisions denying wholesale telecommunications service providers the right to interconnect with incumbent LECs pursuant to sections 251(a) and (b) of the Act are inconsistent with the Act and Commission precedent and would frustrate the development of competition and broadband deployment.

Background

1.       On March 1, 2006, TWC filed a petition for declaratory ruling requesting that the Commission affirm that “requesting wholesale telecommunications carriers are entitled to obtain interconnection with incumbent LECs to provide wholesale telecommunications services to other service providers” (including VoIP-based providers).   In its Petition, TWC states that in 2003 it began to deploy a facilities-based competitive telephone service using VoIP technology, which enables it to offer a combined package of video, high-speed data, and voice services.   TWC purchases wholesale telecommunications services from certain telecommunications carriers, including MCI WorldCom Network Services Inc. (MCI) and Sprint Communications Company, L.P. (Sprint), to connect TWC’s VoIP service customers with the public switched telephone network (PSTN).   MCI and Sprint provide transport for the origination and termination on the PSTN through their interconnection agreements with incumbent LECs.  In addition, MCI and Sprint provide TWC with connectivity to the incumbent’s E911 network and other necessary components as a wholesale service.

2.       TWC claims that MCI has been unable to provide wholesale telecommunications services to TWC in certain areas in South Carolina and that Sprint has been unable to provide wholesale telecommunications services to TWC in certain areas in Nebraska because, unlike certain other state commissions, the South Carolina Public Service Commission (South Carolina Commission) and the Nebraska Public Service Commission (Nebraska Commission) have determined that rural incumbent LECs are not obligated to enter into interconnection agreements with competitive service providers (like MCI and Sprint) to the extent that such competitors operate as wholesale service providers. TWC argues that the South Carolina and Nebraska Commissions misinterpreted the statute when they decided, among other things, that competitive LECs providing wholesale telecommunications services to other service providers, in this case VoIP-based providers, are not “telecommunications carriers” for the purposes of section 251 of the Act, and, therefore, are not entitled to interconnect with incumbent LECs.

TWC asks the Commission to grant a declaratory ruling reaffirming that telecommunications carriers are entitled to obtain interconnection with incumbent LECs to provide wholesale telecommunications services to other service providers.  The Petition also requests that the Commission clarify that interconnection rights under section 251 of the Act are not based on the identity of the wholesale carrier’s customer.

On March 1, 2006, Time Warner Cable (TWC) filed a petition for declaratory ruling requesting that the Commission affirm that competitive local exchange carriers (LECs) are entitled to interconnect with incumbent LECs pursuant to Section 251 of the Communications Act of 1934 (the Act), as amended, for the purpose of exchanging traffic on behalf of VoIP-based providers. TWC asserts that the public service commissions of South Carolina and Nebraska misinterpreted the statute when issuing decisions finding, among other things, that competitive LECs providing wholesale telecommunications services to other service providers are not “telecommunications carriers” for the purposes of Section 251 of the Act, and, therefore, are not entitled to interconnect with incumbent LECs. Specifically, TWC argues that competitive LECs selling telecommunications services on a wholesale basis are telecommunications carriers and are entitled to interconnection under Section 251.