Full opinion text
MEMORANDUM AND ORDER SHAW, District Judge. This action was filed by Southwestern Bell Telephone, L.P., d/b/a SBC Missouri (“SBC”) seeking declaratory and injunctive relief under the Federal Telecommunications Act of 1996. The matter is before the Court on a motion to dismiss for lack of subject matter jurisdiction, two motions to strike, and motions for summary judgment filed by SBC and defendants Sprint Communications Company, L.P. and Charter Fiberlink-Missouri, LLC. The Court concludes that it has subject matter jurisdiction over this action, the motions to strike should be denied, plaintiff SBC’s motion for summary judgment should be granted in part and denied in part, defendant Sprint Communications Company, L.P.’s motion for summary judgment should be granted, and defendant Charter Fiberlink-Missouri, LLC’s motion for summary judgment should be denied. I. Introduction and Regulatory Framework. By enacting the Telecommunications Act of 1966 (the “Act”), “Congress entered what was primarily a state system of regulation of local telephone service and created a comprehensive scheme of telecommunications regulation administered by the Federal Communications Commission.” Indiana Bell Tel. Co. v. Indiana Utility Regulatory Comm’n, 359 F.3d 493, 494 (7th Cir.2004)., While state utility commissions have a role in carrying out the Act, the Supreme Court of the United States has stated that the Act “unquestionably” took “regulation of local telecommunications competition away from the States.” AT & T Corp. v. Iowa Utilities Bd., 525 U.S. 366, 378 n. 6, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999). The Supreme Court has described the fundamental change effected by the Act in telephone markets as follows: Until the 1990’s, local phone service was thought to be a natural monopoly. States typically granted an exclusive franchise in each local service area to a local exchange carrier (LEC), which owned, among other things, the local loops (wires connecting telephones to switches), the switches (equipment directing calls to their destinations), and the transport trunks (wires carrying calls between switches) that constitute a local exchange network. Technological advances, however, have made competition among multiple providers of local service seem possible, and Congress recently ended the longstanding regime of state-sanctioned monopolies. The Telecommunications Act of 1996 ... fundamentally restructures local telephone markets. States may no longer enforce laws that impede competition, and incumbent LECs are subject to a host of duties intended to facilitate market entry. Foremost among these duties is the LEC’s obligation under 47 U.S.C. § 251(c) to share its network with competitors. Under this provision, a requesting carrier can obtain access to an incumbent’s network in three ways: It can purchase local telephone services at wholesale rates for resale to end users; it can lease elements of the incumbent’s network “on an unbundled basis”; and it can interconnect its own facilities with the incumbent’s network. When an entrant seeks access through any of these routes, the incumbent can negotiate an agreement without regard to the duties it would otherwise have under § 251(b) or § 251(c). See § 252(a)(1). But if private negotiation fails, either party can petition the state commission that regulates local phone service to arbitrate open issues, which arbitration is subject to § 251 and the FCC regulations promulgated thereunder. AT & T Corp. v. Iowa Utilities Bd., 525 U.S. 366, 371-73, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999) (footnote added). “To facilitate the entry of competing carriers into the market for local [telephone] service, the Act requires that incumbent carriers provide ‘interconnection’ and other wholesale services to the competing carriers on a non-diseriminatory basis.” Indiana Bell, 359 F.3d at 495. “Sections 251 and 252 of the Act lay out a process for reaching ‘interconnection agreements’ by which competing carriers can gain interconnection with the incumbent carrier’s networks, facilities and services.” Id. Among the duties that apply to incumbent local exchange carriers (“ILECs”) is the obligation to lease certain parts of their networks to competitors at regulated rates. See 47 U.S.C. § 251(c)(3). Before a network facility is required to be made available under this provision, however, the Federal Communications Commission (“FCC”) must determine that competitors are “impaired” without access to it. Id., § 251(d)(2). A facility that the FCC has determined must be made available under this provision is known in the telecommunications industry as an “unbundled network element,” or “UNE.” UNE components include “loops,” “switches,” and “transport facilities.” Loops are copper wires that connect a home or business to the local phone company switch. A switch is a device, usually software, that routes a call from a home or office to the intended recipient. Transport facilities are devices such as copper wires or fiberoptic cables that transport calls between switches. A UNE Platform is a combination of all the network elements required to provide local telephone service, required to be offered in a pre-packaged form that permits competing local exchange carriers (“CLECs”) to provide telephone service with no actual switching, loop or transport facilities of their own. See Peter W. Huber, et al., Federal Telecommunications Law § 2.7.4 at 123 (2d ed. Cum.Supp.2004). Rates that ILECs can charge for UNEs must be based on cost. 47 U.S.C. § 252(d)(1). The FCC has implemented this directive by a pricing methodology known as “total element long-run incremental cost,” or TELRIC. See Local Competition Order, 1996 WL 452885, 11 F.C.C.R. at 15,844, ¶ 672. TELRIC allows access to UNEs at very low rates, and has been upheld by the Supreme Court as the pricing methodology used under certain portions of the Act. Verizon Commc’ns Inc. v. FCC, 535 U.S. 467, 489, 122 S.Ct. 1646, 152 L.Ed.2d 701 (2002). The duties of § 251 are implemented through “interconnection agreements” between ILECs and CLECs. See 47 U.S.C. § 252. The Act requires ILECs and CLECs to negotiate in good faith the terms and conditions of agreements to fulfill the duties described in §§ 251(b) and (c). Id., § 251(c)(1). If negotiations are unsuccessful, either party may ask the appropriate state public utility commission to arbitrate “any open issues” the parties have been unable to resolve. See id., § 252(b). In deciding these “open issues,” the state commission must adhere to the requirements of the statute and the FCC’s implementing regulations. Id., § 252(c). The Eleventh Circuit recently described the history of the FCC’s efforts to implement a regulatory scheme under the Act, which ultimately resulted in the FCC’s Triennial Review Remand Order (“TRRO”). Under the TRRO, the FCC no longer required unbundled access to certain network elements under § 251 and established a transition plan for the telecommunications industry to implement the new regulations: For eight years, the FCC tried and failed to implement a regulatory scheme that, after review by federal courts, satisfied the 1996 Act. For most of those eight years, the FCC required unbun-dling on the theory that it enhanced competition. The FCC required ILECs and CLECs to enter “voluntary” agreements to provide unbundled access to local telephone networks. If the parties could not agree, an agreement was provided either by the FCC or by state commerce commissions. States were given the authority to oversee voluntary agreements and arbitrate disputes arising from those agreements. 47 U.S.C. § 252(a), (b). In 2004, in a challenge to the FCC scheme filed by ILECs, the D.C. Circuit vacated the second attempt of the FCC to implement the directive of Congress regarding local phone service. See U.S. Telecom Ass’n v. FCC, 359 F.3d 554 (D.C.Cir.2004). The D.C. Circuit concluded, in part, that the unbundling regime enacted by the FCC was not based on a rational analysis of whether “CLECs are impaired in the mass market without unbundled access to ILEC switches.” Id. at 569. The D.C. Circuit also expressed some frustration regarding the “failure [of the FCC], after eight years, to develop lawful unbundling rules, and its apparent unwillingness to adhere to prior judicial rulings.” Id. at 595. In response to the ruling of the D.C. Circuit, the FCC issued interim rules that preserved the status quo ante while the FCC wrote new rules, and the FCC established a transition period, ending in early 2005, in which only existing customers could be served through UNEs. In February 2005, the FCC released its Triennial Review Remand Order (TRRO), which stated that the unbun-dling of certain “UNE-Platform” (UNE-P) elements harmed competition by discouraging innovation. To redress that harm, the FCC stated that ILECs would no longer be obliged to provide CLECs “with unbundled access to mass market local switching,” and the FCC provided more limited relief from un-bundling for loops and transport. The FCC stated that existing, or “embedded,” customers could continue to have access to UNE-Ps for up to twelve months, although at higher rates. The FCC also required CLECs to submit orders within one year to convert embedded UNE-P customers to “alternative arrangements.” During the transition period, the FCC banned new orders for unbundled access to local mass market switching: “This transition period shall apply only to the embedded customer base, and does not permit competitive LECs to add new customers using unbundled access to local circuit switching.” The FCC required both ILECs and CLECs to negotiate, under the change-of-law provisions in their contracts, any “necessary” changes to the interconnection agreements: “We expect that [carriers] will implement [our] findings.... Thus, carriers must implement changes to their interconnection agreements consistent with our conclusions in this Order.... Thus, [carriers] must negotiate in good faith regarding any rates, terms, and conditions necessary to implement our rule changes.” Based on the “need for prompt action,” the FCC stated that the TRRO was effective on March 11, 2005. Bellsouth Commc’ns, Inc. v. MCIMetro Access Trans. Servs., LLC, 425 F.3d 964, 967 (11th Cir.2005). 1. Section 271 Requirements. In Section 271, the Act imposes a separate set of affirmative duties on the Bell Operating Companies (“BOCs”) that were divested from AT & T in the consent decree entered in the anti-trust suit brought in the 1970s by the U.S. Department of Justice. See United States v. American Tel. & Tel. Co., 552 F.Supp. 131 (D.D.C.1982), aff'd sub nom Maryland v. United States, 460 U.S. 1001, 103 S.Ct. 1240, 75 L.Ed.2d 472 (1983) (“AT & T case”). These duties were imposed by Congress as a condition of removing the ban in the final judgment in the AT & T case which prohibited BOCs from providing long distance services. “Section 271 sets out the factors the FCC evaluates in deciding whether to grant the application of an [ILEC] carrier to enter the long-distance market.” Indiana Bell, 359 F.3d at 495. “Part of the process is directed at ensuring that the applicant is facilitating competition in the market for local services before it is allowed to enter the long-distance market.” Id. Among the § 271 obligations is a list of fourteen competitive “checklist” items that BOCs must provide to CLECs to ensure that the market for local services is irreversibly open to competition. See 47 U.S.C. § 271(c)(2)(B). The checklist items include: “Local loop transmission from the central office to the customer’s premises, unbundled from local switching or other services,” id., § 271(c)(2)(B)(iv); “[l]ocal transport from the trunk side of a wireline local exchange carrier switch unbundled from switching or other services,” id., § 271(c)(2)(B)(v); and “[l]ocal switching unbundled from transport, local loop transmission, or other services.” Id., § 271(c)(2)(B)(vi). Under § 271, if BOCs such as SBC wish to offer long-distance service, they must provide CLECs with access to certain of their network elements even though they may no longer be required to provide those elements to the CLECs under § 251. Section 271 creates an obligation for BOCs to make network elements available to competitors which is independent of the ILECs’ obligations under § 251. A key difference between the unbundling obligations of § 251 and the checklist obligations of § 271 is the price that CLECs must pay for the network elements: Under § 271, network elements are to be provided at a “just and reasonable rate,” rather than at the low, cost-based TEL-RIC required by § 251. See Triennial Review Order (“TRO”), 18 F.C.C.R. at 17,389, ¶ 664. 2. Role of State Public Utility Commissions. The Act specifically delegates certain responsibilities to state public utility commissions such as the Missouri Public Service Commission (“MPSC”). The Act requires that “the participation of state commissions in the new federal regime be guided by federal-agency regulations.” Indiana Bell, 359 F.3d at 494 (citing AT & T Corp., 525 U.S. at 378 n. 6, 119 S.Ct. 721). Relevant to this case, “state commissions have a role in helping to negotiate and arbitrate interconnection agreements if private negotiations fail to produce a complete agreement within a specific period of time.” Id.; 47 U.S.C. § 252(a), (b). “Before any interconnection agreement may be implemented, the state commission must approve it.” Id., § 252(e)(1). State commissions are also authorized to establish rates for interconnection, services or network elements for purposes of §§ 251(c)(2) and (3). See 47 U.S.C. §§ 252(c), (d). In addition, § 271(d) requires the FCC to “consult” with state commissions to verify a BOC’s compliance with § 271(c) competitive checklist items. See 47 U.S.C. § § 271(c) and (d). “The state commission makes a recommendation, which is merely advisory, as to whether the BOC has satisfied the requirements. The Act reserves to the FCC the authority to decide whether to grant a section 271 application.” Indiana Bell, 359 F.3d at 495. 3. Factual and Procedural Background. In 2001, plaintiff SBC, the incumbent Local Exchange Carrier (“ILEC”) in Missouri, offered a standard interconnection agreement to its competitors. A number of the competitors entered into the standard agreements, which were approved by the MPSC pursuant to 47 U.S.C. § 252(e). The standard interconnection agreements were set to expire in March 2005. In late 2004 SBC attempted to negotiate new agreements with its competitors, but the parties were unable to reach complete agreement on all issues. As required by the Act, SBC petitioned the MPSC to arbitrate the agreements pursuant to § 252. The arbitrator filed a Final Arbitrator’s Report on June 21, 2005, consisting of some 2,075 pages. SBC and some of the CLECs filed comments and objections to the Final Arbitrator’s Report on June 24, 2005. The MPSC heard oral arguments on the comments on June 29 and 30, 2005, and issued an Arbitration Order (the “Arbitration Order”) on July 11, 2005. The Arbitration Order adopted the Final Arbitrator’s Report as the MPSC’s decision on each unresolved issue, except to the extent the Arbitration Order specifically modified the Final Arbitrator’s Report. On July 19, 2005, SBC sought rehearing of the Arbitration Order, asserting that it was contrary to federal law in certain respects. On August 3, 2005, as required by the Arbitration Order, SBC and the CLECs submitted interconnection agreements that conformed to the terms of the Arbitration Order. The MPSC approved these agreements, but in doing so did not address the issues raised by SBC in its rehearing petition. SBC then filed this action, citing 47 U.S.C. § 252(e)(6), 28 U.S.C. § 1331, the Supremacy Clause of the United States Constitution, and 28 U.S.C. § 1367 as the bases for jurisdiction. The defendants are the MPSC, its individual members in their official capacities, and a number of competing local exchange carriers. SBC contends the Arbitration Order requires it to provide competitors with access to SBC’s telecommunications network well beyond the access authorized by FCC regulations. SBC contends the Arbitration Order is preempted by applicable FCC regulations because the MPSC has ordered it to provide network elements in contravention of the FCC’s binding regulations, and because the MPSC cannot require that terms and conditions for § 271 checklist items be included in SBC’s interconnection agreements with CLECs. SBC moved for a preliminary injunction to enjoin the Arbitration Order to the extent it authorizes CLECs to place new UNE Platform orders in violation of the “nationwide bar” on such new orders contained in the FCC’s TRRO. Rather than contesting SBC’s motion, but without conceding its validity, the MPSC and the defendant CLECs stipulated to the entry of a preliminary injunction pending further orders of the Court. See Doc. 43. II. Motion to Dismiss for Lack of Subject Matter Jurisdiction. As a preliminary matter, the Court must address its jurisdiction to hear this matter. The MPSC moves to dismiss this case for lack of subject matter jurisdiction on the basis that it does not arise under the laws or Constitution of the United States as required for federal question jurisdiction under 28 U.S.C. § 1331. The MPSC contends that SBC’s alleged statutory basis for jurisdiction, 47 U.S.C. § 252(e)(6), is not applicable in this case because § 252(e)(6) of the Act provides federal jurisdiction only where a state commission makes a determination under that section, and the Arbitration Order at issue here was not a determination under § 252 -of the Act, but rather under §§ 271-72. SBC responds that MPSC’s position is directly contrary to the Supreme Court’s holding in Verizon Maryland, Inc. v. Public Service Commission, 535 U.S. 635, 122 S.Ct. 1753, 152 L.Ed.2d 871 (2002), which establishes that federal district courts have jurisdiction under 28 U.S.C. § 1331 over complaints such as SBC’s, containing claims that a state commission violated the Act and FCC rulings. The MPSC did not file a reply memorandum. The Court concludes that it has jurisdiction over this action. In Verizon Maryland, the Supreme Court held that 28 U.S.C. § 1331 gave the federal district court a basis for jurisdiction to review a claim that a State commission violated federal law in determining that an interconnection agreement included calls placed to Internet Service Providers as local calls subject to a reciprocal arrangement. Verizon Maryland, 535 U.S. at 643-44, 122 S.Ct. 1753. The Court declined to address whether 47 U.S.C. § 251(e)(6) gives federal courts power to review state commissions’ interpretation of an interconnection agreement, but held that because the plaintiffs complaint alleged the state commission “violated the [Telecommunications] Act and [an] FCC ruling” and sought declaratory and injunctive relief against the state commission’s decision, “federal courts have jurisdiction under § 1331 to entertain such a suit.” Id. at 642, 122 S.Ct. 1753. The Court explained that when a party seeks relief from a state commission order “on the ground that such regulation is preempted by a federal statute which, by virtue of the Supremacy Clause of the Constitution, must prevail ... its claim thus presents a federal question which the federal courts have jurisdiction under 28 U.S.C. § 1331 to resolve.” Verizon Maryland, 535 U.S. at 642, 122 S.Ct. 1753 (internal quotation marks and citation omitted). Subsequent Eighth Circuit decisions have held that under Verizon Maryland, federal district courts have subject matter jurisdiction “to determine whether a state administrative agency correctly interprets federal law, in this case the Telecommunications Act and the FCC regulations interpreting the Act.” Rural Iowa Indep. Tel. Ass’n v. Iowa Utilities Bd., 362 F.3d 1027, 1030 (8th Cir.2004) (citing Verizon Maryland, 535 U.S. at 643-44, 122 S.Ct. 1753); see also Iowa Network Servs., Inc. v. Qwest Corp., 363 F.3d 683, 691-92 (8th Cir.2004) (citing Verizon Maryland in support of the conclusion that jurisdiction exists under § 1331 to review state commission orders for compliance with federal law). Because SBC alleges that the MPSC’s decisions violate federal Law, see Complaint ¶¶ 43, 49-51, this Court has subject matter jurisdiction under 28 U.S.C. § 1331. Motions to Strike. The MPSC filed two motions to strike portions of pleadings as immaterial, one directed to SBC’s complaint, and the other directed to the counterclaim/cross-claim filed by defendant Charter Fiberlink-Mis-souri, LLC (“Charter”). MPSC asserts that nineteen paragraphs in SBC’s complaint and eighteen paragraphs in Charter’s counterclaim/cross-claim violate the “simple, concise and direct” requirement of Rule 8(e)(1), Federal Rules of Civil Procedure, because these pleadings contains “several long and intricate legal arguments that are appropriately raised in a dispositive pleading or brief.” Mots, to Strike, ¶ 2. MPSC cites no case law in support of its motions and does not provide any further information concerning the contents of the paragraphs at issue. Under Federal Rule of Civil Procedure 12(f), a court may “order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Motions to strike are not favored and are infrequently granted, because they propose a drastic remedy. Stanburg Law Firm v. Internal Revenue Service, 221 F.3d 1059, 1063 (8th Cir.2000). Nonetheless, resolution of such a motion lies within the broad discretion of the Court. Id. Matter will not be stricken unless it clearly can have no possible bearing on the subject matter of the litigation. 2 James W. Moore, et al., Moore’s Federal Practice § 12.37[3] (3rd ed.2006). If there is any doubt whether the matter may raise an issue, the motion should be denied. Id. If allegations are redundant or immaterial, they should be stricken only if prejudicial to the moving party. Id. In this case, MPSC has not met its burden to establish that the challenged paragraphs have “no possible bearing” on the subject matter of the litigation. In addition, MPSC has not alleged, must less established, that any of the paragraphs it seeks to strike are prejudicial to it. MPSC’s motions to strike should therefore be denied. III. SBC’s Motion for Summary Judgment. SBC’s motion for summary judgment raises some but not all of the claims asserted in its complaint. SBC asks the Court to vacate the MPSC’s orders to the extent they require SBC to (1) provide access to unbundled switching and the UNE Platform pursuant to § 271 of the Act; (2) provide unbundled access to high-capacity loops and transport, dark fiber loops and sub-loops, and entrance facilities under § 271 of the Act, in circumstances where the FCC has held that these facilities need not be unbundled pursuant to § 251(c)(3) the Act; and (3) treat interex-change calls as subject to reciprocal compensation rather than access charges, where the calls originate in the “Internet Protocol” format. SBC asserts that the MPSC should be enjoined from imposing or enforcing these same obligations in any other agreements involving SBC. SBC challenges the MPSC’s Arbitration Order in two principal areas. First, SBC asserts that the Arbitration Order violates binding FCC decisions limiting the network facilities that state commissions can require incumbent carriers such as SBC to provide at regulated rates to their competitors. Simply put, SBC contends that the network-access requirements imposed by the MPSC have been deemed unlawful by the FCC. SBC also asserts that the MPSC purported to act pursuant to a statutory provision over which the FCC has exclusive authority, 47 U.S.C. § 271, and therefore exceeded its jurisdiction. The defendants responds that the MPSC acted within its jurisdiction under § 271 to include the network-access requirements challenged by SBC. Second, SBC asserts that the MPSC erred in determining the compensation that applies when SBC and its competitors exchange traffic that a competitor has converted from an Internet Protocol format to standard analog format. SBC contends the MPSC’s analysis on this issue is directly contrary to federal law and is completely unreasoned, as the MPSC offered no substantive rationale in support of its decision. The defendants respond that the MPSC correctly determined that reciprocal compensation applies to such calls rather than higher-fee access charges, and adequately explained its reasoning. 1. Standard of Review. In actions such as this one, federal district courts apply de novo review to state commissions’ interpretation and application of federal law, and apply a deferential “arbitrary and capricious” review standard to the commissions’ factual determinations and mixed questions of law and fact. See WWC License, L.L.C. v. Boyle, 459 F.3d 880, 2006 WL 2419162, *6 (8th Cir.2006) (citing cases). SBC’s challenges to the MPSC’s actions primarily allege that the MPSC misinterpreted or misapplied federal law, and therefore are subject to de novo review. 2. Discussion. A. MPSC Jurisdiction Over § 271 Elements. In the Arbitration Order, the MPSC recognized that under binding FCC regulations, ILECs such as SBC are no longer required under § 251 to offer CLECs unbundled access to local switching, high-capacity loops, dedicated transport, OCn and dark fiber loops, and dark fiber and feeder subloops. Nonetheless, the MPSC required SBC to provide CLECs with unbundled access to certain of these network elements under § 271. The Arbitration Order recognized that while unbundled access to these UNEs was proper at TELRIC rates under § 251, access to the same UNEs under § 271 is proper only at the “just and reasonable” rate standard established under §§ 201 and 202 of the Act. The MPSC concluded that it had authority to enforce the FCC’s “just and reasonable” pricing standard for § 271 UNEs, and adopted rates patterned on the FCC’s transition period rates for declassified § 251 UNEs, on an interim basis. See Arbitration Order at 28-30. The gravamen of SBC’s complaint is that the MPSC erroneously concluded it had the jurisdiction and authority to order § 271 unbundling obligations to be included in an interconnection agreement arbitrated pursuant to § 252, where SBC had not agreed to negotiate access to these facilities pursuant to § 251. SBC contends that the statute gives jurisdiction over enforcement of § 271 exclusively to the FCC. SBC also contends that the Arbitration Order requires it to provide CLECs with the UNE Platform in direct contravention of the FCC’s ruling in the TRRO, and therefore creates a substantive conflict with federal law and is preempted. Finally, SBC asserts that even if the MPSC had jurisdiction to issue the rulings concerning UNEs, it did not have the authority to set regulated rates, as “just and reasonable” rates contemplate a market price arrived at through negotiations between SBC and the CLECs. The MPSC and the Coalition defendants separately respond that the MPSC properly exercised its duties under §§ 271 and 272 of the Act and correctly ordered SBC’s interconnection agreements with CLECs to include terms and conditions for the § 271 checklist items SBC is required to make available to its competitors — local switching, local loops and local transport. The Coalition defendants contend that SBC’s obligation to make portions of its network available to CLECs on an unbundled basis exists under two distinct sections of the Act, § 251 and § 271, and note that § 271 explicitly requires the § 271 checklist items to be included in § 252 interconnection agreements. The Coalition defendants contend that approval of terms and conditions for § 271 checklist elements does not constitute “enforcement” of SBC’s § 271 elements by the MPSC, and that the MPSC’s Arbitration Order is therefore not preempted by the FCC’s regulatory scheme. As stated in the introductory section of this opinion, the Act completely changed the primarily state system of regulation of local telephone service and created a comprehensive, federally-administered scheme of telecommunications regulation. See Indiana Bell, 359 F.3d at 494. The Act took “regulation of local telecommunications competition away from the States,” AT & T Corp., 525 U.S. at 378 n. 6, 119 S.Ct. 721, as “Congress transferred broad authority from state regulators to federal regulators, even while it left corners in which the states had a role.” Indiana Bell, 359 F.3d at 497. “The new regime for regulating competition [under the Act] is federal in nature ... and while Congress has chosen to retain a significant role for state commissions, the scope of that role is measured by federal, not state, law.” Southwestern Bell Tel. Co. v. Connect Commc’ns Corp., 225 F.3d 942, 947 (8th Cir.2000). The issue here is whether the MPSC’s action is permissible under the Act, or whether the MPSC has overstepped its prescribed role. For the following reasons, the Court concludes that the MPSC’s actions were without jurisdiction and are preempted by the Act. The text of § 271 gives the FCC exclusive jurisdiction over the enforcement of that section. Section 271 provides that BOC applications to provide long-distance services are submitted to the FCC, which has sole authority to grant the applications. See §§ 271(b)(1), (d)(1), (d)(3). The only role Congress delegated to state commissions under § 271 is to act as consultant to the FCC during the application process. See § 271(d)(2)(B). Where a BOC has already received approval to provide long-distance services, the statute places exclusive enforcement of any ongoing obligations with the FCC. Id., § 271(d)(6). If the FCC determines that a BOC is no longer meeting § 271’s requirements, it may order the BOC to correct any deficiencies, impose a penalty, or suspend or revoke the BOC’s § 271 approval. 47 U.S.C. § 271(d)(6)(A). Section 271 does not contain an express provision for rate-making or rate-making authority, but provides that a BOC must provide the competitive checklist items of § 271(c)(2)(B) at “just and reasonable rates.” In contrast, § 252 explicitly authorizes state commissions to set “just and reasonable” rates for interconnection and network element charges under §§ 251(c)(2) and (3). Section 252 provides that the state commission’s duty in arbitrating and approving agreements is limited to ensuring that the agreement “meets the requirements of section 251,” and does not mention any role for the state commission under § 271. See 47 U.S.C. §§ 252(c)(1), (3)(2)(B). In a different context than presented by this case, the FCC has recognized that Congress granted “sole authority to the [FCC] to administer ... section 271.” InterLATA Boundary Order, 1999 WL 674804, 14 F.C.C.R. at 14, 400-01, ¶¶ 17-18. Two federal district courts have commented, also in a different context, that enforcement authority for § 271 un-bundling duties lies with the FCC and must be challenged there first, and that federal courts are not the appropriate forum to address such issues in the first instance. See Bellsouth Telecommc’ns, Inc. v. Mississippi Public Serv. Comm’n, 368 F.Supp.2d 557, 565 (S.D.Miss.2005); BellSouth Telecommc’ns, Inc. v. Cinergy Commc’ns Co., No. 03:05-CV-16-JMH, 2006 WL 695424, *5-6 (E.D.Ky.2005). A third federal district court recently concluded that the New Hampshire public utilities commission lacked the authority to set rates for § 271 UNE elements, and that the commission’s use of TELRIC rates for these elements directly conflicted with the FCC’s rulings. See Verizon New England, Inc. v. New Hampshire Public Util. Comm’n, No. 05-CV-94-PB, 2006 WL 2433249, at *8 n. 33 (D.N.H. Aug. 22, 2006). Unlike the MPSC in the present case, the New Hampshire state commission did not argue that federal law authorized it to set § 271 rates. Rather, it contended that Verizon agreed to submit its § 271 rates to the commission. Id. at *7-8.' The court rejected this factual contention and concluded that the commission had exceeded its jurisdiction in setting rates under § 271. Id. at *8. But see Verizon New England, Inc. v. Maine Public Utilities Comm’n, 403 F.Supp.2d 96, 102-03 (D.Me.2005) (holding that Maine law authorized the state commission to require ILEC to offer network elements under § 271 and to set the prices of such offerings). Although the decisions of state public utility commissions are not unanimous, numerous state commissions have concluded that they lack jurisdiction or authority to include § 271 checklist items or to order § 271 unbundling as part of arbitrated interconnection agreements, or to set rates for these items. See SBC Reply, Ex. 2 [Doc.103]. • The MPSC and the CLEC defendants rely on § 271(c)(1) and (c)(2) as providing authority for the MPSC’s inclusion of § 271 elements and rate-setting for these elements in the interconnection agreements. Subsections (c)(1) and (c)(2) provide that to obtain initial § 271 approval, a BOC must show that it is providing the relevant services under “one or more binding agreements that have been approved under section 252.” 47 U.S.C. § 271(c)(1)(A). The CLEC defendants’ argument is based on the Act’s requirements that: (1) terms and conditions for § 271 checklist items must be contained in an approved interconnection agreement, (2) such interconnection agreements must be approved under § 252, and (3) § 252 approval is granted exclusively by state commissions as part of the statutory negotiation and arbitration process. The CLECs therefore argue that “[inclusion of the ‘approved under section 252’ language means that the agreements incorporating § 271 checklist elements are subject to the § 252 state commission arbitration process if the parties do not reach agreement, as well as subject to state commission review and approval if negotiated by the parties.” CLEC Defs.’ Mem. Opp. to SBC’s Mot. for Summ. J. at 13. Section 271(c)(1) does not, however, provide authority to state commissions to arbitrate disputed terms or to set rates during an arbitration. Instead, the statute limits state commission arbitration and rate-setting authority to items required under § 251. SBC argues persuasively that it could satisfy the requirements of § 271(c)(1)(A) by pointing to a single, voluntarily negotiated agreement, approved by a state commission, pursuant to which SBC would make available the items on the competitive checklist, including switching, at a just and reasonable rate. Therefore, the limited statutory reference to state commission approval under § 252 cannot vest authority in the MPSC to set the rates for all § 271 checklist items, and is not properly understood as an implied grant of arbitration or rate-making authority. For these reasons, the Court concludes that the MPSC lacks the jurisdiction and authority to order § 271 unbundling obligations to be included as part of an interconnection agreement arbitration pursuant to § 252, where SBC has not agreed to negotiate access to these facilities pursuant to § 251. The Court declines to follow Verizon New England, Inc. v. Maine Public Utilities Comm’n, which concluded that state commissions have the authority to require § 271 elements in interconnection agreements and to set rates under § 271. See 403 F.Supp.2d at 102. The decision cites no federal-law grant of authority to support its conclusion, but rather implies it from § 271’s silence with respect to rate-making authority and relies on Maine law as a source of authority. This reasoning is contrary to the FCC’s rulings and the decisions of most state commissions, and fails to adequately acknowledge the Act’s transfer of the regulation of local telecommunications competition from the states to the FCC. AT & T Corp., 525 U.S. at 378 n. 6, 119 S.Ct. 721. finder the current regulatory scheme, “while Congress has chosen to retain a significant role for state commissions, the scope of that role is measured by federal, not state, law.” Southwestern Bell, 225 F.3d at 947. The Court concludes that the Arbitration Order’s requirement that SBC include § 271 unbundling obligations in its interconnection agreements is beyond the jurisdiction of the MPSC. This aspect of SBC’s motion for summary judgment should therefore be granted. B. Unbundled Switching and UNE Platform. Separate from the issue of the MPSC’s jurisdiction to impose obligations on SBC under § 271, SBC argues that the substantive obligations imposed in the Arbitration Order contravene the clear intent of the FCC as expressed in the TRRO, and are therefore preempted. Specifically, SBC contends that the MPSC’s requirement that it combine switching, which is only required under § 271, with facilities required under § 251 creates the same substantive combination as the UNE Platform and is directly contrary to the FCC’s holding. The Court agrees. As stated in the introduction of this opinion, the FCC in its 2005 Triennial Review Remand Order (“TRRO”) prohibited the mandatory leasing of unbundled switching, which is necessary for the UNE Platform, at TELRIC rates. The FCC explained that competitors were not impaired without unbundled switching and further determined that the availability of the UNE Platform hindered genuine competition. TRRO, 2005 WL 289015, 20 F.C.C.R. at 2653, ¶¶218, 220. The FCC adopted a “nationwide bar” on the mandatory unbundling of local switching. Id. at 2005 WL 289015, 2644, ¶204. Because of the “need for prompt action,” the FCC made its new rules effective on March 11, 2005. Id. at 2005 WL 289015, 2666, ¶ 235. The FCC also created a twelve-month transition period, beginning on that same effective date, during which CLECs could continue to use unbundled mass market switching, and thus the UNE Platform, but only to serve existing mass market customer lines. See id. at 2005 WL 289015, 2659-61, ¶¶ 226-28. CLECs were not permitted to place new orders for unbundled switching and the UNE Platform as of the TRRO’s March 11, 2005 effective date. Id. at 2005 WL 289015, 2641, ¶ 199. During the twelve-month transition period, ILECs were to receive an additional dollar per line per month over prior UNE Platform rates. Id. at 2005 WL 289015, 2660, ¶ 228 n. 630. These transition rules and the transition rate applied “only to the embedded [i.e., existing] customer base” and did “not permit competitive LECs to add new UNE Platform arrangements using unbundled access to local circuit switching pursuant to section 251(c)(3).” TRRO at 2005 WL 289015, 2659-60, ¶227. The FCC also held that facilities which are required only under § 271, unlike UNEs required under § 251, need not be provided in combined, pre-packaged form. See Triennial Review Order, 18 F.C.C.R. at 17,386, ¶ 655 n. 1990 (“We decline to require BOCs, pursuant to section 271, to combine network elements that no longer are required to be unbundled under section 251.”), vacated in part and remanded in part by United States Telecom Ass’n v. FCC, 359 F.3d 554, 589-90 (D.C.Cir.) (“USTAII ”) (affirming FCC’s finding that the no-combination ruling was an “important respectf ]” in which § 251 and § 271 differ), cert. denied, 543 U.S. 925, 125 S.Ct. 313, 160 L.Ed.2d 223 (2004). The Arbitration Order permits CLECs to use the same combination of facilities which comprise the UNE Platform, without limitation and at the same transitional rates the FCC held should apply only to the embedded customer base. See Arbitration Order at 28-30. The Arbitration Order therefore conflicts with substantive restrictions the FCC has placed on UNE access, and accordingly is preempted. See 47 U.S.C. §§ 251(d)(3), 261(b)-(c) (precluding state commission actions that are not “consistent” with federal law). The analysis does not change because the MPSC purported to act pursuant to § 271 rather than § 251. The FCC has held that if a state commission decision in substance reimposes an unbundling decision that the FCC found improper under § 251, that decision is preempted regardless of whether the commission purports to be imposing a § 251 obligation. See Memorandum Opinion & Order, BELLSOUTH TELECOMMC’NS, INC. REQUEST FOR DECLARATORY RULING, 2005 WL 704118, 20 F.C.C.R. 6830, ¶¶ 25-26 (2005) (state commission’s decision to require unbundled access to a network element that the FCC expressly declined to unbundle directly conflicted with and was inconsistent with the FCC’s rules and policies implementing § 251 and was preempted). Therefore, the Court concludes that the Arbitration Order conflicts with and is preempted by federal law to the extent it requires SBC to provide unbundled access to switching and the UNE Platform. C. Unbundled Access to Other Network Facilities. The Arbitration Order requires that SBC provide CLECs with unbundled access to other network facilities — high capacity loops, dedicated transport, OCn and dark fiber loops, and dark fiber and feeder subloops — in circumstances where the FCC has said these facilities may not be required pursuant to § 251. As with unbundled switching discussed above, the MPSC ordered access to these facilities pursuant to § 271 of the Act. See Final Arbitrator’s Report § 1(A) at 1-3, 87-90; § III at 33, 47-48, 59; id. at 44 (loops); id. at 55 (dark fiber transport, dark fiber loops); id. at 68-69 (subloops). SBC asserts that these aspects of the MPSC’s Arbitration Order exceed the MPSC’s jurisdiction and conflict with binding FCC rules for the reasons discussed above in connection with unbundled switching. The Court agrees. The MPSC lacks jurisdiction or authority to include § 271 checklist items or to order § 271 unbundling as part of arbitrated interconnection agreements, or to set rates for these items. In addition, the MPSC’s decision to require unbundled access to these facilities, in circumstances where the FCC has said they may not be unbundled under § 251, creates a substantive conflict with federal law and is accordingly preempted. SBC’s motion for summary judgment should also be granted on the issue of unbundled access to other network facilities no longer required under § 251, on the basis that the MPSC lacked jurisdiction to require the inclusion of these elements in SBC’s interconnection agreements, and the Arbitration Order is contrary to federal law. D. Access to Entrance Facilities Under Section 251(c)(2). SBC asserts that the Arbitration Order also contravenes the FCC’s rulings in the TRRO by requiring SBC to provide CLECs with entrance facilities at TEL-RIC rates, although CLECs are no longer impaired with respect to entrance facilities and therefore are not entitled to these facilities as UNEs under § 251(c)(3). Defendant Sprint contends in its cross-motion for summary judgment that the MPSC correctly ruled that CLECs are entitled to entrance facilities as needed for interconnection pursuant to § 251(c)(2), and that TELRIC is the appropriate rate for these facilities. The Court agrees with Sprint’s position. An entrance facility is a transmission facility that connects CLEC networks with ILEC networks. See TRRO, 2005 WL 289015, 20 F.C.C.R. at 2609, ¶ 136. In the TRRO, the FCC held that CLECs are not impaired without access to entrance facilities, and therefore CLECs are not entitled to entrance facilities as unbundled network elements (UNEs) under § 251(c)(3). See 2005 WL 289015, 20 F.C.C.R. at 2609-12, ¶¶ 136-41. The TRRO is clear, however, that the FCC’s “finding of non-impairment with respect to entrance facilities does not alter the right of competitive LECs to obtain interconnection facilities pursuant to § 251(c)(2) for the transmission and routing of telephone exchange service and exchange access service.” Id. at 2005 WL 289015, 2611, ¶ 140. “Thus, competitive LECs will have access to these facilities at cost-based rates to the extent that they require them to interconnect with the incumbent LEC’s network.” Id. In the Arbitration Order, the MPSC acknowledged the FCC’s ruling that CLECs are not entitled to entrance facilities as UNEs, but required SBC to allow access to these same facilities pursuant to 47 U.S.C. § 251(c)(2), which requires ILECs to provide “interconnection” to CLECs. See Final Arbitrator’s Report, § IV at 16, 31-35; § V at 16. The Court concludes that the MPSC’s Arbitration Order correctly implements the FCC’s rulings on this issue as set forth in the TRRO and the TRO. See TRRO, 2005 WL 289015, 20 F.C.C.R. at 2611, ¶ 140; TRO, 2003 WL 22175730, 18 F.C.C.R. at 17,202-04, ¶¶ 365-66. In the context of ILEC-CLEC network arrangements, carriers can use entrance (transmission) facilities for at least two distinct purposes: (1) to provide a final link in the dedicated transmission path between a CLEC’s customer and the CLEC’s switch, and (2) as interconnection facilities to exchange traffic between ILEC and CLEC switches. In the first situation, a CLEC does not use entrance facilities for interconnection purposes, but rather to carry traffic to and from its own end users, a process known as “backhauling.” In the second situation, a CLEC uses entrance facilities to interconnect with the ILEC’s network, to provide a transmission path between the ILEC’s switch and the CLEC’s switch for the exchange of traffic between the two networks. See TRO, 2003 WL 22175730, 18 F.C.C.R. at 17202-03, ¶¶ 365-66; see also Ex. 9 to Sprint’s Mem. Supp. of Cross-Mot. for Summ. J. (schematic drawing). The FCC determined that when a CLEC uses entrance facilities to carry traffic to and from its own end users (situation (1) above), the CLEC is not entitled to obtain entrance facilities from ILECs as § 251(c)(3) UNEs. See TRRO, 2005 WL 289015, 20 F.C.C.R. at 2610-12, ¶¶ 136-41. The FCC reaffirmed its earlier determination, however, that if a CLEC needs entrance facilities to interconnect with an ILEC’s network (situation (2) above), the CLEC has the right to obtain such facilities from the ILEC, at cost-based rates, under § 251(c)(2) of the Act. Id. at 2005 WL 289015, 2611, ¶ 140; TRO, 2003 WL 22175730, 18 F.C.C.R. at 17,202-04, ¶¶ 365-66. The Court rejects SBC’s contention that the TRRO only requires an ILEC to allow CLECs to interconnect with its network and does not require that it lease the interconnection facilities themselves to CLECs. The FCC has interpreted “interconnection” to mean “the physical linking of two networks for the mutual exchange of traffic.” Local Competition Order, 1996 WL 452885, 11 F.C.C.R. at 15,590, ¶ 176. In implementing this requirement, the FCC has held that CLECs have a “right ... to obtain interconnection facilities pursuant to section 251(c)(2) ... at cost-based rates.... ” TRRO, 2005 WL 289015, 20 F.C.C.R. at 2611, ¶ 140 (emphasis added). The term “interconnect” refers to “ ‘facilities and equipment,’ not to the provision of any service.” AT & T Corp. v. FCC, 317 F.3d 227, 234-35 (D.C.Cir.2003) (interpreting the term “interconnect” in § 251(a)(1)); see Competitive Telecommc’ns Ass’n v. FCC, 117 F.3d 1068, 1071 (8th Cir.1997) (stating of § 251(c)(2), “By its own terms, this reference is to a physical link between the equipment of the carrier seeking interconnection and the LEC’s network.”). Based on the foregoing, the Court concludes that SBC is required under the Act and FCC regulations to provide access to entrance facilities necessary for interconnection. The MPSC made a factual determination that the SBC entrance (transmission) facilities provided under its agreement with Sprint would be used solely for interconnection purposes within the meaning of § 251(c)(2). See Final Arbitrator’s Report, § IV, at 33-35; id. § V, at 15-16. This factual determination was supported by the record evidence. See Direct Testimony of Don Price at 135-36 (Sprint Ex. 7); Rebuttal Testimony of Peter Sywenki at 8-11 (Sprint Ex. 4); Direct Testimony of Edward J. Cadieux at 73-75 (Sprint Ex. 5); Rebuttal Testimony of Edward J. Ca-dieux at 28-29 (Sprint Ex. 6). Accordingly, the MPSC’s factual determination is not arbitrary or capricious and should be affirmed. The Arbitration Order requires SBC to allow access to entrance facilities at the same cost-based TELRIC rates that apply to UNEs, when the entrance facilities are used for interconnection purposes under § 251(c)(2). See Final Arbitrator’s Report, § IV at 16, 31-35; § V at 16. Although SBC challenges use of the TELRIC rate, the Court concludes the Arbitration Order’s requirement correctly implements the FCC’s rulings. The FCC stated in the TRRO that the Act mandates cost-based rates for network interconnection. See TRRO, 2005 WL 289015, 20 F.C.C.R. at 2611, ¶ 140. Section 251(c)(2)(D) requires ILECs to provide interconnection facilities on the “rates, terms and condition” that comply with the requirements of § 252. 47 U.S.C. § 251(c)(2)(D). Section 252(d)(1), in turn, provides that “the just and reasonable rate for the interconnection of facilities and equipment for purposes of subsection (c)(2) of section 251” shall be cost-based. Id., § 252(d)(1)(A)®. In implementing this rate provision, the FCC established the TELRIC methodology. See Local Competition Order, 1996 WL 452885, 11 F.C.C.R. at 15,844, ¶ 672; see also 47 C.F.R. §§ 51.501(a)-.505 (2005) (applying TEL-RIC to the pricing of interconnection). The FCC concluded that Congress intended to apply the same pricing rules to interconnection and UNEs, based on the plain language of §§ 251(c)(2), (c)(3), and § 252(d)(1). See Local Competition Order, 1995 WL 468206, 11 F.C.C.R. at 15, 816, ¶ 628. The Arbitration Order correctly adhered to the FCC’s mandate when it directed the use of TELRIC rates for entrance facilities provided by SBC under the Sprint Agreement for use as interconnection facilities. For these reasons, the Arbitration Order should be affirmed to the extent it determined that CLECs are entitled to entrance facilities as needed for interconnection pursuant to § 251(c)(2), and that TELRIC is the appropriate rate for these facilities. SBC’s motion for summary judgment should therefore be denied with respect to the entrance facilities issue and Sprint’s cross-motion for summary judgment should be granted. E. Compensation for IP-PSTN Traffic. The final issue in SBC’s motion for summary judgment challenges the MPSC’s determination that SBC and the CLECs should exchange reciprocal compensation for Internet Protocol (“IP”) to public switched telephone network (“PSTN”) traffic, instead of higher switched access charges for this traffic. SBC contends that reciprocal compensation for IP-PSTN traffic is contrary to the Act and the FCC’s rules. SBC also contends that this aspect of the Arbitration Order is arbitrary and capricious and results from a failure to engage in reasoned decision-making. The defendants respond that the MPSC’s determination is consistent with the Act and the FCC’s current intercarrier compensation rules, and should be affirmed. The defendants assert that all IP-PSTN traffic is eligible for reciprocal compensation under the Act, and is exempt from access charges under longstanding FCC precedent which insulates providers of “enhanced services” from the access charges that would apply to carriers providing basic long distance service. The Court agrees with the defendants. Background. 1. Reciprocal Compensation. Section 251(b)(5) of the Act imposes upon LECs the “duty to establish reciprocal compensation arrangements for the transport and termination of telecommunications.” 47 U.S.C. § 251(b)(5); Ace Tel. Ass’n v. Koppendrayer, 432 F.3d 876, 881 (8th Cir.2005). “Reciprocal compensation is payment from the carrier who originates a call to the carrier who terminates or receives a call. Reciprocal compensation is intended to permit the carrier for the customer who receives a call to recoup from the caller’s carrier those expenses incurred for terminating the call or sending it to its final destination.” WWC License, L.L.C. v. Boyle, 459 F.3d 880, 884-85 (8th Cir.2006) (citing Ace Tel., 432 F.3d at 878, and 47 U.S.C. § 252(d)(2)(A)(i) (stating that reciprocal compensation must “prdvide for the mutual and reciprocal recovery by each carrier of costs associated with the transport and termination on each carrier’s network facilities of calls that originate on the network facilities of the other carrier.”)). The FCC’s definition of the scope of reciprocal compensation has changed over time. In 1996, the FCC initially limited the application of reciprocal compensation to the exchange of “local” traffic, Local Competition Order, 1996 WL 452885, 11 F.C.C.R. at 16012, 16015-16, and defined “local” traffic for reciprocal compensation purposes as traffic that “originates and terminates” in the same local calling area. 47 C.F.R. § 51.701(b)(1) (1996), vacated, Bell Atlantic Tel. Cos. v. FCC, 206 F.3d 1 (D.C.Cir.2000). In 2001, the FCC examined whether reciprocal compensation should apply to traffic directed to Internet Service Providers (“ISP traffic”). In connection with that particular inquiry, it abandoned the prior focus on whether traffic was “local.” In re Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Intercarrier Compensation for ISP-Bound Traffic, 16 F.C.C.R. 9151, ¶¶ 8, 30, 36 n. 64, 39, 42 (2001) (“ISP Remand Order”). Instead, the FCC determined that reciprocal compensation should apply to all traffic that is not encompassed by § 251(g) of the Act, which preserved pre-Act rules for “exchange access, information access, and exchange services for such access.” 47 U.S.C. § 251(g). The ISP Remand Order was appealed to the D.C. Circuit, which reversed the FCC’s interpretation of § 251(g). WorldCom, Inc. v. FCC, 288 F.3d 429, 433-34 (D.C.Cir.2002). The Court concluded that “[o]n its face, § 251(g) appears to provide simply for the ‘continued enforcement’ of certain pre-Act regulatory ‘interconnection restrictions and obligations.’ ” Id. at 432. The Court stated that while § 251(g) preserves pre-Act obligations under a “regulation, order, or policy of the Commission,” it does not authorize the FCC to “override virtually any provision of the 1996 Act so long as the rule it adopted were in some way, however remote, linked to LECs’ pre-Act obligations.” Id. at 433. Section 251(g) did not empower the FCC to exempt ISP-bound traffic from reciprocal compensation because “there had been no pre-Act obligation relating to intercarrier compensation for ISP-bound traffic.” Id. Although the D.C. Circuit found no basis for the FCC’s action, it chose not to “make., further determinations” regarding the validity of the ISP Remand Order and left the Order in place and remanded it to the FCC for further proceedings consistent with the Court’s decision. Id. at 434. To date, the FCC has not yet issued another comprehensive order governing inter-carrier compensation for ISP traffic. 2. Access Charges. Access charges are part of an intercarrier compensation regime established in the 1980s to govern long distance calls. See Iowa Network Servs. Inc., 363 F.3d at 686; Bell Atlantic Tel. Cos., 206 F.3d at 7-8. “Exchange access” means “the offering of access to telephone exchange services or facilities for the purpose of the origination or termination of telephone toll services.” 47 U.S.C. § 153(16). “Telephone toll service” is defined as “telephone service between stations in different exchange areas for which there is made a separate charge not included in contracts with subscribers for exchange service.” Id. § 153(48). Access charges historically have included “significant implicit subsidies” and by definition have been well above cost. See In re Access Charge Reform, 1997 WL 268841, 12 F.C.C.R. 15,982, ¶¶ 39-40 (1997) (“Access Charge Reform Order”); Competitive Telecommc’ns Ass’n v. FCC, 309 F.3d 8, 14-15 (D.C.Cir.2002) (describing “implicit subsidies” for universal service that remain “embedded in access charges.”). As a result, an incumbent carrier that collects access charges for terminating traffic receives more money than it would if it exchanged reciprocal compensation for the same traffic. 3. Enhanced Services and Information Services. In 1980, the FCC distinguished between “basic sendee,” ie., regular telephone service, and “enhanced service,” i.e., computer-processing service offered over telephone lines. See National Cable & Telecommc’ns Ass’n v. Brand X Internet Servs., 545 U.S. 967, 125 S.Ct. 2688, 2696, 162 L.Ed.2d 820 (2005). A basic service was a “transparent transmission ... that enabled the consumer to transmit an ordinary-language message to another point, with no computer processing or storage of the information ....” Id. at 2697; see also In re Amendment of Section 6^.702 of the Commission’s Rules and Regulations (Second Computer Inquiry), 1980 WL 356789, 77 F.C.C.2d 384, ¶¶ 94-96 (1980) (“Computer II Order ”). In contrast, an “enhanced service” was defined as “service in which computer processing applications [were] used to act on the content, code, protocol, and other aspects of the subscriber’s information, such as voice and data storage services, as well as protocol conversion (i.e., ability to communicate between networks that employ different datatransmission formats).” Brand X Internet Servs., 125 S.Ct. at 2697 (alteration in original; internal citation omitted); see also Computer II Order, 1980 WL 356789, ¶¶ 97, 99. Prior to the Act, telecommunications traffic was regulated based on the distinction between “basic” and “enhanced” services. Basic services were heavily regulated, Brand X Internet Servs., 125 S.Ct. at 2697, and could be subject to compensation rules such as the access charge regime. Enhanced services generally were outside the scope of common-carrier regulation. Id. “The Commission explained that it was unwise to subject enhanced service to common-carrier regulation given the fast-moving, competitive market in which they were offered.” Id. In 1988, the FCC excluded providers of enhanced services from the obligation to pay access charges imposed on interex-change carriers exchanging long distance traffic. In re Amendments of Part 69 of the Commission’s Rules Relating to Enhanced Service Providers, 1988 WL 488404, 3 F.C.C.R. 2631, ¶ 17 (1988) (“ESP Exemption Order”). The FCC did not directly exempt enhanced service providers (“ESPs”) from interstate access charges, but rather defined ESPs as “end users.” See ACS of Anchorage, Inc. v. FCC, 290 F.3d 403, 409 (D.C.Cir.2002). As end users, ESPs obtain access to other carriers’ networks by purchasing a local business line (and paying tariffed rates for use of those lines). Id. at 409. The FCC recognized that ISP-bound traffic was interstate access, but treated such traffic as though it were local. Bellsouth Telecommc’ns, Inc. v. ITC Deltacom Commc’ns, Inc., 62 F.Supp.2d 1302, 1313 (M.D.Ala.1999). Although the exemption for ESPs was described as a temporary means to avoid “unduly” burdening the developing IP industry, ESP Exemption Order, 1988 WL 488404, ¶ 2, it remains in effect. See IN RE DEVELOPING A UNIFIED INTERCARRIER COMPENSATION REGIME, 2005 WL 495087, 20 F.C.C.R. 4685, ¶ 1 n. 2 (2005) (noting continued existence of ESP exemption); IN RE AMENDMENTS OF PART 69 OF THE COMMISSION’S RULES RELATING TO THE CREATION OF ACCESS CHARGE SUPPLEMENTS FOR OPEN NETWORK ARCHITECTURE POLICY AND RULES CONCERNING RATES FOR DOMINANT CARRIERS, 1991 WL 638513, 6 F.C.C.R. 4524, ¶ 60 (1991) (retaining exemption for policy reasons); Bellsouth Telecommc’ns, Inc., 62 F.Supp.2d at 1313 (noting FCC’s continued maintenance of ESP exemption). The Act defines two classes of telecommunications traffic — “information service” and “telecommunications service”. — which are analogous to the pre-Act distinction between enhanced and basic services. 47 U.S.C. §§ 153(20), 153(46); see Brand X Internet Servs., 125 S.Ct. at 2697. A “telecommunications service” is “the offering of telecommunications for a fee direct