                 FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


NORTH COUNTY                           No. 14-15115
COMMUNICATIONS
CORPORATION OF ARIZONA, a                  D.C. No.
California corporation,              2:13-cv-00466-DGC
              Plaintiff-Appellant,

                v.

QWEST CORPORATION, a
Colorado corporation, DBA
CenturyLink QC; GARY PIERCE;
BOB STUMP; SANDRA KENNEDY;
PAUL NEWMAN; BRENDA BURNS,
in their official capacity as
Commissioners of the Arizona
Corporation Commission,
             Defendants-Appellees.


      Appeal from the United States District Court
               for the District of Arizona
      David G. Campbell, District Judge, Presiding
2                      NCCC V. QWEST

NORTH COUNTY                               No. 14-35254
COMMUNICATIONS
CORPORATION OF OREGON, a                    D.C. No.
California corporation,                3:13-cv-00375-BR
              Plaintiff-Appellant,

                 v.                         OPINION

QWEST CORPORATION, DBA
CenturyLink QC, a Colorado
corporation; JOHN SAVAGE;
SUSAN ACKERMAN; STEPHEN
BLOOM, in their capacity as
Commissioners of the Public
Utility Commission of Oregon,
           Defendants-Appellees.


        Appeal from the United States District Court
                 for the District of Oregon,
          Anna Brown, District Judge, Presiding

          Argued and Submitted December 8, 2015
                 San Francisco, California

                      Filed May 31, 2016

    Before: Diarmuid F. O’Scannlain, Barry G. Silverman,
             and Carlos T. Bea, Circuit Judges.

               Opinion by Judge O’Scannlain
                         NCCC V. QWEST                                3

                           SUMMARY*


                    Telecommunications Act

    The panel affirmed two district courts’ summary
judgments in favor of Qwest Corporation and two state
regulatory commissions in actions brought under the
Telecommunications Act of 1996 by local exchange carriers
that provide telecommunications services to their customers
in Arizona and Oregon.

    The plaintiffs sued Qwest Corp., a rival local exchange
carrier, and the commissioners of the Arizona Corporation
Commission and the Public Utility Commission of Oregon,
state agencies whose responsibilities include regulating
contracts between local exchange carriers. Qwest is an
incumbent local exchange carrier (ILEC), which previously
enjoyed a monopoly on local phone service, and North
County is a competitive local exchange carrier (CLEC).

    North County requested to interconnect with Qwest, and
the parties entered into interconnection agreements in 1997.
They subsequently entered into unsuccessful negotiations for
successor agreements, and Qwest petitioned for arbitration
before the state Commissions. The Commissions held
arbitration hearings and approved new interconnection
agreements in 2011.

    Qwest argued that the Commissions had authority to
arbitrate the 2011 agreements because Qwest had the power

  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
4                     NCCC V. QWEST

under 47 U.S.C. § 252 to initiate negotiations with North
County to replace their existing interconnection agreements
and thereafter to force North County into binding arbitration.
Qwest relied on the FCC’s Triennial Review Order, which
states that either a CLEC or an ILEC may initiate
negotiations. Qwest also argued that the language of the
initial interconnection agreements authorized it to initiate
negotiations. The panel held that the state Commissions had
authority to arbitrate the 2011 agreements because the 1997
agreements gave Qwest both the power to initiate
negotiations and the power to compel arbitration.

    The panel rejected North County’s challenges to six
specific provisions of the 2011 interconnection agreements:
(1) the requirement that North County interconnect with
Qwest directly rather than through a third-party tandem
provider; (2) the agreements’ “Relative Use Factor;” (3) the
requirement that North County use digital signaling
technology known as SS7 signaling if and when it originates
calls to Qwest; (4) the requirement that North County pay
Qwest for certain call detail records; (5) the cap on the
number of minutes for which North County can bill Qwest;
and (6) the agreements’ failure to allow North County to
interconnect using Voice over Internet Protocol.


                        COUNSEL

R. Dale Dixon, Jr., Law Offices of Dale Dixon, Del Mar,
California, argued the cause and filed the briefs for the
plaintiff-appellant.
                      NCCC V. QWEST                          5

Lawrence H. Reichman, Perkins Coie LLP, Portland, Oregon,
argued the cause and filed the brief for the defendant-appellee
Qwest Corporation.

Maureen A. Scott, Arizona Corporation Commission,
Phoenix, Arizona, argued the cause and filed the brief for the
defendants-appellees Gary Pierce, Bob Stump, Sandra
Kennedy, Paul Newman, and Brenda Burns, in their capacity
as Commissioners of the Arizona Corporation Commission.
With her on the brief were Brian E. Smith and Robert W.
Geake, Arizona Corporation Commission, Phoenix, Arizona.

Ellen F. Rosenblum, Attorney General, Salem Oregon; Anna
M. Joyce, Solicitor General, Salem Oregon; and Michael T.
Weirich, Senior Assistant Attorney General, Salem, Oregon,
together filed the brief for the defendants-appellees John
Savage, Susan Ackerman, and Stephen Bloom, in their
capacity as Commissioners of the Public Utility Commission
of Oregon.
6                     NCCC V. QWEST

                         OPINION

O’SCANNLAIN, Circuit Judge:

    This dispute under the Telecommunications Act of 1996
pits one telephone company against another with two state
regulatory Commissions caught in the middle. We must
determine whether the matter is subject to binding arbitration,
and, if so, what rules apply.

                               I

    These appeals involve two consolidated cases, one from
the District of Arizona, the other from the District of Oregon.
The lawsuits were brought by North County Communications
Corporation of Arizona and North County Communications
Corporation of Oregon (collectively referred to as “North
County,” except when necessary to distinguish one from the
other). North County is a local exchange carrier that provides
telecommunications services to its customers. North County
sued Qwest Corporation, a rival local exchange carrier, and,
in their official capacities, commissioners of two state
Commissions—the Arizona Corporation Commission
(“Arizona Commission”) and the Public Utility Commission
of Oregon (“Oregon Commission”)—state agencies whose
responsibilities include regulating contracts between such
carriers.

                              A

   As many courts have explained, Congress passed the
Telecommunications Act of 1996, Pub. L. No. 104-104,
110 Stat. 56 (codified as amended in scattered sections of
chapter 47 of the United States Code) (the “Act”), to promote
                      NCCC V. QWEST                           7

competition in the provision of telecommunication services.
See, e.g., AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366,
370–72 (1999). As relevant here, the statute classifies local
exchange carriers into two categories: incumbent local
exchange carriers (ILECs), and competitive local exchange
carriers (CLECs). Quick Commc’ns, Inc. v. Mich. Bell Tel.
Co., 515 F.3d 581, 583 (6th Cir. 2008). ILECs are those
entities that enjoyed a monopoly on local phone service in a
particular geographic area prior to the Act. Id. For both the
Arizona and Oregon cases, Qwest is an ILEC, and North
County is a CLEC.

                               1

    The Act subjects ILECs “to a host of duties intended to
facilitate market entry. Foremost among these duties is the
[incumbent local exchange carrier’s] obligation under
47 U.S.C. § 251(c) . . . to share its network with competitors.”
AT&T Corp., 525 U.S. at 371. Doing so ensures that the
CLEC’s customers can call the ILEC’s customers, and vice
versa. Under the Act, a CLEC may access an ILEC’s
network by requesting to interconnect its facilities with the
ILEC’s network. Id.; see also 47 U.S.C. § 252(a).

                               2

    Section 252(a) of the Act declares that “[u]pon receiving
a request for interconnection, services, or network elements
pursuant to section 251 of this title, an incumbent local
exchange carrier may negotiate and enter into a binding
agreement with the requesting telecommunications carrier.”
47 U.S.C. § 252(a)(1). Section 252(b) then provides that
“[d]uring the period from the 135th to the 160th day
(inclusive) after the date on which an incumbent local
8                     NCCC V. QWEST

exchange carrier receives a request for negotiation under this
section, the carrier or any other party to the negotiation may
petition a State commission to arbitrate any open issues.”
47 U.S.C. § 252(b)(1). Section 252(e) states that “[a]ny
interconnection agreement [“ICA”] adopted by negotiation or
arbitration shall be submitted for approval to the State
commission. A State commission to which an agreement is
submitted shall approve or reject the agreement, with written
findings as to any deficiencies.” 47 U.S.C. § 252(e)(1).

                              B

    In 1997, North County first requested to interconnect with
Qwest in Arizona and Oregon. One provision of the resulting
agreement (“1997 ICA”) between Qwest and North County,
section XXXIV(V), stated:

       This Agreement shall be effective for a period
       of 2 1/2 years, and thereafter the Agreement
       shall continue in force and effect unless and
       until a new agreement, addressing all of the
       terms of this Agreement, becomes effective
       between the Parties. The Parties agree to
       commence negotiations on a new agreement
       no later than two years after this Agreement
       becomes effective.

    Notwithstanding this provision, no new ICAs had been
entered into until the events which gave rise to this dispute.

                              1

    At the time Qwest and North County first interconnected,
the telecommunications industry was undergoing a transition
                      NCCC V. QWEST                          9

from analog signaling technology, known as MF signaling, to
digital signaling technology, known as SS7 signaling. These
signaling technologies are important because they transmit
information with a call as the call crosses a carrier’s system.
Much of this information is necessary for local carriers to
know so that they can properly bill one another for the costs
generated by transmitting calls between their networks.
Unsurprisingly, SS7 signaling has many advantages over MF
signaling: it is more efficient, more flexible, and more
reliable, and it has a greater capacity to track and to record
information relevant for billing purposes.

                              2

     Central to the parties’ dispute is the fact that North
County continues to use the increasingly outdated MF
signaling to exchange local traffic with Qwest. (From the
record, it appears that every other CLEC that interconnects
with Qwest uses SS7 signaling to exchange local traffic.)
That choice has important consequences when it comes to
billing. In particular, North County is entitled to bill Qwest
for some of the local traffic that Qwest sends to it when
telephone users on Qwest’s network call users on North
County’s network, but North County’s reliance on MF
technology makes it difficult for Qwest to verify the accuracy
of the bills North County sends over. At the same time,
North County does not currently send much traffic to
Qwest—in Arizona, for instance, North County primarily
provides telephone services to businesses that take incoming
calls, but does not transmit outbound calls. If, however,
North County were to begin sending traffic to Qwest via MF
signaling using a third-party service provider, Qwest would
be unable to identify and measure the traffic being routed
from North County’s network to Qwest’s.
10                   NCCC V. QWEST

                             C

    In 2008, Qwest suspected that North County was
overbilling it. Qwest, spurred on by the billing dispute,
requested North County to negotiate successor ICAs in
Arizona and Oregon. North County agreed to enter into
negotiations, which lasted more than a year. Importantly,
during that time North County “agreed to a series of
extensions of the arbitration window to file a petition for
arbitration under 47 U.S.C. § 252(b) . . . . In each of the
extension agreements dated January 16, 2009, February 9,
2009, April 29, 2009, and May 29, 2009, [North County]
specifically agreed to extend ‘the period during which either
party may file for arbitration under section 252(b)(l) of the
Act.’” (emphasis added). The negotiations ultimately were
not successful.

                             1

    On August 3, 2009, Qwest petitioned for arbitration in
both Arizona and Oregon. North County raised a number of
objections.      First, North County moved each state
Commission to dismiss Qwest’s petition for arbitration,
arguing that § 252 did not give the Commissions authority to
arbitrate new ICAs because Qwest, not North County, had
requested the underlying negotiations.         Both state
Commissions denied North County’s motions to dismiss. In
2011 the Arizona Commission and the Oregon Commission
each approved a new ICA (“2011 ICAs”) based on the results
of the arbitration hearings.
                     NCCC V. QWEST                        11

                             2

     North County then sought declaratory and injunctive
relief in federal district court in Arizona and Oregon. North
County argued that the 2011 ICAs must be declared “void ab
initio” because, North County reiterated, the state
Commissions lacked authority to arbitrate them. The district
courts rejected this argument, although they accepted North
County’s characterization that the relevant negotiations had
been requested and initiated by Qwest. The Arizona district
court noted that “[n]o court has directly considered whether
the language of sections 252(a)(1) and (b)(1) applies to
requests to negotiate made by ILECs to CLECs.” Despite
agreeing that the text of the Act supported North
County—and only North County—the district courts
reasoned that a literal interpretation would be unacceptable
because it would frustrate the Act’s two main purposes,
which the district courts said were to “encourage competition
in the telecommunications industry by requiring the good
faith negotiation of ICAs by ILECs and CLECs,” and to give
state Commissions a prominent role in overseeing negotiated
ICAs. North County also challenged a number of the 2011
ICAs’ specific provisions, which the district courts likewise
rejected across the board.

   Each district court granted summary judgment to Qwest.
North County timely appealed in both cases.

                             II

    We review a district court’s grant of summary judgment
de novo. Verizon Cal., Inc. v. Peevey, 462 F.3d 1142, 1150
(9th Cir. 2006). In addition, we review de novo whether
arbitrated ICAs are in compliance with Telecommunications
12                    NCCC V. QWEST

Act and its implementing regulations. Id. “[W]e review all
other issues under an arbitrary and capricious standard.” U.S.
W. Commc’ns, Inc. v. Wash. Utils. & Transp. Comm’n,
255 F.3d 990, 994 (9th Cir. 2001). “A state commission’s
decision is arbitrary and capricious if the decision ‘was not
supported by substantial evidence,’ or the commission made
a ‘clear error of judgment.’” Peevey, 462 F.3d at 1150
(quoting Pac. Bell v. Pac W. Telecomm, Inc., 325 F.3d 1114,
1131 (9th Cir. 2003)).

                              III

     North County first contends that the state Commissions
lacked authority to arbitrate the 2011 ICAs. Qwest does not
dispute North County’s premise that Qwest initiated the
relevant negotiations. Hence, the question is whether Qwest,
upon deciding it wanted to scrap the existing ICAs and
replace them with a pair of new ones, had the power to
initiate negotiations with North County and thereafter to force
North County into binding arbitration. If Qwest lacked such
power, North County contends, then the state Commissions
had no authority to resolve the parties’ disagreements.

                              A

    Qwest responds to North County’s argument by urging
that 47 U.S.C. § 252 authorized it to request negotiations with
North County to replace their existing ICAs and to petition
for binding arbitration when those negotiations hit a snag.
Aside from the district courts here, however, it appears that
no federal court has directly ruled on whether § 252, of its
own force, empowers an ILEC like Qwest to initiate
negotiations with a CLEC and thereafter to force the CLEC
into arbitration if the negotiations fail.
                      NCCC V. QWEST                        13

    The relevant statutory text does not appear hospitable to
the reading Qwest proposes. Specifically, § 252(a)(1),
concerning “[v]oluntary negotiations,” states that “[u]pon
receiving a request for interconnection, services or network
elements pursuant to section 251 of this title, an [ILEC] may
negotiate and enter into a binding agreement with the
requesting telecommunications carrier or carriers.” 47 U.S.C.
§ 252(a)(l) (emphasis added). Section 252(b)(l) then declares
that “[d]uring the period from the 135th to the 160th day
(inclusive) after the date on which an [ILEC] receives a
request for negotiation under this section, the carrier or any
other party to the negotiation may petition a State
commission to arbitrate any open issues.” 47 U.S.C.
§ 252(b)(1) (emphasis added).

    As all parties acknowledge, both sections refer only to
situations where an ILEC receives a request for
interconnection or negotiation. The statute does not mention
requests for negotiations initiated by an ILEC or mutually
agreed upon by the two carriers. And as everyone also
agrees, in this case, the relevant negotiations—the ones that
led to the 2011 ICAs—were requested by Qwest, not North
County. That circumstance, says North County, means that
the Telecommunications Act could not have functioned as the
source of any power in Qwest to compel arbitration.

                              1

    Qwest responds in two basic ways. The first—and
potentially most devastating—is that the FCC has definitively
interpreted the relevant statutory provision and that such
interpretation governs the situation here. Qwest’s argument
depends on a footnote in a 2003 FCC order—called the
Triennial Review Order (“TRO”)—in which the FCC stated
14                         NCCC V. QWEST

that “[a]lthough section 252(a)(1) and section 252(b)(1) refer
to requests that are made to incumbent LECs, we find that in
the interconnection amendment context, either the incumbent
or the competitive LEC may make such a request.” In the
Matter of Review of the Section 251 Unbundling Obligations
of Incumbent Local Exchange Carriers, 18 F.C.C.R. 16978,
17405 ¶ 703 n.2087 (2003), vacated in part and remanded,
U.S. Telecom Ass’n v. FCC, 359 F.3d 554, 594 (D.C. Cir.
2004).      Qwest asserts that the just-quoted language
establishes that Qwest had the power to compel arbitration in
this case, after it requested North County to negotiate
successor ICAs and those negotiations reached an impasse.
Furthermore, Qwest maintains that the Hobbs Act, 28 U.S.C.
§ 2342, forbids us from reviewing the FCC’s interpretation.1




  1
    The Hobbs Act states, in relevant part: “The court of appeals (other
than the United States Court of Appeals for the Federal Circuit) has
exclusive jurisdiction to enjoin, set aside, suspend (in whole or in part), or
to determine the validity of . . . all final orders of the Federal
Communications Commission made reviewable by section 402(a) of title
47. . . . Jurisdiction is invoked by filing a petition as provided by section
2344 of this title.” 28 U.S.C. § 2342. As we have explained, “[u]nder the
Hobbs Act, this court lacks jurisdiction to rule on a collateral attack of an
FCC order. . . . ‘Properly promulgated FCC regulations currently in effect
must be presumed valid for the purposes of this appeal. The Hobbs Act,
28 U.S.C. § 2342, requires that all challenges to the validity of final orders
of the FCC be brought by original petition in a court of appeals. The
district court thus lacked jurisdiction to pass on the validity of the FCC
regulations, and no question as to their validity can be before us in this
appeal.’” Pac. Bell Tel. Co. v. Cal. Pub. Utils. Comm’n, 621 F.3d 836,
843 n.10 (9th Cir. 2010) (quoting U.S. W. Commc’ns, Inc. v. Jennings,
304 F.3d 950, 958 n.2 (9th Cir. 2002)). If the Hobbs Act applies here,
then even if we were to “doubt the soundness of the FCC’s interpretation”
of § 252, we would “not [be] at liberty to review that interpretation.” U.S.
W. Commc’ns, Inc. v. Hamilton, 224 F.3d 1049, 1055 (9th Cir. 2000).
                            NCCC V. QWEST                                   15

    Naturally, the strength of Qwest’s Hobbs Act argument
depends on whether the TRO actually addresses the scenario
that transpired here; if it does not, we could not say that North
County’s attack on Qwest is also an attack on the FCC order,
because the validity of the TRO would simply not be drawn
into question at all. Qwest’s Hobbs Act argument would
therefore be neutralized. This question may be close, and it
is certainly complicated—giving footnote number 2,087 its
proper reading in the context of the surrounding 659-page
FCC order is no simple task.2

                                       2

     Second, in addition to relying on the TRO, Qwest defends
its preferred reading of § 252 on the merits by invoking the
traditional tools of statutory construction, above all by
emphasizing the statute’s supposed purposes and the need to
avoid results Qwest deems absurd. As noted, Qwest’s
position is in some tension with the text of § 252, and we are
aware of no federal court to have read the statute in the way
Qwest proposes.

  2
     No party has cited any authority construing the scope of the FCC’s
ruling in the TRO, which by its own terms purported to apply only “in the
interconnection amendment context.”                 TRO, at 19023 n.2087.
Nonetheless, we need not resolve today whether the statutory text of
section 252(b)(1), as interpreted by the FCC, authorizes Qwest to
commence negotiations for new interconnection agreements and then to
compel arbitration before the State commissions when those negotiations
stall. See Valle del Sol Inc. v. Whiting, 732 F.3d 1006, 1030 (9th Cir.
2013) (Bea, J., concurring in part and dissenting in part) (“[T]he ‘cardinal
principle of judicial restraint’ is that ‘if it is not necessary to decide more,
it is necessary not to decide more.’” (quoting PDK Labs. Inc. v. DEA,
362 F.3d 786, 799 (D.C. Cir. 2004) (Roberts, J., concurring in part and
concurring in the judgment))). Here, an independent source—the parties’
own contract—gives Qwest the authority to compel arbitration.
16                        NCCC V. QWEST

                                   B

    We may not need to decide whether § 252(b)(1) on its
own gave Qwest the power to commence negotiations over
the 2011 ICAs and then to force North County into
arbitration, because even if the statute did not grant Qwest
such power, that would not inevitably mean Qwest lacked
such power; Qwest would just have to trace such power to a
different source.

                                    1

    But what about the 1997 ICAs themselves, which, as
private agreements, are capable of defining the parties’ rights
and obligations like any other contracts?3 As we have
explained, “[o]nce the terms [of an ICA] are set, either by
agreement or arbitration, and the state commission approves
the agreement, it becomes a binding contract.” Pac. Bell,
325 F.3d at 1120; see also CoreTel Va., LLC v. Verizon Va.,
LLC, 752 F.3d 364, 370 (4th Cir. 2014) (“[A]n ICA is a
private agreement,” which courts must interpret “[l]ike any
other contract.”); TRO at 17404 ¶ 701 (“Permitting voluntary

 3
    Even if we assume North County is right that § 252 on its own would
not have authorized the state Commissions to arbitrate the 2011 ICAs,
North County nowhere suggests that this limitation is “jurisdictional,” in
the sense that the parties would lack the freedom to vary such rule by
contract. Nor would we readily credit such argument, had it been made.
See, e.g., Sebelius v. Auburn Reg’l Med. Ctr., 133 S. Ct. 817, 824 (2013)
(“To ward off profligate use of the term ‘jurisdiction,’ we have adopted a
‘readily administrable bright line’ for determining whether to classify a
statutory limitation as jurisdictional. We inquire whether Congress has
‘clearly state[d]’ that the rule is jurisdictional; absent such a clear
statement, we have cautioned, ‘courts should treat the restriction as
nonjurisdictional in character.’”) (quoting Arbaugh v. Y & H Corp.,
546 U.S. 500, 516 (2006)) (internal citation omitted).
                      NCCC V. QWEST                         17

negotiations for binding interconnection agreements is the
very essence of section 251 and section 252.”). As such, we
have held that “the agreements themselves and state law
principles govern the questions of interpretation of the [ICAs]
and enforcement of their provisions.” Pac. Bell, 325 F.3d at
1128 (quoting Sw. Bell Tel. v. Pub. Util. Comm’n, 208 F.3d
475, 485 (5th Cir. 2000)).

   Qwest relies heavily on Section XXXIV(V) of the 1997
ICAs. As we noted at the outset of this opinion, Section
XXXIV(V) stated:

       This Agreement shall be effective for a period
       of 2 1/2 years, and thereafter the Agreement
       shall continue in force and effect unless and
       until a new agreement, addressing all of the
       terms of this Agreement, becomes effective
       between the Parties. The Parties agree to
       commence negotiations on a new agreement
       no later than two years after this Agreement
       becomes effective.

    Qwest’s position is that Section XXXIV(V) not only
gives each party the power to initiate negotiations, but also
gives each party the power to achieve a “new agreement” by
compelling arbitration before the state Commissions if those
negotiations fail to resolve all of the parties’ disputes. In
effect, Qwest interprets Section XXXIV(V) to make
reciprocal what would otherwise be a unilateral power to
invoke the § 252 negotiation-and-arbitration process. Both
18                         NCCC V. QWEST

state Commissions agreed with Qwest’s interpretation of the
1997 ICAs.4

    We agree as well, and we therefore conclude for the
following reasons that the state Commissions had authority to
arbitrate the 2011 ICAs because the 1997 ICAs themselves
gave Qwest both the power to initiate negotiations and the
power to compel arbitration.

                                     2

    In the first place, North County’s briefing before this
court does not address the argument that the 1997 ICAs
authorized Qwest to compel arbitration. Given that North
County is a party to the contract, its silence is damning. So,
too, is the course of conduct North County engaged in during
the period before Qwest petitioned for arbitration. As the
parties explained in the Joint Statement of Agreed Facts, filed
with the district court in the Oregon proceeding below,
“[North County] and [Qwest] agreed to a series of extensions
of the arbitration window to file a petition for arbitration
under 47 U.S.C. § 252(b) . . . . In each of the extension
agreements . . . [North County] specifically agreed to extend
‘the period during which either party may file for arbitration


  4
     The Oregon Commission held that “[b]y the terms of the parties’
existing ICA, either Qwest or North County may commence negotiations
under Section 252(a)(l) of the Act, and if negotiations fail, either party
may then petition this Commission to arbitrate any open issues under
Section 252(b)(1) of the Act.” Likewise, the Arizona Commission held
that “the Commission clearly has the authority to arbitrate disputes arising
during the renegotiation of an ICA between Qwest and a CLEC,” based,
in part, on “the fact that under the ICA, both parties have the right to
commence negotiation of a new agreement,” and the fact “that Qwest met
the procedural requirements under the ICA.”
                      NCCC V. QWEST                          19

under section 252(b)(1) of the Act.’” In addition, in January
2010 North County agreed to set a date for arbitration. North
County does not argue that it took any of these actions under
a reservation of rights or the like.

     North County’s behavior under the 1997 ICAs is highly
probative of those ICAs’ meaning. See, e.g., Abrams v.
Horizon Corp., 669 P.2d 51, 57 (Ariz. 1983) (“Where an
agreement involves repeated occasions for performance by
either party with knowledge of the nature of the performance
and opportunity for objection to it by the other, any course of
performance accepted or acquiesced in without objection is
given great weight in the interpretation of the agreement.”
(quoting Restatement (Second) of Contracts § 202(4) (1979)
(emphasis deleted)); Tarlow v. Arntson, 505 P.2d 338,
341–42 (Or. 1973) (en banc) (“How the original parties and
their successors conducted themselves in relation to the
agreement is instructive in our determination of what must
have been intended.”). To be sure, North County later
objected to the state Commissions’ authority to arbitrate. But
its failure to do so at any point during the lengthy period of
time leading up to litigation casts doubt on whether its current
position reflects the proper reading of the 1997 ICAs.
Further, one might be able to argue that the 1997 ICAs, read
as a whole, give Qwest only the power to request
negotiations, but not the additional power to force arbitration.
But North County has not attempted to advance such
argument here.

                               3

   In sum, given (1) the language of the 1997 ICAs’
negotiation clause and the way it was interpreted by both state
Commissions below; (2) North County’s conduct in the time
20                    NCCC V. QWEST

leading up to the arbitration proceedings; and (3) North
County’s lack of any rebuttal argument before this court; we
are satisfied that the state Commissions had authority to
arbitrate the 2011 ICAs because the 1997 ICAs themselves
gave Qwest the power to invoke the negotiation-and-
arbitration mechanism set forth in 47 U.S.C. § 252.

                              IV

    North County next challenges six specific provisions of
the 2011 ICAs themselves: (1) the requirement that North
County interconnect with Qwest directly rather than through
a third-party tandem provider; (2) the ICAs’ Relative Use
Factor; (3) the requirement that North County employ SS7
signaling if and when it originates calls to Qwest; (4) the
requirement that North County pay Qwest for certain call
detail records; (5) the cap on the number of minutes for which
North County can bill Qwest; and (6) the ICAs’ failure to
allow North County to interconnect using Voice over Internet
Protocol.

   The operative terms of the Oregon and Arizona ICAs are
similar or identical, except as indicated herein. We examine
each of North County’s objections in turn.

                              A

    North County’s principal claim is that sections 7.1.1 and
7.2.1.1 of the ICAs, which require North County to
interconnect with Qwest directly rather than indirectly, as in,
                          NCCC V. QWEST                                21

through a third-party tandem provider, are illegal and
unenforceable against it.5

                                    1

    Section 7.2.1.1 of the 2011 ICAs provides that, “[u]nless
otherwise agreed to by the Parties, via an amendment to this
Agreement, the Parties will directly exchange traffic between
their respective networks without the use of third party transit
providers.” North County claims this provision is unlawful.
North County’s position appears to be rather strange, given
that the 1997 ICAs contained nearly identical language,6 and
yet North County has repeatedly stressed that the 1997 ICAs
are fully lawful.

    Equally troubling is the near total lack of support for
North County’s argument. North County cites only one
authority for the proposition that federal law requires that it
be able to force Qwest to interconnect via third-party tandem
provider. That authority is a 1996 FCC order in which the
FCC stated that “competitive telecommunications carriers
that have the obligation to interconnect with requesting
carriers may choose, based upon their own characteristics,
whether to allow direct or indirect interconnection.” In the
Matter of Implementation of the Local Competition


 5
    North County’s direct-vs.-indirect challenge is waived with respect to
the Oregon-affected ICA because North County of Oregon never raised
it before the Oregon Commission. See W. Radio Servs. Co. v. Qwest
Corp., 678 F.3d 970, 979 (9th Cir. 2012).
  6
    Section V.A. of the 1997 ICAs declared that, “[a]bsent a separately
negotiated agreement to the contrary, the Parties will directly exchange
traffic between their respective networks, without the use of third party
transit providers.”
22                    NCCC V. QWEST

Provisions in the Telecommunications Act of 1996,
11 F.C.C.R. 15499, 16171 ¶ 1408 (1996) (hereinafter “First
Report and Order”). From this, North County concludes that
Qwest had a “clear obligation to allow [North County] to
select indirect interconnection with [Qwest] when [Qwest]
submitted its ICA negotiation requests.”

    We are not persuaded that the First Report and Order
renders section 7.2.1.1 unlawful because the FCC ruling is
not on point.

    In particular, when the above-quoted FCC language
highlights a CLEC’s leeway to choose direct vs. indirect, it
does so for the limited purpose of illustrating that CLECs
have different statutory obligations from ILECs. Specifically,
the order explains, 47 U.S.C. § 251(c) requires ILECs—but
not CLECs—to interconnect directly with requesting carriers.
First Report and Order at 15991 ¶ 997 (“Section 251 is clear
in imposing different obligations on carriers depending upon
their classification . . . . For example, section 251(c)
specifically imposes obligations upon incumbent LECs to
interconnect, upon request, at all technically feasible points.
This direct interconnection, however, is not required under
section 251(a) of all telecommunications carriers.”). CLECs,
by contrast, are not subject to § 251(c); CLECs are governed
by §§ 251(a) and (b), which do not require them to
interconnect directly if direct interconnection would be
uneconomical or technically infeasible for them. Indeed, the
major conclusion reached by the FCC order was that “indirect
connection . . . satisfies a telecommunication carrier’s duty to
interconnect pursuant to section 251(a).” First Report and
Order ¶ 997. The FCC emphasized that “telecommunications
carriers should be permitted to provide interconnection
pursuant to section 251(a) either directly or indirectly, based
                      NCCC V. QWEST                        23

upon their most efficient technical and economic choices.”
Id.

    In other words, the First Report and Order merely
clarified that CLECs are permitted to use indirect
interconnection in order to meet the statutory interconnection
obligations imposed on them by § 251(a). But just because
the statute permits CLECs to interconnect indirectly with
other LECs, does not mean that each CLEC has the absolute
right to demand indirect interconnection of other LECs under
any and all circumstances. Whatever else it says, the First
Report and Order does not condemn the default rule the 2011
ICAs establish.

    Hence, the First Report and Order does not give North
County the unilateral right to demand indirect interconnection
from Qwest. Nor does the text of the Telecommunications
Act itself give North County that right. For those reasons,
North County cannot establish that the 2011 ICAs violate the
Act simply because they require North County to use direct
interconnection for the time being. If North County is to
succeed in establishing that it was entitled to indirect
interconnection, it must show that the Arizona Commission
acted arbitrarily and capriciously in approving the 2011 ICA
provisions that set direct interconnection as the parties’
default.

                              2

    The Arizona Commission’s decision to approve the 2011
ICA’s direct interconnection provisions may be set aside as
arbitrary and capricious only if North County demonstrates
that such decision “was not supported by substantial
evidence,” or represents a “clear error of judgment” on the
24                   NCCC V. QWEST

Commission’s part. W. Radio Servs. Co. v. Qwest Corp.,
678 F.3d 970, 976 (9th Cir. 2012) (quoting Verizon Cal., Inc.
v. Peevey, 462 F.3d 1142, 1150 (9th Cir. 2006)).

     North County makes a single argument: that if North
County were allowed to interconnect indirectly with Qwest,
specifically “through a third-party tandem provider that
utilizes SS7 signaling,” then North County’s “use of MF
signaling” would become “irrelevant.” Recall that the
impetus for Qwest’s request to negotiate the 2011 ICAs was
Qwest’s claim that North County had been overbilling it and
obscuring the inclusion of inflated costs by using the more
opaque MF signaling data. North County argues that
interconnection through a third-party tandem provider would
render Qwest’s “reasons for wanting new ICAs . . . moot,”
and the “direct interconnection ICAs forced on [North
County] . . . unnecessary.”

    North County’s argument does not establish that the
Arizona Commission committed a clear error of judgment.
In the first place, North County has offered no evidence
whatsoever to substantiate its assertion that Qwest’s
legitimate concerns would evaporate if only North County
were permitted to connect through a third-party tandem
provider. On the contrary, North County’s President testified
before the Commission that he had “‘no clue’ what kind of
call information its third-party tandem provider gives to
Qwest when it passes a call from [North County].”
Moreover, in testimony before the Commission, Qwest
explained that the parties would need to answer numerous
questions about the terms and conditions of indirect
interconnection, which were not raised during the parties’
pre-arbitration negotiations, before they could interconnect
through a third-party tandem provider. Finally, section
                      NCCC V. QWEST                         25

7.2.1.1 of the 2011 ICAs expressly allows North County to
renegotiate this issue in the future. The Arizona Commission
was well within its discretion to approve the provisions
requiring direct interconnection for the time being.

                              B

   North County next objects to the 2011 ICAs’ Relative
Use Factor.

    In simplified terms, when someone from Qwest’s network
calls someone in North County’s network—or vice versa—
the traffic must be transmitted through certain facilities,
called trunk facilities. But transmitting local traffic between
the two networks generates costs to the party operating the
trunk facilities, and those costs must be divided between
Qwest and North County. Under FCC regulations, an ILEC
like Qwest may charge a CLEC like North County, but only
in proportion to the amount of traffic that originates on the
CLEC’s network and terminates on the ILEC’s network. 47
C.F.R. § 51.703. In an effort to charge North County for the
proportion of Qwest–North County traffic that originates with
North County, the 2011 ICAs employ a so-called “relative
use factor” that assigns 99 percent of the costs to Qwest and
1 percent of the costs to North County, although the ICAs
permit this figure to be adjusted after one calendar quarter to
reflect actual usage data.

   North County objects to the 99:1 ratio; it contends that the
2011 ICAs should assign Qwest 100% of these costs to Qwest
because the 2011 ICAs specifically state that North County
26                         NCCC V. QWEST

does not send any traffic to Qwest.7 In light of that
stipulation, North County argues that it was arbitrary and
capricious for the state Commissions to approve a relative use
factor of 99:1.

    We are not persuaded. Despite the language in the 2011
ICAs declaring that North County sends no calls to Qwest,
there was unrebutted record evidence that North County does
originate at least some calls to Qwest. Moreover, Qwest
testified that it is unable to determine how much traffic North
County originates to it, and neither party supplied the state
Commissions with any actual data quantifying their relative
use of the trunk facilities. Given that North County originates
some small but unknown amount of traffic, and given that the
ICAs allow the Relative Use Factor to be revised after a short
period of time, we conclude that it was not arbitrary and
capricious for the state Commissions to approve a provisional
relative use factor of 99:1.8

                                    C

    North County also contends that the 2011 ICAs violate
the Telecommunications Act by requiring North County to


  7
    In particular, section 7.1.1 of the 2011 ICAs states that “[t]he Parties
understand and agree that CLEC currently sends no traffic to Qwest and
instead terminates traffic either originated by Qwest or originated by other
carriers and passed through Qwest to CLEC.”
  8
   To the extent North County challenges the ICA provisions regarding
Multiplexing and installation charges, North County waived such
challenges with respect to the Oregon-affected ICA. With respect to the
Arizona-affected ICA, such challenges fail because the factual premise of
North County’s argument is incorrect: Multiplexing and installation
charges are not subject to the Relative Use Factor.
                          NCCC V. QWEST                               27

use SS7 technology if and when it originates calls to Qwest.
North County relies on 47 U.S.C. § 252(i), which provides
that “[a] local exchange carrier shall make available any
interconnection, service, or network element provided under
an agreement approved under this section to which it is a
party to any other requesting telecommunications carrier
upon the same terms and conditions as those provided in the
agreement.”

    As its text makes clear, § 252(i) is a non-discrimination
provision. North County’s attempt to invoke it fails because
nothing in the record suggests that Qwest allows other
exchange carriers to do what North County wants to do,
namely, to transmit local traffic using only MF signaling.
Indeed, the parties’ joint statement of undisputed facts filed
in the Oregon proceedings indicates that “[North County] is
the only CLEC in Oregon that interconnects with [Qwest]
using exclusively MF signaling.”9 North County provides no
evidence to substantiate any discrimination theory.

    Moreover, it was not arbitrary and capricious or otherwise
unlawful for Qwest to insist that North County use SS7
signaling if it wants to originate calls to Qwest. Substantial


 9
   And while Qwest has offered evidence that at least one other CLEC in
Oregon “currently interconnects with [Qwest] using the same 1997 ICA
that [Qwest] had with [North County],” the 1997 ICA requires the CLEC
to “make a good faith effort” to transition to SS7 signaling technology
within “4 months” of the execution of that ICA. And, as already
explained above, it is undisputed that even the CLEC operating under the
1997 ICA does not now connect with Qwest using MF signaling
technology. Because there is simply no evidence that Qwest is permitting
any other carrier to do what North County wants to do—namely, transmit
local traffic using only MF signaling—there is no basis upon which to find
that section 7.2.1.1 violates the Act’s non-discrimination provision.
28                    NCCC V. QWEST

evidence supports Qwest’s contention that SS7 signaling has
significant benefits when compared to MF signaling; that MF
signaling is essentially obsolete; and that North County’s use
of MF signaling created serious problems for Qwest, in
particular by impeding Qwest’s ability to bill North County
for traffic exchanged between their networks. We therefore
conclude that substantial evidence supported the state
Commissions’ decisions to approve the ICAs’ requirements
that North County use SS7 signaling if and when it decides to
originate traffic to Qwest.

                              D

    North County next argues that the 2011 ICAs are
unlawful because section 7.6 requires North County to pay
Qwest for certain call detail records. We reject this challenge
because both North County entities failed to raise it before
their respective state Commissions, and both district courts
below properly refused to entertain it. North County
therefore may not assert it here. W. Radio Servs., 678 F.3d at
979.

                              E

    In its penultimate challenge, North County asks us to
invalidate section 7.8 of the ICAs, which impose a cap on the
number of minutes for which North County may bill Qwest.

   Recall that Qwest is obligated to compensate North
County for some portion of the traffic that Qwest sends to
North County. Recall, also, that Qwest had claimed that it
had been overbilled by North County, and that North
County’s continued use of MF signaling to terminate calls
had made it difficult for Qwest to verify the number of
                      NCCC V. QWEST                        29

minutes for which Qwest may lawfully be made to pay North
County. Given those circumstances, Qwest insisted that the
2011 ICAs impose a cap on the number of minutes for which
North County is authorized to bill it. In Arizona, the cap is
400,000 minutes; in Oregon, it is 240,000 minutes. The
Arizona-affected ICA also provides that “[e]ither party may
request a modification of the cap, including its elimination,
based on verifiably accurate records that the traffic is
appropriately subject to reciprocal compensation.” Similarly,
with respect to the Oregon-affected ICA, Qwest testified that
it is “willing to negotiate to amend [the cap] if [North
County] can show that it is receiving more minutes over the
trunks that are truly local and compensable.” North County
objects that these caps are arbitrary and capricious.

    We have no trouble concluding that substantial evidence
supports the state Commissions’ decisions to approve the
caps. First, the record contains ample evidence of the billing
disputes that led Qwest to insist on the caps. Moreover, as
the Arizona Commission explained, “[t]he proposed cap of an
average of 400,000 minutes of use per month . . . was
calculated based on [North County]’s current usage pattern
and Qwest’s best efforts to analyze that data based on
information received from [North County]. [North County]
did not provide evidence in this proceeding about its actual
use of its in-service circuits, nor did it contest Qwest’s
calculations.” Likewise, Qwest selected the Oregon-affected
ICA’s 240,000-minute cap based on evidence of North
County’s actual usage patterns, and in fact, the cap
deliberately allows 40% more minutes than Qwest currently
sends to North County on average. North County has not
presented any evidence to undermine the numbers Qwest has
proposed.
30                    NCCC V. QWEST

    In short, we conclude that the caps respond to a well-
documented, legitimate billing dispute that is the direct
consequence of North County’s continued use of MF
signaling technology. The caps are based on substantial and
uncontroverted evidence, and are subject to renegotiation in
light of future data. North County has not shown them to be
arbitrary and capricious.

                              F

    Finally, North County argues that the
Telecommunications Act requires Qwest to allow North
County to interconnect with it using Voice over Internet
Protocol (“VoIP”) technology. North County does not claim
that it has an absolute right to demand interconnection
through VoIP; instead, North County invokes the Act’s non-
discrimination provisions, §§ 251(c)(2)(D) and 252(i), to
assert that Qwest must offer it VoIP interconnection.

     As we discussed above, § 252(i) declares that “[a] local
exchange carrier shall make available any interconnection,
service, or network element provided under an agreement
approved under this section to which it is a party to any other
requesting telecommunications carrier upon the same terms
and conditions as those provided in the agreement.”
47 U.S.C. § 252(i). Similarly, § 251(c)(2)(D) requires ILECs
to provide interconnection “on rates, terms, and conditions
that are just, reasonable, and nondiscriminatory, in
accordance with the terms and conditions of the agreement
and the requirements of this section and section 252 of this
title.” 47 U.S.C. § 251(c)(2)(D).

   North County’s argument fails for several reasons. First,
with respect to the Oregon-affected ICA, North County never
                      NCCC V. QWEST                        31

raised it before the Oregon Commission, and therefore the
district court properly concluded that it is waived.

    With respect to the Arizona-affected ICA, North County
cannot successfully invoke the Act’s non-discrimination
provisions because it has pointed to no evidence that Qwest
provides service using VoIP technology to anyone. To the
contrary, Qwest testified below that it does not provide VoIP
service; only a separate corporate affiliate does. North
County cites nothing to rebut such testimony. The non-
discrimination provisions of §§ 251(c)(2)(D) and 252(i)
therefore have no application.

                              V

    In conclusion, we are satisfied that the Commissions had
authority to arbitrate the 2011 ICAs. We are also satisfied
that none of the provisions subject to our review violates the
Telecommunications Act or its implementing regulations, and
that none of the state Commissions’ actions were arbitrary or
capricious.

   The judgments of the district courts are AFFIRMED.
