BEFORE THE FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON, D.C. 20554
POST-HEARING BRIEF OF RESPONDENT NORTHGATE NETWORKS AMERICA INC.
Elaine Forsythe Responsible Partner
Howard Bellamy Partner
Aaron Liu Lead Associate
Monica Reyes Associate
CALDERWOOD & HARKNESS LLP 1200 K Street NW, Suite 900 Washington, D.C. 20005 Telephone: (202) 555-7800 Facsimile: (202) 555-7801
Counsel for Respondent Northgate Networks America Inc. 8200 Dulles Corner Boulevard, Suite 1100 Tysons Corner, VA 22182
March 15, 2024
TABLE OF AUTHORITIES
Statutory Provisions.
FCC Orders and Rulings
Cases.
Other Authorities.
I. INTRODUCTION AND SUMMARY OF ARGUMENT
Respondent Northgate Networks America Inc. ("NNA" or "Northgate"), a Delaware corporation and the United States operating subsidiary of Northgate Telecommunications PLC, a public limited company organized under the laws of England and Wales, whose American Depositary Receipts are listed on Nasdaq under the ticker symbol NTP, respectfully submits this Post-Hearing Brief to Administrative Law Judge Robert Fenwick following the three-day evidentiary hearing held on January 22, 23, and 24, 2024, in the above-captioned proceeding.
Complainant Ridgepoint Communications Inc. ("Ridgepoint"), a Delaware corporation headquartered at 3500 Market Street, Suite 700, Philadelphia, Pennsylvania 19104, operates as a competitive local exchange carrier ("CLEC") and enterprise broadband provider in the Mid-Atlantic region. On February 7, 2023, Ridgepoint filed its complaint in this docket, alleging that Northgate violated its interconnection obligations under Sections 251 and 252 of the Communications Act of 1934, as amended by the Telecommunications Act of 1996, 47 U.S.C. §§ 251, 252, by declining Ridgepoint's interconnection and physical colocation requests at fourteen specified central-office and meet-me-room facilities in the Philadelphia–Baltimore–Washington, D.C. corridor. Ridgepoint contends that Northgate's denials constitute an unlawful refusal to deal, that Northgate's Wholesale Access Policy is a pretextual barrier to market entry, and that the Commission should order Northgate to provide colocation access at all fourteen facilities.
Having now had the benefit of a full evidentiary hearing — during which both parties presented live testimony, were subject to cross-examination, and introduced extensive documentary exhibits — the record before the ALJ conclusively demonstrates that Ridgepoint's complaint is without merit and should be dismissed in its entirety. The evidentiary record supports the following conclusions:
First, the fourteen facilities at issue are not subject to the unbundling and colocation requirements that Ridgepoint invokes. Sections 251(c)(3) and 251(c)(6) of the Communications Act impose colocation and unbundling obligations on incumbent local exchange carriers ("ILECs"). Northgate is not an ILEC with respect to any of the fourteen facilities at issue. Northgate operates these facilities as part of its fiber-optic backbone and metro-ring transport network — they are not local exchange switching facilities, and Northgate does not serve as the incumbent local exchange carrier in any of the relevant service territories. Ridgepoint's attempt to extend the Section 251(c) colocation mandates to a competitive fiber transport provider operating backbone and enterprise facilities is unsupported by the statute, the Commission's implementing regulations, or any controlling precedent. Dr. Anton Berger, Northgate's regulatory expert and a former Deputy Bureau Chief of the FCC's Wireline Competition Bureau, testified unequivocally that Section 251(c) obligations do not extend to the class of facilities at issue here.
Second, Northgate's Wholesale Access Policy ("WAP"), adopted in January 2020, is a commercially reasonable practice applied on a non-discriminatory basis to all third-party colocation requests. The WAP establishes a minimum annual revenue commitment threshold of five million dollars ($5,000,000) for third-party physical colocation at Northgate facilities. This threshold was set to ensure that scarce facility resources — including physical cage and rack space, electrical power capacity, and cooling infrastructure — are allocated to wholesale partners whose business volumes justify the consumption of those resources. The WAP was adopted more than a year before Ridgepoint submitted its first interconnection request and more than two and a half years before Ridgepoint filed its complaint. Testimony from Diane Okoro, U.S. President of NNA, and Patrick Salazar, Chief Regulatory Officer of Northgate Telecommunications PLC, confirmed that the WAP is applied uniformly to all requesting carriers, without exception or favoritism, and that Northgate has denied colocation requests from multiple carriers that failed to meet the threshold — not merely Ridgepoint.
Third, even if some interconnection or colocation obligation were deemed applicable, the capacity constraints at the fourteen facilities independently justify Northgate's denials. Every one of the fourteen facilities was operating at or above eighty-five percent (85%) capacity utilization during the period of Ridgepoint's requests, from March 2021 through August 2022. Ms. Okoro testified to the concrete engineering challenges — power limitations, cooling system capacity, physical floor space constraints — that render additional colocation at facilities operating at these utilization levels impractical and potentially harmful to the service quality of existing customers. Dr. Berger confirmed that FCC precedent recognizes capacity constraints as a legitimate and sufficient basis for declining colocation requests, and that the Commission has historically not required carriers to undertake technically infeasible or economically unreasonable buildout to accommodate new colocation at saturated or near-saturated facilities.
Fourth, there was no prior course of dealing between Northgate and Ridgepoint at any of the fourteen disputed facilities. The parties' prior Master Interconnection Agreement ("MIA"), dated June 15, 2015, provided colocation at only three facilities in northern Virginia — none of which is among the fourteen facilities that are the subject of Ridgepoint's complaint. The MIA expired by its own five-year term on June 14, 2020, and Ridgepoint continues to occupy the three original colocation spaces under a month-to-month holdover arrangement at 120% of the prior contractual rate. The existence of a prior commercial relationship at separate locations, under an agreement that has since expired, does not create an obligation — under the Communications Act, Commission precedent, or any other legal authority — to grant access at entirely different facilities.
Fifth, Ridgepoint's economic expert testimony, offered through Dr. Leonard Kuo, a Professor of Economics at Cavendish University, should be afforded little weight in this regulatory proceeding. Dr. Kuo's testimony centered on an artificially narrow market definition and a damages analysis that is more appropriately addressed in the stayed federal antitrust action, Case No. 1:22-cv-01487-CMW, pending before the Honorable Claudia M. Wentworth in the United States District Court for the Eastern District of Virginia, Alexandria Division. Ridgepoint's $127 million lost-profits claim, trebled to $381 million under Clayton Act Section 4, is a matter for the district court. The relevant inquiry before this Commission is whether Northgate's interconnection practices comply with the Communications Act — not whether Ridgepoint has suffered economic loss, and not whether Northgate possesses market power under the antitrust laws. Dr. Kuo's market-definition testimony, which estimated Northgate's market share at 68% within an artificially constrained product market, does not withstand scrutiny when the relevant market is properly defined to include reasonably interchangeable alternatives such as cable-based enterprise services, fixed wireless access, and wholesale ethernet transport.
Ridgepoint's aggregate annual spend with Northgate in fiscal year 2021 was approximately $1.8 million — well below the WAP's $5 million threshold. Ridgepoint failed to meet the requirements of a uniformly applied, commercially reasonable policy. It failed to demonstrate that the fourteen facilities are subject to the unbundling mandates it invokes. It failed to rebut the unrebutted capacity constraint evidence. And it failed to establish any course of dealing at any of the fourteen disputed facilities. The complaint should be dismissed in its entirety.
II. PROCEDURAL HISTORY
A. The FCC Complaint and Northgate's Answer
On February 7, 2023, Ridgepoint Communications Inc. filed its complaint with the Federal Communications Commission in Docket No. WC-23-0042, initiating this proceeding. The complaint alleged that Northgate Networks America Inc. violated Sections 251 and 252 of the Communications Act of 1934, as amended by the Telecommunications Act of 1996, by refusing Ridgepoint's interconnection and physical colocation requests at fourteen specified facilities located throughout the Philadelphia–Baltimore–Washington, D.C. corridor. Ridgepoint alleged, inter alia, that Northgate owed Ridgepoint a duty of interconnection under Section 251(a) and colocation access under Section 251(c)(6); that Northgate's Wholesale Access Policy was a pretextual barrier designed to exclude competitive carriers from the Mid-Atlantic transport market; and that the Commission should order Northgate to provide colocation at all fourteen facilities and award appropriate remedial relief.
The complaint was accompanied by the declaration of Gregory Trent, CEO and Founder of Ridgepoint, and the declaration of Samira Hashemi, COO of Ridgepoint, as well as various documentary exhibits including copies of Ridgepoint's interconnection and colocation request correspondence sent to Northgate between March 2021 and August 2022, Northgate's written responses denying each of those requests, and the prior Master Interconnection Agreement dated June 15, 2015.
In approximately March 2023, Northgate filed its Answer and Affirmative Defenses, denying the material allegations of the complaint and asserting multiple affirmative defenses. Specifically, Northgate denied that the fourteen facilities at issue are subject to the unbundling or colocation requirements of Section 251(c), on the grounds that Northgate does not serve as the incumbent local exchange carrier in any of the relevant service territories and that the facilities in question are backbone and enterprise transport facilities, not local exchange switching offices. Northgate further asserted that its Wholesale Access Policy is a commercially reasonable, non-discriminatory practice; that the $5 million annual minimum revenue commitment threshold serves legitimate business purposes; that Ridgepoint's aggregate annual spend of approximately $1.8 million in fiscal year 2021 fell below the threshold; and that capacity constraints at each of the fourteen facilities, all of which were operating at or above 85% utilization, independently justified the denials.
Northgate's Answer was accompanied by the declarations of Diane Okoro, U.S. President of NNA, and Patrick Salazar, Chief Regulatory Officer of Northgate Telecommunications PLC, as well as a preliminary expert statement of Dr. Anton Berger, Senior Advisor at Torrence Policy Group LLC and former Deputy Bureau Chief of the FCC's Wireline Competition Bureau.
This proceeding exists in parallel with a federal antitrust action filed by Ridgepoint against Northgate in the United States District Court for the Eastern District of Virginia, Alexandria Division, Case No. 1:22-cv-01487-CMW, before the Honorable Claudia M. Wentworth, United States District Judge. Ridgepoint's district court complaint asserts claims under Section 2 of the Sherman Act and Section 4 of the Clayton Act, seeking treble damages of $381 million based on an alleged $127 million in lost profits. On March 14, 2023, Judge Wentworth stayed the federal antitrust action pursuant to the primary jurisdiction doctrine, pending resolution of this FCC proceeding. The stay order recognized that the Commission's expertise in telecommunications regulation and its determination of Northgate's obligations under the Communications Act should inform and precede any adjudication of the antitrust claims.
B. Pre-Hearing Proceedings
Following the filing of Northgate's Answer, Administrative Law Judge Robert Fenwick was designated as the presiding officer in this proceeding. On June 12, 2023, ALJ Fenwick issued a Scheduling Order establishing the procedural framework for the case, including deadlines for discovery, the exchange of expert reports, pre-hearing motions, and the evidentiary hearing itself. The Scheduling Order initially set the evidentiary hearing for a three-day period in September 2023.
During the summer of 2023, the parties engaged in extensive discovery. Northgate produced documents responsive to Ridgepoint's requests, including the complete text of the Wholesale Access Policy and its supporting internal memoranda, capacity utilization data for each of the fourteen facilities at issue, historical revenue and billing records reflecting Ridgepoint's annual spend with Northgate, and correspondence related to colocation requests from other carriers that were also denied under the WAP. Ridgepoint produced financial data, business plans, internal analyses of the Mid-Atlantic fiber transport market, and documents related to its leveraged buyout by Caravel Capital Partners LP.
The parties exchanged expert reports in July and August 2023. Northgate designated Dr. Anton Berger as its regulatory expert, and Dr. Berger submitted a comprehensive report addressing the regulatory framework under Sections 251 and 252, the classification of the fourteen facilities, the commercial reasonableness of the WAP, and the significance of capacity constraints under FCC precedent. Ridgepoint designated Dr. Leonard Kuo as its economics expert, and Dr. Kuo submitted a report addressing market definition, market concentration, competitive effects, and estimated damages.
On August 28, 2023, ALJ Fenwick issued an order postponing the evidentiary hearing from the originally scheduled September 2023 dates to January 22–24, 2024, due to FCC staffing constraints and calendar availability. The parties were directed to exchange pre-hearing briefs in advance of the rescheduled hearing dates, and both parties timely filed their respective pre-hearing submissions.
Several pre-hearing motions were briefed and decided, including motions in limine concerning the admissibility of certain expert testimony and documentary exhibits. Northgate filed a motion in limine seeking to exclude or limit Dr. Kuo's damages testimony on the grounds that it was more properly addressed in the stayed antitrust proceeding; ALJ Fenwick denied the motion, ruling that the testimony would be received subject to the ALJ's determination of the appropriate weight to be given to it in the regulatory context.
C. The Evidentiary Hearing (January 22–24, 2024)
The evidentiary hearing was held before ALJ Fenwick on January 22, 23, and 24, 2024, at the Commission's hearing facilities in Washington, D.C. Both parties were represented by counsel and presented live testimony and documentary evidence over the three-day period.
Northgate presented testimony from three witnesses:
Diane Okoro, U.S. President, Northgate Networks America Inc. Ms. Okoro testified regarding Northgate's business operations in the United States, the development and adoption of the Wholesale Access Policy, the application of the WAP to Ridgepoint's interconnection requests and to requests from other carriers, the capacity constraints at each of the fourteen facilities at issue, and the engineering considerations — including power, cooling, and physical space limitations — that render additional colocation at facilities operating at or above 85% utilization impractical. Ms. Okoro was subjected to extensive cross-examination by Ridgepoint's counsel.
Patrick Salazar, Chief Regulatory Officer, Northgate Telecommunications PLC. Mr. Salazar testified regarding the regulatory framework applicable to Northgate's facilities, the classification of those facilities as backbone and enterprise transport facilities rather than local exchange switching facilities, the development of the WAP in consultation with Northgate's network engineering and regulatory compliance teams, and the uniform, non-discriminatory application of the policy. Mr. Salazar also testified regarding Northgate's status as a competitive provider, rather than an incumbent local exchange carrier, in each of the relevant service territories.
Dr. Anton Berger, Senior Advisor, Torrence Policy Group LLC, 7925 Jones Branch Drive, Suite 510, McLean, Virginia 22102; former Deputy Bureau Chief, FCC Wireline Competition Bureau. Dr. Berger was retained by Northgate as its regulatory expert. He testified regarding the statutory and regulatory framework under Sections 251 and 252, the scope and applicability of ILEC unbundling and colocation obligations, the distinction between ILEC local exchange facilities and competitive backbone and transport facilities, the commercial reasonableness of the WAP under applicable legal standards, and the FCC's historical recognition of capacity constraints as a legitimate basis for declining colocation requests. Dr. Berger's qualifications — including his tenure as Deputy Bureau Chief — were stipulated to by Ridgepoint, and he was accepted by the ALJ as an expert in telecommunications regulation and policy.
Ridgepoint presented testimony from three witnesses:
Gregory Trent, CEO and Founder, Ridgepoint Communications Inc. Mr. Trent testified regarding Ridgepoint's business, its competitive position in the Mid-Atlantic market, the business rationale for seeking colocation at the fourteen Northgate facilities, and the alleged harm resulting from Northgate's denials. On cross-examination, Mr. Trent acknowledged that Ridgepoint did not conduct its own independent engineering assessment of capacity constraints at any of the fourteen facilities prior to filing its complaint.
Samira Hashemi, COO, Ridgepoint Communications Inc. Ms. Hashemi testified regarding Ridgepoint's operational needs, the timing and substance of its interconnection and colocation requests, and the impact of Northgate's denials on Ridgepoint's ability to expand its enterprise fiber service offerings in the Philadelphia–Baltimore–Washington, D.C. corridor. On cross-examination, Ms. Hashemi confirmed that Ridgepoint's aggregate annual spend with Northgate in fiscal year 2021 was approximately $1.8 million and that Ridgepoint was aware of the WAP's $5 million threshold at the time it submitted its requests.
Dr. Leonard Kuo, Professor of Economics, Cavendish University. Dr. Kuo was retained by Ridgepoint as its economics expert. He testified regarding his market definition analysis, in which he defined the relevant product market as "last-mile enterprise fiber-optic transport services (lit and dark fiber) with speeds of 1 Gbps and above, sold to enterprise and government customers." Under this market definition, Dr. Kuo estimated Northgate's market share at 68% in the Philadelphia–Baltimore–Washington, D.C. corridor. Dr. Kuo further testified regarding his damages estimate, projecting $127 million in lost profits for Ridgepoint over a five-year period. On cross-examination, Dr. Kuo acknowledged that his market definition excluded cable-based enterprise services, fixed wireless access, and wholesale ethernet transport, and that inclusion of those categories would substantially reduce Northgate's estimated market share.
Both parties introduced extensive documentary exhibits during the hearing, including the Master Interconnection Agreement dated June 15, 2015; the Wholesale Access Policy document adopted in January 2020; the fourteen individual interconnection and colocation request letters submitted by Ridgepoint between March 2021 and August 2022; Northgate's fourteen corresponding denial letters; facility-specific capacity utilization reports for each of the fourteen facilities; expert reports and supplementary materials of Dr. Berger and Dr. Kuo; Ridgepoint financial records; and the month-to-month holdover arrangement documentation.
D. Post-Hearing Briefing Schedule
At the conclusion of the evidentiary hearing on January 24, 2024, ALJ Fenwick ordered the parties to file simultaneous post-hearing briefs on or before March 15, 2024, and simultaneous reply briefs on or before April 12, 2024. The present filing constitutes Northgate's post-hearing brief pursuant to that order.
III. STATEMENT OF FACTS
A. Northgate's Business and Network
Northgate Telecommunications PLC is a publicly traded telecommunications and software-as-a-service ("SaaS") company headquartered at 14 Broadwall Lane, London SE1 9PQ, United Kingdom. Founded in 1987, Northgate Telecommunications PLC has grown into one of Europe's leading telecommunications infrastructure companies, with operations spanning the United Kingdom, continental Europe, and the United States. The company's American Depositary Receipts are listed on the Nasdaq Global Select Market under the ticker symbol NTP. The company is led by its Chief Executive Officer, Sir Malcolm Prentice, KBE.
Northgate's U.S. operations are conducted through its wholly owned subsidiary, Northgate Networks America Inc., a Delaware corporation (EIN: 54-3298176), headquartered at 8200 Dulles Corner Boulevard, Suite 1100, Tysons Corner, Virginia 22182. NNA is led by U.S. President Diane Okoro and operates under the regulatory oversight of Chief Regulatory Officer Patrick Salazar, who holds his position at the parent company level but devotes a significant portion of his time to U.S. regulatory matters.
Northgate owns and operates approximately 42,000 route-miles of fiber-optic backbone and metro-ring infrastructure across eighteen U.S. states, concentrated primarily along the eastern seaboard. This network encompasses long-haul fiber backbone routes connecting major metropolitan areas, metro-ring fiber networks serving enterprise customers within metropolitan markets, and enterprise access fiber connecting commercial office buildings, data centers, and government facilities to Northgate's metro-ring and backbone infrastructure. In addition to its fiber transport services, Northgate offers enterprise cloud-connectivity services and a proprietary SaaS-based network management platform marketed under the trade name NorthgateOS™, which enables enterprise customers to provision, monitor, and manage their network services through a unified software interface.
For fiscal year 2022, Northgate Telecommunications PLC reported consolidated group revenue of approximately £4.87 billion (approximately $5.96 billion at an average exchange rate of $1.2236 per pound sterling during the fiscal year). Of this total, U.S. revenue was approximately $2.41 billion, representing approximately 40.4% of consolidated group revenue. As of September 2022, Northgate Telecommunications PLC's market capitalization was approximately $11.3 billion, reflecting the company's position as a significant, well-capitalized participant in the global telecommunications infrastructure market.
Northgate's fourteen facilities at issue in this proceeding are a subset of the company's broader U.S. network infrastructure. These facilities function as points of presence along Northgate's backbone and metro-ring fiber networks in the Philadelphia–Baltimore–Washington, D.C. corridor, serving as interconnection points, optical amplification sites, and meet-me-room locations for Northgate's enterprise and wholesale customers. They are not local exchange switching facilities, and Northgate does not provide local dial-tone or last-mile voice telephony service to residential or small-business end users from any of these locations.
B. Ridgepoint's Business
Ridgepoint Communications Inc. is a Delaware corporation headquartered at 3500 Market Street, Suite 700, Philadelphia, Pennsylvania 19104. Ridgepoint was founded by Gregory Trent and operates as a competitive local exchange carrier and enterprise broadband provider in five Mid-Atlantic states: Pennsylvania, New Jersey, Delaware, Maryland, and Virginia. The company operates approximately 6,200 route-miles of owned and leased fiber-optic infrastructure in these markets, providing lit and dark fiber transport services, dedicated internet access, wavelength services, and managed network services to enterprise and government customers.
For fiscal year 2022, Ridgepoint reported revenue of approximately $387 million. The company employs approximately 1,450 individuals. Gregory Trent serves as CEO and Founder, and Samira Hashemi serves as Chief Operating Officer.
Ridgepoint is a privately held company. In November 2018, Caravel Capital Partners LP, a mid-market private equity fund headquartered at 1700 JFK Boulevard, Suite 2900, Philadelphia, Pennsylvania 19103, acquired a 78% equity interest in Ridgepoint through a leveraged buyout valued at approximately $510 million. Caravel Capital Partners is managed by its Managing Partner, Richard Cavanaugh. The Trent family retains the remaining 22% equity interest in the company. Ridgepoint's private equity ownership structure and growth-oriented business strategy are relevant to this proceeding because they inform Ridgepoint's incentive to seek colocation access at Northgate's facilities — specifically, Ridgepoint's desire to expand its network reach and customer base in the Mid-Atlantic corridor without incurring the capital expenditure of constructing its own facilities at the fourteen locations at issue, thereby enhancing the return on Caravel Capital Partners' invested capital.
While Ridgepoint holds itself out as a CLEC, and indeed holds CLEC authorizations in several of the states in which it operates, its business model is predominantly that of an enterprise and government fiber transport provider. Ridgepoint does not provide mass-market residential telecommunications services. The company's CLEC status does not, standing alone, entitle it to colocation access at every facility owned by every carrier in its operating territory — a proposition that Ridgepoint's complaint implicitly advances but that finds no support in the statute or in Commission precedent.
C. The Prior Master Interconnection Agreement (2015–2020)
On June 15, 2015, Northgate and Ridgepoint executed a Master Interconnection Agreement that provided Ridgepoint with physical colocation access at three specific Northgate facilities in northern Virginia. The MIA was introduced into evidence as a joint exhibit during the evidentiary hearing and was the subject of testimony from witnesses on both sides.
Under the terms of the MIA, Ridgepoint was granted cage-space colocation at three designated facilities. The monthly colocation rate was twelve thousand dollars ($12,000) per facility, for a total monthly colocation charge of thirty-six thousand dollars ($36,000) across the three sites. The MIA had a fixed five-year term, commencing on June 15, 2015, and expiring on June 14, 2020, with no provision for automatic renewal.
The MIA expired by its own terms on June 14, 2020. In the months preceding the expiration, Ridgepoint sought to negotiate a renewal of the agreement, but Northgate declined to enter into a new MIA, citing, among other reasons, the recently adopted Wholesale Access Policy and Ridgepoint's failure to meet the $5 million annual minimum revenue commitment threshold established by the WAP. Rather than immediately terminating Ridgepoint's occupancy of the three colocation spaces upon expiration of the MIA, Northgate permitted Ridgepoint to continue occupying those spaces under a month-to-month holdover arrangement. The holdover rate was set at 120% of the prior contractual rate — fourteen thousand four hundred dollars ($14,400) per month per facility, reflecting a holdover premium of two thousand four hundred dollars ($2,400) per month per facility. The aggregate holdover premium across the three facilities is seven thousand two hundred dollars ($7,200) per month, or eighty-six thousand four hundred dollars ($86,400) per year.
Critically, the MIA covered only three facilities in northern Virginia. It never encompassed any of the fourteen facilities that are the subject of Ridgepoint's complaint. The three MIA facilities are distinct from, and geographically separate from, the fourteen facilities at issue, which span the broader Philadelphia–Baltimore–Washington, D.C. corridor, including locations in Philadelphia, Cherry Hill, Trenton, Baltimore, Rockville, Washington, D.C., Ashburn, Reston, and Tysons Corner. The prior MIA does not establish, and cannot be construed to establish, any right of Ridgepoint to colocation access at facilities that were never covered by the agreement.
D. The Wholesale Access Policy (WAP)
In January 2020, Northgate adopted its Wholesale Access Policy, a company-wide policy governing third-party physical colocation at Northgate's U.S. facilities. The WAP restricts new third-party physical colocation to existing wholesale partners that maintain minimum annual revenue commitments of five million dollars ($5,000,000) per year with Northgate. The WAP was introduced into evidence during the evidentiary hearing and was the subject of extensive testimony from Ms. Okoro, Mr. Salazar, and Dr. Berger.
The WAP was adopted as part of a legitimate business decision to optimize the allocation of limited facility capacity among Northgate's wholesale and enterprise customers. As Ms. Okoro testified, Northgate's facilities in the Mid-Atlantic corridor have experienced steadily increasing demand for colocation space, power, and cooling capacity, driven by the growth of enterprise data traffic, cloud computing, and content delivery networks. In this environment of increasing demand and finite supply, Northgate determined that it was commercially necessary to prioritize colocation access for wholesale partners whose business volumes are sufficient to justify the capacity consumed by their colocation installations. The $5 million annual minimum revenue commitment threshold was established to ensure that new colocation tenants generate revenue proportionate to the facility resources they would consume.
The WAP was developed by Northgate's U.S. operations team, including network engineering, wholesale sales, and regulatory compliance personnel, and was approved by senior management, including Ms. Okoro and Mr. Salazar. Mr. Salazar testified that the WAP was designed to be applied uniformly and without discrimination across all third-party colocation requests. The policy does not single out any particular carrier, class of carrier, or type of service provider. It applies equally to ILECs, CLECs, cable operators, wireless carriers, internet service providers, and any other entity seeking physical colocation at Northgate's facilities.
Notably, the WAP was adopted in January 2020 — more than fourteen months before Ridgepoint submitted its first interconnection and colocation request in March 2021, and more than two and a half years before Ridgepoint filed its complaint in February 2023. The temporal gap between the adoption of the WAP and Ridgepoint's first request undermines any suggestion that the policy was adopted in response to, or in anticipation of, Ridgepoint's specific requests.
Northgate declined to renew the MIA upon its June 14, 2020 expiration, citing the newly adopted WAP requirements and Ridgepoint's failure to meet the $5 million threshold. However, as noted above, Northgate permitted Ridgepoint to continue occupying the three original colocation spaces under the month-to-month holdover arrangement — a fact that belies any suggestion that Northgate acted to exclude Ridgepoint from its network.
E. Ridgepoint's Interconnection Requests and Northgate's Denials
Between March 2021 and August 2022, Ridgepoint submitted interconnection and physical colocation requests for fourteen Northgate facilities located throughout the Philadelphia–Baltimore–Washington, D.C. corridor. Each request sought physical cage-space colocation, cross-connect access, and the ability to interconnect Ridgepoint's fiber network with Northgate's backbone and metro-ring infrastructure at the specified facility. The fourteen requests were submitted individually, in writing, over the approximately eighteen-month period, and each was addressed to Northgate's Wholesale Services group.
The fourteen facilities, each of which is identified by its street address, city, state, and ZIP code, are as follows:
1. 401 N. Broad Street, Philadelphia, PA 19108
2. 1500 Spring Garden Street, Philadelphia, PA 19130
3. 100 Delancey Place, Cherry Hill, NJ 08034
4. 220 S. Warren Street, Trenton, NJ 08608
5. 700 E. Pratt Street, Baltimore, MD 21202
6. 1 W. Fayette Street, Baltimore, MD 21201
7. 33 S. Gay Street, Baltimore, MD 21202
8. 9221 Corporate Boulevard, Rockville, MD 20850
9. 1200 New Hampshire Avenue NW, Washington, D.C. 20036
10. 600 New Jersey Avenue NW, Washington, D.C. 20001
11. 44755 Prentice Drive, Ashburn, VA 20147
12. 21571 Beaumeade Circle, Ashburn, VA 20147
13. 1807 Michael Faraday Court, Reston, VA 20190
14. 8100 Boone Boulevard, Tysons Corner, VA 22182
Northgate declined each of Ridgepoint's fourteen requests. Each denial letter, copies of which were introduced into evidence, identified the following bases for the denial:
(a) Capacity constraints: The specific facility identified in the request was operating at or above 85% capacity utilization, and the addition of a new colocation tenant would strain existing power, cooling, and physical space resources to the detriment of current customers' service quality.
(b) Absence of prior course of dealing: Northgate had no existing colocation or interconnection arrangement with Ridgepoint at the requested facility, and the prior MIA — which had expired on June 14, 2020 — covered only three facilities in northern Virginia, none of which was among the fourteen facilities at issue.
(c) Wholesale Access Policy threshold: Ridgepoint did not meet the WAP's $5 million annual minimum revenue commitment threshold. Ridgepoint's aggregate annual spend with Northgate was approximately $1.8 million in fiscal year 2021, representing only 36% of the WAP threshold. Even including projected revenue from the requested colocation arrangements, Ridgepoint's spend would not have met the threshold.
Northgate's denial letters were professional, detailed, and consistent in their reasoning across all fourteen requests. They offered Ridgepoint alternative options, including the possibility of purchasing wholesale transport services from Northgate on a capacity-as-a-service basis without physical colocation, and the suggestion that Ridgepoint explore interconnection at third-party carrier-neutral facilities in the corridor where both Northgate and Ridgepoint maintained a presence. Ridgepoint did not pursue these alternatives.
F. Capacity Utilization at the 14 Facilities
A central factual issue in this proceeding is the capacity utilization of the fourteen Northgate facilities at which Ridgepoint sought colocation. Northgate's internal capacity utilization data, prepared by the company's network engineering team and maintained in the ordinary course of business, was introduced into evidence during the hearing and was the subject of testimony from both Ms. Okoro and Mr. Salazar, as well as expert analysis by Dr. Berger.
The capacity utilization data demonstrates that each of the fourteen facilities was operating at or above 85% capacity utilization during the relevant period — that is, during the period from March 2021 through August 2022, when Ridgepoint's interconnection and colocation requests were submitted and denied. Capacity utilization at these facilities ranged from a low of approximately 85.2% (at 100 Delancey Place, Cherry Hill, NJ) to a high of approximately 97.8% (at 44755 Prentice Drive, Ashburn, VA), with the majority of facilities operating in the 88% to 94% range.
Ms. Okoro testified in detail regarding the operational challenges of granting additional colocation at facilities operating at these utilization levels. She explained that facility capacity is not simply a function of physical floor space, but is constrained by three interrelated factors: (i) available rack and cage space, (ii) electrical power capacity (measured in kilowatts per rack), and (iii) cooling infrastructure capacity (measured in tons of HVAC capacity). At utilization levels of 85% and above, the addition of a new colocation tenant — even one with a relatively modest equipment footprint — can stress one or more of these capacity dimensions, creating risks of power overloads, inadequate cooling, and degradation of service quality for existing customers.
Ms. Okoro further testified that Northgate has a fiduciary and contractual obligation to its existing colocation tenants and wholesale customers to maintain service quality and facility reliability, and that accepting new colocation requests at near-capacity facilities would jeopardize those commitments. She described instances in which other carriers' facilities in the Mid-Atlantic region had experienced service disruptions attributable to overcrowding and power or cooling failures, and testified that Northgate adopted the 85% utilization threshold as an internal guideline for the prudent management of facility capacity.
Dr. Berger's expert testimony corroborated Ms. Okoro's factual testimony and provided the regulatory context for Northgate's capacity-based denials. Dr. Berger testified that the FCC has historically recognized capacity constraints as a legitimate and sufficient basis for a carrier to decline colocation requests, and that the Commission has not required carriers to undertake capital-intensive facility expansions to accommodate every colocation request, particularly where such expansion would be technically infeasible or economically unreasonable at the specific location. Dr. Berger further testified that the 85% utilization threshold is consistent with industry-standard practices among major telecommunications infrastructure providers.
Ridgepoint did not introduce independent engineering evidence to rebut Northgate's capacity utilization data. Ridgepoint's witnesses — Mr. Trent and Ms. Hashemi — did not offer any testimony regarding the technical feasibility of additional colocation at the fourteen facilities, and Dr. Kuo's testimony was confined to economic and market-definition issues, not facility-level capacity analysis.
IV. ARGUMENT
A. The 14 Facilities Are Not Subject to the Unbundling Requirements Ridgepoint Invokes
1. The Statutory and Regulatory Framework Under Sections 251 and 252. Ridgepoint's complaint rests principally on the assertion that Northgate's fourteen facilities are subject to the interconnection and colocation obligations imposed by Sections 251 and 252 of the Communications Act. A careful examination of the statutory text, the Commission's implementing regulations, and controlling judicial precedent demonstrates that these provisions do not impose the obligations Ridgepoint seeks to enforce against Northgate at these facilities.
Section 251 of the Communications Act establishes a layered framework of interconnection obligations, with different duties attaching to different categories of carriers. Section 251(a) imposes a general duty on all telecommunications carriers to "interconnect directly or indirectly with the facilities and equipment of other telecommunications carriers." 47 U.S.C. § 251(a)(1). This is a broad but limited obligation; it requires carriers to interconnect, but it does not dictate the terms, conditions, or specific locations of interconnection, nor does it mandate physical colocation at another carrier's facilities. See H.R. Conf. Rep. No. 104-458, at 123 (1996); Quillon Industries v. Iowa Utilities Board, 525 U.S. 366, 385-86 (1999).
Section 251(b) imposes additional duties on local exchange carriers ("LECs") generally, including the duty to provide number portability, dialing parity, access to rights-of-way, and reciprocal compensation. 47 U.S.C. § 251(b)(1)-(5). These obligations are more specific than those in Section 251(a), but they do not include a general mandate for physical colocation.
Section 251(c) imposes the most significant obligations — unbundled access to network elements and physical colocation — but these obligations apply only to incumbent local exchange carriers ("ILECs"). Specifically, Section 251(c)(3) requires ILECs to provide requesting telecommunications carriers with "nondiscriminatory access to network elements on an unbundled basis at any technically feasible point on rates, terms, and conditions that are just, reasonable, and nondiscriminatory." 47 U.S.C. § 251(c)(3). Section 251(c)(6) requires ILECs to "provide, on rates, terms, and conditions that are just, reasonable, and nondiscriminatory, for physical collocation of equipment necessary for interconnection or access to unbundled network elements at the premises of the local exchange carrier." 47 U.S.C. § 251(c)(6). These provisions are unambiguous: the colocation mandate of Section 251(c)(6) applies to incumbent local exchange carriers, and it applies at the premises of the local exchange carrier in its capacity as the provider of local exchange service.
The Commission's implementing regulations track this statutory structure. The Commission's rules define an incumbent local exchange carrier by reference to the carrier's status as a provider of telephone exchange service and exchange access in a given service area. 47 C.F.R. § 51.5. The unbundling rules at 47 C.F.R. § 51.319 and the colocation rules at 47 C.F.R. §§ 51.321, 51.323 are likewise directed at ILECs and impose obligations in the context of local exchange service.
The Supreme Court has recognized the centrality of the ILEC classification to the Section 251(c) framework. In Quillon Industries v. Iowa Utilities Board, the Court observed that Congress imposed the most burdensome obligations under Section 251(c) specifically on ILECs, in recognition of the fact that ILECs control the local exchange bottleneck facilities that competitive carriers need to reach end users. 525 U.S. at 385-86. In Harborview Holdings Inc. v. FCC, the Court upheld the Commission's pricing methodology for unbundled network elements under Section 251(c)(3), again emphasizing the ILEC-specific nature of these obligations. 535 U.S. 467, 489-90 (2002). And in Talk America, Inc. v. Michigan Bell Telephone Co., the Court addressed the scope of ILEC colocation obligations under Section 251(c)(6), holding that the obligation extends to colocation of equipment used to interconnect with the ILEC's local exchange network. 564 U.S. 50, 55-57 (2011). In each of these cases, the statutory framework was applied to carriers that were undisputedly ILECs providing local exchange service.
The Commission's Triennial Review Order, 18 FCC Rcd 16978 (2003), and Triennial Review Remand Order, 20 FCC Rcd 2533 (2005), further refined the scope of ILEC unbundling obligations, limiting the network elements that ILECs must unbundle to those for which the requesting carrier can demonstrate impairment — i.e., that the inability to access the element would impair the requesting carrier's ability to provide the services it seeks to offer. Even within the ILEC context, the Commission has recognized that unbundling and colocation obligations are not unlimited, and that the scope of these obligations must be calibrated to the specific network elements and facilities at issue.
2. Northgate Is Not an ILEC with Respect to the Disputed Facilities. Northgate is not an incumbent local exchange carrier. This fact is straightforward and essentially undisputed. Northgate does not provide local exchange telephone service — it does not provide dial tone, does not operate local exchange switches, and does not serve as the telephone company of last resort in any geographic service area in the United States. Northgate's U.S. network consists of long-haul fiber-optic backbone infrastructure, metro-ring fiber networks, and enterprise access fiber serving commercial and government customers with high-bandwidth transport services. Northgate is, by any measure, a competitive provider of fiber transport services, not an incumbent provider of local exchange service.
The fourteen facilities at issue are part of Northgate's backbone and enterprise fiber transport network. They function as points of presence along Northgate's backbone and metro-ring routes, providing optical amplification, traffic aggregation, and cross-connect capabilities for Northgate's wholesale and enterprise customers. They are not local exchange switching facilities, central offices in the traditional sense, or facilities from which Northgate provides local telephone service to end users. The presence of meet-me-room colocation space at some of these facilities — which is a common feature of fiber transport infrastructure — does not transform them into local exchange facilities subject to Section 251(c) obligations.
Ridgepoint's complaint attempts to blur the distinction between backbone/transport facilities and local exchange facilities by characterizing Northgate's network as essential infrastructure for the delivery of "last-mile" enterprise services. But this characterization, even if accepted, does not change Northgate's regulatory classification. A carrier's status as an ILEC is determined by its role as the incumbent provider of local exchange telephone service in a particular geographic area, not by the competitive significance of its infrastructure in a broader transport or enterprise services market. The ILEC classification is a specific regulatory designation tied to the historical provision of local telephone service, and Northgate has never held that designation in any of the relevant service territories.
Dr. Berger's expert testimony was unequivocal on this point. Drawing on his experience as a former Deputy Bureau Chief of the FCC's Wireline Competition Bureau — the bureau directly responsible for administering the Commission's interconnection and unbundling rules — Dr. Berger testified that the Section 251(c) colocation and unbundling mandates are directed at ILECs and do not extend to competitive providers of transport services operating backbone, metro-ring, and enterprise fiber facilities of the type at issue in this case. Dr. Berger explained that extending Section 251(c) obligations to facilities like Northgate's would represent a dramatic and unprecedented expansion of the statute's scope, one that would impose ILEC-type regulatory burdens on competitive carriers that Congress did not intend to regulate in that manner.
Dr. Berger further testified that the Commission's own precedent confirms this reading. In the Triennial Review Order and Triennial Review Remand Order, the Commission carefully delineated the scope of ILEC unbundling obligations and declined to extend those obligations beyond the ILEC context. In subsequent proceedings, including the BDS Order, 32 FCC Rcd 3459 (2017), the Commission recognized the increasing competitiveness of the enterprise transport market and took steps to deregulate business data services, reflecting a policy judgment that the competitive transport market — the very market in which Northgate operates — does not require the same regulatory intervention as the local exchange bottleneck.
Ridgepoint has offered no credible legal theory under which Northgate could be deemed an ILEC with respect to the fourteen facilities at issue. Ridgepoint's complaint invokes Sections 251 and 252 in broad terms, but it does not identify any FCC order, rule, or judicial decision holding that a competitive fiber transport provider operating backbone and metro-ring facilities is subject to Section 251(c) colocation mandates. Ridgepoint's reliance on the general interconnection duty of Section 251(a) is addressed separately below, but that provision does not create the specific colocation rights that Ridgepoint seeks. The Section 251(a) duty is a duty to interconnect — not a duty to provide physical colocation at the requesting carrier's chosen location. See Covad Communications Co. v. BellSouth Corp., 299 F.3d 1272, 1282 (11th Cir. 2002); Cavalier Telephone, LLC v. Ashgrove & Co. Virginia, Inc., 330 F.3d 176, 184 (4th Cir. 2003).
Because Northgate is not an ILEC with respect to the fourteen disputed facilities, the colocation mandates of Section 251(c)(6) do not apply, and the unbundling requirements of Section 251(c)(3) do not apply. The complaint, to the extent it relies on these provisions, fails as a matter of law.
B. The Wholesale Access Policy Is Commercially Reasonable and Non-Discriminatory
1. Commercial Reasonableness Under the Communications Act. Even if some interconnection obligation attaches to Northgate under the general duty provision of Section 251(a), that provision does not mandate colocation on the terms Ridgepoint demands. Section 251(a) requires telecommunications carriers to "interconnect directly or indirectly with the facilities and equipment of other telecommunications carriers." 47 U.S.C. § 251(a)(1). This duty is satisfied by commercially reasonable interconnection arrangements — it does not require a carrier to provide physical colocation at every facility at the request of every competing carrier, without regard to business considerations, capacity constraints, or the terms of the carrier's generally applicable interconnection policies.
The standard of commercial reasonableness is well established in telecommunications regulation. Under this standard, a carrier's interconnection practices are lawful so long as they are reasonable in light of legitimate business considerations, are not applied in a discriminatory manner, and do not constitute an unreasonable refusal to deal. See Harborview Holdings Inc. v. FCC, 535 U.S. at 489-90; MCI Telecommunications Corp. v. Harborline Partners LLC, 298 F.3d 1269, 1273 (11th Cir. 2002); Covad Communications, 299 F.3d at 1282. The commercial reasonableness standard does not require a carrier to accept every interconnection request on the requesting carrier's preferred terms; rather, it requires the carrier's practices to be justified by legitimate business rationale and applied without improper discrimination.
Northgate's Wholesale Access Policy satisfies this standard in every respect. As demonstrated below, the WAP serves legitimate business purposes, is applied uniformly and without discrimination, and was not adopted as a pretext for anti-competitive conduct.
2. The WAP Serves Legitimate Business Purposes. The $5 million annual minimum revenue commitment threshold at the core of the WAP was established to address a genuine and well-documented business challenge: the need to allocate scarce facility resources among Northgate's wholesale and enterprise customers in an environment of increasing demand and finite capacity. This is not a hypothetical concern. The capacity utilization data introduced at the hearing demonstrates that all fourteen of the facilities at issue are operating at or above 85% capacity, and several are approaching full capacity. In this environment, it is commercially reasonable — indeed, it is commercially necessary — for Northgate to prioritize colocation access for partners whose business volumes justify the consumption of scarce power, cooling, and physical space resources.
Ms. Okoro's testimony provided a detailed explanation of the business rationale underlying the WAP. She testified that the cost of provisioning and maintaining colocation space is significant — each new colocation installation requires the allocation of rack or cage space, the provisioning of dedicated electrical circuits, the augmentation or reallocation of cooling capacity, and the deployment of physical security and access control infrastructure. These costs are substantially the same regardless of the revenue generated by the colocation tenant. A wholesale partner generating $5 million or more in annual revenue can absorb these costs and generate a return for Northgate that justifies the capacity consumed. A partner generating $1.8 million — as Ridgepoint did in fiscal year 2021 — consumes the same capacity but generates materially less revenue, resulting in an inefficient allocation of scarce resources.
Mr. Salazar corroborated Ms. Okoro's testimony and explained that the WAP was developed in consultation with Northgate's network engineering, wholesale sales, and regulatory compliance teams. The $5 million threshold was set based on an analysis of the average revenue generated by existing colocation tenants and the marginal cost of provisioning new colocation installations at facilities operating at high utilization levels. Mr. Salazar testified that the threshold was designed to be commercially reasonable — neither so high as to be exclusionary nor so low as to be ineffective as a tool for capacity management.
The Commission and the courts have repeatedly recognized that carriers are entitled to adopt commercially reasonable business practices that serve legitimate objectives. See, e.g., National Communications Association, Inc. v. Quillon Industries, 238 F.3d 124, 130-31 (2d Cir. 2001) (carrier may impose reasonable conditions on interconnection); Ridgeway & Co. v. Da Vinci Telecom, Inc., No. 4:09-cv-00342, slip op. at 12-13 (E.D. Ark. 2010) (minimum revenue commitments are not per se unreasonable in the wholesale context); In the Matter of Special Access Rates for Price Cap Local Exchange Carriers, 27 FCC Rcd at 10577-78 (recognizing the legitimacy of volume-based pricing and commitments in wholesale transport). The WAP's $5 million threshold is a paradigmatic example of such a commercially reasonable practice.
3. Non-Discriminatory Application. The evidentiary record conclusively establishes that the WAP is applied uniformly to all third-party colocation requests, without regard to the identity, size, or competitive posture of the requesting carrier. The policy applies equally to ILECs, CLECs, cable operators, wireless carriers, internet service providers, content delivery networks, and any other entity seeking physical colocation at Northgate's facilities.
At the hearing, Ms. Okoro and Mr. Salazar both testified that Northgate has denied colocation requests from multiple carriers that did not meet the WAP's $5 million annual minimum revenue commitment threshold. Northgate introduced documentary evidence — subject to confidential treatment under the protective order issued by ALJ Fenwick — identifying several other carriers whose colocation requests were denied on the same basis during the same period. These denials were not limited to CLECs or competitors of Northgate; they included requests from a regional cable operator, a wireless backhaul provider, and an enterprise internet service provider, each of which failed to meet the $5 million threshold.
Ridgepoint's aggregate annual spend with Northgate in fiscal year 2021 was approximately $1.8 million. This figure was confirmed by Ms. Hashemi during cross-examination and is corroborated by billing records introduced into evidence. The $1.8 million figure represents only 36% of the $5 million WAP threshold. Northgate's denial of Ridgepoint's colocation requests was therefore entirely consistent with the WAP's terms and with Northgate's treatment of other carriers that similarly failed to meet the threshold.
Ridgepoint has not identified a single instance in which Northgate granted colocation access to a carrier that did not meet the $5 million threshold. To the contrary, the record establishes that every carrier that has been granted colocation access at Northgate's facilities since the WAP's adoption in January 2020 has met or exceeded the $5 million annual minimum revenue commitment. The absence of any differential treatment is fatal to Ridgepoint's discrimination claim.
4. Ridgepoint's Pretext Argument Fails. Unable to establish discriminatory application of the WAP, Ridgepoint has argued that the WAP itself is a pretext — that the policy was adopted specifically to exclude competitive carriers from the Mid-Atlantic market and to protect Northgate's alleged dominance in enterprise fiber transport. This argument is unsupported by any evidence in the record and is contradicted by the undisputed facts.
The WAP was adopted in January 2020. Ridgepoint's first interconnection and colocation request was not submitted until March 2021 — more than fourteen months later. Ridgepoint's complaint was not filed until February 7, 2023 — more than three years after the WAP's adoption. If the WAP were adopted as a device to exclude Ridgepoint specifically, one would expect to find evidence of the following: internal communications discussing Ridgepoint's competitive threat; contemporaneous awareness of Ridgepoint's plans to seek colocation at the fourteen facilities; and a temporal relationship between Ridgepoint's activities and the adoption of the WAP. No such evidence exists. Ridgepoint did not introduce a single internal Northgate document, email, memorandum, or communication suggesting that the WAP was motivated by anti-competitive intent or directed at Ridgepoint.
Ms. Okoro testified that the WAP was developed as part of Northgate's broader effort to optimize facility utilization and manage capacity across its U.S. network. Mr. Salazar testified that the WAP applied to all facilities nationwide, not just the fourteen facilities in the Mid-Atlantic corridor. Dr. Berger testified that the adoption of minimum revenue commitment policies is a standard practice among major telecommunications infrastructure providers and does not, standing alone, raise regulatory concerns.
Ridgepoint's pretext argument amounts to speculation, unsupported by documentary evidence, expert analysis, or testimony from any Northgate witness. The argument should be rejected.
C. Capacity Constraints at ≥85% Utilization Independently Justify the Denials
1. Factual Record on Facility Utilization. Even if the ALJ were to conclude that some interconnection or colocation obligation attaches to Northgate under Section 251(a) or another provision of the Communications Act — a conclusion that Northgate submits is not warranted — the capacity constraints at the fourteen facilities independently justify Northgate's denials. The evidentiary record on this point is overwhelming and unrebutted.
Northgate introduced into evidence detailed capacity utilization data for each of the fourteen facilities, covering the period from March 2021 through August 2022 — the precise period during which Ridgepoint's interconnection and colocation requests were submitted. This data was prepared by Northgate's network engineering team and maintained in the ordinary course of business. It measures capacity utilization across three dimensions: physical floor space (rack and cage space), electrical power capacity (available kilowatts per rack), and cooling infrastructure capacity (available tons of HVAC). The data demonstrates that each of the fourteen facilities was operating at or above 85% capacity utilization during the relevant period, with utilization levels ranging from approximately 85.2% to 97.8%.
Ms. Okoro provided detailed testimony regarding the operational implications of these utilization levels. She explained that at 85% utilization and above, the margin of available capacity is insufficient to accommodate new coloc