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The U.S. Court of Appeals for the District of Columbia Circuit Dec. 4 upheld the Federal Communications Commission's authority to require mobile data providers to offer roaming agreements to other mobile data providers on commercially reasonable terms (Cellco Partnership v. FCC, D.C. Cir., No. 11-1135, 12/4/12).
The court said the FCC had authority to regulate mobile-data providers in this manner pursuant to specific provisions of Title III of the Communications Act of 1934, particularly Section 303(b) (47 U.S.C. § 303(b)).
Moreover, the court said, in an opinion by Judge David S. Tatel, the data roaming rule did not impose a common carrier obligation on mobile data providers in violation of the act.
The plaintiff in this case, Cellco Partnership, commonly known as Verizon, brought a facial challenge to the FCC data roaming rule shortly after its promulgation on April 7, 2011.
Verizon argued that the FCC not only lacked statutory authority to issue the rule, but also by doing so it relegated Verizon's mobile data operations to common carrier status, in direct violation of Title III of the act.
Verizon operates under a bifurcated regulatory regimen because it offers both mobile voice services, subject to common carrier regulation under Title II, and mobile data services, which are not classified as common carrier services under Title III.
Verizon specifically argued that the FCC issued the rule with nothing more to go on than the notion that such a rule would serve the public interest. It cited Motion Picture Association of America Inc. v. FCC, 309 F.3d 796, 806 (D.C. Cir. 2002), for the proposition that the FCC may not formally act in the public interest if it does not have the authority to issue the regulation in question.
As the Order itself explains, section 303(b) directs the Commission, consistent with the public interest, to “[p]rescribe the nature of the service to be rendered by each class of licensed stations and each station within any class.” …. As a glance at a dictionary confirms, “prescribe” means, among other things, “to lay down a rule.” …. That is exactly what the data roaming rule does--it lays down a rule about “the nature of the service to be rendered” by entities licensed to provide mobile-data service.
The court rejected Verizon's argument that the rule mandated the provision of a service, in effect exceeding the limits of Section 303(b). Like anyone else, it said, Verizon remains free to choose not to provide mobile internet service.
Verizon also argued that the rule created a fundamental change in wireless licensing, far exceeding Section 316's authority for the FCC to “modify” existing licenses. Again, the court was unpersuaded, stating that nothing so fundamental was involved. “[G]iven that the data roaming rule requires nothing more than the offering of 'commercially reasonable' roaming agreements, it hardly effects such a radical change.”
The court acknowledged Verizon's argument that under the rule the FCC could in effect treat it as a common carrier in the mobile data business. But, the court said, this is a facial challenge, and if the FCC were to act in such a manner Verizon is free to return.
Verizon's argument was that because it did not qualify as a common carrier insofar as it offered mobile data services, the FCC was without authority to compel it to offer other providers' mobile data subscribers to roam on its network. The FCC conceded that it was without authority to treat mobile data providers as common carriers. But it argued that the requirements of the rule were not fundamentally common carrier requirements.
The court agreed. Historically, it said, the term common carriage meant that “all comers” had equal access rights to the common carrier's enterprise. Codifications of the term from the common law, including in the Interstate Commerce Act of 1887, were directed at securing equality of rates for all and negating favoritism, it said.
The court pointed out that in Orloff v. FCC, 352 F.3d 415, 419-21 (D.C. Cir. 2003), it held that Verizon did not breach Title II's common carriage requirements by engaging in individualized negotiations. And, it noted, the rule at issue specifically envisions individualized negotiations in reaching data roaming agreements among providers.
The court said that an important distinction exists between whether a regulatory regime is “consistent” with common carrier status, and whether that regime “necessarily confers” common carrier status. “It is in this realm--the space between per se common carriage and per se private carriage--that the Commission's determination that a regulation does or does not confer common carrier status warrants deference.”
Here, the court decided, the data roaming rule was a reasonable exercise of the commission's authority, noting that the rule has substantial room for individualized negotiations and varying terms.
FCC Chairman Julius Genachowski said Dec. 4, “This unanimous decision confirms the FCC's authority to promote broadband competition and protect broadband consumers.”
Rep. Anna G. Eshoo (D-Calif.), ranking member of the House Subcommittee on Communications and Technology, said the same day, “I welcome the Court's decision rejecting Verizon's challenge of the FCC's data roaming rules. … Such rules are particularly important for smaller wireless carriers that often have little choice for roaming partners other than their largest rivals.”
“Interestingly, many of the legal arguments Verizon made in its challenge to this Order it is also making in its challenge to the Commission's Open Internet Order. This decision may indicate that courts are casting a more skeptical eye on telecommunications companies' endless challenges to the FCC's ability to carry out its job,” John Bergmayer, senior staff attorney at Public Knowledge, a Washington, D.C.-based organization that advocates for technology consumers, said Dec. 4. Public Knowledge filed an amicus curiae brief in the case.
Peter Karanjia, of the FCC, Washington, argued for the FCC. Helgi C. Walker, of Wiley Rein LLP, Washington, argued for Cellco Partnership. Richard P. Bress, of Latham & Watkins LLP, Washington, argued for intervenors Bright House Networks LLC, et al.
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