Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-98-01575/USCOURTS-caDC-98-01575-0/pdf.json

Parties Involved:
AT&T Corporation
Intervenor
Federal Communications Commission
Respondent
United States of America
Respondent
Virgin Islands Telephone Corporation
Petitioner

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 13, 1999 Decided December 21, 1999

No. 98-1575

Virgin Islands Telephone Corporation,

Petitioner

v.

Federal Communications Commission and

United States of America,

Respondents

AT&T Corporation,

Intervenor

On Petition for Review of an Order of the

Federal Communications Commission

Daniel E. Troy argued the cause for petitioner. With him

on the briefs was Carl J. Hartmann, III.

Lisa A. Burns, Counsel, Federal Communications Commission, argued the cause for respondents. With her on the

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brief were Christopher J. Wright, General Counsel, John E.

Ingle, Deputy Associate General Counsel, Joel I. Klein, Assistant Attorney General, U.S. Department of Justice, and Robert B. Nicholson and Robert J. Wiggers, Attorneys. Daniel M.

Armstrong, Associate General Counsel, Federal Communications Commission, and Pamela L. Smith, Counsel, entered

appearances.

Gene C. Schaerr, Mark C. Rosenblum, and James J.R.

Talbot were on the brief for intervenor.

Before: Sentelle, Rogers and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Rogers.

Rogers, Circuit Judge: Petitioner, the Virgin Islands Telephone Corporation, is a provider of local telephone service in

the U.S. Virgin Islands. AT&T Submarine Systems, Inc.

("AT&T-SSI"), a wholly-owned subsidiary of intervenor,

AT&T Corporation, constructs and maintains undersea fiber

optic telecommunications cable systems, or, submarine cable

systems. In this appeal, petitioner contends that in granting

AT&T-SSI's application for cable landing rights as a noncommon carrier, the Federal Communications Commission

("Commission") ignored Congress' clear directive in the 1996

Telecommunications Act ("1996 Act") to apply a new regime

for distinguishing between common carrier and private carrier services. Petitioner maintains that, under the 1996 Act,

"telecommunications services" is defined in a manner that no

longer permits the Commission to apply the two-part test of

National Association of Regulatory Utility Commissioners v.

FCC, 525 F.2d 630 (D.C. Cir. 1976) ("NARUC I"). In petitioner's view, AT&T-SSI would be offering telecommunications "to such classes of users as to be effectively available

directly to the public" as defined by the 1996 Act if its

customers used the capacity they bought from AT&T-SSI to

provide service to the public. Because the Commission's

interpretation of an ambiguous new term in the 1996 Act to

mean "essentially" the same thing as "common carrier"--and

thus governed by the NARUC I framework--is reasonable,

we deny the petition.

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I.

AT&T-SSI filed with the Commission an application for

authority to land and operate a submarine cable system

extending between St. Thomas and St. Croix in the Virgin

Islands, pursuant to 47 U.S.C. s 34 (1994).1 In the application, AT&T-SSI expressed its intention to sell the capacity to

common carriers on an indefeasible right of use ("IRU")

basis.2 Petitioner and TelefOnica Larga Distancia de Puerto

Rico, Inc. ("TLD"), a long distance service provider in the

U.S. Virgin Islands-Puerto Rico market, filed petitions to

deny AT&T-SSI's application. Petitioner and TLD asserted

that the proposed submarine cable system should be operated

on a common carrier basis and that AT&T-SSI should accordingly resubmit its application and seek authorization to

construct or operate the proposed system under 47 U.S.C.

s 214.3 Shortly after the petitions to deny were filed, peti-

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1 The statute provides, in pertinent part, that "[n]o person shall

land or operate in the United States any submarine cable directly

or indirectly connecting the United States with any foreign country,

... unless a written license to land or operate such cable has been

issued by the President of the United States." 47 U.S.C. s 34.

2 The Commission has previously explained IRU interests as

follows:

An IRU interest in a communications facility is a form of

acquired capital in which the holder possesses an exclusive and

irrevocable right to use the facility and to include its capital

contribution in its rate base, but not the right to control the

facility or, depending on the particular IRU contract, any right

to salvage.

Reevaluation of the Depreciated-Original-Cost Standard in Setting Prices for Conveyances of Capital Interests in Overseas

Communications Facilities Between or Among U.S. Carriers, 8

F.C.C.R. 4173 p 2 n.6 (1993).

3 Section 214(a) provides, in relevant part:

No carrier shall undertake the construction of a new line or of

an extension of any line, or shall acquire or operate any line, or

extension thereof, or shall engage in transmission over or by

means of such additional or extended line, unless and until

tioner filed a petition for a declaratory ruling that the proposed submarine cable system should be operated as a common carrier facility.

While the AT&T-SSI application was pending, Congress

enacted the Telecommunications Act of 1996, Pub. L. No.

104-104, 110 Stat. 56 (codified in scattered sections of 47

U.S.C.) ("1996 Act"). The 1996 Act, among other things,

introduced two new terms, "telecommunications carrier" and

"telecommunications service," and defined them as follows:

The term "telecommunications carrier" means any provider of telecommunications services, except that such

term does not include aggregators of telecommunications

services (as defined in section 226 of this title). A

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telecommunications carrier shall be treated as a common

carrier under this chapter only to the extent that it is

engaged in providing telecommunications services, except

that the Commission shall determine whether the provision of fixed and mobile satellite service shall be treated

as common carriage.

47 U.S.C. s 153(44) (Supp. III 1997).

The term "telecommunications service" means the offering of telecommunications for a fee directly to the public,

or to such classes of users as to be effectively available

directly to the public, regardless of the facilities used.

Id. s 153(46). For the purposes of this appeal, the key

aspects of these definitions are that "any provider of telecommunications services," except for "aggregators" of such services, is designated a "telecommunications carrier" and that

to the extent that a telecommunications carrier is engaged in

providing "telecommunications services," it "shall be treated

as a common carrier." Id. s 153(44). In other words, wheth-

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there shall first have been obtained from the Commission a

certificate that the present or future public convenience and

necessity require or will require the construction, or operation,

or construction and operation, of such additional or extended

line.

47 U.S.C. s 214(a).

Er a carrier will be subject to common carrier regulation

pursuant to s 153(44) turns on whether it offers "telecommunications for a fee directly to the public, or to such classes of

users as to be effectively available directly to the public." Id.

s 153(46).

The International Bureau ("Bureau") granted AT&T-SSI's

application for a cable landing license on a non-common

carrier basis. See AT&T Submarine Systems, Inc., 11

F.C.C.R. 14885 p 1 (1996) ("Bureau Order").4 Observing that

"[t]he Commission has not yet addressed the issue of how, if

at all, the 1996 Act's introduction of the concept of a 'telecommunications carrier' affects the applicability of NARUC I

standard," id. p 15, the Bureau decided that, in any event,

AT&T-SSI is not a common carrier because it is neither a

"telecommunications carrier" under the 1996 Act nor a "common carrier" under the NARUC I standard. Id. pp 13-15.

In examining whether AT&T-SSI is a "telecommunications

carrier," or a provider of "telecommunications service," under

the 1996 Act, the Bureau looked to the Commission's interpretation of the term "commercial mobile service," as defined

in the Omnibus Budget Reconciliation Act of 1993, Pub. L.

No. 103-66, Title VI, 107 Stat. 312, 379-401 (codified in

scattered sections of 47 U.S.C.) ("1993 Budget Act"). The

1993 Budget Act defined "commercial mobile service" as "any

mobile service ... that is provided for profit and makes

interconnected service available (A) to the public or (B) to

such classes of eligible users as to be effectively available to a

substantial portion of the public, as specified by regulation by

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the Commission." 47 U.S.C. s 332(d)(1). The Commission

subsequently read "available ... to the public" as "offered

without restriction on who may receive it" and declared that

whether a service was available to "such classes of eligible

users as to be effectively available to a substantial portion of

the public" depended on "several relevant factors such as the

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4 The Bureau Order disposed of both the petitions to deny

AT&T-SSI's application and the petition for a declaratory ruling

that the proposed facility must be operated on a common carrier

basis. See Bureau Order p 8 n.7.

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type, nature, and scope of users for whom the service is

intended." Implementation of Sections 3(n) and 332 of the

Communications Act, Regulatory Treatment of Mobile Services, 9 F.C.C.R. 1411 p 265 (1994) ("CMRS Order"). The

Commission also stated that a service will not be considered

"available to the public" or "effectively available to a substantial portion of the public" if it is "provided only for internal

use or only to a specified class of eligible users under the

Commission's Rules." Id.

Noting the similarity in the definitions of the terms "telecommunications service" and "commercial mobile service," the

Bureau concluded that under the 1996 Act, "whether a service

is effectively available directly to the public depends on the

type, nature, and scope of users for whom the service is

intended and whether it is available to 'a significantly restricted class of users.' " Bureau Order p 25. The Bureau applied

these criteria to AT&T-SSI's proposed facility and found

that:

AT&T-SSI ... will make available bulk capacity in its

system to a significantly restricted class of users, including common carrier cable consortia, common carriers,

and large businesses. Potential users are further limited

because only consortia, common carriers, and large businesses with capacity in interconnecting cables or other

facilities and, in many cases, operating agreements with

foreign operators, will be able to make use of the cable as

a practical matter.

Id. The Bureau rejected the argument that AT&T-SSI will

be making a service effectively available directly to the public

because AT&T-SSI's customers will use the capacity to provide a service to the public, noting that "[s]uch an interpretation is contrary to the plain language of the [1996 Act] by

focusing on the service offerings AT&T-SSI's customers may

make rather than what AT&T-SSI will offer."5 Id. p 26.

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5 The Bureau also questioned the assumption that AT&T-SSI's

customers would sell the capacity to the public because some of the

"large businesses [to which the capacity will be made available] ...

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Therefore, the Bureau concluded that AT&T-SSI will not be

offering a service "directly to the public, or to such classes of

users to be effectively available directly to the public" and

that, consequently, AT&T-SSI is not a "telecommunications

carrier" providing "telecommunications service" under the

1996 Act. Id. p 29.

The Bureau then considered whether AT&T-SSI should

nevertheless be regulated as a common carrier under

NARUC I. The NARUC I test has two parts: "[W]e must

inquire, first, whether there will be any legal compulsion ...

to serve [the public] indifferently, and if not, second, whether

there are reasons implicit in the nature of [the] operations to

expect an indifferent holding out to the eligible user public."

NARUC I, 525 F.2d at 642. The Commission has subsequently interpreted this two-part test to mean that a carrier

has to be regulated as a common carrier if it will "make

capacity available to the public indifferently" or if "the public

interest requires common carrier operation of the proposed

facility." Cable & Wireless, PLC, 12 F.C.C.R. 8516 pp 14-15

(1997). The Bureau, applying the two-part test, decided that

neither prong of the NARUC I standard was applicable to

AT&T-SSI's proposed system and that the proposed system

may thus be offered on a non-common carrier basis. See

Bureau Order p 69. The Bureau added, however, that it

retained "the right to change the regulatory status of the

cable system to common carrier should conditions change in

the future." Id. p 2.

The Commission denied petitioner's application for review,

agreeing with the Bureau that the 1996 Act did not require it

to regulate AT&T-SSI as a common carrier and that "there

are no other public interest reasons for doing so." AT&T

Submarine Systems, Inc., 13 F.C.C.R. 21585 p 1 (1998)

("Commission Order"). In the Commission's view, as it had

previously held in Cable & Wireless, "the term 'telecommunications carrier' means essentially the same as common carrier" and "does not ... introduce a new concept whereby we

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would not use the capacity to provide service to the public." Id.

p 26.

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must look to the customers' customers to determine the

status of a carrier." Commission Order p 6 (citing Cable &

Wireless p 13). The Commission accordingly proceeded to

apply the traditional NARUC I two-part test to determine

whether AT&T-SSI should be regulated as a common carrier

under the 1996 Act.

First, the Commission asked, under the second part of the

NARUC I test, whether AT&T-SSI "intend[ed] to make

'individualized decisions, whether and on what terms to

serve.' " Id. p 7 (citation omitted). Noting that the Bureau

had found that "AT&T-SSI would have to engage in negotiations with each of its customers on the price and other terms

which would vary depending on the customers' capacity

needs, duration of the contract, and technical specifications,"

id. p 8, the Commission found that AT&T-SSI "will not sell

capacity in the proposed cable indifferently to the public."

Id. The Commission thus concluded that the second part of

the NARUC I test did not require that AT&T-SSI be regulated as a common carrier. See id.

Next, the Commission considered whether, under the first

part of the NARUC I test, "the public interest requires

common carrier operation of the facility." Id. p 9. The

Commission focused its inquiry on whether AT&T-SSI "has

sufficient market power to warrant regulatory treatment as a

common carrier." Id. The Commission concluded that because "sufficient alternative facilities" to service the St.

Thomas to St. Croix route are available, "AT&T-SSI does not

have market power," Id. p 11, and the first part of the

NARUC I test does not require that AT&T-SSI be regulated

as a common carrier. See id.

II.

Petitioner principally contends that the Commission's decision to apply the NARUC I test to find that AT&T-SSI does

not offer "telecommunications services" ignored both the

plain language of the 1996 Act and the congressional intent to

replace the traditional NARUC I test with a new statutory

standard that effects a drastic change in the regulatory

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regime.6 Further, petitioner maintains that the Commission

has ruled in other contexts that providers offering services

similar to AT&T-SSI's services are "telecommunications carriers" under the 1996 Act and that the Commission failed to

follow its own precedent without adequate explanation. We

apply the now familiar standard of review articulated in

Chevron U.S.A. Inc. v. Natural Resources Council, Inc., 467

U.S. 837 (1984).

The parties agree that AT&T-SSI does not sell its capacity

"directly to the public," and hence the question before the

Commission was whether AT&T-SSI's business activities

constitute an "offering of telecommunications ... to such

classes of users as to be effectively available directly to the

public." The first inquiry under Chevron is "whether Congress has directly spoken to the precise question at issue."

Id. at 842. Neither the text nor legislative history of the 1996

Act shows that Congress has decided whether the activities

by AT&T-SSI constitute a "telecommunications service."

The phrase "to such classes of users as to be effectively

available directly to the public" is sufficiently vague and openended to leave the precise issue of how to treat AT&T-SSI

undecided. Taken at face value, the legislative history offers

little additional guidance because it simply states that the

definition of telecommunications service "recogniz[es] the distinction between common carrier offerings that are provided

to the public ... and private services." H.R. Conf. Rep. No.

104-458, at 115 (1996).

Consequently, petitioner's contention that the Commission

failed to follow what the text of the 1996 Act "unambiguously"

requires is exaggerated. Petitioner claims that "the statutory language requires ... an examination of the 'class of users'

served by" AT&T-SSI and that the Commission's refusal to

look at the activities of AT&T-SSI's customers thus amounted to a disregard of the statutory directive. Although the

plain language of the statute does not preclude petitioner's

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6 Because petitioner does not challenge the substance of the

Commission's NARUC I analysis, we do not reach the question

whether the Commission applied the NARUC I test correctly.

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reading, neither does it compel such a result. The phrase

"effectively available directly to the public" can be reasonably

read instead as reflecting the NARUC I court's emphasis that

"carriers need not serve the whole public" to be classified as

common carriers. NARUC I, 525 F.2d at 642 (citation omitted). The court, after stating that "[w]hat appears to be

essential to ... the common carrier concept is that the

carrier 'undertakes to carry for all people indifferently,' " id.

at 641 (citation omitted), stressed that "[t]his does not mean

that a given carrier's services must practically be available to

the entire public." Id. The court then added, "It is not

necessary that a carrier be required to serve all indiscriminately; it is enough that its practice is, in fact, to do so." Id.

(citation omitted). Given that the statute's distinction between "directly available to the public" and "effectively available directly to the public" can be read as reflecting the

NARUC I court's distinction between serving the entire

public and serving only a fraction of the public, it is reasonable to read the statute as adopting the NARUC I framework. Therefore, petitioner's contention that the statute

requires the Commission to examine AT&T-SSI's customers'

activities to determine AT&T-SSI's status attributes more

determinative force to the language of the statute than is

warranted.

Because the 1996 Act is silent with respect to the issue of

whether AT&T-SSI should be treated as a common carrier,

the question under Chevron becomes "whether the agency's

answer is based on a permissible construction of the statute."

Chevron, 467 U.S. at 843. The Commission construed the

term "telecommunications carrier" by reasoning that it

"means essentially the same as common carrier" and that it

does not "introduce a new concept whereby we must look to

the customers' customers to determine the status of a carrier." Commission Order p 6. As support for its conclusion,

the Commission looked to its decision in Cable & Wireless,

where it had concluded that the definition of "telecommunications services" in the 1996 Act was "intended to clarify that

telecommunications services are common carrier services,"

Cable & Wireless p 13, citing the above-mentioned legislative

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history that "the definition of telecommunications service

'recognizes the distinction between common carrier offerings

that are provided to the public ... and private services.' "

Id. (quoting H.R. Conf. Rep. No. 104-458, at 115). Reasoning

from this statement in the legislative history, the Commission

viewed the definition of "telecommunication services," that is,

"the offering of telecommunications for a fee directly to the

public or to such classes of users as to be effectively available

directly to the public," to be essentially a way of restating the

definition of common carrier as clarified by NARUC I.

Although the Commission has not provided a detailed explanation of its interpretation of the statute in the decision

under review, the rationale in Cable & Wireless, on which the

Commission relies, constitutes a permissible construction of

the statute. As discussed, Cable & Wireless based its reading

primarily on the legislative history of the 1996 Act. The

Conference Report stated that the definition of telecommunications service "recogniz[es] the distinction between common

carrier offerings that are provided to the public ... and

private services." H.R. Conf. Rep. No. 104-458, at 115. This

emphasis on the distinction between the public and the private echoes the NARUC I court's discussion of the term

"common carrier." The NARUC I court, in discussing the

concept of "common carrier," stated that "the critical point is

the quasi-public character of the activity involved," NARUC

I, 525 F.2d at 641, and referred to phrases like "a sort of

public trust," "availing themselves of the business of the

public at large," and "the public's business" to elucidate the

concept. Id. at 641-42. In addition, the court used the

phrase "public-private dichotomy" to describe "the distinction

between common carrier and non-common carrier operators."

Id. Although the Commission's decision here did not explicitly make this point, the legislative history that Cable &

Wireless relied on can be reasonably construed as manifesting

Congress' intention to maintain the basic public-private dichotomy of NARUC I.

We disagree with petitioner's contention that the Commission's use of the NARUC I test constitutes a failure to give

meaning to the definition of "telecommunications service." It

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is true that the Commission never explained in detail how its

interpretation corresponded to the specific text of the relevant provision.7 However, the Commission implicitly gave

meaning to the statutory language by applying the NARUC I

test. Under the NARUC I test, the key determinant whether a carrier is a common carrier is "the characteristic of

holding oneself out to serve indiscriminately," NARUC I, 525

F.2d at 642, and whether a carrier is offering services "directly to the public" or making them "effectively available directly

to the public" is irrelevant for the purpose of determining

one's common carrier status. In other words, under the

Commission's reading of the statute, the emphasis is on the

phrase "to the public" that appears in both "directly to the

public" and "effectively available directly to the public," and

the difference between "directly" and "effectively available

directly" is important merely for the purpose of emphasizing

the proposition that "common carriers need not serve the

whole public." Id. (emphasis added) (citation omitted). This

is a reasonable reading of the statute, and petitioner's repeated demand that the Commission articulate an interpretation of "effectively available directly to the public" that is

separate from "directly to the public" evinces its failure to

comprehend the structure of the NARUC I test and the

Commission's application of it.

To the extent that petitioner's challenge rests on the assumption that if all Congress had intended was to clarify the

phrase "common carrier" it would not have introduced a new

term, it fares no better. First, the two terms, "telecommunications carrier" and "common carrier" are not necessarily

identical, and, as intervenor AT&T Corporation urges, we

need not decide today what differences, if any, exist between

the two. Second, as the Commission points out in its brief,

the concept of "common carrier" has not been eliminated by

the 1996 Act because "the core provisions of Title II of the

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7 Although the Bureau engaged in a textual analysis of sort by

referring to the CMRS Order, the Commission does not seem to

have adopted the Bureau's analysis of the relationship between the

instant case and the CMRS Order. See infra pp. 14-15.

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1934 [Communications] Act ... remain in the Act and address the duties of 'common carriers.' " The Commission's

theory that Congress attempted to retain the familiar concept

of "common carrier" and yet redefine it in a way that is

clearer thus seems plausible. Whether this is the most

elegant way of providing clarification is, of course, not the

issue.

Finally, petitioner's contention that in granting AT&TSSI's application, the Commission departed from its own

precedent without adequate explanation is unpersuasive.

First, petitioner refers to the Commission's rulemaking in

CMRS Order, which interpreted the term "commercial mobile

service" defined by Congress as: "any mobile service ... that

is provided for profit and makes interconnected service available (A) to the public or (B) to such classes of eligible users as

to be effectively available to a substantial portion of the

public, as specified by regulation by the Commission." 47

U.S.C. s 332(d). Petitioner contends that the Commission's

rulemaking order indicates that it "recognized that by introducing the new concept of CMRS, Congress intended to alter

the [Commission's] method for determining which carriers

would be subject to common carrier regulation" and "that the

phrase 'effectively available' to the public brought within the

definition of CMRS services reaching the public either directly or indirectly-like wholesale services." Thus, petitioner

implies that because AT&T-SSI's planned activities with the

proposed cable system can be characterized as wholesale

services, AT&T-SSI, too, should be treated as a common

carrier in this case.

Although petitioner's discussion of the CMRS Order in its

opening brief implies the objection just outlined, petitioner

never explicitly contends that the Commission's decision is

inconsistent with the CMRS Order. Therefore, petitioner

may have waived this particular argument. See Corson &

Gruman Co. v. NLRB, 899 F.2d 47, 50 n.4 (D.C. Cir. 1990)

(per curiam). Even if petitioner has not waived it, it is

meritless. Petitioner's contention that the Commission considered "effectively available to the public" to include wholesale services mischaracterizes the CMRS Order. Nowhere in

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that decision is there a statement or suggestion that services

reaching the public indirectly, such as wholesale services, fall

within the meaning of "effectively available to the public."

See CMRS Order pp 65-70. Furthermore, even if petitioner

were correct that the CMRS decision considered wholesale

services to be covered by the phrase "effectively available to

the public," it is unclear why that is inconsistent with the

decision on appeal. Unlike petitioner, who assumes a wholesaler-retailer distinction throughout its briefs, neither the

Bureau nor the Commission relied on the distinction for its

decision. Instead, the Commission focused on the NARUC I

test of whether there is an offering of "indiscriminate service"

to the public, leaving open the possibility of characterizing a

type of wholesaler as a common carrier. Therefore, a mere

showing that a previous decision characterized a wholesaler

as a common carrier is insufficient to demonstrate an inconsistency between the Order and the previous decision.

Petitioner's further contention that the Commission misapplied the principle announced in the CMRS Order is to no

avail. Despite the similarities in the language of the provisions considered in the CMRS Order and the Commission

Order, they are not identical: the CMRS Order interpreted

the phrase "effectively available to a substantial portion of the

public," 47 U.S.C. s 332(d)(1), whereas the Commission Order interpreted "effectively available directly to the public."

47 U.S.C. s 153(46). Therefore, the terms of the provisions

by themselves do not compel the Commission to interpret

them in an identical manner.

It is true that the Bureau arrived at its decision, in part, by

drawing an analogy to the definition of "commission mobile

service" as read by the CMRS Order, see Bureau Order

pp 24-25, and the Commission's brief even states that "the

Commission expressly affirmed" the Bureau's discussion of

the CMRS Order. To the extent that the Commission followed the analysis provided in the CMRS Order, it may be

argued that the Commission was obliged to apply the CMRS

Order's standard correctly. But, in our view, the Commission

never relied on the CMRS Order. Although the Commission

affirmed the Bureau's decision, it did not adopt the entirety of

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the Bureau's rationale. The Bureau's decision was that

AT&T-SSI was neither a telecommunications carrier under

the 1996 Act nor a common carrier under the NARUC I

framework. The two legal authorities--the 1996 Act and

NARUC I--were treated as requiring separate tests, and the

Bureau's decision was based primarily on the fact that the

two tests, independent from each other, led to the same

conclusion. See Bureau Order pp 13, 15. In fact, the Bureau

expressed uncertainty concerning the exact relationship between the 1996 Act and the NARUC I test. See id. p 15. By

contrast, the Commission harbored no such uncertainty, and

expressly articulated the relationship between the 1996 Act

and the NARUC I test by stating that " 'telecommunications

carrier' means essentially the same as common carrier,"

Commission Order p 6, and then proceeded to apply the

NARUC I test. Therefore, unlike the Bureau, the Commission never relied on the CMRS Order for its decision in the

first place, and the Commission thus never imposed on itself a

requirement to follow the standard announced in the CMRS

Order.

No more successful is petitioner's contention that the Commission's position is inconsistent with its decisions in FederalState Joint Board on Universal Service, 12 F.C.C.R. 87

(1996) ("Universal Service Recommended Decision"), and

Implementation of the Non-Accounting Safeguards of Sections 271 and 272 of the Communications Act of 1934, as

amended, 11 F.C.C.R. 21905 (1996) ("Non-Accounting Safeguards Order"). Again, petitioner's challenges erroneously

rely on the assumption that the Commission's decision turned

on the fact that AT&T-SSI could be characterized as a

wholesaler, when, in fact, no such wholesaler-retailer distinction is assumed by the Commission.

The source of the confusion is petitioner's failure to distinguish between a "recommended decision" and an "order."

Universal Service Recommended Decision stated that wholesale carriers' activities "are included in the phrase 'to such

classes of eligible users as to be effectively available to a

substantial portion of the public,' " and that carriers that

"lease capacity to other carriers ... would be considered

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carriers that provide ... telecommunications services." Universal Service Recommended Decision p 788 (quoting 47

U.S.C. s 153(46)). However, such recommendations were not

adopted by the Commission until it released Federal-State

Joint Board on Universal Service, 12 F.C.C.R. 8776 (1997)

("Universal Service Order"). Although the Universal Service

Order adopted most of the recommendations contained in the

Universal Service Recommended Decision, the Commission

rejected the portion of the analysis that petitioner cites.

Instead, the Commission observed that "the definition of

'telecommunications services' ... is intended to encompass

only telecommunications provided on a common carrier basis," Universal Service Order p 785, and, accordingly, "private

network operators that lease excess capacity on a noncommon carrier basis" are not telecommunications carriers

under the 1996 Act because they are not "common carriers."

Id. p 786. While the Commission acknowledged that common

carriers' customers need not be "end users" and that "[c]ommon carrier services include services offered to other carriers," it emphasized that "a carrier may be a common carrier

if it holds itself out to service indifferently all potential users,"

and that "a carrier will not be a common carrier where its

practice is to make individualized decisions in particular cases

whether and on what terms to serve." Id. p 785 (quotations

omitted).

Petitioner's contention that the Commission's NonAccounting Safeguards Order is inconsistent with the Commission Order at issue does not work, either.8 The relevant

portions of Non-Accounting Safeguards Order, if anything,

are very similar to the Commission Order. For instance, the

Commission noted in the Non-Accounting Safeguards Order

that "the definition of telecommunications services is intended

__________

8 As the Commission notes, although the Non-Accounting Safeguards Order was reconsidered in Implementation of the NonAccounting Safeguards of Sections 271 and 272 of the Communications Act of 1934, as amended, 12 F.C.C.R. 8653 (1997), there was

no reconsideration of the initial position relevant to the instant case.

We focus on the initial order because it contains a more detailed

discussion of the relevant issue.

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to clarify that telecommunications services are common carrier services." Non-Accounting Safeguards Order p 263. It

also stated that the term "telecommunications service" created a distinction between "common and private carriage." Id.

p 265. It did observe that common carrier services "include

wholesale services to other carriers," id. p 263, that "the term

'telecommunications service' was not intended to create a

retail/wholesale distinction," id. p 265, and that "[n]either the

Commission nor the courts ... has construed 'the public' as

limited to end-users of a service." Id. However, none of

these statements is inconsistent with the Commission's grant

of AT&T-SSI's application. Again, the Commission never

relies on a wholesale-retail distinction; the focus of its analysis is on whether AT&T-SSI offered its services indiscriminately in a way that made it a common carrier under NARUC

I, and the fact that AT&T-SSI could be characterized as a

wholesaler was never dispositive.

Accordingly, we deny the petition for review.

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