In the

United States Court of Appeals

For the Seventh Circuit

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No. 03-2990

In the matter of:

 STARNET, INC.,

Debtor-Appellee

Appeal of: GLOBAL NAPS, INC.; GLOBAL NAPS REALTY,

INC.; and GLOBAL NAPS NETWORKS, INC.,

Appellants

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Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 03 C 4835—Milton I. Shadur, Judge.

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ARGUED DECEMBER 1, 2003—DECIDED JANUARY 9, 2004

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Before POSNER, EASTERBROOK, and ROVNER, Circuit

Judges.

EASTERBROOK, Circuit Judge. StarNet is an intermediary

between local telephone networks and the Internet. It

contracts with Internet Service Providers (ISPs) such as

Earthlink and AOL to maintain a network—including a

pool of modems—that will accept local calls and transfer the

data to the ISPs over high-speed lines that StarNet owns or

maintains. ISPs then publish local access numbers at which

their customers may connect without incurring

long-distance charges. StarNet must in turn contract with

local exchange carriers for phone lines and numbers at
2 No. 03-2990

which the calls may be received and transferred to the

high-speed network. Instead of buying local service from

SBC, Verizon, and other Baby Bells spun off from AT&T

in the 1982 divestiture, StarNet prefers to acquire service from new carriers (called competitive local exchange

carriers or CLECs) that have flourished since the

Telecommunications Act of 1996. For reasons we need not

relate, these CLECs have been able to enter into advantageous financial arrangements with the Baby Bells that

make it less costly for them to operate a service that terminates many calls while originating few—a good description

of calls that are bound for an ISP’s local-access numbers.

See Illinois Bell Telephone Co. v. WorldCom Technologies,

Inc., 179 F.3d 566 (7th Cir. 1999). So StarNet has contracted with these specialized CLECs for local-access

service. To reduce costs still further, StarNet enters into

co-location (or “collocation”) agreements with these CLECs

under which StarNet’s modems are placed at the CLEC’s

premises, and the handover to StarNet’s high-speed network occurs there.

Today StarNet is in bankruptcy. It has sought to escape

what are, at least in retrospect, high-price contracts with

Global NAPs for local-access service in three east-coast

markets: New England; Washington, D.C.; and Miami.

Bankruptcy law allows debtors to reject the executory portions of their contracts, see 11 U.S.C. §365(a), and StarNet

exercised this option in order to obtain service from other

CLECs at lower prices. But there was a catch: new CLECs

would assign StarNet new local-access numbers. The ISPs

have publicized numbers for their customers to use. A customer who dials such a number and finds it dead (because

it was one of the numbers that Global had furnished) will

choose another from the ISP’s list—and the replacement

may route service to some other network, for major ISPs

contract with multiple intermediaries in large markets.

StarNet does not want to lose business, so it asked Global

to port the existing numbers to other CLECs.
No. 03-2990 3

“Porting” in telecom parlance entails changing the entries

in local or national routing tables so that a number invokes

the services of a different carrier. The recent changes in the

FCC’s rules that have required cellular carriers to port

numbers to their rivals, and land-line carriers to port

numbers to local wireless carriers, have drawn public

attention to number portability. See Cellular Telecommunications & Internet Association v. FCC, 330 F.3d 502 (D.C.

Cir. 2003); In re Telephone Number Portability, First Report

and Order and Further Notice of Proposed Rulemaking, 11

F.C.C.R. 8352 (1996) (“First Report and Order”); and the

agency’s many follow-up decisions, most recently In re

Telephone Number Portability, FCC 03-284 (Nov. 10, 2003).

Global refused to port its numbers, observing that the

contracts (which anyway StarNet had rejected) imposed no

such obligation. Global insisted that federal statutes and

rules likewise do not oblige it to accommodate StarNet’s

demand. It contended that opening these number blocs to

porting would require costly changes to its network (costs

that StarNet did not agree to cover) and permit erosion of

business in the future by making it easier for other customers to jump ship.

Bankruptcy Judge Squires issued an injunction compelling Global to port the local numbers to other CLECs that

had agreed to furnish StarNet with service. The injunction

rests on 47 U.S.C. §251(b)(2), part of the 1996 Act. This section requires carriers “to provide . . . number portability in

accordance with requirements prescribed by the [Federal

Communications] Commission.” Another provision of that

Act defines “number portability” as “the ability of users of

telecommunications service to retain, at the same location,

existing telecommunications numbers without impairment

of quality, reliability, or convenience when switching from

one telecommunications carrier to another.” 47 U.S.C.

§153(30). The FCC’s First Report and Order implemented

this statute without elaboration, requiring carriers to port
4 No. 03-2990

numbers to their rivals only “at the same location”. The

agency broached the possibility that in the future it might

require porting to new locations and made it clear that

carriers are free to furnish this service if they want (or

agree by contract to do so), but that location portability is

not now required. 11 F.C.C.R. at 8383 ¶58; see also 47

C.F.R. §52.21(q). Subsequent reports have stated that the

Commission has “no current plans to address location

portability at this time.” In the Matter of Telephone Number

Portability—Second Memorandum Opinion and Order on

Reconsideration, 13 F.C.C.R. 21204, 21219-20 ¶¶29-30 (Oct.

20, 1998). The third and fourth reports (the latter in June

2003) leave matters unchanged.

The bankruptcy court concluded that StarNet had requested porting in order to “retain, at the same location,

existing telecommunications numbers”. Location is unaltered, the bankruptcy court stated, because StarNet’s corporate headquarters count as the customer’s location, and

these are not moving. Although the modem pools would be

moved from Global’s premises, and incoming local calls thus

would be terminated at a different place, the bankruptcy

court concluded that this would not change the “location” to

which the statute and regulation referred. The district court

declined to stay this injunction and, when the judge made

it clear that it would be some time before the court could act

on Global’s request for plenary review, Global filed an

appeal to this court and requested a stay. We initially

denied that motion but expedited the appeal. The day after

oral argument, we entered a stay permitting Global to

reclaim the numbers it had previously ported in order to

comply with the injunction. Our stay was conditioned on

Global’s willingness (expressed in the bankruptcy court and

reiterated here) to match the price and terms offered by the

CLECs through which StarNet now prefers to obtain

service. This opinion explains why we entered that stay and
No. 03-2990 5

what happens next: referral to the FCC so that the agency

can clear up an ambiguity in its rules.

No one has a property interest in a phone number. 47

C.F.R. §52.107(a); see also Jahn v. 1-800-FLOWERS.com,

Inc., 284 F.3d 807 (7th Cir. 2002). The subscriber has at

most a right to use a given number, and whether that number tags along when the customer switches carriers depends

on contracts plus rules to be found in statutes and regulations. StarNet has no contractual right to portability—not

only because StarNet has repudiated its contracts with

Global but also because they would not require portability

even if they remained in force. Lack of an obligation to port

the numbers gives Global some holdup power—it can

demand compensation for porting, or charge a higher price

while service continues, but StarNet knew this when it got

into the deals. Terms negotiated ex ante (not only price but

also Global’s willingness to house the modems, without

extra charge, under a collocation agreement) may have

compensated StarNet for the risk that it would be discomfited ex post by the need to pay Global for portability, or to

abandon the numbers in order to switch carriers. Whether

or not StarNet received compensation ex ante, however, the

fact remains that neither §365(a) nor anything else in

bankruptcy law entitles debtors to more or different

services, at lower prices, than their contracts provide.

Section 365(a) gives debtors a right to walk away before the

contract’s end (with the creditor’s entitlement converted to

a claim for damages, see NLRB v. Bildisco & Bildisco, 465

U.S. 513 (1984)), not a right to obtain extra benefits without

paying for them. In the main, and here, bankruptcy law

follows non-bankruptcy entitlements. See, e.g., Raleigh v.

Illinois Department of Revenue, 530 U.S. 15, 20 (2000);

Butner v. United States, 440 U.S. 48 (1979).

Thus the bankruptcy judge was right to focus attention on

the 1996 Act and the FCC’s regulations, which are the only
6 No. 03-2990

plausible source of an entitlement to portability. Section

153(30) of the 1996 Act defines the minimum required

portability as “the ability of users of telecommunications

service to retain, at the same location, existing telecommunications numbers”. The bankruptcy court held that “location” for this purpose is the subscriber’s residence—or, in

case of a corporation, its headquarters. This is possible, we

suppose, but it is implausible. Like many other corporations, StarNet does business nationwide. It would make

little sense (and may pose technical difficulties) to say that

StarNet could compel Global to port the numbers to any

other carrier in the entire nation, so that local calls originating on Global’s network in Miami could be terminated in

Seattle. Either the user dialing into the ISP’s system would

receive a shock when an apparently local call was billed as

a long-distance call, or Global would be compelled to bear

for the indefinite future the cost of long-distance service.

Nothing in the 1996 Act, or the FCC’s implementing

reports, suggests that either of these outcomes is required.

So “location” cannot be the subscriber’s corporate headquarters. The word “location” must refer to the place where the

call is terminated or handed off to another carrier. When

the phone stays in the same place—when, for example, a

residential customer switches home service from SBC to

WorldCom, and nothing else changes—we have an unambiguous example of porting at “the same location”. But if

the residential customer says: “Please use my old number

at my new house a block away,” things are more complicated. And StarNet’s decision to move its modems may be

equivalent to a householder moving to the next block (or

perhaps the next zip code): the local exchange carrier must

arrange to terminate the call at a different physical location.

One way to read “location” is as the end of the wire, the

physical location where the call (and the phone service)

terminates. If this is right, then moving the modem pool
No. 03-2990 7

moves the “location” and disentitles StarNet to portability.

But there is another possible reading, less confined than the

end of the wire yet more confined than “anywhere in the

nation, as long as the corporate HQ does not move.” On this

reading, the “location” is the telephone rate center— the

area within which all calls are treated the same for billing

purposes. Usually a rate center corresponds to the group of

customers (a subset of an area code) served by a given

complement of telephone switching equipment. On this

understanding, the local exchange carrier defines its own

“location” by choosing where to put its switches and how to

bill its customers. One termination point within the area

covered by the switch then would be treated the same as

any other.

Language in the regulations links “location portability” to

movement “from one physical location to another”, 47 C.F.R.

§52.21(j), but does not distinguish among the customer’s

physical location, the end of the wire’s physical location, or

the rate center’s physical location. A Q&A drafted by the

Commission’s staff, and posted on its web site, may assume

that the “end of the wire” reading is correct, for it answers

no to the question: “Does long-term telephone number

portability mean that I can keep the same telephone

number if I move across town or to another state?” See

<http://ftp.fcc.gov/Bureaus/Common_Carrier/

Factsheets/portable.html>. But another state certainly, and

across town probably, also would mean a new rate center,

so this answer does not clearly distinguish the possibilities,

and is in any event the view of the staff rather than the

Commissioners. Just last November, after the parties had

filed their briefs, the Commission made a new portability

directive that seems more consistent with the rate-center

reading. It required wireline carriers to port numbers to

wireless carriers, when “the requesting wireless carrier’s

‘coverage area’ overlaps the geographic location of the rate

center in which the customer’s wireline number is
8 No. 03-2990

provisioned, provided that the porting-in carrier maintains

the number’s original rate center designation following the

port”. In re Telephone Number Portability, FCC 03-284 at

¶22 (Nov. 10, 2003). This order did not explain the relation

between the wireline-to-wireless porting and the “same

location” restriction on wireline-to-wireline porting. But it

assuredly requires wireline carriers to port numbers to

destinations other than the original terminus of the physical wire that served the customer whose number will be

ported. This implies, though it does not quite say, that the

FCC thinks of the rate center as the “location” that matters.

At oral argument counsel for Global insisted that porting

to wireless carriers is distinct, because a cell phone may

roam anywhere. Yet the question at hand is not the relation

between the wireless carrier and its customer, but the

relation between the wireline carrier and a customer who

wants to port a number to a new carrier. If Global is

required to port a number to a T-Mobile or Cingular switch

at a location different from the existing customer’s physical

address (provided that the wireless carrier’s coverage area

overlaps Global’s rate center), what difference does it make

how the wireless carrier will get the call to its own customer? Yet in some respects the FCC has treated wireless

carriers differently; there is a general wireless-to- wireless

portability rule, unaffected by any location or

rate-center-overlap requirement. 47 C.F.R. §52.31. It is not

out of the question, therefore, that the FCC would see

things Global’s way.

Instead of trying to divine how the FCC would resolve the

ambiguity created by the word “location,” we think it best

to send this matter to the Commission under the doctrine

of primary jurisdiction. This is not to say that the agency

has exclusive jurisdiction, the original and strongest

meaning of “primary jurisdiction.” See United States v.

Western Pacific R.R., 352 U.S. 59, 64 (1956). We use
No. 03-2990 9

the phrase in its weaker sense, as a doctrine that allows a

court to refer an issue to an agency that knows more about

the issue. “The doctrine of primary jurisdiction allows a

federal court to refer a matter extending beyond the ‘conventional experiences of judges’ or ‘falling within the realm

of administrative discretion’ to an administrative agency

with more specialized experience, expertise, and insight.”

National Communications Association, Inc. v. AT&T Co., 46

F.3d 220, 222-23 (2d Cir. 1995). StarNet tells us that this is

a no-no, because the FCC can’t meddle in bankruptcy law,

indeed that the bankruptcy court itself has “exclusive

jurisdiction”. Cf. Arsberry v. Illinois, 244 F.3d 558, 563-64

(7th Cir. 2001) (referral to FCC under primary jurisdiction

inappropriate where the agency could not authorize the

activities challenged in the suit). It is a considerable

overstatement to call the bankruptcy court’s jurisdiction

exclusive; many subjects with effects outside the bankruptcy may be adjudicated outside as well. See, e.g., FCC v.

NextWave Personal Communications Inc., 537 U.S. 293

(2003), which allowed review outside bankruptcy of a

license resale that affected a bankrupt estate. At all events,

we would not ask the FCC any question about bankruptcy

law; our need—and the subject on which the FCC can

help—is to determine StarNet’s non-bankruptcy entitlement, if any, to compel Global to port the numbers. That

turns on the 1996 Act and its implementing regulations, the

bailiwick of the FCC rather than a bankruptcy court. Only

the FCC can disambiguate the word “location”; all we could

do would be to make an educated guess. And although the

FCC’s position would be subject to review by the judiciary

for reasonableness, the agency’s views are the logical place

for the judiciary to start.

We therefore refer this matter to the FCC with a request that it inform us how the “same location” restriction

applies to a local exchange carrier that hands off traffic to

a modem pool at a collocation facility, when the customer
10 No. 03-2990

wants to change local exchange carriers and move the modems. We issued the stay, restoring the parties to their

original positions while the FCC ponders, because we are

reasonably confident that the bankruptcy judge’s use of

corporate headquarters as the “location” is incorrect,

because the record does not reveal whether the local

exchange carriers with which StarNet now prefers to do

business are in the same rate centers as Global’s collocation

facilities that housed StarNet’s modems, and because

Global offered to match the other carriers’ prices and terms

in the interim. Numbers are portable, or not, in

10,000-number blocs. To port StarNet’s numbers to new

carriers, Global had to open 100 or so 10,000-number blocs

to porting. This created the risk of hard-to-calculate injury

if some of Global’s other customers should use the opportunity to port numbers before the FCC resolves this dispute.

StarNet has not offered to compensate Global for that loss.

Indeed, the bankruptcy judge did not require StarNet to

post an injunction bond, so it cannot be required to reimburse Global for the costs of the original porting, and any

business lost, even if Global prevails in the end. A stay

pending a decision by the FCC curtails the losses to which

Global is exposed without prospect of reimbursement, while

protecting StarNet’s interest in receiving prices and terms

offered by the current competitive market.

This matter is referred to the FCC so that it may address

the meaning of the word “location” for purposes of wireline-to-wireline portability. The stay remains in effect

pending further order of this court. Within 21 days after the

FCC renders its decision, the parties may file memoranda

advising the court about the significance of the agency’s

action and what remains to be done to wrap up this litigation.
No. 03-2990 11

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—1-9-04