Source: http://www.fcc.gov/print/node/45457
Timestamp: 2013-12-13 06:21:42
Document Index: 277075373

Matched Legal Cases: ['§ 201', '§ 251', '§ 214', '§ 251', '§ 254', '§ 706', '§ 20', '§ 20', '§ 61', '§ 201']

Appellate Case: 11-9900 Document: 01018946211 Date Filed: 11/06/2012 Page: 1 IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT ____________ NO. 11-9900 ____________ IN RE: FCC 11-161 ____________ ON PETITIONS FOR REVIEW OF AN ORDER OF THE FEDERAL COMMUNICATIONS COMMISSION ____________ UNCITED ADDITIONAL INTERCARRIER COMPENSATION ISSUES PRINCIPAL BRIEF (DEFERRED APPENDIX APPEAL) ____________ Counsel for Petitioners Listed in Alphabetical Order on Following Pages November 6, 2012 Appellate Case: 11-9900 Document: 01018946211 Date Filed: 11/06/2012 Page: 2 Core Communications, Inc.* By Its Counsel James C. Falvey, Esq. Charles A. Zdebski, Esq. Eckert Seamans Cherin & Mellott, LLC 1717 Pennsylvania Ave., NW 12th Floor Washington, D.C. 20006 ph: (202) 659-6655 fax: (202) 659-6699 jfalvey@eckertseamans.com [4] czdebski@eckertseamans.com [5] *Core Communications, Inc. does not join in Parts I and II of the Brief. National Telecommunications Cooperative Association, and U.S. TelePacific Corp.* By Their Counsel Russell Blau Tamar Finn Bingham McCutchen LLP 2020 K Street, NW Washington, DC 20006 Tel: 202-373-6000 russell.blau@bingham.com [6] tamar.finn@bingham.com [7] *National Telecommunications Cooperative Association, and U.S. TelePacific Corp do not join in Parts I and III of the Brief. ii Appellate Case: 11-9900 Document: 01018946211 Date Filed: 11/06/2012 Page: 3 North County Communications Corp.* By Its Counsel R. Dale Dixon, Jr. Law Offices of Dale Dixon 1155 Camino Del Mar, #497 Del Mar, CA 92014 tel: 858.925.6074 cel: 858.688.6292 fax: 888.677.5598 email: dale@daledixonlaw.com [8] *North County does not join in Part I of the Brief. Rural Independent Competitive Alliance* By Its Counsel David Cosson 2154 Wisconsin Avenue, N.W. Washington, DC 20007 Tel: 202-333-5275 dcosson@klctele.com [9] H. Russell Frisby, Jr. Dennis Lane Harvey Reiter Stinson Morrison Hecker LLP 1775 Pennsylvania Ave., NW Suite 800 Washington, DC 20006 Tel: 202-785-9100 rfrisby@stinson.com [10] dlane@stinson.com [11] hreiter@stinson.com [12] *RICA does not join in Parts II and III of the brief iii Appellate Case: 11-9900 Document: 01018946211 Date Filed: 11/06/2012 Page: 4 Table of Contents Table of Contents .............................................................................iv Table of Authorities ..........................................................................v Glossary ..........................................................................................viii Statement of Issues ..........................................................................1 Statement of Additional Facts ..........................................................2 Standard of Review ..........................................................................7 Summary of Argument .....................................................................7 Argument ........................................................................................10 I. The Commission Improperly Denied Rural CLECs USF Support To Offset Lost ICC Revenues While Providing Such Support To Their ILEC Competitors; The FCC’s Rationale That Rural CLECs Could Offset Their Losses By Raising Rates Is Inconsistent With The FCC’s Prior Finding That Rural CLECs Lacked Market Power And Hence The Ability To Raise Rates .............................................10 II. Implementation of “Bill-and-Keep” for CMRS-LEC Traffic on a Different Schedule Than Other Telecommunications Traffic Exchanged with LECs is Arbitrary and Capricious .........19 III. The FCC’s Access Stimulation Benchmark Rules As Applied to CLECs Are Unlawfully Discriminatory and Arbitrary and Capricious ..........................................................30 iv Appellate Case: 11-9900 Document: 01018946211 Date Filed: 11/06/2012 Page: 5 Table of Authorities CasesBurlington Truck Lines, Inc. v. United States, 371 U.S. 156 (1962) . 14 Carpenters and Millwrights v. NLRB, 481 F.3d 804 (D.C. Cir. 2007) ........................................................................................ 28 Contractors Transp. Corp. v. United States, 537 F.2d 1160 (4th Cir. 1976) ........................................................................................ 20 Elizabethtown Gas Co. v. FERC, 10 F.3d 866 (D.C. Cir. 1993) ....... 13 FCC v. Fox Television Stations, Inc., 556 U.S. 502 (2009) ......... 16, 23 Gen. Chem. Corp. v. United States, 817 F.2d 844 (D.C. Cir. 1987) .................................................................................. 25, 33 Grace Petroleum Corp. v. FERC, 815 F.2d 589 (10th Cir. 1987) ...... 16 Louisiana Energy and Power Auth. v. FERC, 141 F.3d 364 (D.C. Cir. 1998) ......................................................................... 13 MCI Telecomm. Corp. v. Am. Tel. & Tel. Co., 512 US 218 (1994) ..... 13 MetroPCS Cal., LLC v. FCC, 644 F.3d 410 (D.C. Cir. 2011) ............ 26 Mobil Pipe Line v. FERC, 676 F.3d 1098 (D.C. Cir. 2012) ............... 14 Motor Vehicle Mfrs. Assn. of United States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) ........................................ 14, 18 SCFC ILC, Inc. v. Visa USA, Inc., 36 F. 3d 958 (10th Cir. 1994)...... 13 Universal Camera Corp. v. NLRB, 340 U.S. 474 (1951) .................. 28 Statutes47 U.S.C. § 201(b) ......................................................................... 4 47 U.S.C. § 251(b)(5) ............................................................. passim 47 U.S.C. § 214(e)(1) .................................................................... 15 v Appellate Case: 11-9900 Document: 01018946211 Date Filed: 11/06/2012 Page: 6 47 U.S.C. § 251(c)(3), (4) .............................................................. 17 47 U.S.C. § 254(e) ........................................................................ 15 47 U.S.C. § 706 ........................................................................... 18 Rules47 C.F.R. § 20.11 ................................................................... 21, 22 47 C.F.R. § 20.11(b)(2) ............................................... 26, 27, 28, 30 47 C.F.R. § 61.38 ..................................................... 5, 6, 31, 32, 35 Other AuthoritiesReply Comments of Pac-West Telecomm, CC Docket 01-92 (Apr. 18, 2011) .......................................................................... 27 Section XV Comments of Bluegrass, CC Docket 01-92 (Apr. 1, 2011) .......................................................... 31, 32, 34, 35 Section XV Comments of Core Commc’ns, CC Docket 01-92 (Apr. 1, 2011) ............................................................................ 35 Agency DecisionsAccess Charge Reform, 16 F.C.C.R. 9923 (2001) ....... 2, 8, 16, 18, 19 Compl. of xChange Telecom, Inc. Against Sprint Nextel Corp. for Refusal to Pay Terminating Comp., et al., N.Y. P.S.C. Case Nos. 07-C-1541, 09-C-0370 (Jan. 19, 2010) ...................................... 27 Connect America Fund, 26 F.C.C.R. 17633 (2011) .......................... 2 Connect America Fund, 26 F.C.C.R. 17663 (2011) .................. Passim Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, 11 F.C.C.R. 15499 (1996) .. 21, 23 Intercarrier Compensation for ISP-Bound Traffic, 16 F.C.C.R. 9151 (2001) ........................................................................ 23, 24 N. Cnty. Commc’n. Corp. v. MetroPCS Cal., LLC, 24 F.C.C.R. 14036 (2009) ............................................................................. 26 vi Appellate Case: 11-9900 Document: 01018946211 Date Filed: 11/06/2012 Page: 7 Pet. of Mid-Rivers Tel. Coop., Inc. for Order Declaring It to be an Incumbent Local Exch. Carrier in Terry, Montana Pursuant to Section 251(h)(2), WC Docket No. 02-78 (Aug. 31, 2006) .............. 17 Policy and Rules Concerning Rates for Competitive Common Carrier Services and Facilities Authorizations Therefor, 77 F. C. C. 2d 308 (1979) ................................................................................ 13 Universal Service Order, 12 F.C.C.R. 8776 (1997) ......................... 17 vii Appellate Case: 11-9900 Document: 01018946211 Date Filed: 11/06/2012 Page: 8 Glossary 1996 Act Telecommunications Act of 1996 CAF Connect America Fund CLEC Competitive Local Exchange Carrier CMRS Commercial Mobile Radio Service COLR Carrier of Last Resort ETC Eligible Telecommunications Carrier FCC, or Commission Federal Communications Commission ICC Intercarrier Compensation ILEC Incumbent Local Exchange Carrier ISP Internet Service Provider IXC Interexchange Carrier LEC Local Exchange Carrier MOU Minute of Use MTA Major Trading Area NECA National Exchange Carriers Association NPRM Notice of Proposed Rulemaking RBOC Regional Bell Operating Company RLEC Rate-of-Return ILEC USF Universal Service Fund
rural incumbent LECs are permitted to ‘benchmark’ to the access rates prescribed in the NECA access tariff . . . .”) However, the FCC also created a new exception to the benchmarking rule. Id. (“competitive LECs meeting the access revenue sharing definition are required to benchmark to the lowest interstate switched access rate of a price cap LEC in the state.”). In section XI.A. of the Order, the FCC established new restrictions on the rates that RLECs and CLECs may charge for 3 Appellate Case: 11-9900 Document: 01018946211 Date Filed: 11/06/2012 Page: 12 switched access. See generally, Order, ¶¶ 656-701. The FCC proscribed these “access stimulation” rules in response to IXC complaints that RLECs and CLECs operating in rural rate-of-return territories were charging high switched access rates in connection with conference call traffic which the LECs “stimulated” by entering into revenue-sharing arrangements with conference call providers. According to the FCC, “[t]he record confirms the need for prompt Commission action . . . to help ensure that [LEC] interstate switched access rates remain just and reasonable, as required by § 201(b) of the Act.” Id. ¶ 662. Access rates are traditionally calculated by dividing a carrier’s costs by anticipated traffic volumes. In the Commission’s view, the problem was “that the interstate switched access rates being charged by access stimulating LECs do not reflect the volume of traffic associated with access stimulation,” which “almost uniformly [made] their interstate switched access rates unjust and unreasonable.” Id. The FCC defined “access stimulation” as follows. “The first condition is that the LEC has entered into an access revenue sharing agreement . . .” Id. ¶ 667. “The second condition is met where the LEC either has had a three-to-one interstate terminating-
4 Appellate Case: 11-9900 Document: 01018946211 Date Filed: 11/06/2012 Page: 13 to-originating traffic ratio in a calendar month, or has had a greater than 100 percent increase in interstate originating and/or terminating switched access MOU in a month compared to the same month in the preceding year.” Id. In order to ensure that LEC switched access rates “reflect the volume of traffic associated with access stimulation,” the FCC established different rules for RLECs and CLECs that meet the two conditions. As to RLECs, the FCC required “carriers filing interstate switched access tariffs based on projected costs and demand pursuant to section 61.38 of the rules to file revised access tariffs . . .” Id. ¶ 685. The FCC found that “[t]his tariff filing requirement provides the carrier with the opportunity to show, and the Commission to review, any projected increase in costs, as well as to consider the higher anticipated demand in setting revised rates.” Id. The FCC concluded that “the rule we adopt will require section 61.38 carriers to set their rates based on projected costs and demand data.” Id. ¶ 687. For CLECs, the FCC mandated benchmarking to a significantly lower rate than in the past, “a rate no higher than the lowest rate of a price cap LEC in the state.” Id. ¶ 689. The FCC 5 Appellate Case: 11-9900 Document: 01018946211 Date Filed: 11/06/2012 Page: 14 found that: [N]either the switched access rate of the rate-of-return LEC in whose territory the competitive LEC is operating nor the rate used in the rural exemption is an appropriate benchmark when the competitive LEC meets the access stimulation definition. In those instances, the access stimulator’s traffic vastly exceeds the volume