Opinion ID: 159096
Heading Depth: 2
Heading Rank: 2

Heading: Competitively Neutral

Text: 9 47 U.S.C. 253(a) provides: No State or local statute or regulation . . . may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service. The Wyoming statute clearly has the effect of prohibiting telecommunications companies from obtaining a concurrent CPCN to provide intrastate phone service. However, petitioners argue that the Wyoming statute is saved by 253(b). 10 Nothing in this section shall affect the ability to impose, on a competitively neutral basis and consistent with section 254 of this section, requirements necessary to preserve and advance universal service, protect the public safety and welfare, ensure the continued quality of telecommunications services, and safeguard the rights of consumers. 11 47 U.S.C. 253(b). The FCC found that the Wyoming statute could not be saved under this provision because it was not competitively neutral. Petitioners disagree and argue that the Wyoming statute is competitively neutral because it treats all new telecommunication entrants the same. 12 In reviewing a final FCC order interpreting the Telecommunications Act, we utilize the two-step approach announced in Chevron USA Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984). See U.S. West v. FCC, 182 F.3d 1224, 1231 (10th Cir. 1999). If the statute speaks clearly to the precise question at issue, we must give effect to the express intent of Congress. See Chevron, 467 U.S. at 842-43. When the statute is silent or ambiguous, however, deference is due to the agency's interpretation, so long as it is reasonable and not otherwise arbitrary, capricious or contrary to the statute. See id. at 843-44. Since the FCC's order in this case involved the interpretation of the ambiguous phrase competitively neutral, we review with deference. 2 13 In its Reconsideration Order, the FCC noted that the Wyoming legal requirements are not 'competitively neutral' within the meaning of 253(b), because they award certain incumbent LECs the ultimate competitive advantage preservation of monopoly status and simultaneously saddle potential new entrants with the ultimate competitive disadvantage an insurmountable barrier to entry. Reconsideration Order at 3. The FCC specifically rejected the claim that a statute was neutral if it treated all new carriers the same. Neither the language of section 253(b) nor its legislative history suggests that the requirement of competitive neutrality applies only to one portion of a local exchange market new entrants and not to the market as a whole, including the incumbent LEC. Id. at 6. 14 Petitioners argue that the Wyoming statute is not an insurmountable or absolute barrier to competition, and therefore, it must be competitively neutral. The problem with this argument is that it simply does not speak to the question of competitive neutrality. First, the FCC's view that this is an absolute bar to prospective LECs is correct. [A] potential new entrant cannot do anything to avoid or hurdle the rural incumbent protection provision's bar. The incumbent LEC, instead, has essentially unfettered discretion to determine whether the rural incumbent protection provision will operate to preclude competitive entry in its territory. FCC Reconsideration Order at 5. 15 Second, even assuming Petitioners' argument to be true, the extent to which the statute is a complete bar is irrelevant. 253(a) forbids any statute which prohibits or has the effect of prohibiting entry. Nowhere does the statute require that a bar to entry be insurmountable before the FCC must preempt it. 16 Support for the FCC's definition of competitively neutral can be drawn from recent cases discussing the term as used in other sections of the Telecommunications Act. In U.S. West v. MFS Intelenet, Inc., 193 F.3d 1112 (9th Cir. 1999), the Ninth Circuit noted that [t]he FCC has ruled that a mechanism assigning costs based on each exchange carrier's active local numbers is 'competitively neutral' [under 251(e)(2)] but a mechanism requiring new entrants to bear all the costs of number portability is not. Id. at 1120. The court then prohibited a collateral attack on this order since plaintiffs had not sought a determination of validity directly with the court of appeals. 17 In Cablevision of Boston, Inc. v. Public Improvement Comm'n, 184 F.3d 88 (1st Cir. 1999), a carrier challenged city policy regarding the use of underground cable and circuit conduits. In examining the competitively neutral requirements of 253(c), the court held: 18 that the term competitively neutral in 253(c) imposes at most a negative restriction on local authorities' choices regarding the management of their rights of way. This means that the statute would not require local authorities to purposefully seek out opportunities to level the telecommunications playing field. If, however, a local authority decides to regulate for its own reasons . . ., 253(c) would require that it do so in a way that avoids creating unnecessary competitive inequities among telecommunications providers. 19 Id. at 105. The court assumed that the city's oral policy which resulted in equivalent notice obligations for all market participants satisfied the competitively neutral requirement. Id. at 103 (emphasis added). 20 Petitioners spend the majority of their briefs arguing that the Wyoming statute should not be preempted because it accords with the universal service policy of the federal Telecommunications Act. However, it is a well established rule of statutory construction that general policy does not trump specific legislative provisions. While we empathize with Wyoming's desire to achieve statewide modern telecommunications service, 253 governs this case and requires preemption. 21 Petitioners further argue (1) that preemption is only possible when Congress has passed legislation occupying an entire field of regulation; (2) the FCC failed to give proper notice of the proceedings; and (3) the FCC exceeded its authority by preempting more than was necessary to enforce 253. These arguments are meritless. 22 First, [p]re-emption occurs when Congress, in enacting a federal statute, expresses a clear intent to pre-empt state law . . . . Louisiana Pub. Serv. Comm. v. FCC, 476 U.S. 355, 368 (1986). 253 is a clear example of this. See 47 U.S.C. 253(d) (the Commission shall preempt the enforcement of such statute) (emphasis added). Second, the FCC gave proper notice of its contemplated action in two Public Notices, which specifically stated that the FCC was contemplating preempting both the Wyoming PSC's Denial Order and certain provisions of the Wyoming Telecommunications Act of 1995 (i.e., Wyo. Stat. Ann. 37-15-201(c)-(f)). R. at tab. 17, 37. Third, the FCC order was necessary within the meaning of 253(d) to afford new LECs a competitive opportunity in the telecommunications market. Petitioners have not asserted, nor are we aware of, any alternative besides complete preemption which would have guaranteed across the board competitive neutrality. 23 The FCC's Orders preempting the Wyoming statute were based on a reasonable interpretation of 253(b) and are not otherwise unconstitutional. 24 AFFIRMED.