Opinion ID: 431653
Heading Depth: 2
Heading Rank: 2

Heading: The Rural Impact Issue

Text: 28 Petitioners' claim that the FCC ignored the impact of voice use of DTS/DEMC systems upon telephone rates in rural areas is also unripe for review at this time. Again, the elements of general fitness of the issue for review, finality of the administrative determination, and demonstrated hardship to the parties from deferral of review are all lacking. 29 Petitioners' concern arises from the possibility that large corporate customers 35 might by-pass local telephone exchange facilities by using DTS for voice communications. Local telephone exchange carriers are compensated for the use of their exchange facilities to complete interexchange telephone calls; this compensation is based in significant part on the amount of interstate use of the local facilities. 36 Petitioners argue that DTS by-pass of the local telephone facilities would result in a loss of this revenue to local exchange carriers. In rural areas, where the costs of providing local services are relatively high, compensation received from the use of local exchange facilities in interstate calls may represent a substantial part of the local carrier's revenues; these revenues underwrite in part the high costs of operation in rural areas and help to keep local rates from becoming exorbitant. To the degree that it may duplicate telephone service and cause traffic and accompanying revenues to be diverted from local exchanges, voice use of DTS, petitioners assert, will threaten the provision of communications service with adequate facilities at reasonable charges 37 in rural areas. Petitioners further contend that the FCC arbitrarily and capriciously ignored comments raising the problem of rural impact and predicated its authorization of voice use of DTS only on data from and assumptions concerning major metropolitan areas. 30 Had the FCC Order actually authorized DTS service in rural areas, we might find merit in petitioners' contention that the FCC inadequately evaluated the impact of by-pass on rural telephone service. 38 The Order did not do so, however. Instead, the Commission made a generalized finding that allocation of spectrum for a nationwide DTS/DEMS system would advance the public interest, but left the determination of whether service by a given prospective carrier in a particular market would similarly advance the public interest to individualized licensing proceedings. 39 Thus, the FCC Order was not the agency's final determination with respect to the rural impact issue; that issue could be revived in the context of individual licensing proceedings should any DTS carrier decide to apply for authorization to serve a rural area. 31 The Commission's decision to defer the issue of rural impact until applications for licenses to serve rural markets may be made was not unreasonable. Consideration of the effects of DTS on every conceivable market would have been virtually impossible in the context of a single proceeding. Consequently, the Commission appropriately based its determination that the allocation of spectrum for DTS would serve the public interest upon evidence of the probable impact of the service on the markets potential carriers represented they would be most likely to serve, i.e., large metropolitan areas housing a number of major corporate headquarters. 40 The record contained sufficient evidence that inherent limitations on voice use of DTS in such areas would prevent a deleterious impact on rates and services to place the Commission's decision within the zone of reasonableness. 41 Should a carrier apply to provide DTS in a rural market, the FCC would have to consider whether the assumptions on which its general rulemaking rested still apply and, if they do not, what the appropriate policy toward DTS use in that market should be. This approach has solid support in our prior cases. In Telocator Network of America v. FCC, 42 for example, this court found that an FCC policy favoring open entry into the radiotelephone market may augur more harm than good if implemented indiscriminately in all market conditions. 43 The court continued, however: 32 We do not think this potential justifies invalidating the entire perpetual open entry policy; we do, however, sound the warning that in applying that policy to authorize additional carrier access to already saturated frequencies, the Commission must be sensitive to the dynamics of the particular market .... The Commission has an ongoing obligation to monitor its regulatory programs and make adjustments in light of actual experience .... This duty to fine tune its regulatory approach as more information becomes available is necessarily the price of leeway the courts accord the Commission to pursue plans and policies bottomed on informed prediction.... While the Commission need not re-study the entire problem de novo and reconsider the policy every time it receives an application for waiver of the rule, ... it cannot bind itself to the exigencies of the truly exceptional case. 44 33 If and when the FCC grants a DTS license in a rural area over the objection of interested parties, a challenge based on the adverse impact of voice use of DEMS/DTS on that market will be ripe for judicial review. Consideration of the issue in such a context will give the court the benefit of facts not available in this proceeding 45 without imposing undue hardship on the parties in this case.