Opinion ID: 6971591
Heading Depth: 2
Heading Rank: 1

Heading: Departure from Established Principles

Text: Cellnet contends that the FCC’s decision to sunset its rule violated its establishment of a common carrier’s obligation to serve the public indifferently, and in so doing, represented an arbitra^ and capricious decision. We may set aside an agency’s rule only if it is arbitrary, capricious, abusive of discretion or otherwise not in accordance with law. Cincinnati Bell Tel. Co. v. FCC, 69 F.3d 752, 758 (6th Cir.1995) (citing 5 U.S.C. § 706(2)(A)). Cellnet argues that for over twenty years the FCC has consistently applied to telecommunications common carriers the basic principle that their services must be offered without regard to the status of the customer and without restrictions on services which are privately beneficial and not publicly detrimental. Cellnet relies on a D.C. Circuit decision, Hush-A-Phone Corp. v. United States, 238 F.2d 266 (D.C.Cir.1956), as the source of the articulation of the public's right to unrestricted non-detrimental use of common carrier telecommunications services. It also cites Hush-A-Phone as the basis of the FCC’s establishment of its first resale policy for private line service. The petitioner identifies as the essence of the FCC’s justification for its evolving resale policies a customer’s right to use a selected service without interference from the carrier selling the service. Cellnet then extrapolates from that principle to the situation at hand, contending that limiting the customers of cellular providers, such as the petitioner, to dealing only with a facilities-based carrier despite the benefits a reseller may be able to provide to customers, is in violation of the established principle articulated in Hush-A-Phone. The FCC responds that there is no common carrier obligation to allow resale of services. It cites the statutory requirements that carriers are subject to: that they must engage in just and reasonable practices and that their practices cannot be unjustly or unreasonably discriminatory. See 47 U.S.C. §§ 201(b) & 202(a). 6 It also cites the fact that Congress’s 1996 amendments to the Communications Act created a resale requirement for “local exchange carriers” and left to the FCC’s discretion to decide if any CMRS providers should be defined as “local exchange carriers.” Given such, the FCC argues, there is no well-established requirement that carriers resell their' services as outlined by the petitioner. The FCC also responds to Cellnet’s argument that judicial and FCC precedent applying §§ 201(b) and 202(a) entitles it as a matter of law to use the services of CMRS licensees for any “privately beneficial” purpose unless such use is demonstrated to result in “public detriment.” The FCC asserts that the authorities cited by Cellnet do not support such a narrow view of the FCC’s discretion under §§ 201 and 202 and that Cellnet exaggerates the reach of the D.C. Circuit’s holding in Hush-A-Phone. It characterizes the decision as concerning the reasonableness of a telephone company’s restrictions on a subscriber’s use of a telephone instrument devoted to a subscriber’s private use. In the FCC’s view of the D.C. Circuit’s decision in Hush-A-Phone, the court’s holding that the tariffed prohibition on “foreign attachments” was “neither just or reasonable” under § 201(b) does not translate to, as Cellnet argues, a conclusion that subscribers are entitled to resell a carrier’s services. The FCC also contends that Hushr-A-Phone did not establish any type of “public detriment/private benefit” analysis as the universal test for the FCC’s determination of what is “just and reasonable” under § 201(b). The FCC characterizes as meritless Cellnet’s contention that the FCC’s reliance on Hushr-A-Phone in its early resale decisions created a subscriber’s right to be free from restrictions on resale so long as there was no concrete “public detriment.” Because this contention is meritless, the FCC argues, Cellnet’s identification of the use of cost-benefit analysis as an arbitrary departure from such an “established” subscriber’s right is also meritless. The FCC points out that it used a cost-benefit analysis to ehminate the resale requirement between facilities-based cellular providers when it determined that such a limitation on the resale rule was just and reasonable under § 201(b). See Cellular Resale NPRM and Order, 7 F.C.C.R. at 4008. In that same decision, the FCC found that the exception to the general cellular resale rule would not violate § 202(a) because it was justified in light of the goal of stimulating interbrand competition and promoting more efficient use of the cellular radio spectrum. Id. The FCC acknowledges that it performed a “public detriment” analysis as part of its consideration of restrictions on resale in earlier decisions, but asserts that such is not a required step in its rule-making. Finally, the FCC contends that its resale policy is not guided by a rigid interpretation of §§ 201 and 202. Rather than being guided by some absolute right, it is guided by a policy goal of opening up monopoly and duopoly markets to competition. The FCC explains that its determinations in the past that resale restrictions were unlawful have been ease-by-case determinations depending on markets and the particular effects of resale restrictions. The FCC argues that, contrary to Cellnet’s position, it did not forbear from enforcing §§ 201 and 202; to the contrary, the FCC made clear that its sunsetting did not “relieve CMRS providers of any portion of their statutory obligation under sections 201(b) and 202(a) of the Act, nor ... determine that any resale practice is just and reasonable per se.” CMRS Resale Order at 14. We agree with the FCC that Cellnet’s arguments are meritless. We reject the notion that the Hush-A-Phone decision set out a “public detriment/private benefit” test for FCC action. In that decision, the D.C. Circuit determined that the tariff at issue was neither just nor reasonable under §§ 201 and 202 because it was an unwarranted interference with a person’s use of their own telephone. The justness and reasonableness requirements set out in §§ 201 and 202 remain the criteria for FCC action. Thus, the Hushr-A-Phone decision neither set forth other, more restrictive principles, nor did it recognize the existence of a customer’s right to resell services as long as such was not publicly detrimental. Accordingly, we do not regard the order under review as an arbitrary departure. See Cellular Resale NPRM and Order, 6 F.C.C.R. at 1720-22 (deciding that cellular carriers may deny resale capacity to fully operational facilities-based competitors on the basis that such would not violate the standards of § 201(b) and § 202(a)), aff'd sub nom., Cellnet Communication, Inc. v. FCC, 965 F.2d 1106 (D.C.Cir.1992). In its order, the FCC determined that the continuation of the resale rule would no longer be needed to ensure that providers’ practices were just, reasonable and not unreasonably discriminatory under §§ 201 and 202; it determined that the developing competitive market would ensure the reasonableness of carriers’ practices. We also decline to characterize the FCC’s decision as arbitrary, capricious or not in accordance with law in light of Congress’s directive to the FCC that it consider the competitive effect of its regulations and that it must “forbear from applying any regulation ... if the Commission determines that enforcement of such regulation or provision is not necessary to ensure that [carriers’ practices or regulations] are just and reasonable and are not unjustly or unreasonably discriminatory,” 47 U.S.C. § 160(a)(1) (1996). 7