134 F.3d 1143 (D.C. Cir. 1998), 97-1393, Melcher v. F.C.C.

Docket Nº97-1393, 97-1415, 97-1431, 97-1483 and 97-1484.
Citation134 F.3d 1143
Party Name(P&F) 475 James L. MELCHER, et al., Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents, CellularVision USA, Inc., et al., Intervenors. Nos. 93-1110, 93-1111 to 93-1120, 93-1122 to 93-1128, 93-1130 to 93-1137, 93-1139, 93-1140, 93-1142 to 93-1150, 93-1152, 93-1154, 97-1368, 97-1371, 97-1380, 97-1386,
Case DateFebruary 06, 1998
CourtUnited States Courts of Appeals, United States Court of Appeals (District of Columbia)

Page 1143

134 F.3d 1143 (D.C. Cir. 1998)

(P&F) 475

James L. MELCHER, et al., Petitioners,

v.

FEDERAL COMMUNICATIONS COMMISSION and United States of

America, Respondents,

CellularVision USA, Inc., et al., Intervenors.

Nos. 93-1110, 93-1111 to 93-1120, 93-1122 to 93-1128,

93-1130 to 93-1137, 93-1139, 93-1140, 93-1142 to 93-1150,

93-1152, 93-1154, 97-1368, 97-1371, 97-1380, 97-1386,

97-1393, 97-1415, 97-1431, 97-1483 and 97-1484.

United States Court of Appeals, District of Columbia Circuit

February 6, 1998

Argued Jan. 16, 1998.

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[Copyrighted Material Omitted]

Page 1145

On Petitions for Review of Orders of the Federal Communications Commission.

Frederick M. Joyce, Washington, DC, argued the cause for petitioners James L. Melcher, et al., with whom John Haven Chapman and Christine McLaughlin, Washington, DC, were on the briefs. James H. Barker, III, Michael R. Gardner, Tom W. Davidson, Daniel E. Troy and Robert L. Pettit, Washington, DC, entered appearances.

Richard P. Bress, Washington, DC, argued the cause for petitioners United States Telephone Association, et al., with whom Maureen E. Mahoney and Gary M. Epstein, Washington, DC, Michael E. Glover and James G. Pachulski, Arlington, VA, Mary M. McDermott, Los Angeles, CA, Linda Kent, San Diego, CA, M. Robert Sutherland, Atlanta, GA, Gail L. Polivy, Washington, DC, and John F. Raposa, Irving, TX, were on the briefs. Frank W. Krogh and Andre J. Lachance, Washington, DC, entered appearances.

Paul J. Sinderbrand, Washington, DC, argued the cause for petitioner U S West, Inc., with whom L. Andrew Tollin, Robert G. Kirk, Craig E. Gilmore and Georgina M. Lopez-Ona, Washington, DC, and Robert B. McKenna, Denver, CO, were on the briefs.

L. Marie Guillory, Washington, DC, argued the cause for petitioner National Telephone Cooperative Association, with whom David Cosson, Washington, DC, was on the briefs.

Joel Marcus, Counsel, Federal Communications Commission, Washington, DC, argued the cause for respondents, with whom Joel I. Klein, Acting Assistant Attorney General, United States Department of Justice, Robert B. Nicholson and Andrea Limmer, Attorneys, William E. Kennard, General Counsel, Washington, DC, at the time the brief was filed, Federal Communications Commission, Christopher J. Wright, General Counsel, John E. Ingle, Deputy General Counsel, Carl D. Lawson and Roberta L. Cook, Counsel, Washington, DC, were on the brief. Catherine G. O'Sullivan, Attorney, United States Department of Justice, Daniel M. Armstrong, Associate General Counsel, Federal Communications Commission, and David Silberman, Counsel, Washington, DC, entered appearances.

Glenn B. Manishin, Washington, DC, argued the cause for intervenors WebCel Communications, Inc., et al., with whom Matthew B. Pachman and John D. Windhausen, Jr., Washington, DC, were on the joint briefs. Frank W. Krogh, Washington, DC, entered an appearance.

Caressa D. Bennet, Michael R. Bennet, Gregory W. Whiteaker and Stephen G. Kraskin, Washington, DC, were on the joint briefs for intervenors Rural Telecommunications Group, et al.

Before: EDWARDS, Chief Judge, WALD and ROGERS, Circuit Judges.

Opinion for the Court filed by Circuit Judge WALD.

WALD, Circuit Judge:

This case involves the Local Multipoint Distribution Service ("LMDS"), a new wireless mode of communication that supports video, voice, and data services. The crux of the dispute concerns the Federal Communication Commission's ("FCC") decision to bar incumbent local telephone companies (known as local exchange carriers, or "LECs"), including rural local telephone companies, from holding LMDS licenses in the same geographic areas in which they provide telephone service, for three years from the date of the upcoming LMDS auction. 1 The FCC

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explains that its Order is designed to prevent LECs from acquiring LMDS licenses in order to preempt competition in the local telephone market. The LEC and rural LEC petitioners, consisting of various trade associations as well as individual LEC companies, challenge the FCC's eligibility restriction on multiple grounds. In addition, a number of waiver applicants challenge the FCC's previous decision, promulgated while the FCC was devising the current regime, that denied them waivers of the rules that formerly governed use of the spectrum now designated for LMDS. We reject the claims put forth by the LECs, the rural LECs, and the waiver applicants, and accordingly deny their petitions for review.

I. BACKGROUND

  1. The Regulatory Regime Before 1996

    In 1970, the FCC adopted a cross-ownership rule prohibiting telephone companies from providing video programming directly to subscribers in their telephone service areas, because of concerns that telephone companies might monopolize the emerging cable industry. See General Tel. Co. v. United States, 449 F.2d 846, 851-52 (5th Cir.1971). Congress eventually codified that rule in 1984. See 47 U.S.C. § 533(b), repealed by Telecommunications Act of 1996, Pub.L. No. 104-104, § 302(b)(1), 110 Stat. 56, 124 ("1996 Act"). Over the next two decades, however, it became apparent that this cross-ownership prohibition granted cable providers too much protection. By 1992, "most cable television subscribers ha[d] no opportunity to select between competing cable systems," resulting in "undue market power for the cable operator as compared to that of consumers and video programmers." Cable Television Consumer Protection and Competition Act of 1992, Pub.L. No. 102-385, § 2(a)(2), 106 Stat. 1460, 1460.

  2. The Telecommunications Act of 1996

    Congress enacted the Telecommunications Act of 1996 "to provide for a pro-competitive, de-regulatory national policy framework designed to accelerate rapidly private sector deployment of advanced telecommunications and information technologies and services to all Americans by opening all telecommunications markets to competition." H.R. CONF. REP. NO. 104-458, at 1 (1996) ("Conference Report"). 2

    The 1996 Act eliminates the ban on telephone-cable cross-ownership, see 1996 Act § 302(b)(1), and authorizes a variety of ways for telephone companies to deliver video services, including: (1) via Title III radio-based systems (the Title that includes LMDS); (2) as a common carrier under Title II; (3) via a Title IV cable system; and (4) through an Open Video System ("OVS"), see id. § 651.

    The only specific reference in the legislative history of the 1996 Act to LMDS involves section 301(b)(3)(C) of the Act. This section amends 47 U.S.C. § 543(l)(1), which provides alternative definitions of "effective competition," by expanding the definition of that term to include: "a local exchange carrier or its affiliate (or any multichannel video programming distributor using the facilities of such carrier or its affiliate) [that] offers video programming services directly to subscribers by any means (other than direct-to-home satellite services) in the franchise area of an unaffiliated cable operator which is providing cable service in that franchise area, but only if the video programming services so offered in that area are comparable to the video programming services provided by the unaffiliated cable operator in that area." 1996 Act § 301(b)(3)(C) (emphasis added). The Conference Report on the 1996 Act states that " '[b]y any means,' includes any medium (other than direct-to-home satellite

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    service) for the delivery of comparable programming, including MMDS [Multichannel Multipoint Distribution Service], LMDS, an open video system, or a cable system." Conference Report, at 170.

    The 1996 Act seeks additionally to stimulate competition in the local telephone market, requiring, for instance, incumbent local telephone companies to interconnect with the facilities and equipment of their competitors. See 1996 Act § 251(c)(2); see also id. § 251(c)(3) (duty to provide "unbundled access"); id. § 251(c)(4)(A) (duty "to offer for resale at wholesale rates any telecommunications service that the carrier provides at retail to subscribers who are not telecommunications carriers"). Along the same lines, section 271 of the 1996 Act provides that a Regional Bell Operating Company ("RBOC") may provide long-distance service, but only after that RBOC has demonstrated that it has met all the requirements for opening its local telephone market to competition and the FCC has found that "the requested authorization is consistent with the public interest, convenience, and necessity." Id. § 271(d)(3)(C).

  3. The FCC's Rulemaking on LMDS

    On January 8, 1993, three years before the passage of the 1996 Telecommunications Act, the FCC released a Notice of Proposed Rulemaking that proposed redesignating the 28 GHz spectrum for LMDS. See In the Matters of Rulemaking to Amend Part 1 and 21 of the Commission's Rules to Redesignate the 27.5-29.5 GHz Frequency Band, 8 F.C.C.R. 557 (released Jan. 8, 1993) ("first NPRM"). This first NPRM stated that the FCC did not propose to adopt cross-ownership restrictions on acquiring LMDS licenses, explaining that:

    The evidence before us suggests that the most likely first use of the 28 GHz band will be video entertainment programming.... There is no assurance this will be the case, or that even if it is the predominant use, that it will be the most viable use in all geographic areas. In view of this uncertainty, we are inclined not to exclude any existing video distribution or telecommunications firm from constructing and operating 28 GHz facilities. We seek comment on our tentative policy conclusion that cross-ownership restrictions should not be imposed.

    Id. p 33. The FCC then denied the 971 outstanding requests for waivers of the rules that formerly governed use of the spectrum now tentatively designated for LMDS. See id. pp 51-53. (These rejected waiver applicants had sought to provide point-to-multipoint service on the 28 GHz band, at a time when only...

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    ...problem, an agency may be `entitled to conduct . . . a general analysis based on informed conjecture.' '') quoting from Melcher v. FCC, 134 F.3d 1143, 1158 (D.C. Cir. 1998), and cited with approval in Chamber of Commerce v. NLRB, supra, 118 F.Supp. 3d at The Board majority in the 2014 amend......
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    ...we require only that the agency 'so state and go on to identify the considerations it found persuasive.'"); see also Melcher v. FCC, 134 F.3d 1143, 1151-52 (D.C. Cir. 1998) ("[O]ur review of the FCC's exercise of its predictive judgment is particularly deferential" because wh......
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