394 F.3d 933 (D.C. Cir. 2005), 03-1431, AT&T Corp. v. F.C.C.

Docket Nº:03-1431.
Citation:394 F.3d 933
Party Name:AT&T CORPORATION, Petitioner v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents
Case Date:January 14, 2005
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

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394 F.3d 933 (D.C. Cir. 2005)



FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents

No. 03-1431.

United States Court of Appeals, District of Columbia Circuit

January 14, 2005

Argued Nov. 12, 2004

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On Petition for Review of an Order of the Federal Communications Commission.

David W. Carpenter argued the cause for petitioner. With him on the briefs were Peter H. Jacoby, James F. Bendernagel, Jr., C. John Buresh, and Michael J. Hunseder.

Laurence N. Bourne, Counsel, Federal Communications Commission, argued the cause for respondents. With him on the briefs were Robert B. Nicholson and Steven J. Mintz, Attorneys, U.S. Department of Justice, John A. Rogovin, General Counsel, Richard K. Welch, Associate General Counsel, John E. Ingle, Deputy Associate General Counsel, and Rodger D. Citron, Counsel. Laurel R. Bergold, Counsel, entered an appearance.

Before: GINSBURG, Chief Judge, and TATEL and ROBERTS, Circuit Judges.


ROBERTS, Circuit Judge.

AT&T Corporation petitions for review of a Federal Communications Commission order interpreting AT&T's tariff on resales of 800 telephone service. A provision of that tariff allows resellers to transfer their business, so long as the recipient assumes all of the transferor's obligations. Based on this provision, AT&T denied one reseller's request to move the "traffic" under its 800 plans to another reseller without a transfer of the corresponding obligations. The Commission interpreted the tariff transfer provision as not addressing the movement of traffic, and ultimately held that AT&T could not refuse the transfer. We conclude that traffic is a type of service covered by the transfer provision, and that the Commission's contrary interpretation would render the provision meaningless. We grant the petition for review.


This case concerns the transfer of toll-free 800 telephone service. At the time of the events in question, AT&T was the dominant carrier of such service, which it provided pursuant to tariffs filed with the FCC. Under the Communications Act of 1934, as amended, and the "filed rate doctrine" incorporated therein, neither the carrier nor its customers could depart from the terms set forth in AT&T's tariffs. See 47 U.S.C. § 203(c); AT&T v. Cent. Office Tel., Inc., 524 U.S. 214, 221-24, 118 S.Ct. 1956, 1963-64, 141 L.Ed.2d 222 (1998); Orloff v. FCC, 352 F.3d 415, 418 (D.C.Cir. 2003).

The tariff at issue here--AT&T Tariff FCC No. 2--allowed companies to purchase and resell 800 service to small businesses around the country. The tariff refers to this resale business, as well as the underlying service itself, as Wide Area Telecommunications Service (WATS). Any company could qualify as a reseller so long as it met the requirements of one of several plans described in the tariff. Companies qualified by aggregating the WATS usage of multiple small businesses into a single plan, and, under the tariff, the companies obtained AT&T's service for these "end-user" businesses at a discounted rate. In return, the reseller or "aggregator" company agreed to meet certain obligations set forth by the carrier, including commitments to purchase a certain volume of use.

In the early 1990s, as other carriers began to acquire a share of the 800 market, the FCC began to loosen its regulation

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of AT&T. Starting in 1991, the Commission no longer forced the carrier to offer WATS only through the generic plans set forth in Tariff No. 2. Instead, the FCC gave AT&T the option of individually negotiating "contract tariffs" with particular resale companies. As contract tariffs could be drawn to offer discounts greater than those available under Tariff No. 2, many resellers naturally sought to obtain them.

Alfonse Inga, a New Jersey businessman who owned several aggregator companies, was one such reseller. In 1994, Mr. Inga undertook a series of transactions designed to move his business from Tariff No. 2 to a more lucrative contract tariff. First, his companies--each of which operated under CSTP II, a type of plan offered under Tariff No. 2--transferred all nine of their plans to a new entity, Combined Companies, Incorporated (CCI). As required by Section 2.1.8 of Tariff No. 2, CCI expressly agreed to assume all obligations of the transferor companies. The transfer also stipulated that CCI would pass 80 percent of its profits on to the transferor companies. Second, CCI attempted to negotiate a contract tariff with AT&T. Third, as temporary cover until this envisioned contract tariff became a reality, or as a permanent alternative in case it never did, Mr. Inga planned another transfer--one between CCI and Public Services Enterprises of Pennsylvania (PSE). PSE already had a contract...

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