57 F.3d 1136 (D.C. Cir. 1995), 93-1464, MCI Telecommunications Corp. v. F.C.C.

Docket Nº:93-1464.
Citation:57 F.3d 1136
Party Name:MCI TELECOMMUNICATIONS CORPORATION, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION; United States of America, Respondents. Sprint Communications Company, L.P., et al., Intervenors.
Case Date:June 27, 1995
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit
 
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Page 1136

57 F.3d 1136 (D.C. Cir. 1995)

MCI TELECOMMUNICATIONS CORPORATION, Petitioner,

v.

FEDERAL COMMUNICATIONS COMMISSION; United States of

America, Respondents.

Sprint Communications Company, L.P., et al., Intervenors.

No. 93-1464.

United States Court of Appeals, District of Columbia Circuit

June 27, 1995

Argued Nov. 1, 1994.

Page 1137

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

Paul M. Smith argued the cause for petitioner. On the briefs were Frank W. Krogh and Donald J. Elardo.

Carl D. Lawson, Counsel, F.C.C., argued the cause for respondents. With him on the briefs were Anne K. Bingaman, Asst. Atty. Gen., Catherine G. O'Sullivan and Nancy C. Garrison, Attys., U.S. Dept. of Justice, William E. Kennard, Gen. Counsel, Daniel M. Armstrong, Associate Gen. Counsel, and John Ingle, Deputy Associate Gen. Counsel, F.C.C. Laurence N. Bourne, entered an appearance for respondents.

Leon M. Kestenbaum and Michael B. Fingerhut, filed the brief for intervenor Sprint Communications Co. Harold R. Juhnke, entered an appearance for Sprint Communications Co. Genevieve Morelli, filed the brief for intervenor Competitive Telecommunications Ass'n. Roy L. Morris, filed the brief for intervenor Allnet Communications Services, Inc. Barbara J. Kern, filed the brief for intervenors Illinois Bell Telephone Co., Indiana Bell Telephone Co., Inc., Michigan Bell Telephone Co., the Ohio Bell Telephone Co. and Wisconsin Bell, Inc. John W. Bogy and James P. Tuthill, filed the brief for intervenor Pacific Bell. James L. Wurtz, entered an appearance for Pacific Bell. Edward R. Wholl and Carlos J. Sandoval, filed the brief for intervenors New York Telephone Co. and New England Tel. & Tel. Co. Shelley E. Harms, entered appearances for New York Telephone Co. and New England Tel. & Tel. Co. Robert B. McKenna, Jr. and Laurie J. Bennett, filed the brief for intervenor US West Communications, Inc. Richard C. Hartgrove, Thomas A. Pajda and Robert M. Lynch, filed the brief for intervenor Southwestern Bell Telephone Co. Mary McDermott, filed the brief for intervenor U.S. Telephone Ass'n. Martin T. McCue, entered an appearance for U.S. Telephone Ass'n. Matthew R. Sutherland, entered an appearance for intervenor BellSouth Telecommunications, Inc. James S. Blaszak and Patricia J. Whittle, entered appearances for intervenor Ad Hoc Telecommunications Users Committee. Peter D. Keisler and David W. Carpenter, entered appearances for intervenor AT & T Co. Alfred W. Whittaker, entered an appearance for intervenor Ameritech Operating Companies. James B. Ramsey and Charles D. Gray, entered appearances for intervenor Nat. Ass'n of Regulatory Utility Com'rs.

Before WILLIAMS, GINSBURG, and ROGERS, Circuit Judges.

GINSBURG, Circuit Judge:

MCI Telecommunications Corporation petitions for review of an FCC Order that (1) requires the Bell Operating Companies to

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unbundle and offer separately the access services they provide to long-distance carriers, and (2) allows the BOCs to phase out their bundled access offerings. Arguing that the Commission (1) provided inadequate notice of its intention to allow the BOCs to phase out their bundled access offerings, and (2) failed adequately to consider various important issues related to that decision, MCI and supporting intervenors ask the court to vacate the Commission's Order and remand the matter for further consideration. Because we hold that the Commission's notice failed to meet the requirements of the Administrative Procedure Act, we grant the petition and the relief requested.

I. BACKGROUND

The BOCs and other local exchange carriers (collectively LECs) provide both long-distance telephone companies (interexchange carriers or IXCs) and enhanced services providers (ESPs) with access to local telephone users. The manner in which the BOCs offer access service to IXCs is the subject of this case. In order to understand the present dispute, however, a brief review of access regulation may be helpful.

A. Interexchange Carriers

In its 1983 Access Order, the Commission held that there was no rational justification for the disparate nature of the access services and rates that the LECs were then offering to different IXCs. See MTS and WATS Market Structure, Third Report and Order, CC Docket No. 78-72, 93 FCC 2d 241 (1983) (Access Order ), modified on recon., 97 FCC 2d 682 (1983), modified on further recon., 97 FCC 2d 834 (1984), aff'd in principal part and remanded in part, Nat'l Ass'n of Regulatory Utility Comm'rs v. FCC, 737 F.2d 1095 (D.C.Cir.1984), cert. denied, 469 U.S. 1227, 105 S.Ct. 1224, 84 L.Ed.2d 364 (1985), modified on further recon., 99 FCC 2d 708 (1984), aff'd, American Tel. and Tel. Co. v. FCC, 832 F.2d 1285 (D.C.Cir.1987), modified on further recon., 101 F.2d 1222 (1985), further recon. denied, 102 FCC 2d 849 (1985). Specifically, the Commission concluded that "a single, uniform, and nondiscriminatory structure for interstate access tariffs covering those services that make identical or similar use of access facilities is required by the Communications Act." Id. at 250. Accordingly, the Commission prescribed the "rate elements," i.e., components of service, that every LEC must offer, the methodology it must use to set rates, and the type of charge (e.g., per minute, per line) it may make for each element. See 47 C.F.R. Sec. 69.

Under this regulatory regime, the LECs have filed with the Commission tariffs offering access service to the IXCs in so-called "feature groups." A feature group bundles the basic rate elements set out in 49 C.F.R. Sec. 69 together with specific features that the IXCs tend to find appropriate and useful. Because these feature group offerings are relatively uniform across LECs, the IXCs have been able to develop and use automated ordering, auditing, and payment systems for their purchase of local access services. In order to preserve this convenience, the IXCs strongly oppose any measure that would facilitate the abolition of feature groups.

B. Enhanced Service Providers

The Commission defines enhanced services as

services, offered over common carrier transmission facilities used in interstate commerce, which employ computer processing applications that act on the format, content, code, protocol or similar aspects of the subscriber's transmitted information; provide the...

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