Conference Grp., LLC v. Fed. Commc'ns Comm'n

Decision Date02 July 2013
Docket NumberNo. 12–1124.,12–1124.
Citation720 F.3d 957
PartiesThe CONFERENCE GROUP, LLC, Petitioner v. FEDERAL COMMUNICATIONS COMMISSION and United States Of America, Respondents Cisco Webex LLC, Intervenor for Petitioner Verizon and Verizon Wireless, Intervenors for Respondents.
CourtU.S. Court of Appeals — District of Columbia Circuit

OPINION TEXT STARTS HERE

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

Ross A. Buntrock argued the cause for petitioner. With him on the briefs was Michael B. Hazzard.

Christopher J. Wright argued the cause for intervenor Cisco WebEx LLC. With him on the briefs was Brita D. Strandberg.

Joel Marcus, Counsel, Federal Communications Commission, argued the cause for respondent. On the brief were Robert B. Nicholson and Nickolai G. Levin, U.S. Department of Justice, Attorneys, and Sean A. Lev, General Counsel, Federal Communications Commission, Peter Karanjia, Deputy General Counsel, Richard K. Welch, Deputy Associate General Counsel, and Laurel R. Bergold, Attorney.

Helgi C. Walker argued the cause for intervenors Verizon, et al. With her on the brief were Elbert Lin, Michael E. Glover, and Christopher M. Miller.

Before: GARLAND, Chief Judge, ROGERS, Circuit Judge, and SILBERMAN, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge ROGERS.

ROGERS, Circuit Judge:

In 2008 the Federal Communications Commission decided that the audio bridging services provided by InterCall, Inc. are properly classified as “telecommunications” under the Communications Act of 1934, as amended, and thereby obligate it and “similarly situated” providers to contribute directly to the Universal Service Fund (“USF”), 47 U.S.C. § 254(d). The Conference Group, joined by intervenor Cisco WebEx, contends that the Commission converted an unlawful decision by the administrator of the USF as to InterCall, Inc.'s contribution obligation into an industry-wide legislative rule without adequate notice or comment, in violation of section 553 of the Administrative Procedure Act (“APA”), and that the Commission's action was arbitrary and capricious because it ignored uncontroverted facts and legal precedent.

The Conference Group has standing to challenge the Commission's decision as procedurally unlawful rulemaking, but we conclude that there is no merit to that challenge. The Commission's decision involved a statutory interpretation that could be rendered in the form of an adjudication, not only in a rulemaking. Because the decision was an adjudication and the The Conference Group was not a party, it lacks standing to challenge the merits of that adjudication. Although the Commission stated its decision would apply to “similarlysituated” providers, that is true of all precedents. And this court has held that the mere fact that an adjudication creates a precedent that could harm a non-party does not create the injury-in-fact required for Article III standing. If the Commission applies its rule of decision for InterCall, Inc. to The Conference Group, The Conference Group can present its substantive arguments in its own adjudication. Intervenor Cisco WebEx's lack of standing is a fortiori because it claims it is not similarly situated to InterCall, Inc. and thus can claim no injury as a consequence of the Commission's decision. Accordingly, we deny The Conference Group's petition in part and dismiss it in part for lack of jurisdiction.

I.

The Communications Act of 1934, as amended by the Telecommunications Act of 1996, 47 U.S.C. § 151 et seq. (the Act), defines two categories of regulated entities relevant here: telecommunications carriers and information-service providers. See generally Nat'l Cable & Telecomm. Ass'n v. Brand X Internet Serv., 545 U.S. 967, 975, 125 S.Ct. 2688, 162 L.Ed.2d 820 (2005) ( “Brand X ”). The Act regulates the former as common carriers, and providers of telecommunications services are required to contribute to the USF. 47 U.S.C. § 254(d). It also authorizes the Commission to impose additional regulatory obligations on non-common carriers under its Title I ancillary jurisdiction to regulate interstate and foreign communications. See Brand X, 545 U.S. at 975, 125 S.Ct. 2688 (citing 47 U.S.C. §§ 151–161). The Act defines “telecommunications” as “the transmission, between or among points specified by the user, of information of the user's choosing, without change in the form or content of the information as sent and received.” 47 U.S.C. § 153(50). Thus, “telecommunications service” is “the offering of telecommunications for a fee directly to the public, or to such classes of users as to be effectively available directly to the public, regardless of the facilities used.” Id. § 153(53). In contrast, “information service” is “the offering of a capability for generating, ... or making available information via telecommunications, and includes electronic publishing, but does not include any use of any such capability for the management, control, or operation of a telecommunications system or the management of a telecommunications service.” Id. § 153(24).

Section 254, on universal service, provides, in relevant part:

Every telecommunications carrier that provides interstate telecommunications services shall contribute, on an equitable and nondiscriminatory basis, to the specific, predictable, and sufficient mechanisms established by the Commission to preserve and advance universal service.... Any other provider of interstate telecommunications may be required to contribute to the preservation and advancement of universal service if the public interest so requires.

Id. § 254(d) (emphases added). By regulation, the Commission announced that, in addition to “telecommunications services” providers such as common carriers, [c]ertain other providers of interstate telecommunications ... also must contribute to the universal service support mechanisms.” 47 C.F.R. § 54.706(a). Specifically:

Interstate telecommunications include, but are not limited to: (1) Cellular telephone and paging services;

(2) Mobile radio services; (3) Operator services; (4) Personal communications services (PCS); (5) Access to interexchange service; (6) Special access service; (7) WATS; (8) Toll-free service; (9) 900 service; (10) Message telephone service (MTS); (11) Private line service; (12) Telex; (13) Telegraph; (14) Video services; (15) Satellite service; (16) Resale of interstate services; (17) Payphone services; and (18) Interconnected VoIP services[;] (19) Prepaid calling card providers.

Id. (emphasis added). Required USF contributions are based on a provider's projected net end-user telecommunications revenues, id. § 54.706(b), and filed in accordance with the Telecommunications Reporting Worksheet (FCC Form 499), id. § 54.711(a), (c). Since 2002 the instructions accompanying the FCC Form 499 for annual filings have provided that “toll teleconferencing” is subject to direct USF contributions. See FCC Form 499–A Telecommunications Reporting Worksheet at 20 (Feb.2002).

The Commission has delegated administration of the USF to the Universal Service Administrative Company (“USAC”), see In re Changes to the Board of Directors of the National Exchange Carrier Association, Inc. and Federal–State Joint Board on Universal Service, 12 FCC Rcd. 18400, 18407 ¶ 11 (1997) ( “Second Order on Reconsideration ”). It has no policy or interpretive role, see47 C.F.R. § 54.702(c), and must seek guidance from the Commission where the Act or the Commission's rules are unclear or do not address a particular situation, id. Upon appeal of the USAC's contribution decisions, the Commission conducts de novo review of “novel questions of fact, law, or policy.” Id. § 54.723(b).

In 2007, the USAC initiated an audit of InterCall, Inc. for the purpose of determining whether it owed USF contributions. As self-described, InterCall, Inc. offers an audio bridging service that “allows multiple end users to communicate and collaborate with each other using telephone lines” by “link [ing] multiple communications together and feed[ing] to each station a composite audio input minus the user's own audio.” See In the Matter of Request for Review by InterCall, Inc. of Decision of the Universal Service Administrator at 4, CC Docket No. 96–45 (Feb. 1, 2008) (Request for Review). “The audio bridge also performs conference validation functions, collects billing and participant information ... and enables numerous conference control features, including recording, delayed playback, mute and unmute of callers and operator assistance.” Id. InterCall, Inc. provides a “stand-alone” audio bridge service and “purchases toll-free, international and/or local number-based services from one or more telecommunications vendors” in order to obtain the telecommunications input required to operate its service. Id. at 5.

The USAC found that the audio bridging services provided by InterCall, Inc. are toll teleconferencing services subject to direct USF contribution obligations. See Letter from USAC to Steven A. Augustino, Esq. (Jan. 15, 2008) (“USAC Decision”). InterCall, Inc. sought review by the Commission and a stay, arguing that the USAC acted beyond its authority, and that InterCall, Inc.'s audio bridging service is an information service that is not obligated to make USF payments. See Request for Review at 1, 6–10. It argued that the Commission had to proceed by rulemaking to modify audio bridging providers' USF contribution requirements, id. at 23–25, and, alternatively, that even if audio bridging services were telecommunications, InterCall, Inc. and other stand-alone audio bridging service providers are not subject to common carrier regulations and thus not subject to § 254(d)'s mandatory contribution obligations, see id. at 12–17. The Commission issued a public notice on February 14, 2008, seeking comment on InterCall, Inc.'s request for review of the USAC Decision and a stay. Comments by interested parties were due, and comments were...

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