Cellnet Communication, Inc. v. F.C.C., s. 91-1251
| Decision Date | 14 September 1992 |
| Docket Number | 91-1253,Nos. 91-1251,s. 91-1251 |
| Parties | CELLNET COMMUNICATION, INC., Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and the United States of America, Respondents, McCaw Cellular Communications, Inc., Cellular Telecommunications Industry Association, Amarillo CellTelco, Ameritech Mobile Communications, Inc., North American Telecommunications Association, Intervenors. NATIONAL CELLULAR RESELLERS ASSOCIATION, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and the United States of America, Respondents, BellSouth Corporation, NYNEX Mobile Communications Company, McCaw Cellular Communications, Inc., Southwestern Bell Mobile Systems, Inc., Cellular Telecommunications Industry Association, Amarillo CellTelco, Ameritech Mobile Communications, Inc., North American Telecommunications Association, Intervenors. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Donald E. Ward, Washington, D.C., for petitioner Cellnet Communications, Inc. in No. 91-1251.
Robert J. Aamoth, Washington, D.C., for petitioner Nat. Cellular Resellers Ass'n in No. 91-1253. W. Theodore Pierson, Jr., Washington, D.C., also entered an appearance for petitioner.
John E. Ingle, Deputy Associate General Counsel, with whom Robert L. Pettit, Gen. Counsel and Laura R. Bergard, counsel, F.C.C., and Robert B. Nicholson and Robert J. Wiggers, Attys., Dept. of Justice, Washington, D.C., were on the brief, for respondents in both cases.
Charles A. Zielinski, Washington, D.C., for intervenors Ameritech Mobile Communications, Inc., Cellular Telecommunications Industry Ass'n, McCaw Cellular Communications, Inc., NYNEX Mobile Communications Co., and Southwestern Bell Mobile Systems, Inc. in Nos. 91-1251 and 91-1253. R. Michael Senkowski, Theodore C. Whitehouse, Philip L. Verveer, Sue D. Blumenfeld, A. Richard Metzger, Jr. and Martin E. Grambow, Washington, D.C., also entered appearances for intervenors.
Eliot J. Greenwald, Washington, D.C., entered an appearance for intervenor Amarillo CellTelco in Nos. 91-1251 and 91-1253.
Albert H. Kramer and Robert F. Aldrich, Washington, D.C., entered appearances for intervenor North American Telecommunications Ass'n in Nos. 91-1251 and 91-1253. William B. Barfield, R. Frost Branon, Jr. and M. Robert Sutherland, Atlanta, Ga., entered appearances for intervenor BellSouth Corp. in No. 91-1253.
Donald W. Boecke, Washington, D.C., and Edward R. Wholl, Pearl River, N.Y., also entered appearances for intervenor NYNEX Mobile Communications Co. in No. 91-1253.
Before: MIKVA, Chief Judge, SILBERMAN and STEPHEN F. WILLIAMS, Circuit Judges.
Opinion for the Court filed by Circuit Judge STEPHEN F. WILLIAMS.
This appeal arises out of a Federal Communications Commission order that initiated a rulemaking proceeding, "clarified" an existing rule, and dismissed a petition to expand the proceeding. Petitioners Cellnet Communications, Inc. and National Cellular Resellers Association ("NCRA") argue that the "clarification" was actually a new rule, and thus that the FCC acted improperly by issuing it without notice and comment. NCRA also argues that the FCC erred by dismissing its petition to expand. We reject these arguments and affirm the FCC's order.
* * * * * *
Since 1981 the FCC has pursued a policy of licensing two firms to construct and operate facilities for cellular service in every cellular services market. See Cellular Communications Systems, 86 FCC2d 469 (1981), Reconsideration, 89 FCC2d 58, Further Reconsideration, 90 FCC2d 571 (1982). The FCC apparently contemplated that one of these "facilities-based carriers" was to be a "wireline carrier" (the local landline telephone monopoly), the other a "non-wireline carrier". See Cellular Communications Systems, 86 FCC2d at 483-87. The FCC prohibited the facilities-based carriers from restricting resale of their capacity to each other or to "non-facilities-based resellers", companies that owned no cellular facilities but resold capacity purchased in bulk from the facilities-based carriers. See id. at 510-11. The ability of third-party resellers of capacity to engage in arbitrage would tend to prevent price discrimination by the two facilities-based carriers. Id.
In October 1988 the Commission rejected a request by Cellular Telephone Company to interpret the ban on resale restrictions as containing a limited exception (substantively irrelevant to the present suit), but decided to review the rule itself. To launch that process it treated Cellular's request as a petition for rulemaking, and invited public comment. Cellular Telephone Co., 3 FCC Rcd 6274-75 (1988).
In December 1988 NCRA submitted a petition seeking to broaden the proceedings. The petition said that facilities-based carriers were circumventing the rules established by the FCC to ensure competition, and asked the FCC to investigate these anticompetitive practices and to reaffirm and enforce its prohibition on resale restrictions. It asked the FCC to require carriers to operate their wholesale arms at a profit, apparently assuming that the FCC already required carriers to maintain separate wholesale and retail operations. (Another party expressly asserted that such a requirement currently existed and sought its elimination.) NCRA also asked the FCC to address its "unbundling" policy, i.e., its policy barring carriers from supplying cellular equipment and service as a package. On December 23 NCRA submitted an "Emergency Petition for Declaratory Ruling" that incorporated the petition to expand the proceedings and provided additional evidence; it explained that this petition was intended as a procedural "vehicle" by which the Commission could commit itself to vigorous enforcement of the unbundling policy. NCRA Petition at 54.
The Commission responded to these petitions in March 1991. It reaffirmed the general policy of prohibiting resale restrictions but issued a Notice of Proposed Rulemaking--suggesting adoption of Cellular's proposed exception and asking for comment on the subject. See Petitions for Rule Making Concerning Proposed Changes to the Commission's Cellular Resale Policies, 6 FCC Rcd 1719, 1720-21 (1991) ("Notice "). The Notice also dismissed NCRA's petition to expand the rulemaking into a general inquiry into anticompetitive practices, on the ground that the evidence did not justify such an investigation. Id. at 1724. And in a passage purporting to clarify the rule against resale restrictions, the FCC said that it had never required carriers to establish separate wholesale and resale operations, or to charge separate wholesale rates. Id. at 1726. This Notice is the order on review here.
On the same day the FCC issued another Notice of Proposed Rulemaking, this one on the subject of unbundling. Bundling of Cellular Customer Premises Equipment and Cellular Service, 6 FCC Rcd 1732 (1991) (Bundling Order). In the same order, however, it dismissed NCRA's "Emergency Petition" for a declaratory ruling, id. at 1735, but noted: Id. at 1736 n. 9. Thus, in essence, it opened up consideration of the issue that NCRA proposed be considered, but withheld any immediate issuance of the special confirmatory declaration that NCRA sought. NCRA filed a petition for review of this order, but this court dismissed it for want of finality. National Cellular Resellers Ass'n v. FCC, 961 F.2d 963 (D.C.Cir.1992).
* * * * * *
First we address the argument (made by both Cellnet and NCRA) that the FCC's purported clarification of the ban on resale restrictions actually changed the rule, and thus was unlawful for want of notice and opportunity to comment. See 5 U.S.C. § 553 (1988).
There is a preliminary jurisdictional hurdle. The FCC argues that we lack jurisdiction because the petitioners failed to raise the issue either initially or in the petition for rehearing, see 47 U.S.C. § 405(a)(1) (1988 & Supp.1991). FCC Brief at 28 n. 33. But comments by other parties raised the issue, one suggesting that the existing rule required separate wholesale and retail operations, see Joint Appendix 151-62, which if true would be inconsistent with the Commission's "clarification", and another explicitly suggesting a round of notice and comment to resolve the issue, see id. at 329 n. 6. Consideration of the issue by the agency at the behest of another party is enough to preserve it, see Washington Ass'n for Television and Children v. FCC, 712 F.2d 677, 682 & n. 10 (D.C.Cir.1983), so long of course as the issue was raised in a timely fashion, see Coalition for the Preservation of Hispanic Broadcasting v. FCC, 931 F.2d 73, 77 (D.C.Cir.1991).
All agree that the FCC's policy on resale barred facilities-based carriers from restricting resale to non-facilities-based resellers and from discriminating against purchasers for resale. Cellnet and NCRA argue that the FCC also required facilities-based carriers to maintain separate retail and wholesale operations. Such a separation requirement would make it easier for the Commission to monitor compliance with the ban on resale restrictions; otherwise facilities-based carriers might by covert discriminatory pricing or other terms discourage purchase by parties interested in resale. In its Notice the Commission stated that no such additional requirement ever existed. See 6 FCC Rcd at 1726.
Cellnet appeals to a passage accompanying the initial statement of the rule:
We shall require that AT & T and its underlying cellular affiliate provide system capacity to non-affiliated retailers or resellers on a non-discriminatory basis and on the same terms and conditions as its own distribution arm.
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