Ad Hoc Telecommunications Users Committee v. F. C. C., s. 80-1785
| Decision Date | 11 June 1982 |
| Docket Number | Nos. 80-1785,80-1876 and 80-2093,s. 80-1785 |
| Parties | AD HOC TELECOMMUNICATIONS USERS COMMITTEE, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, American Telephone and Telegraph Company, Aeronautical Radio, Inc., United States Transmissions Systems, Inc., American Hotel and Motel Association, Intervenors. AERONAUTICAL RADIO, INC. and Air Transport Association of America, Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, American Hotel and Motel Association, Aerospace Industries Association of America, Inc., International Communications Association, American Telephone and Telegraph Company, Telecommunications Association, Intervenors. AMERICAN PETROLEUM INSTITUTE, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, American Telephone and Telegraph Company, Aerospace Industries Association of America, Inc., Intervenors. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Joseph M. Kittner, with whom Edward P. Taptich, Washington, D. C., was on the brief, for Ad Hoc Telecommunications Users Committee, petitioner in 80-1785.
Charles R. Cutler, John L. Bartlett, Michael Yourshaw, Robert J. Butler and James E. Landry, Washington, D. C., were on the brief for Aeronautical Radio, Inc., petitioner in 80-1876 and intervenor in 80-1785.
Wayne V. Black, Larry S. Solomon, Stark Ritchie, David E. Lindgren, and Sheila A. Millar, Washington, D. C., were on the brief for American Petroleum Institute, petitioner in 80-2093.
John J. Loflin, with whom Jack P. Jefferies, and David P. Ballard, New York City, were on the brief, for American Hotel and Motel Ass'n, intervenor in 80-1785 and 80-1876.
Charles Lister, Washington, D. C., with whom Alfred A. Green, and Francine J. Berry, New York City, were on the brief, for American Tel. and Tel. Co., intervenor in 80-1785, 80-1876, and 80-2093.
Arthur Scheiner and Michael H. Rosenbloom, Washington, D. C., were on the brief for Aerospace Industries Ass'n of America, Inc., intervenor in 80-1785, 80-1876, and 80-2093.
Michael D. Sullivan, Counsel, F.C.C. with whom Stephen A. Sharp, Gen. Counsel, Daniel M. Armstrong, Associate Gen. Counsel, John E. Ingle, Deputy Associate Gen. Counsel, and Jack David Smith, Counsel, F.C.C., Washington, D. C., were on the brief, for respondent, F.C.C. Jane E. Mago, Counsel, F.C.C., Washington, D. C., also entered an appearance for respondent, F.C.C.
Robert B. Nicholson, Peter L. de la Cruz, James Laskey, Attys., Dept. of Justice, Washington, D. C., entered appearances for respondent, United States of America.
Lewis A. Rivlin and Robert J. Miller, Washington, D. C., entered appearances for Intern. Communications Ass'n, intervenor in 80-1876.
Before: ROBINSON, Chief Judge, MacKINNON and GINSBURG, Circuit Judges.
Opinion for the Court filed by Circuit Judge GINSBURG.
Petitioners and intervenors in this case provide, use or are otherwise interested in the availability of long distance telephone services known as Outward WATS and Inward WATS. They challenge a Federal Communications Commission (FCC or Commission) decision that each of these WATS services is "like" ordinary long distance telephone service for purposes of 47 U.S.C. § 202(a), which prohibits unjust or unreasonable discrimination in charges "for or in connection with like communication service." 1 The Commission emphasizes that its determination does not mandate elimination or alteration of WATS services. Rather, the FCC explains, if its decision is affirmed, "any rate discrimination or preference between (WATS and ordinary long distance service) must be clearly shown to be justified in accordance with applicable Commission rules and orders, and if not, the discrimination or preference must be eliminated."
2 Petitioners and intervenors contend that, in making the "likeness" determination at issue, and adhering to it on reconsideration, the Commission failed to apply any ascertainable standard. They further assert that, in face of overwhelming record evidence to the contrary, the FCC's decision characterizing WATS and ordinary long distance as "like service(s)" was arbitrary and capricious.
The Commission purported to apply its judicially-approved "functional equivalency" test in arriving at the "likeness" determination before us for review. But the Commission's explanation slips from the grasp and, in the shape presented to us, does not satisfy the demands of cogent decisionmaking. Because the "functional equivalency" test is an important, still-evolving Commission approach, we do not believe it appropriate to cut off at this juncture the FCC's opportunity to define comprehensibly the path it is taking. Accordingly, we vacate the Commission's orders and remand for a more precise determination of the "likeness" vel non of the services at issue.
The American Telephone and Telegraph Company (AT&T) operates a nationwide telecommunications system and offers several forms of long distance communication including ordinary long distance service and two distinct WATS services. Long Distance Message Telecommunications Service (MTS) is the familiar nationwide long distance service. It has two-way capability (placing and receiving calls) and may be accessed from almost any telephone at any time. It provides virtually world-wide service. Operator assistance is available for special service features, including collect, credit card, conference, person-to-person, and third-party-billed calls. Subscribers are provided a detailed bill which itemizes the charges for each call period.
Wide Area Telecommunications Service (WATS), on the other hand, is a one-way-only calling or receiving service covering specified geographical areas. The WATS services in question are of two kinds: Outward WATS and Inward WATS (the latter commonly called "800" Service).
Outward WATS, first introduced in 1961, permits high-volume users to place direct-dialed calls anywhere within a designated service area at a fixed monthly rate. Outward WATS calls proceed over a unidirectional access line from the subscriber's phone to a specifically equipped WATS central office. At this location the calls are switched onto the interstate long distance telephone network, known as the public switched network, the same network over which regular long distance calls travel. At the WATS central office a screening and blocking function occurs which accepts only calls to the designated geographic area covered by the subscription. Outward WATS customers subscribe to coverage selected from among five service areas within the United States, none of which includes the subscriber's home state. 3 These areas may be viewed as five concentric circles of increasing size. The larger the size of the service area selected, the higher the rate charged.
Inward WATS (800 Service), first introduced in 1967, operates in a manner essentially the reverse of Outward WATS. It permits the subscriber to receive direct-dialed calls, originating from within the selected service area, on a collect basis at a fixed monthly rate. Inward WATS calls first traverse the public switched network and then are blocked and screened at the terminating WATS office serving the subscriber. Inward WATS also requires the use of separate access lines to carry the calls from the central office to the subscriber. The special WATS access lines cannot be used for placing or receiving any other type of calls.
The fixed monthly fees for both WATS services are prepaid. If WATS services of either character are used in excess of the time periods paid for, additional charges are billed. The itemized billing statement characteristic of MTS is not a feature of either WATS service.
On September 26, 1977, the Commission released a Notice of Inquiry in which it solicited comments on the question whether Outward WATS or Inward WATS constitutes service "like" MTS within the meaning of section 202(a). American Telephone & Telegraph Co. (WATS), 66 F.C.C.2d 224, 226 (1977) (Notice of Inquiry ). The Commission also solicited comments on the specific standards or criteria it should rely upon in making "likeness" determinations. Id. After evaluating the numerous responses received, the Commission discarded differences in service it deemed "irrelevant" and concluded that both WATS services are "like" MTS for section 202(a) purposes. American Telephone & Telegraph Co. (WATS), 70 F.C.C.2d 593 (1978) (Like Services Decision ).
The Commission stated that, in reaching its decision, it employed the "functional equivalency" test, which focuses on whether the services under consideration differ in any material functional respect. Id. at 604. The FCC concluded here that "no difference exists between the services in terms of (the) communication functions performed for the subscriber." Id. at 605. The Commission asserted that it arrived at this conclusion after examining, through review of comments submitted by subscribers, customer perception of the various services, which the FCC "believe(s) to be a major test of functional equivalency." Id. at 609 (footnote omitted). 4 The Commission also pointed to the undisputed fact that the transmission of MTS and WATS calls from end-to-end within the public switched network is essentially identical. Id. at 605. Based on its "like service" finding, the FCC ordered AT&T either to demonstrate the lawfulness of its discriminatory charges or to eliminate them. Id. at 614-15.
On July 15, 1980, the Commission released a Memorandum Opinion and Order in American Telephone & Telegraph Co. (WATS), 79 F.C.C.2d 10 (1980) (Like Services Reconsideration), denying petitions for reconsideration of the Like Services Decision. The Commission reaffirmed its...
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